Proposal for a Council Regulation on the financing of the common agricultural policy
Date: 2004-07-14
Institutions: European Commission
Subjects: common agricultural policy, financing, fund (EU), reform of the CAP

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.7.2004 
COM(2004) 489 final 

2004/0164 (CNS) 

Proposal for a 

COUNCIL REGULATION 

on the financing of the common agricultural policy 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

The  purpose  of  this  proposal  is  to  establish  a  single  legal  framework  for  financing  the 
common agricultural policy. 

To that end, this proposal sets up two Funds: 

– 

– 

a European Agricultural Guarantee Fund (EAGF) 

a European Agricultural Fund for Rural Development (EAFRD) 

This draft Regulation creates the legal bases for financing the different measures covered by 
those  two  Funds,  including  the  technical  assistance  necessary  for  the  establishment  and 
monitoring of the CAP. 

The  financing  of  some  measures  under  the  CAP  involves  shared  management.  It  seemed 
appropriate,  therefore,  to  specify  the  terms  of  the  Commission's  responsibilities  for 
implementing  the  general  budget  of  the  European  Communities  and  to  clarify  the  Member 
States' cooperation obligations. 

In  so  far  as  possible,  a  similar  operating  system  for  the  two  Funds  should  provide  the 
necessary streamlining for both the Member States and the Commission. 

In this context, there is provision for the Member States to accredit the paying agencies and, 
where necessary, the coordinating bodies. 

The  submission  of  annual  accounts  must  be  accompanied  by  a  statement  of  assurance  from 
the  person  in  charge  of  the  paying  agency  and  a  document  certifying  that  the  accounts 
submitted  are  complete,  accurate  and  true.  Checks  by  the  Commission  will  be  conducted 
according to a two-stage clearance of accounts procedure (accounting and conformity). 

However, each of the  two  Funds  will  also  maintain specific features, including the fact that 
the  EAGF  has  non-differentiated  appropriations  while  the  EAFRD  has  differentiated 
appropriations,  regarding  which  the  N+2  rule  followed  by  automatic  decommitment  is 
maintained.  The  rate  of  payment  is  also  different  for  the  two  Funds  (monthly  and  quarterly 
respectively),  as  is  the  treatment  of  amounts  recovered  following  irregularities.  Under  the 
EAFRD,  these  amounts  may  in  fact  be  reused  by  the  Member  States  in  the  context  of  the 
same rural development programme. 

This draft Regulation also includes rules on budget discipline and takes account of the reform 
of the CAP as provided for by Regulation (EC) No 1782/2003. Those rules cover in particular 
the fixing of the amounts available annually for EAGF expenditure, forecasts relating to the 
payment  deadlines  imposed  on  the  Member  States,  any  reductions  and  suspensions  of 
monthly or quarterly amounts and specifications regarding the dollar exchange rate to be used 
in drawing up the budget.  

It  should  be  specified  that,  in  cases  where  financial  ceilings  have  been  set  in  euros  in 
Community  legislation,  reimbursement  to  the  Member  States  will  be  limited  to  that  ceiling, 
subject  to  any  reductions  decided  in  the  context  of  financial  discipline  as  provided  for  in 
Article 11 of Regulation (EC) No 1782/2003. 

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In  this  same  context,  it  is  laid  down  that,  if  the  Council  does  not  succeed  in  fixing  the 
adjustments  provided  for  in  that  Article  within  the  deadlines  set,  the  Commission  will  be 
responsible for doing so. 

The  principle  of  compliance  with  the  budget  ceiling  must  be  observed  at  all  stages  of  the 
budget  procedure.  If,  however,  there  is  a  risk  at  the  end  of  the  budget  year  that  payment 
applications from the Member States will overrun the ceiling available, a specific procedure 
guaranteeing compliance with this ceiling will be set in motion.  

Taking account of Article 180 of the Financial Regulation, this draft Regulation defines the 
revenue  allocated  to  the  EAGF  and  EAFRD.  Finally,  the  draft  Regulation  lays  down  the 
indispensable  provisional rules on the transition between rural development financed by the 
EAGGF Guarantee Section, the measures financed by the EAGGF Guidance Section and the 
operation of the EAFRD from 2007. 

It  is  also  specified  that,  during  the  meeting  (AGRI-BUDG)  held  on  24  June  2004, 
DG Agriculture  and  DG  Budget  adopted  the  principle  that  the  draft  Interinstitutional 
Agreement will contain a commitment by Parliament and the Council to respect the allocation 
of  commitment  appropriations  as  provided  for  in  the  financial  envelopes  for  the  Structural 
Funds, rural development fund and fisheries fund. 

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2004/0164 (CNS) 

Proposal for a 

COUNCIL REGULATION 

on the financing of the common agricultural policy 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular the third 
subparagraph of Article 37(2) thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Parliament, 

Having regard to the opinion of the Court of Auditors, 

Having regard to the opinion of the European Economic and Social Committee, 

Whereas: 

(1) 

(2) 

(3) 

The common agricultural policy consists of a series of measures, some of which relate 
to rural development. It is important that financing be provided for those measures in 
order  to  contribute  to  the  attainment  of  the  objectives  of  the  common  agricultural 
policy.  Since  the  measures  have  certain  elements  in  common  but  also  differ  in  a 
number  of  respects,  their  financing  should  be  combined  under  one  regulatory 
framework  which  allows  for  different  treatment  where  necessary.  In  order  to  take 
account  of  those  differences,  two  European  agricultural  funds  should  be  created, 
namely  the  European  Agricultural  Guarantee  Fund,  for  the  financing  of  market 
measures,  and  the  European  Agricultural  Fund  for  Rural  Development,  for  the 
financing of rural development programmes. 

The  Community  budget  is  to  finance  common  agricultural  policy  expenditure, 
including that on rural development, through the abovementioned Funds. In line with 
Article 53 of Council Regulation (EC) No 1605/2002 of 25 June 2002 on the Financial 
Regulation applicable to the general budget of the European Communities1, this is done 
either  centrally  or  in  the  context  of  shared  management  with  the  Member  States.  All 
the types of measure that can be financed using the two Funds should be specified. 

During  the  clearance  of  accounts,  if  the  Commission  does  not  have  satisfactory 
assurance  that  the  national  controls  are  adequate  and  transparent  and  that  the  paying 
agencies  verify  the  legality  and  correctness  of  the  payment  requests  which  they 
execute, it cannot determine within a reasonable period of time the total expenditure to 
be entered against the European Agricultural Fund. Provision should therefore be made 

1 

OJ L 248, 16.9.2002, p. 1. 

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for the accreditation of paying agencies by Member States, the establishment by them 
of procedures for obtaining the requisite declarations of assurance, and the certification 
of management, monitoring and control systems, as well as the certification of annual 
accounts by independent bodies.  

(4) 

In order to ensure consistency in the standards required for accreditation in the Member 
States, the Commission is to provide guidance on the criteria to be applied. Moreover, 
in  order  to  ensure  the  transparency  of  national  controls,  in  particular  as  regards 
authorisation, validation and payment procedures, the number of authorities and bodies 
to  which  these  responsibilities  are  delegated  should,  where  appropriate,  be  restricted 
taking account of the constitutional arrangements of each Member State.  

(5)  Where a Member State accredits more than one paying agency, it is important that it 
designate a single coordinating body to ensure consistency in the management of the 
funds,  to  provide  liaison  between  the  Commission  and  the  various  accredited  paying 
agencies and to ensure that the information requested by the Commission concerning 
the operations of several paying agencies is made rapidly available.  

(6) 

(7) 

(8) 

(9) 

To  ensure  harmonious  cooperation  between  the  Commission  and  the  Member  States 
regarding  the  financing  of  common  agricultural  policy  expenditure  and,  more 
particularly, to allow the Commission to monitor closely financial management by the 
Member  States  and  clear  the  accounts  of  the  accredited  paying  agencies,  certain 
information has to be communicated by the Member States to the Commission or has 
to be kept available to the Commission. Information technology must be used as fully 
as possible to that end. 

For the purposes of compiling the data to be sent to the Commission, and so that the 
Commission has full immediate access to expenditure data in both paper and electronic 
form,  suitable  rules  on  the  presentation  and  transmission  of  data,  and  also  on  time 
limits to be observed, need to be laid down. 

The financing of measures and operations under the common agricultural policy will in 
part  involve  shared  management.  To  ensure  that  Community  funds  are  soundly 
managed,  the  Commission  performs  checks  on  the  management  of  the  Funds  by  the 
Member State authorities responsible for making payments. It would be appropriate to 
define the nature of the checks to be made by the Commission, to specify the terms of 
its  responsibilities  for  implementing  the  budget  and  to  clarify  the  Member  States' 
cooperation obligations.  

Only paying agencies accredited by the Member States offer reasonable assurance that 
the  necessary  controls  have  been  carried  out  before  granting  Community  aid  to 
beneficiaries.  It  should  therefore  be  stipulated  that  only  expenditure  effected  by 
accredited  paying  agencies  should  be  liable  for  reimbursement  by  the  Community 
budget. 

(10)  The  financial  resources  required  to  cover  the  expenditure  effected  by  the  accredited 
paying  agencies,  in  respect  of  the  European  Agricultural  Guarantee  Fund,  are  to  be 
made  available  to  the  Member  States  by  the  Commission  in  the  form  of 
reimbursements  against  the  booking  of  the  expenditure  effected  by  these  agencies. 
Until  these  reimbursements,  in  the  form  of  monthly  payments,  have  been  paid, 
financial  resources  must  be  mobilised  by  the  Member  States  in  accordance  with  the 
needs of their accredited paying agencies. The personnel costs and the administrative 

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costs  of  the  Member  States  and  the  beneficiaries  involved  in  the  execution  of  the 
common agricultural policy should be borne by themselves. 

(11)  Community  aid  should  be  paid  to  beneficiaries  in  good  time  so  that  they  may  use  it 
efficiently. A failure by the Member States to comply with the payment deadlines laid 
down  in  Community  legislation  could  create  serious  difficulties  for  the  beneficiaries 
and  could  jeopardize  the  Community's  yearly  budgeting.  It  is  therefore  justified  to 
exclude expenditure made without respecting deadlines for payments from Community 
financing. In order to respect the principle of proportionality, the Commission should 
be able to provide for exceptions to this general rule. 

