Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products
Date: 2003-12-23
Institutions: European Commission
Subjects: State aid, agricultural product, agro-industry, aid to undertakings, marketing, small and medium-sized enterprises

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(Acts whose publication is obligatory)

COMMISSION REGULATION (EC) No 1/2004

of 23 December 2003

on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized
enterprises active in the production, processing and marketing of agricultural products

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 994/98 of 7 May
1998 on the application of Articles 92 and 93 of the Treaty
establishing the European Community to certain categories of
horizontal State aid (1), and in particular Article 1(1)(a)(i)
thereof,

Having published a draft of this Regulation (2),

Having consulted the Advisory Committee on State aid,

Whereas:

(1)

(2)

(3)

Regulation (EC) No 994/98 empowers the Commission
to declare, in accordance with Article 87 of the Treaty,
that, under certain conditions, aid to small and medium-
sized enterprises is compatible with the common market
and not subject to the notification requirement of Article
88(3) of the Treaty.

Commission Regulation (EC) No 70/2001 of 12 January
2001 on the application of Articles 87 and 88 of the EC
Treaty to State aid to small and medium-sized enter-
prises (3) does not apply to activities linked to the
production, processing or marketing of products listed
in Annex I to the Treaty.

The Commission has applied Articles 87 and 88 of the
Treaty to small and medium-sized enterprises active in
the production, processing and marketing of agricultural
products in numerous decisions and has also stated its
policy, most recently in the Community guidelines for
State aid in the agriculture sector (4) (hereafter referred to
the
as
Commission's considerable experience in applying those
Articles to small and medium-sized enterprises active in
the production, processing and marketing of agricultural
products, it is appropriate, with a view to ensuring effi-
cient supervision and simplifying administration without

the ‘agriculture guidelines’).

In the light of

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ C 194, 15.8.2003, p. 2.
(3) OJ L 10, 13.1.2001, p. 33.
(4) OJ C 28, 1.2. 2000, p. 2. (Corrected version OJ C 232, 12.8.2000,

p. 19.)

(4)

(5)

(6)

weakening Commission monitoring, that the Commis-
sion should make use of the powers conferred by Regu-
lation (EC) No 994/98 also for small and medium-sized
enterprises active in the production, processing and
marketing of agricultural products, insofar as Article 89
the Treaty has been declared applicable to such
of
products. Due to the specificities of
the agricultural
sector, a Regulation covering only small and medium-
sized enterprises active in this sector is justified.

This Regulation is without prejudice to the possibility
for Member States to notify aid to small and medium-
sized enterprises active in the production, processing
and marketing of agricultural products. Such notifica-
tions will be assessed by the Commission in the light of
this Regulation and on the basis of the agriculture guide-
lines. Notifications pending on the date of entry into
force of this Regulation should be assessed first in the
light of this Regulation and,
if the conditions it lays
down are not fulfilled, then on the basis of the Agri-
culture Guidelines. It is appropriate to lay down transi-
tional provisions for aid which was granted before the
entry into force of this Regulation and was not notified
in breach of the obligation in Article 88(3) of the Treaty.

Over the coming years, agriculture will have to adapt to
new realities and further changes in terms of market
evolution, market policy and trade rules, consumer
demand and preferences and the enlargement of the
Community. These changes will affect not only agri-
cultural markets but also local economies in rural areas
in general. Rural development policy should aim at
restoring and enhancing the competitiveness of rural
areas and, therefore, contribute to the maintenance and
creation of employment in those areas.

Small and medium-sized enterprises play a decisive role
in job creation and, more generally, act as a factor of
social stability and economic drive. However, their devel-
opment may be limited by market imperfections. They
often have difficulties in obtaining capital or credit,
given the risk-shy nature of certain financial markets and
the limited guarantees that they may be able to offer.
Their limited resources may also restrict their access to
information, notably regarding new technology and
potential markets. Having regard to those considerations,
the purpose of the aid exempted by this Regulation
should be to facilitate the development of the economic
enterprises,
activities of

and medium-sized

small

(7)

(8)

(9)

(11)

(12)

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provided that such aid does not adversely affect trading
conditions to an extent contrary to the common interest.
These
and
should
supported by simplification of the existing rules, as far
as they apply to small and medium-sized enterprises.

developments

encouraged

be

The production, processing and marketing of agricultural
products in the Community is largely dominated by
small and medium-sized enterprises.

Council Regulation (EC) No 1257/1999 of 17 May 1999
on support for rural development from the European
Agricultural Guidance and Guarantee Fund (EAGGF) and
amending and repealing certain Regulations (1) has
already introduced specific State aid rules for certain
rural development measures receiving Member State
support without any Community financing.

(13)

In order to eliminate differences that might give rise to
to facilitate coordination
distortions of competition,
between different Community and national
initiatives
concerning small and medium-sized enterprises and for
reasons of administrative clarity and legal certainty, the
definition of ‘small and medium-sized enterprises’ used
in this Regulation should be that laid down in Regu-
lation (EC) No 70/2001.

(14)

In accordance with established practice of the Commis-
sion, and with a view to ensuring that aid is propor-
tionate and limited to the amount necessary, thresholds
should normally be expressed in terms of aid intensities
in relation to a set of eligible costs, rather than in terms
of maximum aid amounts.

(15)

This Regulation should exempt any aid that meets all the
requirements it lays down, and any aid scheme, provided
that any aid that could be granted under such scheme
meets all the relevant requirements of this Regulation.
With a view to ensuring efficient supervision and simpli-
fying administration without weakening Commission
monitoring, aid schemes and individual grants outside
any aid scheme should contain an express reference to
this Regulation.

(10) Aid granted towards costs linked to advertising as
defined by the Community guidelines for State aid for
advertising of products listed in Annex I to the EC Treaty
and of certain non-Annex I products (2) should be
excluded from the scope of this Regulation and continue
to be covered only by those guidelines.

In order to determine whether or not aid is compatible
with the common market pursuant to this Regulation, it
is necessary to take into consideration the aid intensity
and thus the aid amount expressed as a grant equivalent.
The calculation of the grant equivalent of aid payable in
several instalments and aid in the form of a soft loan
requires the use of market interest rates prevailing at the
time of grant. With a view to a uniform, transparent,
and simple application of the State aid rules, the market
this Regulation should be
rates for the purposes of
deemed to be the reference rates, provided that, in the
case of a soft loan, the loan is backed by normal security
and does not involve abnormal risks. The reference rates
should be those which are periodically fixed by the
Commission on the basis of objective criteria and
published in the Official Journal of the European Union and
on the Internet.

