Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001
Date: 2006-12-15
Institutions: European Commission
Subjects: State aid, agricultural holding, agricultural insurance, agricultural product, aid to agriculture, early retirement, eligibility criteria, producer organisation, production aid, reparcelling, small and medium-sized enterprises, young farmer

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COMMISSION REGULATION (EC) No 1857/2006

of 15 December 2006

on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized
enterprises active in the production of agricultural products and amending Regulation
(EC) No 70/2001

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

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

Having published a draft of this Regulation,

Having consulted the Advisory Committee on State Aid,

Whereas:

(1)

(2)

(3)

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

Commission Regulation (EC) No 70/2001 of 12 January
2001 on the application of Articles 87 and 88 of the EC
Treaty to State aid to small and medium-sized enter-
prises (2) does not apply to activities linked to the
production, processing or marketing of products listed
in Annex I to the Treaty.

The Commission has applied Articles 87 and 88 of the
Treaty to small and medium-sized enterprises active in
the production, processing and marketing of agricultural
products in numerous decisions and has also stated its
policy, most recently in the Community guidelines for
State aid in the agriculture sector (3). In the light of the
Commission's considerable experience in applying those
Articles to small and medium-sized enterprises active in
the production of agricultural products, it is appropriate,

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ L 10, 13.1.2001, p. 33. Regulation as last amended by Regu-

lation (EC) No 1040/2006 (OJ L 187, 8.7.2006, p. 8).

(3) OJ C 28, 1.2.2000, p. 2. Corrected version (OJ C 232, 12.8.2000,

p. 17).

(4)

(5)

(6)

without

supervision and
with a view to ensuring efficient
weakening
administration
simplifying
Commission monitoring,
the Commission should
that
also make use of the powers conferred by Regulation
(EC) No 994/98 for small and medium-sized enterprises
active in the production of agricultural products, insofar
as Article 89 of the Treaty has been declared applicable
to such products.

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

Small and medium-sized enterprises play a decisive role
in job creation and, more generally, act as a factor of
social stability and economic drive. However, their devel-
opment may be limited by market imperfections. They
often have difficulties in obtaining capital or credit, given
the risk-shy nature of certain financial markets and the
limited guarantees that they may be able to offer. Their
limited resources may also restrict their access to infor-
mation, notably regarding new technology and potential
markets. Having regard to those considerations,
the
purpose of the aid exempted by this Regulation should
economic
be
the development of
activities
enterprises,
provided that such aid does not adversely affect trading
conditions to an extent contrary to the common interest.
These
and
should
supported by simplification of the existing rules, as far
as they apply to small and medium-sized enterprises.

and medium-sized

developments

to facilitate

encouraged

small

the

be

of

The production, processing and marketing of agricultural
products in the Community is largely dominated by
small and medium-sized enterprises. However, there are
considerable differences between the structure of primary
production, on the one hand, and processing and
marketing of agricultural products, on the other hand.
The processing and marketing of agricultural products
industrial
similar
would often appear
to that of
it would appear more appropriate
products. Therefore,
to have
approach for processing and
marketing of agricultural products and include those
activities in the rules for industrial products. Conse-
approach taken in
quently,

and contrary

a different

to the

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(12)

(13)

(14)

Commission Regulation (EC) No 1/2004 of 23 December
2003 on the application of Articles 87 and 88 of the EC
Treaty to State aid to small and medium-sized enterprises
active in the production, processing and marketing of
agricultural products (4),
it appears useful to set up an
exemption regulation targeted at the specific needs of
primary agricultural production.

Council Regulation (EC) No 1257/1999 of 17 May 1999
on support for rural development from the European
Agricultural Guidance and Guarantee Fund (EAGGF)
and amending and repealing certain Regulations (5) and
Council Regulation (EC) No 1698/2005 of 20 September
2005 on support for rural development by the European
(EAFRD) (6)
Agricultural Fund for Rural Development
have introduced specific State aid rules for certain rural
development measures receiving Member State support
without any Community financing.

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

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

this Regulation,

This Regulation should not exempt export aid or aid
contingent upon the use of domestic over imported
products. Such aid may be incompatible with the
Community's international obligations. Aid towards the
costs of participation in trade fairs or of studies or
consultancy services needed for the launch of a new or
existing product on a new market should not normally
constitute export aid.

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

(15)

(7)

(8)

(9)

(10)

(11)

practice

established

accordance with

the
In
Commission, and with a view to ensuring that aid is
proportionate and limited to the amount necessary,
thresholds should normally be expressed in terms of
aid intensities in relation to a set of eligible costs,
rather than in terms of maximum aid amounts.

of

In order to determine whether or not aid is compatible
with the common market pursuant to this Regulation, it
is necessary to take into consideration the aid intensity
and thus the aid amount expressed as a grant equivalent.
The calculation of the grant equivalent of aid payable in
instalments requires the use of market interest
several
rates prevailing at the time of grant. With a view to a
uniform, transparent, and simple application of the State
aid rules, the market rates for the purposes of this Regu-
lation should be deemed to be the reference rates peri-
odically fixed by the Commission on the basis of
objective criteria and published in the Official Journal of
the European Union and on the Internet.

In order to ensure transparency and effective monitoring,
this Regulation should apply only to aid measures which
are transparent. These are aid measures in which it is
possible to calculate precisely the gross grant equivalent
as a percentage of eligible expenditure ex ante without a
need to undertake a risk assessment (for example, grants,
interest rate subsidies and capped fiscal measures). Public
loans should be considered to be transparent provided
that they are backed by normal security and do not
involve abnormal risk and are therefore not considered
to contain a State guarantee element. In principle, aid
measures involving State guarantees or public loans
with a State guarantee element should not be considered
as transparent. However, such aid measures should be
considered as transparent if, before the implementation
of the measure, the methodology used to calculate the
aid intensity of the State guarantee has been accepted by
the
the
Commission after adoption of this Regulation. The meth-
odology will be assessed by the Commission in line with
the Notice on the application of Article 87 and 88 of the
EC Treaty to State aid in the Forms of Guarantees (7).
Public participation and aid comprised in risk capital
measures should not be considered as transparent aid.
Aid measures which are not transparent should always
be notified to the Commission. Notifications of non-
transparent
assessed by the
Commission in particular in the light of the criteria set
out in the Community guidelines for State aid in the
agriculture and forestry sector 2007-2013.

aid measures will be

Commission

notification

following

to

of

practice

established

accordance with

In
the
Commission for the evaluation of State aid in the agri-
cultural sector, no differentiation between small enter-
prises and medium-sized enterprises is necessary. For
certain types of aid,
the establishment of maximum
amounts of aid which a beneficiary may receive is appro-
priate.