(12)  Provision should be made for an administrative procedure allowing the Commission to 
take  a  decision  to  reduce  or  temporarily  suspend  monthly  payments  where  the 
information communicated by the Member States does not enable it to confirm that the 
Community  rules  applicable  have  been  observed  and  indicates  a  clear  misuse  of 
Community funds. In clearly defined cases, a reduction or a suspension should also be 
possible  without  such  a  procedure.  In  both  cases,  the  Commission  should  inform  the 
Member State, indicating that any decision to reduce or suspend the monthly payments 
will  be  without  prejudice  to  the  decisions  taken  in  the  context  of  the  clearance  of 
accounts. 

(13) 

In  the  context  of  respecting  budget  discipline,  it  is  necessary  to  define  the  annual 
ceiling for the expenditure financed by the European Agricultural Guarantee Fund by 
taking  into  account  the  maximum  amounts  laid  down  for  this  Fund  in  the  Financial 
Perspective  and  the  sums  fixed  by  the  Commission  under  Article  10(2)  of  Council 
Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for 
direct support schemes under the common agricultural policy and establishing certain 
support  schemes  for  farmers  and  amending  Regulations  (EEC)  No  2019/93,  (EC) 
No 1452/2001,  (EC)  No  1453/2001,  (EC)  No  1454/2001,  (EC)  1868/94,  (EC) 
No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) 
No 2529/20012 and the sums laid down in Articles 143d and 143e of that Regulation.  

(14)  Budget discipline also requires that the annual ceiling for expenditure financed by the 
European Agricultural Guarantee Fund be respected under all circumstances and at all 
stages of the budget procedure and the execution of the budget. This requires that the 
national  ceiling  for  the  direct  payments  per  Member  State,  after  correction  in 
accordance  with  Article  10  of  Regulation  (EC)  No  1782/2003,  be  regarded  as  a 
financial ceiling for such direct payments for the Member State concerned and that the 
reimbursement of these payments remain within this financial ceiling. Furthermore, it 
demands that all the legislative measures proposed by the Commission or adopted by 
the Council or by the Commission under the common agricultural policy and financed 
by the European  Agricultural Guarantee Fund comply  with the  annual ceiling for  the 
expenditure financed by this Fund. In the same context, it is necessary to authorise the 
Commission  to  set  the  adjustments  referred  to  in  Article  11(1)  of  Regulation  (EC) 
No 1782/2003 where the Council does not fix these before 30 June of the calendar year 
in respect of which the adjustments apply.  

2 

OJ L 270, 21.10.2003, p. 1. Regulation as last amended by Regulation (EC) No 864/2004 (OJ L 161, 
30.4.2004, p. 18). 

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(15)  The  measures  taken  to  determine  the  financial  contribution  from  the  EAGF  and  the 
EAFRD in respect of the calculation of financial ceilings do not affect the powers of 
the  budgetary  authority  designated  by  the  Treaty.  These  measures  must  therefore  be 
based  on  the  reference  amounts  fixed  in  accordance  with  the  Interinstitutional 
Agreement of […] and the Financial Perspective set out in Annex I to this Agreement. 

(16)  Budget discipline also demands a continuous examination of the medium-term budget 
situation. The Commission, when submitting the preliminary draft budget for a given 
year, must therefore present its forecasts and analyses to the European Parliament and 
the  Council  and  propose,  if  necessary,  appropriate  measures  to  the  Council. 
Furthermore,  the  Commission  should  make  full  use  of  its  management  powers  at  all 
times  to  ensure  compliance  with  the  annual  ceiling  and,  if  necessary,  propose 
appropriate measures to the Council to redress the budget situation. If, at the end of a 
budget  year,  the  annual  ceiling  cannot  be  complied  with  as  a  result  of  the 
reimbursements  requested  by  the  Member  States,  the  Commission  should  be  able  to 
take  measures  allowing,  on  the  one  hand,  provisional  distribution  of  the  available 
budget among the Member States in proportion to their requests for reimbursement not 
yet  paid  and,  on  the  other  hand,  compliance  with  the  ceiling  fixed  for  the  year 
concerned. Payments for that year should be charged to the following budget year and 
the  total  amount  of  Community  financing  per  Member  State  should  be  definitively 
established, as should compensation between Member States in order to comply with 
the established amount.  

(17)  When  implementing  the  budget,  the  Commission  should  operate  a  monthly  early-
warning and monitoring system for agricultural expenditure, so that, if there is a risk of 
the annual ceiling being exceeded, the Commission may at the earliest opportunity take 
the  appropriate  measures  under  the  management  powers  at  its  disposal,  and  then,  if 
these measures prove insufficient, propose other measures to the Council, which should 
act as soon as possible. In order to have a smoothly functioning system, it should allow 
for the comparison of actual expenditure with profiles of expenditure established on the 
basis  of  expenditure  in  preceding  years.  A  monthly  report  by  the  Commission  to  the 
European Parliament and the Council should compare the evolution of the expenditure 
effected so far with the profiles and give an assessment of the foreseeable execution of 
the remainder of the budget year. 

(18)  The exchange rate used by the Commission in drawing up the budget documents which 
it  submits  to  the  Council  should,  while  making  allowances  for  the  time  lag  between 
drafting and submission, reflect the most recent information available. 

(19)  The  rural  development  programmes  are  financed  from  the  Community  budget  on  the 
basis of commitments in annual instalments. The Member States must be able to draw 
on  the  funds  provided  as  soon  as  they  begin  the  programmes.  A  suitably  restricted 
prefinancing system ensuring a steady flow of funds so that payments to beneficiaries 
under the programmes are made at the appropriate time is therefore needed. 

(20)  Prefinancing  apart,  a  distinction  should  be  drawn  between  intermediate  payments  by 
the Commission to the accredited paying agencies and payment of balances, and rules 
on their payment should be set. 

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(21)  To  protect  the  Community's  financial  interests  the  Commission  must  be  able  to 
suspend or reduce intermediate payments in cases where expenditure has been unduly 
incurred.  A  procedure  for  Member  States  to  show  that  their  expenditure  has  been 
correct needs to be set up. 

(22)  The  automatic  decommitment  rule  must  help  speed  up  execution  of  programmes  and 

contribute to sound financial management.  

(23) 

In order to establish the financial relationship between the accredited paying agencies 
and the Community budget, the Commission should clear the accounts of these paying 
agencies annually. The clearance of accounts decision should cover the completeness, 
accuracy and veracity  of the accounts but  not the conformity of the expenditure with 
Community law. 

(24)  The  Commission,  which  is  responsible  for  the  proper  application  of  Community  law 
under Article 211 of the Treaty, should decide whether the expenditure incurred by the 
Member  States  complies  with  Community  law.  Member  States  should  be  given  the 
right  to  justify  their  decisions  to  make  payments  and  should  have  recourse  to 
conciliation where there is no common agreement between them and the Commission. 
In  order  to  give  Member  States  legal  and  financial  assurances  as  to  expenditure 
effected  in  the  past,  a  maximum  period  should  be  set  for  the  Commission  to  decide 
which financial consequences should follow from non-compliance. 

(25) 

In order to protect the financial interests of the Community budget, measures should be 
taken by Member States to satisfy themselves that transactions financed by the Funds 
are actually carried out and are executed correctly. Member States should also prevent 
and deal effectively with any irregularities committed by beneficiaries. 

(26)  As regards the European Agricultural Guarantee Fund, sums recovered should be paid 
back to this Fund where the expenditure is not in conformity with Community law and 
no  entitlement  existed.  Provision  should  be  made  for  a  system  of  financial 
responsibility  for  irregularities  in  the  absence  of  total  recovery.  In  this  respect  a 
procedure should be established permitting the Commission to safeguard the interests 
of the Community budget by deciding on a partial charging of sums lost as a result of 
irregularities  and  not  recovered  within  reasonable  deadlines  to  the  Member  State 
concerned. In certain cases of negligence on the part of the Member State, it is justified 
to  charge  the  full  sum  to  the  Member  State  concerned.  However,  subject  to  Member 
States complying with obligations under their internal procedures, it should be possible 
to divide the financial burden fairly between the Community and the Member State. 

(27)  The recovery procedures used by the Member States may have the effect of delaying 
recoveries for a number of years, with no guarantee that the outcome will actually be 
successful. The cost of implementing these procedures may also be out of proportion to 
the  amounts  which  are  or  may  be  collected.  Consequently,  Member  States  should  be 
permitted to halt recovery procedures in certain cases. 

(28)  As regards the European Agricultural Fund for Rural Development, sums recovered or 
cancelled  following  irregularities  should  remain  available  to  the  approved  rural 
development  programmes  of  the  Member  State  concerned  as  these  sums  have  been 
allocated  to  that  Member  State.  In  order  to  protect  the  financial  interests  of  the 

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Community budget, provision should be made for cases where the required measures 
are not taken by Member States following the detection of irregularities.  

(29)  To  permit  reuse  of  EAGF  and  EAFRD  funds,  rules  are  needed  on  assignment  of  the 
sums  recovered  by  Member  States  when  conformity  clearance  is  carried  out  or 
following proceedings in the event of discovery of irregularity or negligence. For the 
same reason these rules should also cover additional levies on milk production. 

(30)  So that the Commission can fulfil its obligation to check on the existence and proper 
functioning of management and inspection systems for Community expenditure in the 
Member States, provision should be made, irrespective of the inspection carried out by 
Member  States themselves, for checks by persons delegated by the Commission who 
will be able to request assistance from the Member States in their work. 

(31) 

Information  technology  needs  to  be  used  as  fully  as  possible  for  producing  the 
information to be sent to the Commission. When carrying out checks, the Commission 
should  have  full  and  immediate  access  to  expenditure  information  recorded  both  in 
paper form and in electronic files. 