In view of the need to strike the appropriate balance
between minimising distortions of competition in the
aided sector and the objectives of this Regulation,
it
should not exempt individual grants which exceed a
fixed maximum amount, whether or not made under an
aid scheme exempted by this Regulation.

(16)

In accordance with established practice of the Commis-
sion for the evaluation of State aid in the agricultural
sector, no differentiation between small enterprises and
medium-sized enterprises is necessary. For certain types
of aid, the establishment of maximum amounts of aid
which a beneficiary may receive is appropriate.

This Regulation should not exempt export aid or aid
contingent upon the use of domestic over imported
products. Such aid may be incompatible with the
Community's international obligations under the World
Trade Organisation (WTO) Agreement on Subsidies and
Countervailing Measures and the WTO Agreement on
Agriculture. Aid towards the costs of participation in
trade fairs or of studies or consultancy services needed
for the launch of a new or existing product on a new
market should not normally constitute export aid.

(1) OJ L 160, 26.6.1999, p. 80.
(2) OJ C 252, 12.9.2001, p. 5.

(17) Aid ceilings should be fixed, in the light of the Commis-
sion's experience, at a level that strikes the appropriate
balance between minimising distortions of competition
in the aided sector and the objective of facilitating the
development of the economic activities of small and
medium-sized enterprises in the agriculture sector. In the
interests of coherence with Community-financed support
measures, the ceilings should be harmonised with those
fixed in the agriculture guidelines and in Regulation (EC)
No 1257/1999.

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(18)

(19)

(20)

is appropriate to establish further conditions that
It
should be fulfilled by any aid scheme or individual aid
exempted by this Regulation. Companies
receiving
investment aid should have to comply with the criteria
concerning viability and respect of minimum standards
provided for in Articles 5 and 26(1) of Regulation (EC)
No 1257/1999. Any restrictions on production or
limitations of Community support under the common
market organisations should be taken into account.
the Treaty, aid
Having regard to Article 87(3)(c) of
should not normally have the sole effect of continuously
or periodically reducing the operating costs which the
beneficiary would normally have to bear, and should be
proportionate to the handicaps that have to be over-
come in order to secure the socioeconomic benefits
deemed to be in the Community interest. Unilateral State
aid measures which simply seek to improve the financial
situation of producers but which in no way contribute
to the development of the sector, and in particular aid
which is granted solely on the basis of price, quantity,
unit of production or unit of the means of production is
considered to constitute operating aid which is incompa-
tible with the common market. Furthermore, such aid is
also likely to interfere with the mechanisms of
the
common organisations of the markets. It is therefore
appropriate to limit
this Regulation to
the scope of
certain types of aid.

This Regulation should exempt aid to small and
medium-sized enterprises regardless of location. Invest-
ment and job creation can contribute to the economic
development of less favoured regions and of Objective 1
regions in the Community. Small and medium-sized
enterprises in those regions suffer from both the struc-
tural disadvantage of the location and the difficulties
deriving from their size. It is therefore appropriate that
small and medium-sized enterprises in less favoured and
Objective 1 regions should benefit from higher ceilings.

invested in,

Because of the risk of distortions resulting from targeted
investment aid and in order to offer farmers freedom to
decide about products
investment aid
exempted under this regulation should not be limited to
specific agricultural products. This condition should not
prevent a Member State from excluding certain agri-
cultural products from such aid or aid schemes, notably
where no normal market outlets can be found. Also,
certain types of investment should, per se, be excluded
from this Regulation. Investment aid targeted at certain
sectors may be justified and therefore exempted where
the aid is limited to costs of the implementation of
specific rules relating to the protection and improvement
of the environment, the improvement of hygiene condi-
farm
tions of

livestock enterprises or the welfare of

should be

animals. Investments for the processing and marketing
of agricultural products undertaken at farm level, not
entailing an increase in capacity and having total eligible
expenses below the limit set under Article 7 of Regu-
lation (EC) No 1257/1999,
examined
according to the rules established for investments for the
production of agricultural products. On-farm invest-
ments for processing and marketing of agricultural
products entailing an increase in production capacity,
and/or having total eligible expenses above the limit set
under Article 7 of Regulation (EC) No 1257/1999,
should be examined according to the rules established
for investments for the processing and marketing of agri-
cultural products.

(21) Where aid is granted to adapt to newly introduced stan-
dards at Community level, Member States should not be
in a position to lengthen the adaptation period for
farmers by delaying implementation of
such rules.
Therefore, the date from which new legislation can no
longer be considered new should be clearly set out.

(22)

(23)

Services offered at subsidised rates are often offered to
farmers by companies which cannot be freely chosen by
the farmer. In order to avoid aid being granted to the
providers of the service, and not to the farmer, and in
order to ensure that the farmer gets the best service at a
competitive price,
it should normally be ensured that
such providers of services are chosen and remunerated
according to market principles. However,
for certain
services, notably controls, and due to the nature of the
service or the legal basis for the provision of the service,
there may be only one provider.

Certain Council Regulations in the field of agriculture
provide for specific authorisations for the payment of
aid by Member States, often in combination with or in
addition to Community financing. However, those provi-
sions usually do not provide for an exemption from the
duty to notify under Article 88 of the Treaty, insofar as
such aid fulfils the conditions of Article 87(1) of the
Treaty. Since the conditions for such aid are clearly
specified in those Regulations, and/or there is a duty to
communicate such measures to the Commission under
the special provisions of those Regulations, no further
and separate notification under Article 88(3) of
the
Treaty is necessary in order to allow for an assessment
of these measures by the Commission. For reasons of
legal certainty, a reference to those provisions should be
included in this Regulation, and therefore notification of
those measures under Article 88 of the Treaty should
not be necessary,
insofar as it can be ascertained in
advance that such aid is exclusively granted to small and
medium-sized enterprises.

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(24)

(25)

(26)

(27)

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In order to ensure that the aid is necessary and acts as
an incentive to develop certain activities, this Regulation
should not exempt aid for activities in which the benefi-
ciary would already engage under market conditions
alone. No aid should be granted retroactively in respect
of activities which have already been undertaken by the
beneficiary.

HAS ADOPTED THIS REGULATION:

CHAPTER 1

SCOPE, DEFINITIONS AND CONDITIONS

This Regulation should not exempt aid cumulated with
other State aid,
including aid granted by national,
regional or local authorities, with public support granted
within the framework of Regulation (EC) No 1257/1999
or with Community assistance, in relation to the same
eligible costs, when such cumulation exceeds the thresh-
olds fixed in this Regulation.