(4) OJ L 1, 3.1.2004, p. 1.
(5) OJ L 160, 26.6.1999, p. 80.
(6) OJ L 277, 21.10.2005, p. 1. Regulation as last amended by Regu-

lation (EC) No 1698/2005 (OJ L 277, 21.10.2005, p. 1).

(7) OJ C 71, 11.3.2000, p. 14.

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(16) Aid ceilings should be fixed, in the light of the Commis-
sion's experience, at a level that strikes the appropriate
balance between minimising distortions of competition
in the aided sector and the objective of facilitating the
the economic activities of small and
development of
medium-sized enterprises in the agriculture sector.
In
the interests of coherence with Community-financed
support measures,
the ceilings should be harmonised
with those fixed in Regulation (EC) No 1257/1999 and
in Regulation (EC) No 1698/2005.

(20) Where aid is granted to adapt

to newly introduced
standards at Community level, Member States should
not be able to lengthen the adaptation period for
farmers by delaying implementation of
such rules.
Therefore, the date from which new legislation can no
longer be considered new should be clearly set out.

in order

is appropriate to establish further conditions that
It
should be fulfilled by any aid scheme or individual aid
exempted by this Regulation. Any restrictions on
production or limitations of Community support under
the common market organisations should be taken into
account. Having regard to Article 87(3)(c) of the Treaty,
aid should not have the sole effect of continuously or
periodically reducing the operating costs which the bene-
ficiary would normally have to bear, and should be
to the handicaps
to be
proportionate
overcome
socio-economic
to secure
benefits deemed to be in the Community interest.
Unilateral State aid measures which simply seek to
improve the financial situation of producers but which
in no way contribute to the development of the sector,
and in particular aids which are granted solely on the
basis of price, quantity, unit of production or unit of the
considered to constitute
means of production are
incompatible with the
aids which are
operating
common market. Furthermore, such aids are also likely
to interfere with the mechanisms of the common orga-
nisations of the markets. It is therefore appropriate to
limit the scope of this Regulation to certain types of aid.

that have
the

This Regulation should exempt aid to small and medium-
sized agricultural holdings (farms) regardless of location.
Investment and job creation can contribute to the
less favoured regions and
economic development of
areas as referred to in Article 36(a)(i),
(ii) and (iii) of
Regulation (EC) No 1698/2005. Small and medium-
sized agricultural holdings (farms) in those areas suffer
from both the structural disadvantage of the location and
the difficulties deriving from their size.
It is therefore
appropriate that small and medium-sized enterprises in
such areas should benefit from higher ceilings.

(21)

(22)

(23)

(17)

(18)

(19)

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

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

local

authorities, with public

This Regulation should not exempt aid cumulated with
including aid granted by national,
other State aid,
regional or
support
granted within the framework of Regulation (EC) No
1698/2005 or with Community assistance,
in relation
to the same eligible costs, when such cumulation
exceeds the thresholds fixed in this Regulation. Aid
exempted
be
this Regulation
cumulated with de minimis support within the meaning
of Commission Regulation (EC) No 1860/2004 of 6
October 2004 on the application of Articles 87 and
88 of the EC Treaty to de minimis aid in the agriculture
and fisheries sectors (8)
in respect of the same eligible
expenditure or investment project,
if such cumulation
would result in an aid intensity exceeding that fixed by
this Regulation.

should

under

not

investment

invested in,

about products

Because of the risk of distortions resulting from targeted
investment aid and in order to offer farmers freedom to
decide
aid
exempted under this Regulation should not be limited
to specific agricultural products. This condition should
not prevent a Member State from excluding certain agri-
cultural products from such aid or aid schemes, notably
where no normal market outlets can be found. Also,
certain types of investment should per se be excluded
from this Regulation.

(8) OJ L 325, 28.10.2004, p. 4.

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(24)

(25)

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

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

(26) Aid to companies active in the processing and marketing
of agricultural products should be covered by the rules
governing aid to small and medium-sized enterprises in
other sectors laid down in Regulation (EC) No 70/2001.
Regulation (EC) No 70/2001 should therefore be
amended accordingly.

(27)

State aid exempted under Regulation (EC) No 1/2004
should continue to be exempted if
the
conditions of this Regulation.

fulfils all

it

(29)

This Regulation is without prejudice to the possibility for
Member States to notify aid to small and medium-sized
enterprises active
in the production of agricultural
products. Such notifications will be assessed by the
Commission in the light of this Regulation and on the
basis of the Community guidelines for State aid in the
agriculture and forestry sector 2007-2013. Notifications
pending on the date of entry into force of this Regulation
should be assessed first in the light of this Regulation
and, if the conditions it lays down are not fulfilled, then
on the basis of the Community guidelines for State aid in
the agriculture and forestry sector 2007-2013.

(30)

In the light of the Commission's experience in this area,
and in particular the frequency with which it is generally
necessary to revise State aid policy, it is appropriate to
limit the period of application of this Regulation. Should
this Regulation expire without being extended, aid
schemes already exempted by this Regulation should
continue to be exempt
for a further period of six
months, in order to give Member States time to adapt,

HAS ADOPTED THIS REGULATION:

CHAPTER 1

SCOPE, DEFINITIONS AND CONDITIONS

Article 1

Scope

1.
This Regulation shall apply to transparent aid granted to
small and medium-sized agricultural holdings (farms) active in
the primary production of agricultural products. Without
prejudice to Article 9,
it shall not apply to aid granted for
expenditure linked to the processing or marketing of agri-
cultural products.