(32)  A  date  should  be  set  for  the  last  payments  for  the  approved  rural  development 
programmes  for  the  period  2000–06  financed  by  the  EAGGF  Guarantee  Section.  In 
order to allow Member States to receive reimbursements for payments made after this 
date, specific transitional measures have to be envisaged. These measures should also 
include  provisions  for  the  recovery  of  the  advances  paid  by  the  Commission  on  the 
basis of the second subparagraph of Article 5(1) of Regulation (EC) No 1258/1999 and 
for  the  amounts  subjected  to  the  voluntary  modulation  arrangements  referred  to  in 
Articles 4 and 5 of Regulation (EC) No 1259/1999. 

(33)  A date should be set at which the Commission can automatically decommit the sums 
committed but not spent under the approved rural development programmes financed 
by  the  EAGGF  Guidance  Section  where  the  necessary  documents  relating  to  the 
closure  of  the  operations  have  not  reached  the  Commission  by  that  date.  The 
documents which are necessary for the Commission to establish whether the measures 
are closed should be defined. 

(34)  The Commission is responsible for managing the Funds and close cooperation between 
it  and  the  Member  States  is  provided  for  through  a  Committee  on  the  agricultural 
funds. 

(35)  The  extent  of  Community  financing  makes  it  necessary  for  the  European  Parliament 

and the Council to be kept regularly informed by means of financial reports. 

(36)  As  personal  data  or  business  secrets  might  be  involved  in  the  application  of  the 
national  control  systems  and  the  conformity  clearance,  the  Member  States  and  the 
Commission  should  guarantee  the  confidentiality  of  the  information  received  in  the 
context of these operations.  

(37) 

In  the  interests  of  sound  financial  management  of  the  Community  budget  and 
impartiality of treatment at both Member State and farmer level, rules on the use of the 
euro should be specified. 

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(38)  As  a  result  of  the  provisions  of  this  Regulation,  Council  Regulation  No  25  on  the 
financing of the common agricultural policy3, Council Regulation (EC) No 723/97 of 
22 April 1997 on the implementation of Member States' action programmes on control 
of  EAGGF  Guarantee  Section  expenditure4  and  Council  Regulation 
(EC) 
No 1258/1999  of  17  May  1999  on  the  financing  of  the  common  agricultural  policy5 
should be repealed. Certain Articles in Regulation (EEC) No 595/91 should be deleted 
as the present Regulation provides for their arrangements. 

(39)  The measures necessary for the implementation of this Regulation should be adopted in 
accordance  with  Council  Decision  1999/468/EC  of  28  June  1999  laying  down  the 
procedures for the exercise of implementing powers conferred on the Commission6. 

(40)  The  switch-over  from  the  arrangements  in  the  Regulations  repealed  to  those  in  this 
Regulation  could  give  rise  to  practical  and  specific  difficulties,  particularly  in 
connection with the transition to the new arrangements, which are not dealt with in this 
Regulation.  In  order  to  deal  with  that  eventuality,  provision  should  be  made  for  the 
Commission to adopt the necessary and duly justified measures. Those measures may 
derogate from the provisions of this Regulation but only to the extent necessary and for 
a limited period. 

(41)  As  the  programming  period  for  the  rural  development  programmes  financed  on  the 
basis  of  the  present  Regulation  runs  from  1  January  2007,  the  present  Regulation 
should  be  applicable  as  from  that  date.  However,  certain  provisions  should  apply  as 
from an earlier date, 

HAS ADOPTED THIS REGULATION: 

Title I 
General provisions 

Article 1 
Purpose and scope 

This  Regulation  sets  specific  requirements  and  rules  on  the  financing  of  expenditure  falling 
under  the  common  agricultural  policy,  including  expenditure  on  rural  development  but 
excluding that on fishery products. 

Article 2 
Funds financing agricultural expenditure 

In  order  to  attain  the  objectives  of  the  common  agricultural  policy  defined  by  the 
Treaty and finance the various measures falling under it, including rural development, 
the following are hereby set up: 

OJ  30  20.4.1962,  p.  991.  Regulation  as  last  amended  by  Regulation  (EEC)  No  728/70  (OJ  L  94, 
28.4.1970, p. 9). 
OJ L 108, 25.4.1997, p. 6. Regulation amended by Regulation (EC) No 2136/2001, 1.11.2001, p. 1. 
OJ L 160, 26.6.1999, p. 103. 
OJ L 184, 17.7.1999, p. 23. 

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2. 

1. 

(a) 

a European Agricultural Guarantee Fund, hereinafter referred to as the "EAGF"; 

(b) 

a European Agricultural Fund for Rural Development, hereinafter referred to as 
the "EAFRD". 

The  EAGF  and  the  EAFRD  shall  come  under  the  general  budget  of  the  European 
Communities. 

Article 3 
EAGF expenditure 

The  EAGF  shall  finance  in  a  context  of  shared  management  between  the  Member 
States  and  the  Community  the  following  expenditure,  which  shall  be  effected  in 
accordance with Community law: 

(a) 

refunds for the exportation of agricultural products to third countries; 

(b) 

intervention measures to regulate agricultural markets; 

(c) 

direct payments to farmers under the common agricultural policy; 

(d) 

information  and  promotion  measures  for  agricultural  products  on  the  internal 
market of the Community and in third countries, undertaken by Member States 
on the basis of programmes other than those referred to in Article 4 and selected 
by the Commission. 

2. 

The  EAGF  shall  finance  the  following  expenditure  in  a  centralised  manner  and  in 
accordance with Community law: 

(a) 

the  Community  financial  contribution 
to  specific  veterinary  measures, 
veterinary inspection measures, inspection measures for foodstuffs and animal 
feed, animal disease eradication and control programmes (veterinary measures) 
and plant-health measures; 

(b)  promotion  of  agricultural  products,  undertaken  either  directly  by 

the 

Commission or via international organisations; 

(c)  measures,  undertaken  in  accordance  with  Community  law,  to  ensure  the 
conservation, characterisation, collection and utilisation of genetic resources in 
agriculture; 

(d) 

establishment and maintenance of agricultural accounting information systems; 

(e) 

agricultural  survey  systems,  including  surveys  on  the  structure  of  agricultural 
holdings. 

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Article 4 
EAFRD expenditure 

The EAFRD shall finance, in a context of shared management between the Member States and 
the  Community,  rural  development  programmes  implemented  in  accordance  with  Council 
Regulation (EC) No […] of […]7. 

Article 5 
Financing technical assistance 

The  EAGF  and  the  EAFRD  may  each  respectively  finance  on  a  centralised  basis,  on  the 
initiative of the Commission and/or on its behalf, the preparatory, monitoring, administrative 
and  technical  support,  evaluation,  audit  and  inspection  measures  required  to  implement  the 
common  agricultural  policy,  including  rural  development.  Those  measures  shall  include  in 
particular: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

measures  required  for  the  analysis,  management,  monitoring,  information  exchange 
and implementation of the common agricultural policy, as well as measures relating 
to the implementation of control systems and technical and administrative assistance; 

measures  required  to  maintain  and  develop  methods  and  technical  means  for 
information, interconnection, monitoring and control of the financial management of 
the resources used to finance the common agricultural policy; 

provision  of  information  on  the  common  agricultural  policy,  undertaken  by  the 
Commission; 

studies on the common agricultural policy and evaluation of measures financed by the 
EAGF and the EAFRD, including improvement of evaluation methods and exchange 
of information on practices; 

where  relevant,  executive  agencies  set  up  in  accordance  with  Council  Regulation 
(EC) No 58/20038, acting in connection with the common agricultural policy; 

measures  relating  to  dissemination,  raising  awareness,  promoting  cooperation  and 
exchanging  experience  at  Community  level,  undertaken  in  the  context  of  rural 
development, including networking of the parties concerned. 

Article 6 
Accreditation and withdrawal of accreditation of paying agencies and coordinating bodies 

1. 

Paying  agencies  shall  be  the  departments  or  bodies  of  the  Member  States  which,  in 
respect of payments to be made under their jurisdiction and as regards communicating 
and keeping information, provide sufficient guarantees that: 

(a) 

the  eligibility  of  requests  and  their  compliance  with  Community  rules  are 
checked before payment is authorised; 

(b) 

accurate and exhaustive accounts are kept of the payments made; 

7 
8 

OJ L […], […], p. […]. 
OJ L 11, 16.1.2003, p. 1. 

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(c) 

(d) 

the  requisite  documents  are  presented  within  the  time  limits  and  in  the  form 
stipulated by Community rules; 

the  documents  are  accessible  and  kept  in  a  manner  which  ensures  their 
completeness,  validity  and  legibility  over  time,  including  with  regard  to 
electronic documents within the meaning of Community rules. 

2. 

Member  States  shall  accredit  as  paying  agencies  departments  or  bodies  which  fulfil 
the conditions laid down in paragraph 1.  

Each  Member  State  shall,  taking  into  account  its  constitutional  provisions  and 
institutional  structure,  restrict  the  number  of  its  accredited  paying  agencies  to  the 
minimum  necessary  to  ensure  that  the  expenditure  referred  to  in  Article  3(1)  and 
Article 4 is effected under sound administrative and accounting conditions. 

3. 

Where  more  than  one  paying  agency  is  accredited,  the  Member  State  shall 
communicate to the Commission the particulars of the department or body to which it 
assigns the following tasks: 

(a) 

centralising  the  information  to  be  made  available  to  the  Commission  and 
sending that information to the Commission; 

(b)  promoting harmonised application of the Community rules. 

This department or body, hereinafter referred to as the "coordinating body", shall be 
subject to specific accreditation by the Member States. 

4. 

Where an accredited paying agency does not meet or no longer meets one or more of 
the  conditions  laid  down  in  paragraph  1,  the  Member  State  shall  withdraw 
accreditation unless the paying agency makes the necessary changes within a period 
to be determined according to the severity of the problem. 

Article 7 
Certification bodies 

The certification body shall be a public or private legal entity designated by the Member State, 
responsible for certification of the management, monitoring and control systems set up by the 
accredited paying agencies, as well as of those agencies' annual accounts. 

The  certification  referred  to  in  the  first  subparagraph  shall  be  carried  out  according  to  the 
standards  and  within  the  period  defined  in  compliance  with  the  procedure  referred  to  in 
Article 41(2). 