In order to ensure transparency and effective moni-
toring, in accordance with Article 3 of Regulation (EC)
it is appropriate to establish a standard
No 994/98,
in which Member States should provide the
format
Commission with summary information whenever,
in
pursuance of this Regulation, an aid scheme is imple-
mented or an individual aid outside such schemes is
granted, with a view to publication in the Official Journal
of the European Union. For the same reasons, it is appro-
priate to establish rules concerning the records that
Member States should keep regarding the aid exempted
by this Regulation. For the purposes of the annual report
to be submitted to the Commission by Member States, it
is appropriate for
the Commission to establish its
specific requirements. In view of the wide availability of
the necessary technology, the summary information and
the annual report should be in computerised form.

Failure by a Member State to comply with the reporting
obligations established in this Regulation may make it
impossible for the Commission to perform its moni-
toring task under Article 88(1) of the Treaty and, in par-
ticular, to assess whether the cumulative economic effect
of the aids exempted under this Regulation is such as to
adversely affect trading conditions to an extent contrary
to the common interest. The need to evaluate the cumu-
lative effect of State aid is particularly high where the
same beneficiary may receive aid granted by several
sources, as is increasingly the case in the field of agri-
culture. It is therefore of primary importance that the
Member State rapidly submits appropriate information
before implementing aid under this Regulation.

(28) Having regard to the Commission's experience in this
area, and in particular the frequency with which it is
generally necessary to revise State aid policy, it is appro-
priate to limit the period of application of this Regu-
lation. Should this Regulation expire without being
extended, aid schemes already exempted by this Regu-
lation should continue to be exempt for six months,

Article 1

Scope

This Regulation shall apply to aid granted to small and
1.
medium-sized enterprises active in the production, processing
or marketing of agricultural products.

2.

This Regulation shall not apply to:

(a) aid granted towards costs linked to advertising as defined
by the Community guidelines for State aid for advertising
of products listed in Annex I to the EC Treaty and of
certain non-Annex I products;

(b) aid granted to processing of Annex I agricultural products

into non-Annex I products.

3.
This Regulation shall not apply to aid for individual
investments with eligible expenses in excess of EUR 12,5
million, or where the actual amount of aid exceeds EUR 6
million. Such aid shall be specifically notified to the Commis-
sion in accordance with Article 88(3) of the Treaty.

4. Without prejudice to Article 16(a) this Regulation shall
not apply to:

(a) aid to export-related activities, namely aid directly linked to
the quantities exported, to the establishment and operation
of a distribution network or to other current expenditure
linked to the export activity;

(b) aid contingent upon the use of domestic over imported

goods.

Article 2

Definitions

For the purpose of this Regulation:

1.

‘aid’ means any measure fulfilling all the criteria laid down
in Article 87(1) of the Treaty;

2.

‘agricultural product’ means:

(a) the products listed in Annex I to the Treaty, except
fishery and aquaculture products covered by Council
Regulation (EC) No 104/2000 (1);

(b) products falling under CN codes 4502, 4503 and

4504 (cork products);

(1) OJ L 17, 21.1.2000, p. 22.

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(c) products intended to imitate or substitute milk and
milk products, as referred to in Article 3(2) of Council
Regulation (EEC) No 1898/87 (1);

3.

‘processing of an agricultural product’ means an operation
on an agricultural product where the product resulting
from the operation is also an agricultural product;

12.

‘producer group’ means a group which is set up for the
purpose of jointly adapting, within the objectives of the
common market organisations, the production and output
of its members to market requirements,
in particular by
concentrating supply;

13.

‘producer association’ means an association which consists
of recognised producer groups and pursues the same
objectives on a larger scale.

4.

‘small and medium-sized enterprises’ (SME) means enter-
prises as defined in Annex I to Regulation (EC) No 70/
2001;

14.

5.

‘gross aid intensity’ means the aid amount expressed as a
percentage of the project's eligible costs. All figures used
shall be taken before any deduction for direct taxation.
Where aid is awarded in a form other than a grant, the aid
the aid. Aid
amount shall be the grant equivalent of
payable in several
instalments shall be discounted to its
value at the moment of granting. The interest rate to be
used for discounting purposes and for calculating the aid
amount in a soft loan shall be the reference rate applicable
at the time of grant;

6.

‘quality product’ is a product fulfilling the criteria of Article
24b(2) or (3) of Council Regulation (EC) No 1783/2003
amending Regulation (EC) 1257/1999 on support for rural
development
from the European Agricultural Guidance
and Guarantee Fund (EAGGF) (2);

7.

‘adverse climatic events which can be assimilated to natural
disasters’ means weather conditions such as frost, hail, ice,
rain or drought which destroy 20 % of normal production
in less-favoured areas and 30 % in other areas;

8.

‘less-favoured areas’ means areas as defined by Member
States on the basis of Article 17 of Regulation (EC) No
1257/1999;

9.

‘objective 1 regions’ means regions referred to in Article 3
of Council Regulation (EC) No 1260/1999 (3);

10.

‘newly introduced minimum standards regarding the envir-
onment, hygiene and animal welfare’ means:

(a) in the case of standards which do not provide for any
transitional period, standards to be made compulsory
vis-à-vis operators not more than two years before the
investment is actually started; or

(b) in the case of standards which provides for a transi-
tional period, standards to be made compulsory vis-à-
vis operators after the investment has actually been
started;

11.

‘young farmers’ means producers of agricultural products
as defined in Article 8 of Regulation (EC) No 1257/1999;

(1) OJ L 182, 3.7.1987, p. 36.
(2) OJ L 270, 21.10.2003, p. 70.
(3) OJ L 161, 26.6.1999, p. 1.

‘TSE and BSE test costs’ are all costs, including those for
test kits, taking, transporting, testing, storing and destruc-
tion of samples necessary for tests undertaken in accord-
ance with Annex X, Chapter C to Regulation (EC) No 999/
2001 of the European Parliament and of the Council of 22
May 2001 laying down rules for the prevention, control
and eradication of certain transmissible spongiform ence-
phalopathies (4).

Article 3

Conditions for exemption

1.
Individual aid outside any scheme, fulfilling all the condi-
tions of this Regulation, shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be exempt from the notification requirement of Article
88(3) of the Treaty provided that the summary information
provided for in Article 19(1) has been submitted and that it
contains an express reference to this Regulation, by citing its
title and publication reference in the Official Journal of the Euro-
pean Union.