2. Without prejudice to Article 16(1)(a), this Regulation shall
not apply to:

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

(28)

It is appropriate to lay down transitional provisions for
aid which was granted before the entry into force of this
Regulation and was not notified in breach of the obli-
gation in Article 88(3) of the Treaty.

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

goods.

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Article 2

Definitions

For the purpose of this Regulation:

1.

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

2.

‘agricultural product’ means:

7.

8.

‘quality product’
be defined pursuant
No 1698/2005;

is a product

fulfilling the criteria to
to Article 32 of Regulation (EC)

‘adverse climatic event which can be assimilated to a
natural disaster’ means weather conditions such as frost,
hail,
ice, rain or drought which destroy more than 30 %
of the average of annual production of a given farmer in
the preceding three-year period or a three-year average
based on the preceding five-year period, excluding the
highest and lowest entry;

(a)

the products listed in Annex I of the Treaty, except
fishery and acquaculture products covered by Council
Regulation (EC) No 104/2000 (9);

9.

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

(b) products falling under CN codes 4502, 4503 and 4504

(cork products);

10.

‘investment made
minimum standards’ means:

to comply with newly introduced

(c) products intended to imitate or substitute milk and
referred to in Article 3(2) of

milk products, as
Council Regulation (EEC) No 1898/87 (10);

(a)

3.

4.

‘processing of agricultural products’ means any operation
on an agricultural product resulting in a product which is
also an agricultural product, except on farm activities
necessary for preparing an animal or plant product for
the first sale;

‘marketing of agricultural products’ means holding or
display with a view to sale, offering for sale, delivery or
any other manner of placing on the market, except the first
sale by a primary producer to resellers or processors and
any activity preparing a product for such first sale; a sale by
a primary producer to final consumers shall be considered
as marketing if it takes place in separate premises reserved
for that purpose;

5.

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

6.

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

(9) OJ L 17, 21.1.2000, p. 22.
(10) OJ L 182, 3.7.1987, p. 36.

in the case of standards which do not provide for any
investments actually started not
transitional period,
more than two years after the date on which the
standards
vis-à-vis
operators; or

to be made

compulsory

are

(b) in the case of standards which provides for a transi-
investments actually started before the
to be made

tional period,
date on which the
compulsory vis-à-vis operators;

standards

are

11.

‘young farmers’ means producers of agricultural products
fulfilling the criteria laid down in Article 22 of Regulation
(EC) No 1698/2005;

12.

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

13.

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

14.

‘fallen stock’ means animals which have been killed by
euthanasia with or without definite diagnosis or have
died (including stillborn and unborn animals) on a farm
or any premise or during transport, but have not been
slaughtered for human consumption;

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15.

kits,

taking,

transporting,

‘TSE and BSE test costs’ means all costs, including those for
test
and
destruction of samples necessary for tests undertaken in
accordance with Annex X, Chapter C to Regulation (EC)
the
No 999/2001 of
Council (11);

the European Parliament and of

testing,

storing

16.

‘enterprises in difficulty’ means enterprises considered in
difficulty within the meaning of the Community guidelines
on State aid for
in
difficulty (12);

rescuing and restructuring firms

17.

‘replacement investment’ means an investment that simply
replaces an existing building or machine, or parts of it, by a
new up-to date building or machine, without expanding the
production capacity by at least 25 % or without funda-
mentally changing the nature of production or the tech-
nology involved. Neither the complete demolition of a farm
building at least 30 years old and replacement by an up-to
date building, nor the fundamental renovation of a farm
building, are considered as replacement investments. Reno-
vation is considered as fundamental when its cost amounts
to at least 50 % of the value of the new building.

18.

‘transparent aid’ means aid measures in which it is possible
to calculate precisely the gross grant equivalent as a
percentage of eligible expenditure ex ante without need
(for example measures
to undertake a risk assessment
which use grants,
rate subsidies, capped fiscal
measures).

interest

Article 3

Conditions for exemption

and shall be

Transparent individual aid outside any scheme, fulfilling
1.
all the conditions of this Regulation, shall be compatible with
the common market within the meaning of Article 87(3)(c) of
the Treaty
from the notification
requirement of Article 88(3) of the Treaty provided that the
summary information provided for in Article 20(1) has been
submitted and that the aid contains an express reference to this
Regulation, by citing its title and publication reference in the
Official Journal of the European Union.

exempt

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

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

(c)

the summary information provided for in Article 20(1) has
been submitted.

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

4.
Aid which does not fall within the scope of this Regu-
lation, or of other Regulations adopted pursuant to Article 1 of
Regulation (EC) No 994/98 or Regulations listed in Article 17
of
this Regulation, shall be notified to the Commission in
accordance with Article 88(3) of the Treaty. Such aid shall be
assessed in accordance with the criteria laid down in the
Community guidelines for State aid in the agriculture and
forestry sector 2007-2013.

CHAPTER 2

CATEGORIES OF AID

Article 4

Investment in agricultural holdings

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

2.

The gross aid intensity must not exceed:

(a) 50 % of eligible investments in less favoured areas or in
areas referred to in Article 36(a)(i), (ii) and (iii) of Regulation
(EC) No 1698/2005, as designated by Member States in
accordance with Articles 50 and 94 of that Regulation;

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

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

the conditions set out in this Regulation;

(11) OJ L 147, 31.5.2001, p. 1.
(12) OJ C 244, 1.10.2004, p. 2.