Article 8 
Communication of information and access to documents 

1. 

In  addition  to  the  provisions  laid  down  in  the  sectoral  Regulations,  Member  States 
shall  send  to  the  Commission,  within  the  time  limits  set  in  compliance  with  the 
procedure  referred  to  in  Article  41(2),  the  following  information,  declarations  and 
documents: 

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(a) 

for accredited paying agencies and accredited coordinating bodies: 

(i) 

their accreditation document; 

(ii) 

their function (accredited paying agency or accredited coordinating body); 

(iii)  where relevant, the withdrawal of their accreditation. 

(b) 

for certification bodies: 

(i) 

their name; 

(ii) 

their address details. 

(c) 

for measures relating to operations financed by the EAGF and the EAFRD: 

(i) 

(ii) 

(iii) 

declarations of expenditure, certified by the accredited paying agency or 
the  accredited  coordinating  body  and  accompanied  by  the  requisite 
information; 

estimates  of  their  financial  requirements,  with  regard  to  the  EAGF  and, 
with regard to the EAFRD, an update of estimated requests for payment 
which  will  be  submitted  during  the  year  and  estimated  requests  for 
payment in respect of the following financial year; 

the  annual  accounts  of  the  accredited  paying  agencies,  accompanied  by 
the  requisite  information  for  their  clearance,  a  statement  of  assurance 
signed  by  the  person  in  charge  of  the  accredited  paying  agency,  and  a 
document  certifying  that  the  accounts  submitted  are  complete,  accurate 
and true. 

The  annual  accounts  of  accredited  paying  agencies  relating  to  EAFRD  expenditure 
shall be submitted at the level of each programme. 

2. 

The accredited paying agencies shall keep supporting documents relating to payments 
made  and  documents  relating  to  the  performance  of  the  administrative  and  physical 
checks  required  by  Community  legislation,  and  shall  make  the  documents  and 
information available to the Commission. 

Where  those  documents  are  kept  by  the  bodies  responsible  for  authorising 
expenditure,  those  bodies  shall  send  reports  to  the  accredited  paying  agency  on  the 
number  of  checks  made,  their  content  and  the  measures  taken  in  the  light  of  their 
results. 

3. 

The  Commission  shall  establish,  in  accordance  with  the  procedure  referred  to  in 
Article 41(2): 

(a) 

the  arrangements  for  submission  of  the  names  and  particulars  of  accredited 
paying agencies, accredited coordinating bodies and certification bodies; 

(b) 

the nature of the information which must be communicated; 

(c) 

the  rules  on  the  submission  and  certification  of  the  accounts  referred  to  in 
paragraph 1(c)(iii); 

(d) 

the arrangements and time limits for communicating that information. 

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Article 9 
Protection of the financial interests of the Community and assurances  
regarding the management of Community funds 

1. 

The Member States shall: 

(a)  within the framework of the common agricultural policy, adopt all legislative, 
regulatory and administrative provisions and take any other measures necessary 
to ensure effective protection of the financial interests of the Community, and 
particularly in order to: 

(i) 

check  the  genuineness  and  compliance  of  operations  financed  by  the 
EAGF and the EAFRD; 

(ii)  prevent and pursue irregularities; 

(iii)  recover sums lost as a result of irregularities or negligence. 

(b) 

set up an efficient management, monitoring and control system comprising the 
certification of accounts and a declaration of assurance based on the signature 
of the person in charge of the accredited paying agency. 

2. 

The  Commission  shall  ensure  that  the  Member  States  check  the  legality  and 
compliance of the expenditure referred to in Articles 3(1) and 4, and that they observe 
the  principles  of  sound  financial  management;  it  shall  carry  out  the  following 
measures and checks in this connection:  

(a) 

(b) 

it  shall  check  that  management,  monitoring  and  control  systems  exist  and 
function properly in the Member States; 

it shall reduce or suspend intermediate payments in full or in part and apply the 
requisite  financial  corrections,  particularly  where  the  management  and  control 
systems fail; 

c) 

it  shall  check  that  prefinancing  is  reimbursed  and  shall,  if  necessary, 
automatically decommit budget commitments. 

3. 

Member States shall inform the Commission of the provisions adopted and measures 
taken  under  paragraph  1  and,  with  regard  to  rural  development  programmes,  the 
measures  taken  in  compliance  with  Article  75  of  Regulation  (EC)  No  …/..  [rural 
development]  to  that  end,  subject  to  the  conditions  adopted  in  accordance  with  the 
procedure laid down in Article 41(2). 

Article 10 
Admissibility of payments made by the paying agencies 

The expenditure referred to in Articles 3(1) and 4 may be covered by Community financing 
only if it is effected by accredited paying agencies designated by Member States. 

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Article 11 
Payment in full to beneficiaries 

Except  where  provision  is  made  to  the  contrary  under  Community  legislation,  payments 
relating to the financing provided for under this Regulation or to amounts corresponding to the 
public  financial  contribution  under  the  rural  development  programmes  shall  be  disbursed  in 
full to the beneficiaries.  

Title II – EAGF 

Chapter I 
Community financing 

Article 12 
Budget ceiling 

1. 

2. 

3. 

The  annual  ceiling  for  EAGF  expenditure  shall  be  constituted  by  the  maximum 
amounts  set  for  it  under  the  multiannual  financial  framework  provided  for  in  the 
Interinstitutional Agreement of […], less the amounts referred to in paragraph 2.  

The  Commission  shall  set  the  amounts  which,  pursuant  to  Articles  10(2),  143d  and 
143e of Regulation (EC) No 1782/2003, are made available to the EAFRD. 

The Commission shall set, on the basis of the data referred to in paragraphs 1 and 2, 
the net balance available for EAGF expenditure. 

Article 13 
Administrative and personnel costs 

Expenditure  relating  to  administrative  and  personnel  costs  incurred  by  Member  States  and 
beneficiaries of aid from the EAGF shall not be borne by the Fund, except where provided for 
under the procedure referred to in Article 41(2). 

Article 14 
Monthly payments 

1. 

2. 

The  appropriations  necessary  to  finance  the  expenditure  referred  to  in  Article 3(1) 
shall be made available to Member States by the Commission in the form of monthly 
reimbursements,  hereinafter  referred  to  as  "monthly  payments",  on  the  basis  of  the 
expenditure effected by the accredited paying agencies during a reference period. 

Until transfer of the monthly payments by the Commission, the resources required to 
undertake  expenditure  shall  be  mobilised  by  the  Member  States  according  to  the 
needs of their accredited paying agencies. 

EN 

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Article 15 
Procedure for making monthly payments 

1. 

2. 

3. 

4. 

5. 

Monthly  payments  shall  be  made  by  the  Commission,  without  prejudice  to  the 
decisions  referred  to  in  Articles  30  and  31,  for  expenditure  effected  by  Member 
States' accredited paying agencies during the reference month. 

The  Commission  shall  decide,  in  accordance  with  the  procedure  referred  to  in 
Article 41(3), the monthly payments which it makes, on the basis of a declaration of 
expenditure from the Member States and the information supplied in accordance with 
Article 8(1), taking into account reductions or suspensions applied under Article 17. 

Monthly  payments  shall  be  made  to  each  Member  State  at  the  latest  on  the  third 
working day of the second month following that in which the expenditure is effected. 

Expenditure  effected  by  Member  States  between  1  and  15  October  shall  count  as 
made in the month of October. Expenditure effected between 16 and 31 October shall 
count as made in the month of November. 

The Commission may decide to make supplementary payments or deductions. In such 
cases, the Committee on the agricultural funds shall be informed at its next meeting. 

Article 16 
Compliance with payment deadlines 

Where  payment  deadlines  are  laid  down  by  Community  legislation,  any  overrun  of  those 
deadlines by the paying agencies shall make the payments ineligible for Community financing, 
except  in  the  cases,  conditions  and  limits  determined,  according  to  the  principle  of 
proportionality, on the basis of the procedure referred to in Article 41(2). 

However,  direct  payments  shall  under  no  circumstances  be  made  after  15  October  of  the 
budget year concerned. 

Article 17 
Reduction and suspension of monthly payments 

1. 

Where the declarations of expenditure or the information referred to in Article 15(2) 
do  not  enable  the  Commission  to  establish  that  the  commitment  of  funds  is  in 
accordance  with  the  applicable  Community  rules,  the  Commission  shall  ask  the 
Member  State  concerned  to  supply  further  information  within  a  period  which  the 
Commission  shall  determine  according  to  the  severity  of  the  problem  and  which 
generally may not be less than thirty days. 

If the Member State fails to respond to the Commission request referred to in the first 
subparagraph, or if the response is considered unsatisfactory or demonstrates that the 
Community rules applicable have not been complied with or that Community funds 
have  been  improperly  used,  the  Commission  may  reduce  or  temporarily  suspend 
monthly  payments  to  the  Member  State.  It  shall  inform  the  Member  State,  pointing 
out  that  reduction  or  suspension  is  without  prejudice  to  the  decisions  referred  to  in 
Articles 30 and 31. 

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2. 

Where the declarations of expenditure or the information referred to in Article 15(2) 
enable  the  Commission  to  establish  that  a  financial  ceiling  set  by  Community 
legislation has been exceeded or that the Community rules applicable have clearly not 
been  complied  with,  the  Commission  may  apply  the  reductions  or  suspensions 
referred to in the second subparagraph of paragraph 1, after giving the Member State 
an opportunity to submit its comments. 

3. 

Reductions  and  suspensions  shall  be  applied  according  to  the  principle  of 
proportionality, under the decision on monthly payments referred to in Article 15(2). 

Chapter II 
Budget discipline 

Article 18 
Compliance with the ceiling 

1. 

2. 

4. 

1. 

the  budget  procedure  and 

Throughout 
the  budget, 
appropriations relating to EAGF expenditure shall not exceed the net balance referred 
to in Article 12(3). 

implementation  of 

the 

All legislative instruments proposed by the Commission or adopted by the Council or 
the Commission and having an influence on the EAGF budget shall comply with the 
net balance referred to in Article 12(3). 