2.
Aid schemes fulfilling all the conditions set out in this
Regulation shall be compatible with the common market
within the meaning of Article 87(3)(c) of the Treaty and shall
be exempt from the notification requirement of Article 88(3) of
the Treaty provided that:

(a) any aid that could be awarded under such scheme fulfils all

the conditions set out in this Regulation;

(b) the scheme contains an express reference to this Regu-
lation, by citing its title and publication reference in the
Official Journal of the European Union;

(c) the summary information provided for in Article 19(1) has

been submitted.

3.
Aid granted under the schemes referred to in paragraph 2
shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt
from the notification requirement of Article 88(3) of the Treaty
provided that the aid granted directly fulfils all the conditions
of this Regulation.

(4) OJ L 147, 31.5.2001, p. 1.

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CHAPTER 2

CATEGORIES OF AID

Article 4

Investment in agricultural holdings

1.
Aid for investments in agricultural holdings within the
Community for the production, processing and marketing of
agricultural products, shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be exempt from the notification requirement of Article
88(3) of the Treaty if it fulfils the conditions set out in para-
graphs 2 to 10.

2.

The gross aid intensity must not exceed:

(a) 50 % of eligible investments in less favoured areas;

(b) 40 % of eligible investments in other regions.

In the case of investments made by young farmers within five
years of setting up, the maximum aid rate shall be increased to
60 % in less-favoured areas, and 50 % in other regions.

Where investments result in extra costs relating to the protec-
tion and improvement of the environment, the improvement
of hygiene conditions of livestock enterprises or the welfare of
farm animals,
the maximum aid rates of 50 % and 40 %
referred to in points (a) and (b) of the first subparagraph may
be increased by 25 and 20 percentage points, respectively. This
increase may only be granted for investments which go beyond
the minimum Community requirements in force, or for invest-
ments made to comply with newly introduced minimum stan-
dards. The increase must be limited to the extra eligible costs
necessary and must not apply in the case of investments which
result in an increase in production capacity.

The investment must pursue one or more of

3.
following objectives:

the

(a) reduction of production costs;

(b) improvement and redeployment of production;

(c) improvement in quality;

(d) preservation and improvement of the natural environment,

hygiene conditions and animal welfare standards;

(e) promotion of the diversification of farm activities.

4.

The eligible expenses may include:

(a) the construction, acquisition or improvement of immovable

property;

(b) the purchase or lease-purchase of new machinery and
equipment, including computer software up to the market
value of the asset; other costs connected with a leasing

(tax,

lessor's margin,

interest refinancing costs,
contract
overheads, insurance charges, etc.) are not eligible expendi-
ture;

(c) general costs, such as architects, engineers and consultation
fees,
the acquisition of patents and
licences, up to 12 % of the expenditure referred to in points
(a) and (b).

feasibility studies,

By way of derogation from point (b) of the first subparagraph,
the purchase of second-hand equipment may be regarded as
eligible expenditure in duly substantiated cases when the
following conditions are met:

(a) a declaration by the seller of the equipment confirms its
exact origin and that the equipment has not already been
the subject of national or Community assistance;

(b) the purchase of

the equipment represents a particular
advantage for the programme or project, or is made neces-
sary by exceptional circumstances (for example, no new
threatening proper
equipment available on time,
execution of the project);

thus

(c) reduction of

the costs involved, and therefore of

the
amount of aid, as compared with the costs of the same
equipment purchased new, while maintaining a good cost-
benefit ratio;

(d) the second-hand equipment acquired must have the tech-
nical and/or technological characteristics necessary for the
requirements of the project.

Aid may only be granted to viable agricultural holdings
5.
which comply with the criteria set out in Article 5 of Regu-
lation (EC) No 1257/1999.

Aid may be granted in order to enable the beneficiary to reach
newly introduced minimum standards regarding the environ-
ment, hygiene and animal welfare.

Assessment of compliance with the criteria of Article 5 of
Regulation (EC) No 1257/1999 must be made at enterprise
level by a public body or an independent third party, which is
qualified to undertake such assessment. The rules setting up the
aid scheme or the decision awarding individual aid outside such
a scheme must specify how such assessment is to be made.

Sufficient evidence must be available that normal market
6.
outlets for the products concerned exist for the future. This
must be assessed at the appropriate level determined by the
Member State, in relation to the products concerned, the types
of investments, and existing and expected capacities. Assess-
ment of normal market outlets must be made by a public body
or a third party, which are independent from the beneficiary of
the aid and qualified to undertake such assessment. The rules
setting up the aid scheme must specify how such assessment is
to be made. The assessment must be based on recent data and
must be made publicly available.

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The aid must not be granted in contravention of any
7.
prohibitions or restrictions laid down in Council regulations
establishing common organisations of the market, even where
such prohibitions and restrictions only refer to Community
support.

8.
Unless it is limited to the costs of the implementation of
specific rules relating to the protection and improvement of the
environment, the improvement of hygiene conditions of live-
stock enterprises or the welfare of farm animals, aid must not
be limited to specific agricultural products. Aid must not be
granted in respect of the following:

(a) investment having as their effect increased production capa-
city, where the capacity increase on a farm amounts to
more than 20 %, to be measured in livestock units for
animal production and cultivated surface for plant produc-
tion;

(b) the purchase of production rights, animals, land other than
land for construction purposes, plants or the planting of
plants;

(c) simple replacement investments.

9.
The maximum expenses eligible for support must not
exceed the limit for total investment eligible for support set by
the Member State in accordance with Article 7 of Regulation
(EC) No 1257/1999. Aid schemes must state this limit.

10.

The aid must not be granted in respect of the following:

(a) the manufacture and marketing of products which imitate

or substitute for milk and milk products;

(b) processing and marketing activities in the sugar sector.

Article 5

Conservation of traditional landscapes and buildings

Aid for conservation of traditional landscapes and build-
1.
ings shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt
from the notification requirement of Article 88(3) of the Treaty
if it fulfils the conditions set out in paragraphs 2 and 3.

Aid may be granted up to 100 % of

2.
the real costs
incurred as regards investments or capital works intended for
the conservation of non-productive heritage features located on
such as archaeological or historical
agricultural holdings,
features. These costs may include reasonable compensation for
the work undertaken by the farmer himself, or his workers, up
to a limit of EUR 10 000 a year.

Where there is an increase in production capacity, the aid rates
for investment established in Article 4(2) shall apply as regards
eligible expenses resulting from undertaking the relevant work
using normal contemporary materials. Additional aid may be
granted at a rate of up to 100 % to cover the extra costs
incurred by using traditional materials necessary to maintain
the heritage features of the building.