(c) 60 % of eligible investments in less-favoured areas or in
areas referred to in Article 36(a)(i), (ii) and (iii) of Regulation
(EC) No 1698/2005, as designated by Member States in
accordance with Articles 50 and 94 of that Regulation,
and 50 % in other regions,
investments
made by young farmers within five years of setting up;

in the case of

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(d) 75 % of eligible investments in the outermost regions and
the small Aegean Islands within the meaning of Council
Regulation (EEC) No 2019/93 (13);

(e) 75 % of eligible investments in regions referred to in point
(a) and 60 % in other regions where investments result in
extra costs relating to the protection and improvement of
the environment, the improvement of hygiene conditions of
livestock enterprises or the welfare of farm animals. This
increase may only be granted for investments which go
beyond the minimum Community requirements in force,
or for investments made to comply with newly introduced
minimum standards. The increase must be limited to the
extra eligible costs necessary and must not apply in the case
of investments which result in an increase in production
capacity.

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

7.
The aid must not be limited to specific agricultural
products and must therefore be open to all sectors of agri-
culture, unless a Member State excludes certain products
because of overcapacity or a lack of market outlets. Aid must
not be granted in respect of the following:

(a)

the purchase of production rights, animals and annual
plants;

(b) the planting of annual plants;

3.
The
objectives:

investment must pursue notably the

following

(c) drainage works or

works, unless such investment
previous water use of at least 25 %;

irrigation equipment and irrigation
leads to a reduction of

(a) reduction of production costs;

(b) improvement and re-deployment of production;

(c)

improvement in quality;

(d) simple replacement investments.

(d) preservation and improvement of the natural environment,
or the improvement of hygiene conditions or animal welfare
standards.

8.
Aid may be granted for a purchase of land other than land
for construction purposes costing up to 10 % of the eligible
expenses of the investment.

4.

The eligible expenses may include:

(a)

the construction, acquisition or improvement of immovable
property;

(b) the purchase or lease-purchase of machinery and equipment,
including computer software up to the market value of the
asset;

(c) general costs linked to expenditure under points (a) and (b),
such as architects, engineers and consultation fees, feasibility
studies, the acquisition of patents and licences.

9.
The maximum amount of aid granted to an individual
enterprise must not exceed EUR 400 000 over any period of
three fiscal years, or EUR 500 000 if the enterprise is situated in
a less favoured area or in an area referred to in Article 36(a)(i),
(ii) or (iii) of Regulation (EC) No 1698/2005, as designated by
Member States in accordance with Articles 50 and 94 of that
Regulation.

10.
The aid must not be granted in respect of the manu-
facture of products which imitate or substitute for milk and
milk products.

Article 5

Conservation of traditional landscapes and buildings

Costs connected with a leasing contract other than those listed
in point
lessor's
margin,
insurance,
charges, etc. are not eligible expenditure.

the first subparagraph, such as tax,
costs,

(b) of
interest

refinancing

overheads

Aid may only be granted to agricultural holdings which

5.
are not enterprises in difficulty.

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

(13) OJ L 184, 27.7.1993, p. 1.

Aid for

traditional

conservation of

and
1.
buildings
shall be compatible with the common market
within the meaning of Article 87(3)(c) of the Treaty and shall
be exempt from the notification requirement of Article 88(3) of
the Treaty if it complies with the provisions of paragraphs 2
and 3 of this Article.

landscapes

2.
Aid may be granted up to 100 % of the real costs incurred
as regards investments or capital works intended for the conser-
vation of non-productive heritage features located on agri-
cultural holdings, such as archaeological or historical features.
These costs may include reasonable compensation for the work
undertaken by the farmer himself, or his workers, up to a limit
of EUR 10 000 a year.

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Aid may be granted up to 60 %, or 75 % in less favoured
3.
areas or in areas referred to in Article 36(a)(i), (ii) or (iii) of
Regulation (EC) No 1698/2005, as designated by Member States
in accordance with Articles 50 and 94 of that Regulation, of the
real costs incurred as regards investments or capital works
intended for the conservation of heritage features of productive
assets on farms, such as farm buildings, provided that
the
investment does not entail any increase in the production
capacity of the farm.

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

Regulation (EC) No 1698/2005, as designated by Member States
in accordance with Articles 50 and 94 of that Regulation, of the
expenses relating to this increase. If the beneficiary is a young
farmer, this contribution shall be at least 55 % or 45 %.

Article 7

Aid for setting up of young farmers

Aid for the setting up of young farmers shall be compatible
with the common market within the meaning of Article
87(3)(c) of the Treaty and shall be exempt from the notification
requirement of Article 88(3) of the Treaty if the criteria set out
in Article 22 of Regulation (EC) No 1698/2005 are fulfilled.

Article 8

Aid for early retirement

Article 6

Relocation of farm buildings in the public interest

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

the

Aid for

relocation of

farm buildings

1.
shall be
compatible with the common market within the meaning of
Article 87(3)(c) of the Treaty and shall be exempt from the
notification requirement of Article 88(3) of the Treaty if it is
in the public interest and fulfils the conditions set out in para-
graphs 2, 3 and 4 of this Article.

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

Aid may be granted up to 100 % of the actual costs
simply
and re-erection of

2.
incurred where a relocation in the public interest
consists of
existing facilities.

the dismantling,

removal

3. Where the relocation in the public interest results in the
farmer benefiting from more modern facilities, the farmer must
contribute at least 60 %, or 50 % in less favoured areas or in
areas referred to in Article 36(a)(i), (ii) or (iii) of Regulation (EC)
No 1698/2005, as designated by Member States in accordance
with Articles 50 and 94 of that Regulation, of the increase in
the value of the facilities concerned after relocation. If the bene-
ficiary is a young farmer, this contribution shall be at least 55 %
or 45 % respectively.

(a)

the criteria set out in Article 23 of Regulation (EC) No
1698/2005 and any rules adopted by the Commission to
implement that Article must be fulfilled;

(b) the cessation of commercial
permanent and definitive.

farming activities must be

Article 9

Aid for producer groups

1.
Start-up aid for the constitution of producer groups or
producer associations shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty
from the notification requirement of
and shall be exempt
Article 88(3) of the Treaty if it complies with the provisions
of paragraphs 2 to 8 of this Article.