Where  Community  rules  stipulate  a  financial  ceiling  in  euros  for  agricultural 
expenditure  in  respect  of  a  Member  State,  such  expenditure  shall  be  reimbursed 
subject to that limit set in euros, with any necessary adjustments being made if Article 
11 of Regulation (EC) No 1782/2003 applies. 

National ceilings for direct payments set by Community legislation, including those 
set by Article 41(1) of Regulation (EC) No 1782/2003, corrected by the percentages 
laid down in Article 10(1) of that Regulation, shall be deemed to be financial ceilings 
in euros. 

Where  the  Council  has  not  set  by  30  June  of  the  year  in  question  the  adjustments 
referred to in Article 11(1) of Regulation (EC) No 1782/2003, the Commission shall 
set those adjustments in accordance with the procedure laid down in Article 41(3) and 
inform the Council of them immediately. 

Article 19 
Budget discipline procedure 

The Commission shall present to the European Parliament and to the Council, at the 
same  time  as  the  preliminary  draft  budget  for  financial  year  N,  its  forecasts  for 
financial  years  N–1,  N  and  N+1.  It  shall  simultaneously  present  an  analysis  of  the 
differences observed between the initial forecasts and actual expenditure for financial 
years N–2 and N–3. 

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2. 

3. 

4. 

If, on drawing up the preliminary draft budget for financial year N, there appears to 
be a risk that the net balance referred to in Article 12(3) for financial year N will be 
exceeded,  the  Commission  shall  propose  to  the  Council  the  measures  necessary, 
including those required under Article 11(2) of Regulation (EC) No 1782/2003. 

At  any  time,  if  the  Commission  considers  that  there  is  a  risk  of  the  net  balance 
referred to in Article 12(3) being exceeded and that it cannot take adequate measures 
to remedy the situation under its management powers, it shall propose other measures 
to the Council to ensure compliance with that balance.  

The  Council  shall  decide  on  those  measures,  in  accordance  with  the  procedure  laid 
down in Article 37 of the Treaty, within two months following receipt of the proposal 
from the Commission. The European Parliament shall give its opinion in time for the 
Council to take note of it and decide within the period stated. 

If,  at  the  end  of  financial  year  N,  reimbursement  requests  from  the  Member  States 
exceed or are likely to exceed the net balance set in accordance with Article 12(3), the 
Commission shall: 

(a) 

consider the requests presented by Member States pro rata and within the limit 
of the available budget, and shall provisionally set the amount of the payments 
for the month concerned; 

(b)  determine, for all Member States, at the latest by 28 February of the following 
year,  their  situation  with  regard  to  Community  financing  for  the  previous 
financial year; 

(c) 

set,  in  accordance  with  the  procedure  laid  down  in  Article  41(3),  the  total 
amount of Community financing broken down by Member State, on the basis of 
a single rate of Community financing, within the limit of the budget which was 
available for the monthly payments; 

(d) 

effect,  at  the  latest  when  the  monthly  payments  are  made  for  March  of  year 
N+1, any compensations to be carried out between Member States. 

Article 20 
Early-warning system 

In  order  to  ensure  that  the  budget  ceiling  will  not  be  exceeded,  the  Commission  shall 
implement a monthly early-warning and monitoring system in respect of EAGF expenditure. 

Before the beginning of each financial year, the Commission shall determine for that purpose 
monthly expenditure profiles based, if necessary, on average monthly expenditure during the 
previous three years. 

The Commission shall present to the European Parliament and to the Council a monthly report 
examining the development of expenditure effected in relation to the profiles and containing 
an assessment of the foreseeable implementation for the current financial year. 

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Article 21 
Reference exchange rates 

1. 

2. 

When  adopting  the  preliminary  draft  budget,  or  a  letter  of  amendment  to  the 
preliminary  draft  budget  which  concerns  agricultural  expenditure,  the  Commission 
shall use for EAGF budget estimates the average euro/United States dollar exchange 
rate  recorded  on  the  market  during  the  latest  quarter  ending  at  least  20  days  before 
adoption of the budget document by the Commission. 

When adopting a preliminary draft amending and supplementary budget or a letter of 
amendment  thereto,  in  so  far  as  those  documents  concern  appropriations  relating  to 
the measures referred to in Article 3(1)(a) and (b), the Commission shall use: 

(a) 

(b) 

firstly, the average euro/United States dollar exchange rate actually recorded on 
the  market  from  1  August  of  the  previous  financial  year  until  the  end  of  the 
latest quarter ending at least 20 days before adoption of the budget document by 
the Commission and at the latest on 31 July of the current financial year, and 

secondly,  as  a  forecast  for  the  remainder  of  the  financial  year,  the  average 
exchange rate actually recorded during the latest quarter ending at least 20 days 
before adoption of the budget document by the Commission. 

Title III – EAFRD 

Chapter 1 
Method of financing 

Article 22 
Financial contribution from the EAFRD 

The  financial  contribution  from  the  EAFRD  towards  expenditure  under  rural  development 
programmes shall be determined for each programme, within the ceilings laid down in Article 
70(1)  of  Regulation  (EC)  No  ….  [rural  development],  plus  the  amounts  set  by  the 
Commission under Article 12(2) of this Regulation. 

Expenditure  financed  under  this  Regulation  shall  not  be  the  subject  of  any  other  financing 
under the Community budget. 

Article 23 
Budget commitments 

The  Community's  budget  commitments  for  rural  development  programmes  (hereinafter 
referred  to  as  "budget  commitments")  shall  be  made  in  annual  instalments  over  the  period 
from 1 January 2007 to 31 December 2013.  

The Commission decision taken in accordance with Article 17(4) of Regulation (EC) No …. 
[rural development] approving each rural development shall constitute a financing decision 
within  the meaning  of Article 75(2) of Regulation (EC) No 1605/2002 and, once  notified to 
the Member State concerned, a legal commitment within the meaning of that Regulation.  

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For each programme, the budget commitment for the first instalment shall follow the adoption 
of  the  programme  by  the  Commission.  The  budget  commitments  for  subsequent  instalments 
shall  be  made  by  the  Commission,  before  1  May  of  each  year,  on  the  basis  of  the  decision 
referred to in the second subparagraph. 

Chapter II 
Financial management 

Article 24 
Provisions applying to all payments 

1. 

2. 

3. 

4. 

1. 

2. 

3. 

4. 

Payment  of  the  EAFRD  contribution  shall be  in  line  with  the  budget  commitments. 
Payment  shall  be  made  to  the  approved  paying  agency  designated  by  the  Member 
State for the relevant rural development programme. 

The  Commission  shall  make  the  appropriations  needed  to  cover  expenditure  as 
indicated  in  Article  4  available  to  the  Member  States  through  prefinancing, 
intermediate payments and the payment of a balance. Articles 25 to 28 shall apply to 
these appropriations. 

Payments shall be assigned to the oldest open budget commitment. 

The combined total of prefinancing and intermediate payments shall not exceed 95% 
of the EAFRD's contribution to each rural development programme. 

Article 25 
Prefinancing arrangements 

After adopting a rural development programme, the Commission shall, in accordance 
with  Article  17(4)  of  Regulation  (EC)  No  …  [rural  development],  pay  a  single 
prefinancing  amount  for  that  programme  to  the  approved  paying  agency  designated 
by  the  Member  State.  This  shall  represent  7%  of  the  EAFRD  contribution  to  the 
programme  concerned.  It  may  be  split  between  two  financial  years  depending  on 
resource availability. 

The total amount paid as prefinancing shall be reimbursed to the Commission by the 
accredited  paying  agency  if  no  payment  application  for  the  rural  development 
programme is sent within twenty-four months of the date on which the Commission 
pays the first instalment of the prefinancing amount. 

Interest  generated  on  the  prefinancing  shall  be  posted  to  the  rural  development 
programme concerned and deducted from the amount of public expenditure indicated 
on the final declaration of expenditure. 

The  total  prefinancing  amount  shall  be  cleared  when  the  rural  development 
programme is closed. 

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Article 26 
Intermediate payments 

Intermediate  payments  shall  be  made  for  each  rural  development  programme.  They 
shall be calculated by applying the part-financing rate for each priority to the certified 
public expenditure pertaining to it. 

Subject to resource availability, the Commission shall make intermediate payments in 
order  to  reimburse  the  expenditure  incurred  by  accredited  paying  agencies  in 
implementing the programmes.  

Each  intermediate  payment  shall  be  made  subject  to  compliance  with  the  following 
requirements: 

(a) 

transmission to the Commission of a declaration of expenditure and a payment 
application, both certified by the accredited paying agency, in accordance with 
Article 8(1)(c); 

(b)  no  overrun  of  the  total  EAFRD  contribution  to  each  priority  for  the  entire 

period covered by the programme concerned; 

(c) 

transmission  to  the  Commission  by  the  managing  authority  of  the  last  annual 
execution  report  required,  within  the  time  limits  laid  down  in  Article  86  of 
Regulation (EC) No … [rural development]. 

If  one  of  the  requirements  laid  down  in  paragraph  3  is  not  met  and  the  payment 
application cannot therefore be accepted, the Commission shall inform the accredited 
paying agency forthwith. 

The Commission shall make intermediate payments within two months of registering 
payment applications for which the requirements set out in paragraph 3 are met. 

Accredited paying agencies shall see to it that intermediate payment applications are 
grouped  for  presentation  to  the  Commission,  wherever  possible  three  times  a  year. 
Applications  shall  cover  expenditure  not  covered  by  previous  applications  that  the 
agency  has  incurred  up  to  the  end  of  the  month  preceding  that  in  which  the 
application is made. 

Intermediate payment applications in respect of expenditure incurred from 16 October 
onwards shall be booked to the following year's budget. 

The  Commission  shall  make  intermediate  payments,  without  prejudice  to  the 
decisions  referred  to  in  Articles  30  and  31,  for  expenditure  incurred  by  accredited 
paying agencies during the reference period. 

The  deadlines  for  lodging  payment  applications  shall  be  set  in  accordance  with  the 
procedure referred to in Article 41(2). 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

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1. 

2. 

3. 

4. 

1. 

2. 

3. 