Article 6

Relocation of farm buildings in the public interest

1.
Aid for the relocation of farm buildings shall be compa-
tible with the common market within the meaning of Article
87(3)(c) of the Treaty and shall be exempt from the notification
requirement of Article 88(3) of the Treaty if it is in the public
interest and fulfils the conditions set out in paragraphs 2, 3
and 4.

The public interest invoked to justify the granting of aid under
this Article shall be specified in the relevant provisions of the
Member State.

2.
Aid may be granted up to 100 % of the actual costs
incurred where a relocation in the public interest simply
consists of the dismantling, removal and re-erection of existing
facilities.

3. Where the relocation in the public interest results in the
farmer benefiting from more modern facilities, the farmer must
contribute at least 60 %, or 50 % in less favoured areas, of the
increase in the value of the facilities concerned after relocation.
If the beneficiary is a young farmer, this contribution shall be
at least 55 % or 45 % respectively.

4. Where the relocation in the public interest results in an
increase in production capacity,
the contribution from the
beneficiary must be at least equal to 60 %, or 50 % in less
favoured areas, of the expenses relating to this increase. If the
beneficiary is a young farmer, this contribution shall be at least
55 % or 45 %.

Article 7

Investment in processing and marketing

1.
Aid for investment in the processing and marketing of
agricultural products shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be exempt from the notification requirement of Article
88(3) of the Treaty if it fulfils the conditions set out in para-
graphs 2 to 7.

3.
Aid may be granted up to 60 %, or 75 % in less favoured
areas, of the real costs incurred as regards investments or
capital works intended for the conservation of heritage features
of productive assets on farms, such as farm buildings, provided
that the investment does not entail any increase in the produc-
tion capacity of the farm.

2.

The gross aid intensity must not exceed:

(a) 50 % of eligible investments in Objective 1 regions;

(b) 40 % of eligible investments in other regions.

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3.

The eligible expenses may include:

(a) the construction, acquisition or improvement of immovable

property;

(b) the purchase or lease-purchase of new machinery and
equipment, including computer software up to the market
value of the asset; other costs connected with a leasing
contract
interest refinancing costs,
overheads, insurance charges, etc.) are not eligible expendi-
ture;

lessor's margin,

(tax,

(c) general costs, such as architects, engineers and consultation
the acquisition of patents and
fees,
licences, up to 12 % of the expenditure referred to in points
(a) and (b).

feasibility studies,

By way of derogation from point (b) of the first subparagraph,
the purchase of second-hand equipment may be regarded as
eligible expenditure in duly substantiated cases when the
following conditions are met:

(a) a declaration by the seller of the equipment confirms its
exact origin and that the equipment has not already been
the subject of national or Community assistance;

(b) the purchase of

the equipment represents a particular
advantage for the programme or project, or is made neces-
sary by exceptional circumstances (for example, no new
equipment available on time,
threatening proper
execution of the project);

thus

(c) reduction of

the costs involved, and therefore of

the
amount of aid, as compared with the costs of the same
equipment purchased new, while maintaining a good cost-
benefit ratio;

(d) the second-hand equipment acquired must have the tech-
nical and/or technological characteristics necessary for the
requirements of the project.

4.
Aid may only be granted to enterprises which can be
demonstrated to comply with the criteria set out in Article
26(1) of Regulation (EC) No 1257/1999.

Aid may be granted in order to enable the beneficiary to reach
newly introduced minimum standards regarding the environ-
ment, hygiene and animal welfare.

Assessment of compliance with the criteria set out in Article
26(1) of Regulation (EC) No 1257/199 must be made at enter-
prise level by a public body or an independent third party
which is qualified to undertake such assessment. The rules
setting up the aid scheme must specify how such assessment is
to be made.

Member State, in relation to the products concerned, the types
of investments, and existing and expected capacities. Assess-
ment of normal market outlets must be made by a public body
or a third party, which are independent from the beneficiary of
the aid and qualified to undertake such assessment. The rules
setting up the aid scheme must specify how such assessment is
to be made. The assessment must be based on recent data and
must be made publicly available.

The aid must not be granted in contravention of any
6.
prohibitions or restrictions laid down in Council Regulations
establishing common organisations of the market, even where
such prohibitions and restrictions only refer to Community
support.

7.
The aid must not be limited to specific agricultural
products, but must however not be granted in respect of the
following:

(a) the manufacture and marketing of products which imitate

or substitute for milk and milk products;

(b) processing and marketing activities in the sugar sector.

Article 8

Aid for setting up of young farmers

Aid for the setting up of young farmers shall be compatible
with the common market within the meaning of Article
87(3)(c) of the Treaty and shall be exempt from the notification
requirement of Article 88(3) of the Treaty under the following
conditions:

(a) the criteria set out in Articles 7 and 8 of Regulation (EC)

No 1257/1999 must be fulfilled;

(b) the combined support granted under Regulation (EC) No
1257/1999 and in the form of State aid under this Article
must not exceed the maximum limits provided for in
Article 8(2) of that Regulation.

Article 9

Aid for early retirement

Aid for early retirement of farmers shall be compatible with the
common market within the meaning of Article 87(3)(c) of the
Treaty and shall be exempt from the notification requirement
of Article 88(3) of the Treaty under the following conditions:

(a) the criteria set out in Articles 10, 11 and 12 of Regulation

(EC) No 1257/1999 must be fulfilled;

5.
Sufficient evidence must be available that normal market
outlets for the products concerned exist for the future. This
must be assessed at the appropriate level determined by the

(b) the cessation of commercial
permanent and definitive.

farming activities must be

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Article 10

Aid for producer groups

1.
Start-up aid for the constitution of producer groups or
producer associations shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be exempt from the notification requirement of Article
88(3) of the Treaty if it fulfils the conditions set out in para-
graphs 2 to 9.

2.
The following shall be eligible for the aid referred to in
paragraph 1, provided that they are entitled to financial assis-
tance under the legislation of the Member State concerned:

(a) producer groups or producer associations involved in the

production of agricultural products; and/or

(b) associations of producers responsible for the supervision of
the use of denominations of origin or quality marks in
conformity with Community law.

The internal rules of the producer group or association must
provide an obligation on members to market production in
accordance with the rules on supply and placing on the market
drawn up by the group or association.