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

(a) producer groups or producer associations involved in the

production of agricultural products; and/or

4. Where the relocation in the public interest results in an
increase in production capacity, the contribution from the bene-
ficiary must be at least equal to 60 %, or 50 % in less favoured
areas or in areas referred to in Article 36(a)(i), (ii) or (iii) of

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

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The internal rules of the producer group or association must
provide an obligation on members to market production in
accordance with the rules on supply and placing on the
market drawn up by the group or association. Those rules
may permit a proportion of the production to be marketed
directly by the producer. They must require producers joining
the group or association to remain members for at least three
years and to give at least 12 months notice of withdrawal. In
addition they must provide common rules on production,
in
particular relating to product quality, or use of organic practices
or other practices designed to protect
environment,
common rules for placing goods on the market and rules on
product information, with particular regard to harvesting and
availability. However, producers must remain responsible for
managing their holdings. The agreements concluded in the
framework of the producer group or association must comply
fully with all
in
particular Articles 81 and 82 of the Treaty.

relevant provisions of competition law,

the

the

acquisition of office

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

equipment,

4.
The aid must not be paid in respect of costs incurred after
the fifth year, or paid following the seventh year after recog-
nition of the producer organisation. This is without prejudice to
grant aid towards eligible expenses limited to and resulting from
a year-on-year increase in turnover of a beneficiary of at least
30 % where this is due to the accession of new members and/or
the coverage of new products.

The aid must not be granted to production organisations
5.
such as companies or co-operatives, the objective of which is
the management of one or more agricultural holdings and
which are therefore in effect single producers.

Article 10

Aid in respect of animal and plant diseases and pest
infestations

the costs of health checks,

and plant protection products,

Aid to compensate farmers for the costs of prevention and
1.
infestations
eradication of animal or plant diseases or pest
incurred for
tests and other
screening measures, purchase and administration of vaccines,
and
medicines
destruction costs of animals and costs of destruction of crops
shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt
from the notification requirement of Article 88(3) of the Treaty
if it fulfils the following conditions and the conditions set out in
paragraphs 4 to 8 of this Article:

slaughter

(a)

the gross aid intensity must not exceed 100 %;

(b) the aid shall be granted in kind by means of subsidised
services and must not involve direct payments of money
to producers.

2.
Aid to compensate farmers for losses caused by animal or
plant diseases or pest infestations shall be compatible with the
common market within the meaning of Article 87(3)(c) of the
Treaty and shall be exempt from the notification requirement of
Article 88(3) of the Treaty if it fulfils the following conditions
and the conditions set out in paragraphs 4 to 8 of this Article:

(a) compensation must be calculated only in relation to:

(i) the market value of animals killed or plants destroyed
by the disease or pest infestation or of animals killed or
a
plants destroyed by public order
compulsory
eradication
public
programme;

as part of
or

prevention

(ii) income losses due to quarantine obligations and diffi-

culties in restocking or replanting;

The aid must not be granted to other agricultural asso-
6.
ciations, which undertake tasks at
the level of agricultural
production, such as mutual support and farm relief and farm
management services, in the members' holdings without being
involved in the joint adaptation of supply to the market.

(b) the gross aid intensity must not exceed 100 %;

(c)

the aid must be limited to losses caused by diseases for
which an outbreak has been formally recognised by public
authorities.

7.
The total amount of aid granted to a producer group or
association under this Article must not exceed EUR 400 000.

The maximum amount of costs or loss eligible for aid

3.
pursuant to paragraphs 1 and 2 must be reduced by:

8.
The aid must not be granted to producer groups or asso-
ciations the objectives of which are incompatible with a Council
Regulation setting up a common market organisation.

(b) costs not

incurred because of

the disease, which would

otherwise have been incurred.

(a) any amount received under insurance schemes; and

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Payments must be made in relation to diseases or pests for
4.
which Community or national provisions exist, whether laid
down by law, regulation or administrative action. Payments
thus be made as part of a public programme at
must
the prevention,
regional
Community, national or
control or eradication of the disease or pest concerned. The
diseases or pest infestation must be clearly identified in the
programme, which must also contain a description of
the
measures concerned.

level

for

(a)

the result of multiplying the quantity of product produced
in the year of the adverse climatic event by the average
selling price obtained during that year;

(b) the result of multiplying the average annual quantity
produced in the preceding three-year period (or a three-
year average based on the preceding five-year period,
excluding the highest and lowest entry) by the average
selling price obtained.

5.
The aid must not relate to a disease in respect of which
Community legislation provides for specific charges for control
measures.

The amount thus eligible for aid may be increased by other
costs
specifically incurred by the farmer because of non-
harvesting due to the adverse event.

The aid must not relate to measures in respect of which
6.
Community legislation provides that the cost of such measures
is to be borne by the agricultural holding, unless the cost of
such aid measures is entirely offset by compulsory charges on
producers.

7.
As regards animal diseases, the aid must be granted in
respect of diseases mentioned in the list of animal diseases
established by the World Organisation for Animal Health
and/or in the Annex to Council Decision 90/424/EEC (14).

8.
Aid schemes must be introduced within three years
following the occurrence of the expense or loss. Aid must be
paid out within four years following the occurrence.

Article 11

Aid for losses due to adverse climatic events

1.
Aid to compensate farmers for losses of plants or animals
or farm buildings caused by adverse climatic events which can
be assimilated to natural disasters shall be compatible with the
common market within the meaning of Article 87(3)(c) of the
Treaty and shall be exempt from the notification requirement of
Article 88(3) of the Treaty if it fulfils the conditions set out in
paragraphs 2 to 6, 9 and 10 of this Article as far as plants or
animals are concerned, and paragraphs 3 to 8 and 10 of this
Article as far as farm buildings are concerned.

2.
Gross aid intensity must not exceed 80 %, and 90 % in
less favoured areas or in areas referred to in Article 36(a)(i), (ii)
or (iii) of Regulation (EC) No 1698/2005, as designated by
Member States in accordance with Articles 50 and 94 of that
Regulation, of the reduction in income from the sale of the
product
event. That
reduction in income shall be calculated by subtracting:

resulting from the

climatic

adverse

(14) OJ L 224, 18.8.1990, p. 19.