Article 27 
 Suspension and reduction of intermediate payments 

The  Commission  shall  make  intermediate  payments  on  the  basis  of  the  expenditure 
declarations and financial information provided by Member States. Article 81 of the 
Regulation (EC) No 1605/2002 shall apply. 

If the expenditure declarations or financial information do not enable the Commission 
to find that the Fund expenditure declaration itself satisfies the relevant Community 
rules, it shall ask the Member State to provide additional information within a period 
that it shall set according to the seriousness of the problem but that may not normally 
be less than thirty days. 

If  the  Member  State  fails  to  respond  to  the  Commission  request  referred  to  in 
paragraph 2, or if the response is considered unsatisfactory or demonstrates that the 
rules  applicable  have  not  been  complied  with  or  that  Community  funds  have  been 
improperly  used,  the  Commission  may  reduce  or  temporarily  suspend  intermediate 
payments  to  the  Member  State.  It  shall  inform  the  Member  State,  pointing  out  that 
reduction or suspension is without prejudice to the decisions referred to in Articles 30 
and 31. 

The Commission shall in suspending or reducing intermediate payments as indicated 
in Article 26 observe the principle of proportionality. 

Article 28 
Payment of the balance and closure of the programme 

After  receiving  the  final  implementing  report  referred  to  in  Article  86  of  the 
Regulation  [rural  development],  the  Commission  shall  pay  the  balance,  subject  to 
resource  availability,  on  the  basis  of  the  part-financing  rate  per  priority,  the  annual 
accounts  for  the  last  execution  year  for  the  relevant  rural  development  programme 
and of the corresponding clearance decision. These accounts shall be presented to the 
Commission by 30 June 2016 and shall cover the expenditure incurred by the paying 
agency up to 31 December 2015. 

The  balance  shall  be  paid  no  later  than  six  months  after  the  information  and 
documents mentioned in paragraph 1 are received. The amounts still committed after 
the  balance  is  paid  shall  be  decommitted  by  the  Commission  within  a  period  of  six 
months, without prejudice to Article 29(6). 

If by 30 June 2016 the Commission has not been sent the last annual execution report 
and the documents needed for clearance of the accounts of the last execution year for 
the  programme  the  balance  shall  be  automatically  decommitted  in  line  with 
Article 29. 

Article 29 
Automatic decommitment 

1. 

The Commission shall automatically decommit any portion of a budget commitment 
for  a  rural  development  programme  that  has  not  been  used  for  the  purpose  of 

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2. 

3. 

4. 

prefinancing or making intermediate payments or for which no payment application 
meeting  the  conditions  laid  down  in  Article  26(3)  has  been  presented  to  it  by  31 
December of the second year following that of the budget commitment. 

That  part  of  budget  commitments  still  open  on  31  December  2015  for  which  a 
payment  application  has  not  been  made  by  30  June  2016  shall  be  automatically 
decommitted. 

If a Commission decision subsequent to the decision approving the rural development 
programme is needed for authorisation of assistance or of an aid scheme, the period 
leading  to  automatic  decommitment  shall  run  from  the  date  of  that  subsequent 
decision.  The  amount  in  question  shall  be  established  using  a  schedule  provided  by 
the Member State. 

In the event of any legal proceedings or an administrative appeal having suspensory 
effect, the period for automatic decommitment referred to in paragraph 1 or 2 shall be 
interrupted,  in  respect  of  the  amount  relating  to  the  operations  concerned,  for  the 
duration  of  those  proceedings  or  that  administrative  appeal,  provided  that  the 
Commission  receives  substantiated  notification  from 
the  Member  State  by 
31 December of year N+2. 

5. 

The following shall be disregarded in calculating the automatic decommitment: 

(a) 

(b) 

that part of the budget commitments for which a payment application has been 
made  but  reimbursement  of  which  has  been  reduced  or  suspended  by  the 
Commission at 31 December of year N+2; 

that part of the budget commitments which a paying agency has been unable to 
disburse for reasons of force majeure seriously affecting implementation of the 
rural  development  programme.  National  authorities  claiming  force  majeure 
must demonstrate the direct consequences on the implementation of all or part 
of the programme. 

The Commission shall inform Member States and the authorities concerned in good 
time if there is a risk of automatic decommitment. It shall inform them of the amount 
involved as indicated by the information in its possession. The Member States shall 
have two months from receiving this information to agree the amount in question or 
present  observations.  The  Commission  shall  carry  out  the  automatic  decommitment 
not later than nine months after the time limit laid down in paragraphs 1 to 4. 

In  the  event  of  automatic  decommitment,  the  EAFRD  contribution  to  the  rural 
development programme concerned shall be reduced, for the year in question, by the 
amount  automatically  decommitted.  The  Member  State  shall  produce  a  revised 
financing plan splitting the reduction of the aid between the priorities. If it does not 
do so, the Commission shall reduce the amounts allocated to each priority pro rata. 

If  this  Regulation  enters  into  force  after  1  January  2007,  the  periods  on  expiry  of 
which the first automatic decommitment referred to in paragraph 1 is liable to occur 
shall  be  extended  for  the  first  commitment  by  the  number  of  months  between  1 
January 2007 and the date of adoption by the Commission of the corresponding rural 
development programme, in accordance with Article 17(4) of Regulation (EC) No... 
[rural development]. 

6. 

7. 

8. 

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Title IV 
Clearance of accounts and Commission monitoring 

Chapter 1 
Clearance 

Article 30 
Clearance of accounts 

1. 

2. 

1. 

2. 

3. 

Prior to 30 April of the year following the budget year in question, the Commission 
shall take a decision concerning the clearance of the accounts of the accredited paying 
agencies  under  the  procedure  laid  down  in  Article  41(3),  on  the  basis  of  the 
information transmitted in line with the third indent of Article 8(1)(c)(iii). 

The  clearance  decision  shall  cover  the  completeness,  accuracy  and  veracity  of  the 
annual accounts submitted. The decision shall be without prejudice to decisions taken 
subsequently under Article 31. 

Article 31 
Conformity clearance 

If  the  Commission  finds  that  expenditure  as  indicated  in  Articles  3(1)  and  (4)  has 
been  incurred  in  a  way  that  has  infringed  Community  rules,  it  shall  decide  what 
amounts are to be excluded from Community financing. 

The Commission shall assess the amounts to be excluded on the basis of the gravity 
of the non-conformity recorded. It shall take due account of the nature and gravity of 
the infringement and of the financial damage caused to the Community. 

Before any decision to refuse financing is taken, the findings from the Commission's 
inspection  and  the  Member  State's  replies  shall  be  notified  in  writing,  following 
which the two parties shall attempt to reach agreement on the action to be taken. 

If  agreement  is  not  reached,  the  Member  State  may  request  opening  of  a  procedure 
aimed  at  reconciling  each  party's  position  within  four  months.  A  report  of  the 
outcome of the procedure shall be given to the Commission, which shall examine it 
before deciding on any refusal of financing. 

4. 

Financing may not be refused for: 

(a) 

(b) 

(c) 

expenditure  as  indicated  in  Article  3(1)  that  is  incurred  more  than  thirty-six 
months  before  the  Commission  notifies  the  Member  State  in  writing  of  its 
inspection findings; 

expenditure  on  multiannual  measures  falling  within  the  scope  of  Article  3(1) 
where the final obligation on the  recipient occurs more than thirty-six  months 
before  the  Commission  notifies  the  Member  State  in  writing  of  its  inspection 
findings; 

expenditure on programmes, as indicated in Article 4, payment of the balance 
of which is made more than thirty-six months before the Commission notifies 
the Member State in writing of its inspection findings. 

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5. 

Paragraph 4 shall not apply in the case of : 

(a) 

irregularities covered by Articles 32 and 33; 

(b)  national aids or infringements for which the procedure indicated in Article 88 or 

Article 226 of the Treaty has begun. 

Chapter 2 
Irregularities 

Article 32 
Provisions specific to the EAGF 

1. 

2. 

3. 

4. 

5. 

Sums  recovered  following  the  occurrence  of  irregularity  or  negligence  and  the 
interest on these shall be made over to the paying agency and booked by it as revenue 
assigned to the EAGF in the month in which the money is actually received. 

When  the  Community  budget  is  credited,  the  Member  State  may  retain  20%  of  the 
amounts recovered, as referred to in paragraph 1, as flat-rate recovery costs, except in 
cases of irregularity or negligence attributable to its administrative authorities or other 
official bodies. 

When  the  annual  accounts  are  sent,  as  provided  for  in  Article  8(1)(c)(iii),  Member 
States  shall  provide  the  Commission  with  a  summary  report  on  the  recovery 
procedures initiated in response to irregularities. This shall give a breakdown of the 
amounts not yet recovered, by administrative and/or judicial procedure and by year of 
the primary administrative or judicial finding of the irregularity. 

Member  States  shall  make  available  to  the  Commission  detailed  particulars  of  the 
individual recovery procedures and of the individual sums not yet recovered. 

After  the  procedure  laid  down  in  Article  31(3)  has  been  followed,  the  Commission 
may decide to charge the sums to be recovered to the Member State in the following 
cases: 

(a) 

(b) 

if the Member State has not for recovery purposes initiated all the appropriate 
administrative  or  judicial  procedures  laid  down  in  national  and  Community 
legislation within one year of the primary administrative or judicial finding; 

if there has been no administrative or judicial finding, or the delay in making it 
is such as to jeopardise recovery, or the irregularity has not been included in the 
summary report provided for in the first subparagraph of paragraph 3 above for 
the year in which the primary administrative or judicial finding is made. 

If  recovery  has  not  taken  place  within  four  years  of  the  primary  administrative  or 
judicial  finding,  or  within  six  years  where  recovery  action  is  taken  in  the  national 
courts,  50%  of  the  financial  consequences  of  non-recovery  shall  be  borne  by  the 
Member State concerned and 50% by the Community budget, after application of the 
deduction provided for in paragraph 2. 

Member States shall indicate separately in the summary report referred to in the first 
subparagraph  of  paragraph  3  the  amounts  not  recovered  within  the  time  limits 
specified in the first subparagraph of this paragraph. 