Those rules may permit a proportion of the production to be
marketed directly by the producer. They must require produ-
cers joining the group or association to remain members for at
least three years and to give at least 12 months notice of with-
drawal.
In addition they must provide common rules on
production, in particular relating to product quality, or use of
organic practices, common rules for placing goods on the
market and rules on product
information, with particular
regard to harvesting and availability. However, producers must
remain responsible for managing their holdings. The agree-
ments concluded in the framework of the producer group or
association must comply fully with all relevant provisions of
competition law, in particular Articles 81 and 82 of the Treaty.

the

acquisition of office

The eligible expenses may include the rental of suitable
3.
premises,
including
computer hardware and software, administrative staff costs,
overheads and legal and administrative fees. If premises are
purchased, the eligible expenses for premises shall be limited to
rental costs at market rates.

equipment,

The aid must not be paid in respect of costs incurred after
5.
the fifth year, or paid following the seventh year after recogni-
tion of the producer organisation. This is without prejudice to
grant aid towards eligible expenses limited to and resulting
from a year-on-year increase in turnover of a beneficiary by at
least 30 % where this is due to the accession of new members
and/or the coverage of new products.

The aid must not be granted to production organisations
6.
such as companies or cooperatives, the objective of which is
the management of one or more agricultural holdings and
which are therefore in effect single producers.

7.
The aid must not be granted to other agricultural associa-
tions, which undertake tasks at the level of agricultural produc-
tion, such as mutual support and farm relief and farm manage-
ment services, in the members' holdings without being involved
in the joint adaptation of supply to the market.

The total amount of aid granted to a producer group or

8.
association under this Article must not exceed EUR 100 000.

The aid must not be granted to producer groups or asso-
9.
ciations the objectives of which are incompatible with a
Council regulation setting up a common market organisation.

Article 11

Aid towards the payment of insurance premiums

Aid for insurance premiums for enterprises involved in
1.
the primary production of agricultural products
shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty if it
fulfils the conditions set out in paragraphs 2, 3 and 4.

2.

The gross aid intensity must not exceed:

(a) 80 % of the cost of insurance premiums where the policy
specifies that it provides cover only against losses caused by
adverse climatic events which can be assimilated to natural
disasters;

4.
Aid must be temporary and degressive and must not
exceed 100 % of eligible costs incurred in the first year. The aid
level must be reduced by at least 20 percentage points for each
year of operation, so that in the fifth year the amount of aid is
limited to 20 % of actual eligible expenditure occurred in that
year.

(b) 50 % of the cost of insurance premiums where the policy
specifies that it provides cover against losses referred to in
point (a) and in addition against:

(i) other losses caused by climatic events; and/or

(ii) losses caused by animal or plant diseases.

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Losses caused by adverse climatic events which can be assimi-
lated to natural disasters must be determined on the basis of
the gross production of the relevant crop in the year in ques-
tion compared with the gross annual production in a normal
year. Gross production must be calculated by reference to the
average gross production in the previous three years, excluding
any year in which compensation was payable as a result of
other adverse weather conditions. In the case of damage to the
means of production, the effects of which are felt over several
years, the percentage real loss for the first harvest following the
occurrence of the adverse event in comparison with a normal
year, determined in accordance with the principles set out in
this subparagraph, must exceed 10 % and the percentage real
loss multiplied by the number of years in which production is
lost must exceed 20 % in the less-favoured areas and 30 % in
other areas.

The aid must be granted for the cost of

3.
insurance
premiums which include cover for losses caused by adverse
climatic events which can be assimilated to natural disasters.

4.
The aid must not constitute a barrier to the operation of
the internal market for insurance services. The aid must not be
limited to insurance provided by a single insurance company
or group of companies, or be made subject to the condition
that the insurance contract be taken out with a company estab-
lished in the Member State concerned.

Article 12

Aid for land reparcelling

1.
Aid to enterprises involved in the production of agri-
cultural products shall be compatible with the common market
within the meaning of Article 87(3)(c) of the Treaty and shall
be exempt from the notification requirement of Article 88(3) of
the Treaty if it is granted towards and limited to the legal and
administrative costs, including survey costs, of land reparcel-
ling, up to 100 % of actual costs incurred.

Paragraph 1 shall not apply to aid for investments,

2.
including aid for land purchase.

Article 13

Aid to encourage the production and marketing of quality
agricultural products

Aid to encourage the production and marketing of quality
1.
agricultural products shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be exempt from the notification requirement of Article
88(3) of the Treaty if it is granted towards the eligible costs
listed in paragraph 2 and fulfils the conditions set out in para-
graphs 3 to 7.

Aid may be granted to cover the costs of the following
insofar as they are related to the development of

2.
activities,
quality agricultural products:

(a) up to 100 % of the costs of market research activities,
product conception and design, including aid granted for
the preparation of applications for recognition of denomi-
nations of origin or certificates of specific character in
accordance with the relevant Community regulations;

(b) up to 100 % of the costs of the introduction of quality
assurance schemes such as ISO 9000 or 14000 series,
systems based on hazard analysis and critical control points
(HACCP), traceability systems, systems to assure respect of
authenticity and marketing norms or environmental audit
systems;

(c) up to 100 % of the costs of training personnel to apply

schemes and systems as referred to in point (b);

(d) up to 100 % of the costs of the charges levied by recog-
nised certifying bodies for the initial certification of quality
assurance and similar systems;

(e) up to 100 % of the costs of compulsory control measures
undertaken pursuant to Community or national legislation
by or on behalf of the competent authorities, unless Com-
munity legislation requires enterprises to bear such costs;

(f) temporary and degressive aid towards the costs of control
measures undertaken during the first six years following the
establishment of the control system to ensure the authenti-
city of denominations of origin, or certificate of specific
character in the framework of Council Regulations (EEC)
No 2081/92 (1) and (EEC) No 2082/92 (2); degressivity must
be at least 10 percentage points per year;

(g) up to 100 % of actual costs incurred for controls of organic
production methods conducted within the framework of
Council Regulation (EEC) No 2092/91 (3).

3.
The aid must be granted in respect of controls undertaken
by or on behalf of third parties, such as the competent regula-
tory authorities, or bodies acting on their behalf, or indepen-
dent organisms responsible for the control and supervision of
the use of denominations of origin, organic labels, or quality
labels, provided these denominations and labels are in confor-
mity with Community legislation.

4.
The aid must not be granted towards the cost of controls
undertaken by the farmer or manufacturer himself, or where
Community legislation provides that the cost of control is to be
met by producers, without specifying the actual
level of
charges.

(1) OJ L 208, 24.7.1992, p. 1.
(2) OJ L 208, 24.7.1992, p. 9.
(3) OJ L 198, 22.7.1991, p. 1.

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The total amount of public support granted under para-
5.
graph 2 must not exceed EUR 100 000 per beneficiary over
any three-year period. For the purpose of calculating the
amount of aid, the beneficiary is considered to be the person
receiving the services listed in that paragraph.