The maximum amount of loss eligible for aid pursuant to

3.
paragraph 1 must be reduced by:

(a) any amount received under insurance schemes; and

(b) costs not incurred because of the adverse climatic event.

The calculation of loss must be made at the level of the

4.
individual holding.

Aid must be paid directly to the farmer concerned or to a
5.
producer organisation of which the farmer is a member. If the
aid is paid to a producer organisation, the amount of aid must
not exceed the amount of aid that could be granted to the
farmer.

6.
Compensation for damages to farm buildings and farm
equipment caused by adverse climatic events which can be
assimilated to natural disasters must not exceed gross aid
intensity of 80 %, and 90 % in less favoured areas or in areas
referred to in Article 36(a)(i), (ii) or (iii) of Regulation (EC) No
1698/2005, as designated by Member States in accordance with
Articles 50 and 94 of that Regulation.

7.
The adverse climatic event which can be assimilated to a
natural disaster must be formally recognised as such by public
authorities.

From 1 January 2010, compensation offered must be
8.
reduced by 50 % unless it is given to farmers who have taken
out insurance covering at least 50 % of their average annual
production or production-related income and the statistically
most frequent climatic risks in the Member State or region
concerned.

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From 1 January 2011, aid for losses caused by drought
9.
may be paid only by a Member State which has fully imple-
mented Article 9 of Directive 2000/60/EC of the European
in respect of agriculture,
Parliament and of
and ensures that the costs of water services provided to agri-
culture are recovered through an adequate contribution from
that sector.

the Council (15)

Aid schemes must be introduced within three years
10.
following the occurrence of the expense or loss. Aid must be
paid out within four years following the occurrence.

Article 12

Aid towards the payment of insurance premiums

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

2.

The gross aid intensity must not exceed:

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

(b) 50 % of the cost of insurance premiums, where the policy

specifies that it provides cover against:

(i) losses referred to in point (a) and against other losses

caused by climatic events; and/or

88(3) of the Treaty if it is granted towards and limited to the
legal and administrative costs,
including survey costs, up to
100 % of actual costs incurred.

Article 14

Aid to encourage the production of quality agricultural
products

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

2.
Aid may be granted to cover the costs of the following
service activities, insofar as they are related to the development
of quality agricultural products:

(a) up to 100 % of

the costs of market research activities,
including aid granted for
product conception and design,
the preparation of applications for recognition of geogra-
phical indications and designations of origin or certificates
of
in accordance with the relevant
specific character
Community regulations;

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

(ii) losses caused by animal or plant diseases or pest infes-

tations.

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

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

3.
The aid must not constitute a barrier to the operation of
the internal market for insurance services. The aid must not be
limited to insurance provided by a single insurance company or
group of companies, or be made subject to the condition that
the insurance contract be taken out with a company established
in the Member State concerned.

Article 13

Aid for land reparcelling

Aid for land reparcelling shall be compatible with the common
market within the meaning of Article 87(3)(c) of the Treaty and
shall be exempt from the notification requirement of Article

(15) OJ L 327, 22.12.2000, p. 1.

(d) up to 100 % of the costs of the charges levied by recognised
the initial certification of quality

for

certifying bodies
assurance and similar systems;

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

(f) up to the amounts laid down in the Annex to Regulation
support concerning measures

(EC) No 1698/2005 for
referred to in Article 32 of that Regulation.

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The aid may be granted only in respect of costs of services
3.
provided by third parties and/or controls undertaken by or on
behalf of third parties, such as the competent regulatory autho-
rities, or bodies acting on their behalf, or
independent
organisms responsible for the control and supervision of the
use of geographical
indications and designations of origin,
organic labels, or quality labels, provided these denominations
and labels are in conformity with Community legislation. The
aid must not be granted towards expenditure for investment.

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

(d) concerning the organisation of and participation in forums
to share knowledge between businesses, competitions, exhi-
bitions and fairs:

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

5. With the exception of the aid referred to in paragraph 2(f),
the aid shall be granted in kind by means of subsidised services
and must not involve direct payments of money to producers.

(i) participation fees;

(ii) travel costs;

(iii) costs of publications;

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

Article 15

Provision of technical support in the agricultural sector

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

2.

Aid may be granted to cover the following eligible costs:

(a) concerning education and training of

farmers and farm

workers:

(i) costs of organising the training programme;

(ii) travel and subsistence expenses of participants;

(iii) cost of the provision of replacement services during the

absence of the farmer or the farm worker;

(iv) the rent of exhibition premises;

(v) symbolic prizes awarded in the framework of compe-
titions, up to a value of EUR 250 per prize and winner;

(e) provided that individual companies, brands or origin are not

named:

(i) the vulgarisation of scientific knowledge;

(ii) factual information on quality systems open to products
from other countries, on generic products and on the
nutritional benefits of generic products and suggested
uses for them.

Aid may also be granted to cover the costs referred to in
point (e) if the origin of products covered by Council Regu-
lation (EC) No 510/2006 (16) and by Articles 54 to 58 of
Council Regulation (EC) No 1493/1999 (17)
is indicated,
to the origin correspond
the references
provided that
exactly to those references which have been registered by
the Community.

such as catalogues or websites presenting
(f) publications
factual
information about producers from a given region
or producers of a given product, provided the information
and presentation is neutral and that all producers concerned
have equal opportunities to be represented in the publi-
cation.

3.
The aid may cover 100 % of the costs listed in para-
graph 2. The aid must be granted in kind by means of
subsidised services and must not involve direct payments of
money to producers.

(b) concerning farm replacement services, the actual costs of
the farmer's partner, or a

the replacement of a farmer,
farm worker, during illness and holidays;

(16) OJ L 93, 31.3.2006, p. 12.
(17) OJ L 179, 14.7.1999, p. 1.