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The  distribution  of  the  financial  burden  of  non-recovery  in  line  with  the  first 
subparagraph  shall  be  without  prejudice  to  the  requirement  that  the  Member  State 
concerned  must  pursue  recovery  procedures  in  compliance  with  Article  9(1)  of  this 
Regulation. 50% of the amounts recovered in this way shall be credited to the EAGF. 

Where,  in  the  context  of  the  recovery  procedure,  the  absence  of  any  irregularity  is 
recorded by an administrative or legal instrument of a definitive nature, the Member 
State concerned shall declare as expenditure to the EAGF the financial burden borne 
by it under the first subparagraph.  

6. 

If  there  is  justification  for  doing  so,  Member  States  may  decide  not  to  pursue 
recovery. A decision to this effect may be taken only in the following cases: 

(a) 

(b) 

if the costs already and likely to be incurred total more than the amount to be 
recovered, or 

if recovery proves impossible owing to the insolvency, recorded and recognised 
under  national  law,  of  the  debtor  or  the  persons  legally  responsible  for  the 
irregularity. 

The Member State shall show separately in the summary report referred to in the first 
subparagraph of paragraph 3 the amounts for which it has been decided not to pursue 
recovery and the grounds for its decision. 

Member States shall enter in the annual accounts to be sent to the Commission under 
Article  8(1)(c)(iii)  the  amounts  to  be  borne  by  them  under  paragraph  5.  The 
Commission shall check that this has been done and make any adjustments needed as 
part of the decision specified in Article 30(1). 

Following completion of  the  procedure laid down in  Article 31(3), the Commission 
may decide to exclude from financing sums charged to the Community budget in the 
following cases: 

(a) 

under paragraphs 5 and 6 of this Article, if it finds that the irregularity or lack of 
recovery  is  the  outcome  of  irregularity  or  negligence  attributable  to  the 
administrative authorities or another official body of the Member State; 

(b)  under paragraph 6 of this Article, if it considers that the grounds stated by the 

Member State do not justify its decision to halt the recovery procedure. 

Article 33 
Provisions specific to the EAFRD 

Member States shall make financial corrections where irregularities or negligence are 
detected  in  rural  development  operations  or  programmes  by  totally  or  partially 
cancelling  the  Community  financing  concerned.  Member  States  shall  take  into 
consideration the nature and gravity of the irregularities detected and the level of the 
financial loss to the EAFRD. 

Where the Community funds have already been paid to the beneficiary, they shall be 
recovered  by  the  accredited  paying  agency  in  accordance  with  its  own  recovery 
procedures and reused in accordance with paragraph 3(c). 

7. 

8. 

1. 

2. 

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27 

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3. 

The  financial  corrections  and  reuse  of  funds  shall  be  undertaken  by  Member  States 
subject to the following conditions: 

(a)  where irregularities are detected, Member States shall extend their inquiries to 

cover all operations liable to be affected by such irregularities; 

(b) 

(c) 

the  Member  States  shall  notify  the  relevant  programme  management  of  the 
corrections; 

amounts of Community financing which are cancelled and amounts recovered, 
as well as the interest thereon, shall be reused by the accredited paying agency. 
However,  the  cancelled  or  recovered  Community  funds  may  be  reused  by  the 
Member  States  only  for  an  operation  under  the  same  rural  development 
programme  and  provided  the  funds  are  reallocated  to  operations  which  have 
been the subject of a financial correction. 

When  the  annual  accounts  are  sent,  as  provided  for  in  Article  8(1)(c)(iii),  Member 
States  shall  provide  the  Commission  with  a  summary  report  on  the  recovery 
procedures initiated in response to irregularities. This shall give a breakdown of the 
amounts not yet recovered, by administrative and/or judicial procedure and by year of 
the primary administrative or judicial finding of the irregularity. 

They  shall  inform  the  Commission  how  they  have  decided  or  plan  to  reuse  the 
cancelled  funds  and,  where  appropriate,  to  amend  the  financing  plan  for  the  rural 
development programme concerned.  

After  the  procedure  laid  down  in  Article  31(3)  has  been  followed,  the  Commission 
may decide to charge the sums to be recovered to the Member State in the following 
cases: 

(a)  where  the  Member  State  has  not  initiated  the  administrative  or  judicial 
procedures laid down in national and Community legislation for the recovery of 
the funds paid to the beneficiaries; 

(b)  where  the  Member  State  has  failed  to  comply  with  its  obligations  under 

paragraph 2(a) and (c). 

Where  it  has  been  possible  to  effect  the  recovery  referred  to  in  paragraph  2  after 
closure of a rural development programme, the Member State shall refund the sums 
recovered to the Community budget. 

After closure of a rural development programme the Member State may decide to halt 
the recovery procedure, subject to the conditions laid down in Article 32(6). 

If recovery has not taken place within four years of the closure of a rural development 
programme, or within six years where recovery action is taken in the national courts, 
50%  of  the  financial  consequences  of  non-recovery  shall  be  borne  by  the  Member 
State concerned and 50% by the Community budget. 

In cases as referred to in paragraph 8, the amounts corresponding to the 50% borne by 
the Member State shall be paid by the Member State to the Community budget. 

4. 

5. 

6. 

7. 

8. 

9. 

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28 

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10. 

Where  the  Commission  makes  a  financial  correction,  this  shall  not  affect  the 
obligations of the Member State to recover the sums paid as part of its own financial 
contribution under Article 14 of Council Regulation (EC) No 659/19999. 

Article 34 
Assignment of revenue from the Member States 

1. 

The following shall be regarded as assigned revenue within the meaning of Article 18 
of Regulation (EC) No 1605/2002: 

(a) 

(b) 

sums  which,  under  Articles  31,  32  and  33,  must  be  paid  to  the  Community 
budget, including interest thereon; 

sums  which  are  collected  or  recovered  under  Council  Regulation  (EC) 
No 1788/200310. 

2. 

The sums referred to in paragraph 1(a) and (b) shall be paid to the Community budget 
and,  in  the  event  of  reuse,  shall  be  used  exclusively  to  finance  EAGF  or  EAFRD 
expenditure. 

Article 35 
Definition of administrative finding 

For the purposes of this Chapter the primary administrative or judicial finding means the first 
written assessment, whether or not internal, of a competent authority, either administrative or 
judicial,  concluding  on  the  basis  of  actual  facts  that  an  irregularity  has  been  committed, 
without prejudice however to the possibility that this conclusion may subsequently have to be 
adjusted  or  withdrawn  as  a  result  of  developments  in  the  course  of  the  administrative  or 
judicial procedure.  

Chapter 3 
Commission monitoring 

Article 36 
Access to information 

1. 

2. 

Member States shall make available to the Commission all information necessary for 
the  smooth  operation  of  the  EAGF  and  EAFRD  and  shall  take  all  appropriate 
measures  to  facilitate  the  checks  which  the  Commission  deems  appropriate  in 
connection  with  the  management  of  Community  financing,  including  on-the-spot 
checks. 

Member States shall communicate to the Commission on request the laws, regulations 
and  administrative  provisions  which  they  have  adopted  for  implementing  the 
Community instruments relating to the common agricultural policy, where those acts 
have a financial impact on the EAGF or the EAFRD. 

9 
10 

OJ L 83, 27.3.1999, p. 1. 
OJ L 270, 21.10.2003, p. 123.  

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29 

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3. 

1. 

Member  States  shall  make  available  to  the  Commission  all  information  about 
irregularities  detected,  in  accordance  with  Articles  32  and  33,  and  about  the  steps 
taken to recover undue payments in connection with those irregularities. 

Article 37 
On-the-spot checks 

Without  prejudice  to  the  checks  carried  out  by  the  Member  States  under  national 
laws, regulations and administrative provisions or Article 248 of the Treaty, and any 
check organised under Article 279 of the Treaty, the Commission may organise on-
the-spot checks with a view to checking in particular: 

(a) 

compliance of administrative practices with Community rules; 

(b) 

(c) 

the  existence  of  the  requisite  supporting  documents  and  their  correlation  with 
the operations financed by the EAGF or the EAFRD; 

the terms on which the operations financed by the EAGF or the EAFRD have 
been undertaken and checked. 

Persons  delegated  by  the  Commission  to  carry  out  on-the-spot  inspections  or 
Commission agents acting within the scope of the powers conferred upon them shall 
have access to the books and all other documents, including electronic data drawn up 
or  recorded  on  a  data  processing  medium,  relating  to  expenditure  financed  by  the 
EAGF or the EAFRD. 

2. 

The  Commission  shall  give  sufficient  prior  notice  of  an  inspection  to  the  Member 
State  concerned  or  the  Member  State  on  whose  territory  the  inspection  is  to  take 
place. Personnel from the Member State concerned may take part in such checks. 

At  the  request  of  the  Commission  and  with  the  agreement  of  the  Member  State, 
additional checks or inquiries into the operations covered by this Regulation shall be 
undertaken  by  the  competent  bodies  of  that  Member  State.  Commission  agents  or 
persons delegated by the Commission may take part in such checks. 

In order to improve checks, the Commission may, with the agreement of the Member 
States concerned, enlist the assistance of the authorities of those  Member  States for 
certain inspections or inquiries. 

Title VI 
Transitional and final provisions 

Article 38 
Expenditure under the EAGGF Guarantee Section other than on rural development 

1. 

The  Guarantee  Section  of  the  European  Agricultural  Guidance  and  Guarantee  Fund 
(EAGGF) shall finance the expenditure incurred by the Member States in accordance 
with  Article  2  and  Article  3(2)  and  (3)  of  Regulation  (EC)  No  1258/1999  until 
15 October 2006. 

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2. 

1. 

Expenditure by the Member States from 16 October 2006 shall follow the rules laid 
down in this Regulation. 

Article 39 
Expenditure on rural development under the EAGGF Guarantee Section 

For  Member  States  belonging  to  the  European  Union  before  1  May  2004,  the 
following rules shall apply to rural development programmes for the period 2000–06, 
which  are  financed  by  the  EAGGF  Guarantee  Section  in  accordance  with 
Article 3(1): 

(a)  Payments to beneficiaries shall cease no later than 15 October 2006 and related 
expenditure  by  the  Member  States  shall  be  reimbursed  to  them  by  the 
Commission  no  later  than  under  the  declaration  concerning  expenditure  for 
October 2006. 