6.
The aid must be accessible to all those eligible in the area
concerned, based on objectively defined conditions. Where the
provision of services listed in paragraph 2 is undertaken by
producer groups or other agricultural mutual support organisa-
tions, membership of such groups or organisations must not be
a condition for access to the service. Any contribution of non-
members towards the administrative costs of the group or
organisation concerned must be limited to the proportional
costs of providing the service.

7. Where the choice of the provider of a service listed in
paragraph 2 is not freely left to the beneficiary of the service,
and unless there is only one possible provider due to the nature
of the service or the legal basis for the provision of that service,
such provider must be chosen and remunerated according to
market principles, in a non-discriminatory way, where neces-
sary using tendering procedures which are in accordance with
Community law, and in any event using a degree of advertising
sufficient to enable the services market to be opened up to
competition and the impartiality of procurement rules to be
reviewed.

Article 14

Provision of technical support in the agricultural sector

1.
Aid shall be compatible with the common market within
the meaning of Article 87(3)(c) of the Treaty and shall be
exempt from the notification requirement of Article 88(3) of
the Treaty if it is granted towards the eligible costs of the tech-
nical support activities listed in paragraph 2 and fulfils the
conditions set out in paragraphs 3, 4 and 5.

2.

Aid may be granted to cover the following eligible costs:

(a) concerning education and training of

farmers and farm

workers:

(i) costs of organising the training programme;

(ii) travel and subsistence expenses of participants;

(iii) cost of the provision of replacement services during

the absence of the farmer or the farm worker;

(d) concerning the organisation of and participation in compe-

titions, exhibitions and fairs:

(i) participation fees;

(ii) travel costs;

(iii) costs of publications;

(iv) the rent of exhibition premises.

3.
The total amount of public support granted under para-
graph 2 must not exceed EUR 100 000 per beneficiary over
any three-year period, or 50 % of the eligible costs, whichever
is greater. For the purpose of calculating the amount of aid, the
beneficiary is considered to be the person receiving the tech-
nical support.

technical support

4.
The aid must be accessible to all those eligible in the area
concerned, based on objectively defined conditions. Where the
provision of
is undertaken by producer
groups or other agricultural mutual support organisations,
membership of such groups or organisations must not be a
condition for access to the service. Any contribution of non-
members towards the administrative costs of the group or
organisation concerned must be limited to the costs of
providing the service.

5. Where the choice of the provider of technical support is
not freely left to the beneficiary of the service, such provider
must be chosen and remunerated according to market princi-
ples,
in a non-discriminatory way, where necessary using
tendering procedures which are in accordance with Community
law, and in any event using a degree of advertising sufficient to
enable the services market to be opened up to competition and
the impartiality of procurement rules to be reviewed.

Article 15

Support for the livestock sector

The following aid to enterprises active in the livestock sector
shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt
from the notification requirement of Article 88(3) of
the
Treaty:

(b) concerning farm replacement services, the actual costs of
the replacement of a farmer, the farmer's partner, or a farm
worker, during illness and holidays;

(a) aid at a rate of up to 100 % to cover the administrative
costs directly linked to the establishment and maintenance
of herd books;

(c) concerning consultancy services, the fees for services which
do not constitute a continuous or periodic activity nor
relate to the enterprise's usual operating expenditure, such
as routine tax consultancy services, regular legal services, or
advertising;

(b) aid at a rate of up to 70 % of the costs of tests performed
by or on behalf of third parties, to determine the genetic
quality or yield of livestock, with the exception of controls
the livestock and routine
undertaken by the owner of
controls of milk quality;

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(c) aid at a rate of up to 40 % of the eligible costs listed in
Article 4 for investments in animal reproduction centres
and for the introduction at farm level of innovative animal
breeding techniques or practices, with the exception of
costs relating to the introduction or performance of artifi-
cial insemination.

(d) aid at a rate of up to 100 % towards the costs of TSE tests.

However, as far as compulsory BSE testing of bovine
animals slaughtered for human consumption is concerned,
total direct and indirect support,
including Community
payments, may not be more than EUR 40 per test. This
amount refers to the total costs of testing, comprising: test-
kit, taking, transporting, testing, storing and destruction of
the sample. The obligation for testing may be based on
Community or national legislation.

State aid towards the cost of TSE tests has to be paid to the
operator where the samples for the tests have to be taken.
However, in order to facilitate administration of such State
aid, payment of
the aid may be made to laboratories
instead, provided that the full amount of State aid is passed
on to the operator. State aid directly or indirectly received
by an operator where the samples for the tests have been
taken must be reflected in correspondingly lower prices
charged by this operator.

Article 16

Aid provided for in certain Council Regulations

The following aid to small and medium-sized enterprises shall
be compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty:

(a) Member State contributions fulfilling all the conditions laid
down in Council Regulation (EC) No 2702/1999 of 14
December 1999 on measures to provide information on,
and to promote, agricultural products in third countries (1),
in particular Article 9(3) thereof;

(b) Member State contributions fulfilling all the conditions laid
down in Council Regulation (EC) No 2826/2000 of 19
December 2000 on information and promotion actions for
agricultural products on the internal market (2), in particu-
lar Article 9(2), (3) and (4) thereof;

(c) aid granted by Member States fulfilling all the conditions
laid down in Regulation (EC) No 999/2001 of the Euro-
pean Parliament and of the Council of 22 May 2001 laying
down rules for the prevention, control and eradication of
certain transmissible spongiform encephalopathies (3),
in
particular Article 13(4) thereof;

(1) OJ L 327, 21.12.1999, p. 7.
(2) OJ L 328, 23.12.2000, p. 2.
(3) OJ L 147, 31.5.2001, p. 1.

(d) aid granted by Member States fulfilling all the conditions
laid down in Council Regulation (EC) No 1255/1999 of 17
May 1999 on the common market organisation of the
market in milk and milk products (4), in particular Article
14(2) thereof;

(e) aid granted by Member States fulfilling all the conditions
laid down in Council Regulation (EC) No 1254/1999 of 17
May 1999 on the common organisation of the market in
beef and veal (5), in particular Articles 6(5) and 14 thereof;

(f) aid granted by Member States in accordance with Articles 3
and 4 of Commission Regulation (EC) No 2777/2000 of 18
December 2000 adopting exceptional support measures for
the beef market (6);

(g) aid granted by Member States in accordance with Article
6(3) second subparagraph of Council Regulation (EC) No
1251/1999 of 17 May 1999 establishing a support system
for producers of certain arable crops (7);

(h) aid granted by Member States in accordance with Article
15(6) of Council Regulation (EC) 2200/96 of 28 October
1996 on the common organisation of the market in fruit
and vegetables (8).