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technical

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

support

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

testing, comprising test-kit,

transporting,

taking,

Article 16

Support for the livestock sector

1.
The following aid to enterprises active in the livestock
sector shall be compatible with the common market within
the meaning of Article 87(3)(c) of
the Treaty and shall be
exempt from the notification requirement of Article 88(3) of
the Treaty:

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

The exemption provided for in paragraph 1(d), (e), (f) and
2.
(g) shall be conditional upon the existence of a consistent
programme monitoring and ensuring safe disposal of all fallen
stock in the Member State. In order to facilitate administration
of such State aid, payment may be made to economic operators
active downstream from the farmer, providing services linked to
the removal and/or destruction of
if it can be
properly demonstrated that the full amount of State aid paid
is passed on to the farmer.

fallen stock,

The aid shall not involve direct payments of money to

3.
producers.

Article 17

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

Aid provided for in certain Council Regulations

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

(c) until 31 December 2011, aid at a rate of up to 40 % for the
introduction at farm level of innovative animal breeding
techniques or practices, with the
costs
relating to the introduction or performance of artificial inse-
mination;

exception of

(d) aid at a rate of up to 100 % of costs of removal of fallen
stock, and 75 % of
such
carcasses; alternatively, aid up to an equivalent amount
towards
for
insurance covering the costs of removal and destruction
of fallen stock;

the costs of premiums paid by farmers

the costs of destruction of

(a) aid granted by Member States fulfilling all the conditions
laid down in Council Regulation (EC) No 1255/1999 (18), in
particular Article 14(2) thereof;

(b) aid granted by Member States fulfilling all the conditions
laid down in Council Regulation (EC) No 1782/2003 (19), in
particular Article 87, Article 107(3) and the first subpar-
agraph of Article 125(5) thereof;

(c) aid granted by Member States in accordance with Article

15(6) of Council Regulation (EC) No 2200/96 (20).

(e) aid at a rate of up to 100 % for costs of removal and
destruction of carcasses where the aid is financed through
fees or through compulsory contributions destined for the
financing of the destruction of such carcasses, provided that
such fees or contributions are limited to and directly
imposed on the meat sector;

CHAPTER 3

COMMON AND FINAL PROVISIONS

Article 18

Steps preceding grant of aid

(f) aid of 100 % for the costs of removal and destruction of
fallen stock where there is an obligation to perform TSE
tests on the fallen stock concerned;

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

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

(18) OJ L 160, 26.6.1999, p. 48.
(19) OJ L 270, 21.10.2003, p. 1.
(20) OJ L 297, 21.11.1996, p. 1.

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If the aid scheme creates an automatic right to receive the aid,
requiring no further action at administrative level, the aid itself
shall only be granted in respect of activities undertaken or
services received after the aid scheme has been set up and
published in accordance with this Regulation.

Aid exempted by this Regulation shall not be cumulated
3.
with de minimis support within the meaning of Regulation (EC)
No 1860/2004 in respect of the same eligible expenditure or
investment project, if such cumulation would result in an aid
intensity exceeding that fixed by this Regulation.

If the aid scheme requires an application to be submitted to the
the aid itself shall only be
competent authority concerned,
granted in respect of activities undertaken or services received
after the following conditions have been fulfilled:

Article 20

Transparency and monitoring

(a)

the aid scheme must have been set up and published in
accordance with this Regulation;

(b) an application for

the aid must have been properly

submitted to the competent authority concerned;

(c)

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

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

3.

This Article shall not apply to aid covered by Article 17.

Article 19

Cumulation

The aid ceilings fixed in Articles 4 to 16 shall apply
1.
regardless of whether the support
for the aided project or
activity is financed entirely from State resources or is partly
financed by the Community.

2.
Aid exempted by this Regulation shall not be cumulated
with any other State aid within the meaning of Article 87(1) of
the Treaty, or financial contributions provided by Member
States, including those covered by the second subparagraph of
Article 88(1) of Regulation (EC) No 1698/2005, or financial
contributions by the Community in relation to the same
eligible costs,
in an aid
intensity exceeding the maximum laid down in this Regulation.

such cumulation would result

if

1.
At the latest 10 working days before the entry into force
of an aid scheme exempted by this Regulation, or the granting
individual aid exempted by this Regulation outside any
of
forward to the Commission,
scheme, Member States shall
with a view to its publication in the Official
the
European Union, a summary of the information regarding such
aid scheme or individual aid in the form laid down in Annex I.
shall be provided in computerised form. Within 10
This
working days of receipt of
the Commission
will send a notice of receipt with an identification number
and publish the summary on the internet.

that summary,

Journal of

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

3. Member States shall compile a report on the application
of this Regulation in respect of each whole or part calendar year
during which this Regulation applies, in the form laid down in
Annex II. This report may be integrated into the annual report
to be submitted by Member States pursuant to Article 21(1) of
Council Regulation (EC) No 659/1999 (21), and shall be
submitted by 30 June of the year following the calendar year
covered by the report. By the same date, the Member State shall
submit a separate report relating to payments made under
Articles 10 and 11 of this Regulation, describing the amounts
paid in that calendar year, the conditions for payment, the
diseases concerned under Article 10 and, in relation to Article
11, the appropriate meteorological information proofing type,
timing, relative magnitude and location of the climatic events
and on its consequences on the production for which compen-
sation has been granted.

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

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As soon as an aid scheme exempted by this Regulation
4.
enters into force, or an individual aid exempted by this Regu-
lation is granted outside an aid scheme, Member States shall
publish on the internet the full text of such aid scheme, or the
criteria and conditions under which such individual aid is
granted.

The address of the web-sites including a direct link to the text
the scheme shall be communicated to the Commission
of
together with the summary of the information regarding the
shall also be
aid required pursuant
contained in the
to
paragraph 3.

to paragraph 1.
report

submitted pursuant

annual

It

5.

Paragraph 1 shall not apply to aid covered by Article 17.