(b)  Advances made to the Member States for the period of implementation of these 
programmes under the second subparagraph of Article 5(1) of Regulation (EC) 
No 1258/1999 shall be recovered by the Commission no later than 15 October 
2006. 

(c)  By way of derogation from Article 72(1) of Regulation (EC) No No …. [rural 
development] and at the request of the Member States, expenditure incurred by 
accredited  paying  agencies  between  16  October  and  31  December  2006  in 
respect  of  rural  development  measures  shall  be  taken  over  by  the  EAFRD 
budget under the programming of rural development for 2007–13. 

(d)  The  financial  resources  available  in  a  Member  State  on  1  January  2007 
following  reductions  in  the  amounts  of  payments  which  that  State  has  made 
voluntarily,  under  Articles  4  and  5  of  Regulation  (EC)  No  1259/1999,  and 
measures  taken  to  facilitate  the  transition  from  that  Regulation  to  Regulation 
(EC)  No  1782/2003,  in  accordance  with  Article  155  thereof,  may  be  used  by 
that  Member  State  to  finance  the  rural  development  measures  referred  to  in 
Article 4 of this Regulation. 

(e) 

If  the  Member  States  do  not  use  the  financial  resources  referred  to  in 
paragraph 4 within a period to be determined in accordance with the procedure 
laid  down  in  Article  41(2),  the  corresponding  amounts  shall  be  repaid  to  the 
EAGF budget no later than 31 December 2009. 

2. 

For Member States joining the European Union on 1 May 2004, amounts committed 
to  finance  rural  development  measures  in  accordance  with  Article  3(1)  under  a 
Commission  decision  taken  between  1  January  2004  and  31  December  2006,  in 
respect of which the documents required for closure of the assistance have not been 
sent to the Commission by the end of the time allowed for transmission of the final 
report,  shall  be  automatically  decommitted  by  the  Commission  no  later  than  31 
December  2010  and  shall  result  in  the  reimbursement  by  the  Member  States  of 
amounts wrongly received.  

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Article 40 
Expenditure under the EAGGF Guidance Section 

Amounts  committed  to  finance  rural  development  measures  from  the  EAGGF 
Guidance Section under a Commission decision adopted between 1 January 2000 and 
31  December  2006,  in  respect  of  which  the  documents  required  for  closure  of  the 
assistance have not been sent to the Commission by the end of the time allowed for 
transmission  of  the  final  report,  shall  be  automatically  decommitted  by  the 
Commission no later than 31 December 2010 and shall result in the reimbursement by 
the Member States of amounts wrongly received. The documents required for closure 
of  the  assistance  shall  be  the  application  for  payment  of  the  balance,  the  final 
implementing  report  and  the  declaration  by  a  person  or  department  operationally 
independent of the managing authority. 

Amounts  relating  to  operations  or  programmes  which  are  the  subject  of  legal 
proceedings or an administrative appeal which, under the legislation of the Member 
State, has a suspensory effect shall be excluded from the calculation of the amount to 
be automatically decommitted, as provided for in paragraph 1. 

Article 41 
Committee on the funds 

The  Commission  shall  be  assisted  by  a  Committee  on  the  agricultural  funds 
(hereinafter referred to as the "Committee"). 

Where reference is made to this paragraph, Articles 4 and 7 of Decision 1999/468/EC 
shall apply. 

The time referred to in Article 4(3) of Decision 1999/468/EC shall be one month. 

Where reference is made to this paragraph, Articles 3 and 7 of Decision 1999/468/EC 
shall apply. 

The Committee shall adopt its own rules of procedure. 

1. 

2. 

1. 

2. 

3. 

4. 

Article 42 
Scope 

Detailed  rules  for  the  application  of  this  Regulation  shall  be  adopted  through  the  procedure 
provided for in Article 41(2). 

Article 43 
Annual financial report 

By  1  September  of  each  year  following  the  budget  year,  the  Commission  shall  draw  up  a 
financial  report  on  the  administration  of  the  EAGF  and  the  EAFRD  during  the  previous 
financial year. 

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32 

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Article 44 
Confidentiality 

The  Member  States  and  the  Commission  shall  take  all  necessary  steps  to  ensure  the 
confidentiality of the information communicated or obtained under inspection and clearance of 
accounts measures implemented under this Regulation.  

The  principles  mentioned  in  Article  8  of  Council  Regulation  (Euratom,  EC)  No  2185/9611 
shall apply to that information. 

Article 45 
Use of the euro 

The amounts given in the Commission decisions adopting rural development programmes in 
accordance with Article 17(4) of Regulation (EC) No …/.. [rural development], the amounts 
of commitments and payments by the Commission and the amounts of expenditure attested or 
certified  and  amounts  in  applications  for  payment  by  the  Member  States  shall  be  expressed 
and paid in euros, in accordance with arrangements adopted by the Commission in accordance 
with the procedure laid down in Article 41(2). 

Article 46 
Amendment to Regulation (EEC) No 595/91 

Regulation (EEC) No 595/91 is hereby amended as follows: 

(a) 

(b) 

Article 5(2) is deleted; 

Article 7(1) is deleted. 

Article 47 
Repeal 

1. 

2. 

1. 

Regulation  No  25,  Regulation  (EC)  No  723/97  and  Regulation  (EC)  No  1258/1999 
are hereby repealed. 

However,  Regulation  (EC)  No  1258/1999  shall  continue  to  apply  to  expenditure 
incurred up to 15 October 2006. 

References  to  the  Regulations  repealed  shall  be  construed  as  references  to  this 
Regulation and shall be read in accordance with the correlation table in the Annex. 

Article 48 
Transitional measures 

For the implementation of this Regulation, the Commission shall adopt the measures 
which are both necessary and duly justified to resolve, in cases of urgency, practical 
and  specific  problems,  in  particular  those  relating  to  the  transition  between  the 

11 

OJ L 292, 15.11.1996, p. 2. 

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provisions of  Regulations No 25, (EC) No 723/97 and (EC)  No 1258/1999 and this 
Regulation. These measures may derogate from certain parts of this Regulation, but 
only to the extent and for the time strictly necessary. 

2. 

The  measures  taken  under  this  Article  shall  be  adopted  in  accordance  with  the 
procedure referred to in Article 41(2). 

Article 49 
Entry into force 

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

It shall apply from 1 January 2007. 

However, the following provisions shall apply from 16 October 2006: 

– 

– 

– 

Articles 30 and 31, as regards expenditure incurred from 16 October 2006; 

Article 31, as regards cases notified under Article 3 of Regulation (EEC) No 595/91 
and for which full recovery has not yet taken place by 16 October 2006; 

Articles 38 to 41, 44 and 45 for expenditure declared in 2006 under the 2007 budget 
year. 

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

Done at Brussels, […]. 

For the Council 
The President 
[…] 

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ANNEX 

Correlation Table 

Regulation No 25 

This Regulation 

Article 1 

Articles 2 to 8 

Article 2(2) 

– 

Regulation (EEC) No 595/91 

This Regulation 

Article 5(2) 

Article 7(1) 

Article 32(3)  
Article 8 

Article 32(2) 

Regulation (EC) No 723/97 

This Regulation 

Articles 1 to 4(1) and (3) 
Articles 5 to 9 

Article 4(3) 

– 
– 

Article 5(1)(b) 

Regulation (EC) No 1258/1999 

This Regulation 

Article 1(1), first subparagraph 

Article 2(2) 

Article 1(2)(a) 
Article 1(2)(b) 
Article 1(2)(c) 
Article 1(2)(d) 
Article 1(2)(e) 

Article 1(3) 
Article 1(4) 
Article 2 
Article 3 
Article 4(1)(a) 

Article 4(2) 
Article 4(3) 
Article 4(4) 
Article 4(5) 

Article 3(1)(a) 
Article 3(1)(b) 
Article 4 
Article 3(2)(a) 
Article 3(1)(d) 
Article 5(1)(c) 
Article 5(1)(d) 
Article 4 
Article 13 
– 
– 

Article 8(1)(a) 
Article 8(1)(b) 
Article 6(1) 
Article 8(2) 
Article 10 
Article 6(2) 

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Article 4(6) 
Article 4(7) 
Article 4(8) 
Article 5(1), first subparagraph 
Article 5(1), second subparagraph 
Article 5(2) 
Article 5(3) 
Article 6(1) 
Article 6(2) 
Article 7(1) 
Article 7(2), first subparagraph 
Article 7(2), second subparagraph 
Article 7(2), third subparagraph 
Article 7(3), first subparagraph 
Article 7(3), second subparagraph 
Article 7(4), first subparagraph 
Article 7(4), second subparagraph 
Article 7(4), third subparagraph 
Article 7(4), fourth subparagraph 
Article 7(4), fifth subparagraph 
Article 7(4), sixth subparagraph 
Article 7(5) 
Article 8(1), first subparagraph 
Article 8(1), second subparagraph 
Article 8(2) 
Article 8(3) 
Article 9(1), first subparagraph 
Article 9(1), second subparagraph 
Article 9(2) 
Article 9(3) 
Article 10 
Articles 11 to 15 
Article 16 
Article 17 
Article 18 
Article 19 

Article 8(1)(a) 
Article 6(3) 
Article 5(7) 
Article 14(1) 
Article 25(1) 
Article 14(2) 
Article 14(3) 
Article 8(1)(c) 
Article 8(3) 

– 

Article 15(2) 
Article 15(3) and (4) 
Article 15(5) 
Article 30(1) 
Article 30(2) 
Article 31(1) 
Article 31(3), first subparagraph 
Article 31(3), second subparagraph 
Article 31(2) 
Article 31(4) 
Article 31(5) 
Article 31(6) 
Article 9(1) 
Article 9(3) 
Article 32(1) and (8) 
Article 32(9) 
Article 36(1) 
Article 36(2) 
Article 37(1) 
Article 37(3) 
Article 43 
Article 41 
Article 41 
– 
Article 48 
– 

Article 20 

Article 49 

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