CHAPTER 3

COMMON AND FINAL PROVISIONS

Article 17

Steps preceding grant of aid

1.
In order to qualify for exemption under this Regulation,
aid under an aid scheme shall only be granted in respect of
activities undertaken or services received after the aid scheme
has been set up and published in accordance with this Regu-
lation.

If the aid scheme creates an automatic right to receive the aid,
requiring no further action at administrative level, the aid itself
may only be granted after the aid scheme has been set up and
published in accordance with this Regulation.

If the aid scheme requires an application to be submitted to the
competent authority concerned,
the aid itself may only be
granted after the following conditions have been fulfilled:

(a) the aid scheme must have been set up and published in

accordance with this Regulation;

(b) an application for

the aid must have been properly

submitted to the competent authority concerned;

(4) OJ L 160, 26.6.1999, p. 48.
(5) OJ L 160, 26.6.1999, p. 21.
(6) OJ L 321, 19.12.2000, p. 47.
(7) OJ L 160, 26.6.1999, p. 1.
(8) OJ L 297, 21.11.1996, p. 1.

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(c) the application must have been accepted by the competent
authority concerned in a manner which obliges
that
authority to grant the aid, clearly indicating the amount of
aid to be granted or how this amount will be calculated;
such acceptance by the competent authority may only be
made if the budget available for the aid or aid scheme is
not exhausted.

2.
In order to qualify for exemption under this Regulation,
individual aid outside any aid scheme shall only be granted in
respect of activities undertaken or services received after the
criteria in points (b) and (c) of the third subparagraph of para-
graph 1 have been satisfied.

Article 18

Cumulation

1.
The aid ceilings fixed in Articles 4 to 15 shall apply
regardless of whether the support for the aided project or
activity is financed entirely from State resources or is partly
financed by the Community.

2.
Aid exempted by this Regulation shall not be cumulated
with any other State aid within the meaning of Article 87(1) of
the Treaty, or financial contributions provided by Member
States or by the Community covered by the second sub-
paragraph of Article 51(1) of Regulation (EC) No 1257/1999,
in relation to the same eligible costs, if such cumulation would
result in an aid intensity exceeding the maximum laid down in
this Regulation.

3. Where a Member State grants aid covered by any of Arti-
cles 8, 10, 13 or 14 of this Regulation to an enterprise, it shall
inform the enterprise that such aid is granted under the respec-
tive Article of this Regulation. The Member State shall obtain
from the enterprise concerned full
information about other
similar aid received. For aid covered by Articles 13 and 14, the
information shall be given about similar aid received during the
previous three years.

The Member State may only grant the new aid after having
checked that this will not raise the total amount of aid granted
under any of these Articles above the total amount of aid
received during the relevant period to a level above the ceiling
set out in the respective Article.

summary, the Commission shall send a notice of receipt with
an identification number and publish the summary on the
internet.

2. Member States shall maintain detailed records regarding
the aid schemes exempted by this Regulation, the individual aid
granted under those schemes, and the individual aid exempted
by this Regulation that is granted outside any existing aid
scheme. Such records shall contain all information necessary to
establish that the conditions for exemption, as laid down in this
Regulation, are fulfilled, including information on the status of
the company as an SME. Member States shall keep a record
regarding an individual aid for 10 years from the date on
which it was granted and, regarding an aid scheme, for 10
years from the date on which the last
individual aid was
granted under such scheme. On written request, the Member
State concerned shall provide the Commission, within a period
of 20 working days or such longer period as may be fixed in
the request, with all the information which the Commission
considers necessary to assess whether the conditions of this
Regulation have been complied with.

3. Where a Member State has set up a central register of aid
separately granted under Articles 8, 10, 13 or 14 respectively,
containing complete information on all such aid granted by
any authority within that Member State, the requirement of the
first subparagraph of Article 18(3) no longer applies from the
moment the register covers a period of three years.

4. Member States shall compile a report on the application
of this Regulation in respect of each whole or part calendar
in the form laid
year during which this Regulation applies,
down in Annex II, in computerised form. This report may be
integrated into the annual report to be submitted by Member
States pursuant to Article 21(1) of Council Regulation (EC) No
659/1999 (1), and shall be submitted by 30 June of the year
following the calendar year covered by the report.

5.
As soon as an aid scheme enters into force, or an indivi-
dual aid is granted outside an aid scheme exempted by this
Regulation, Member States shall publish on the internet the full
text of such aid scheme, or the criteria and conditions under
which such individual aid is granted. The address of
the
websites shall be communicated to the Commission together
the information regarding the aid
with the summary of
required pursuant to paragraph 1. It shall also be contained in
the annual report submitted pursuant to paragraph 4.

Article 19

Article 20

Transparency and monitoring

Entry into force and applicability

1.
At the latest 10 working days before the entry into force
of an aid scheme, or the granting of individual aid outside any
scheme, exempted by this Regulation, Member States shall,
forward to the Commission, with a view to its publication in
the Official Journal of the European Union, a summary of the
information regarding such aid scheme or individual aid in the
form laid down in Annex I. This shall be provided in compu-
terised form. Within five working days from receiving that

1.
This Regulation shall enter into force on the 20th day
following that of its publication in the Official Journal of the
European Union.

It shall apply until 31 December 2006.

(1) OJ L 83, 27.3.1999, p. 1.

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Notifications pending at the time of entry into force of
2.
this Regulation shall be assessed in accordance with its provi-
sions. Where the conditions of this Regulation are not fulfilled,
the Commission shall examine such pending notifications
under the Community guidelines for State aid in the agriculture
sector.

Individual aid and aid schemes implemented before the date of
entry into force of this Regulation and aid granted under those
schemes in the absence of a Commission authorisation and in
breach of the notification requirement of Article 88(3) of the
Treaty shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt if

they fulfil the conditions laid down in Article 3 of this Regu-
lation, except the requirements in paragraph 1 and paragraph
2(b) and (c) of that Article that express reference be made to
this Regulation, and that the summary provided for in Article
19(1) has been submitted before granting aid. Any aid which
those conditions shall be assessed by the
does not
Commission in accordance with the relevant
frameworks,
guidelines, communications and notices.

fulfil

3.
Aid schemes exempted under this Regulation shall remain
exempt during an adjustment period of six months following
the date provided for in the second subparagraph of paragraph
1.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 23 December 2003.

For the Commission

Franz FISCHLER

Member of the Commission

3.1.2004

EN

Official Journal of the European Union

L 1/15

ANNEX I

L 1/16

EN

Official Journal of the European Union

3.1.2004

ANNEX II