Article 21

Amendment of Regulation (EC) No 70/2001

Regulation (EC) No 70/2001 is amended as follows:

1. In Article 1(2), point (a) is replaced by the following:

‘(a)

to fishery and acquaculture products covered by Council
Regulation (EC) No 104/2000 (*) and to activities linked
to the primary production (farming) of agricultural
products;
and marketing of
products intended to imitate or substitute for milk and
milk products;

to the manufacture

___________
(*) OJ L 17, 21.1.2000, p. 22.’;

2. Article 2 is amended as follows:

the following points (k) to (n) are added:

‘(k)

“agricultural product” means:

(i) the products listed in Annex I of the Treaty, except
fishery and acquaculture products covered by Regu-
lation (EC) No 104/2000;

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

4505 (cork products);

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

(l)

“products intended to imitate or substitute milk and
milk products” means products which could be
confused with milk and/or milk products but whose
composition differs from such products in that they
contain fat and/or protein of non-milk origin with or
without protein derived from milk (“products other than

milk products” as referred to in Article 3(2) of Regu-
lation (EEC) No 1898/87);

(m) “processing

of

products” means

agricultural

any
operation on an agricultural product resulting in a
product which is also an agricultural product, except
on farm activities necessary for preparing an animal
or plant product for the first sale;

(n)

sale by a primary producer

“marketing of agricultural products” means holding or
display with a view to sale, offering for sale, delivery or
any other manner of placing on the market, except the
to resellers or
first
processors and any activity preparing a product
for
such first sale; a sale by a primary producer to final
consumers shall be considered as marketing if it takes
place in separate premises reserved for that purpose.

___________
(*) OJ L 182, 3.7.1987, p. 36.’;

3. In Article 4, the following paragraph 7 is added:

‘7. Where the investment concerns the processing and
marketing of agricultural products listed in Annex I to the
Treaty, the gross aid intensity may not exceed:

(a) 75 % of eligible investments in the outermost regions;

(b) 65 % of eligible investments in the smaller Aegean
Islands within the meaning of Council Regulation (EEC)
No 2019/93 (*);

(c) 50 % of eligible investments in regions eligible under

Article 87(3)(a) EC;

(d) 40 % of eligible investments in all other regions.

___________
(*) OJ L 184, 27.7.1993, p. 1.’

4. In Annex II, the following is added after ‘Other manufac-

turing’, at the same level as ‘All manufacturing’:

‘ Processing and marketing of agricultural products (*)
___________
(*) As defined in Article 2(k) of this Regulation.’

Article 22

Transitional measures

Aid schemes exempted under Regulation (EC) No 1/2004 which
fulfil all the conditions of this Regulation shall continue to be
exempted until the date mentioned in Article 23(1) of this
Regulation

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Article 23

Entry into force and applicability

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

It shall apply from 1 January 2007 until 31 December 2013.

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

Individual aid and aid schemes implemented before the date of
entry into force of this Regulation and aid granted under those
schemes in the absence of a Commission authorisation and in
breach of the notification requirement of Article 88(3) of the
Treaty shall be compatible with the common market within the
meaning of Article 87(3)(c) of the Treaty and shall be exempt if
they fulfil the conditions laid down in Article 3 of this Regu-
lation, except the requirements in paragraph 1 and paragraph 2
(b) and (c) of that Article that express reference be made to this
Regulation, and that the summary provided for in Article 20(1)
has been submitted before granting aid. Any aid which does not
fulfil those conditions will be assessed by the Commission in
accordance with the relevant frameworks, guidelines, commu-
nications and notices.

3.
Aid schemes exempted under this Regulation shall remain
exempt for a period of six months following the date of expiry
of this Regulation.

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

Done at Brussels, 15 December 2006.

For the Commission

Mariann FISCHER BOEL
Member of the Commission

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ANNEX I

Form of summary information to be provided whenever an aid scheme exempted by this Regulation is
implemented and whenever an individual aid exempted by this Regulation is granted outside any aid scheme

Summary information on State aid granted in conformity with Commission Regulation (EC) No 1857/2006

Member State

Region (Indicate the name of the region if the aid is granted by a subcentral authority).

Title of aid scheme or name of company receiving an individual aid (Indicate the name of the aid scheme or in case
of individual aid, the name of the beneficiary).

Legal basis (Indicate the precise national legal reference for the aid scheme or for the individual aid).

Annual expenditure planned under the scheme or overall amount of individual aid granted to the company
(Amounts are to be given in euros or, if applicable, national currency. In case of an aid scheme, indicate the annual
overall amount of the budget appropriation(s) or the estimated tax loss per year for all aid instruments contained in the
scheme. In case of an individual aid award: indicate the overall aid amount/tax loss. If appropriate, indicate also for how
many years the aid will be paid in instalments or over how many years tax losses will be incurred. For guarantees in both
cases, indicate the (maximum) amount of loans guaranteed).

Maximum aid intensity (Indicate the maximum aid intensity or the maximum aid amount per eligible item).

Date of implementation (Indicate the date from which aid may be granted under the scheme or when the individual aid
is granted).

Duration of scheme or individual aid award (Indicate the date (year and month) until which aid may be granted under
the scheme or in case of an individual aid and if appropriate the expected date (year and month) of the last instalment to
be paid).

Objective of aid (It is understood that the primary objective is aid to SME. Indicate the further (secondary) objectives
pursued. Indicate which one of (Articles(s) 4 to 17) is used and the eligible costs covered by the scheme or individual aid.

Sector(s) concerned (Indicate the subsectors by mentioning the type of animal production (e.g. pig/poultry) or type of
plant production (e.g. apple/tomato) concerned.

Name and address of the granting authority

Web-address (Indicate the internet address where the full text of the scheme or the criteria and conditions under which
individual aid is granted outside of an aid scheme can be found).

Other information.

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ANNEX II

Form of the periodic report to be provided to the Commission

Annual reporting format on aid schemes exempted under a group exemption regulation adopted pursuant to
Article 1 of Council Regulation (EC) No 994/98

Member States are required to use the format below for their reporting obligations to the Commission under group
exemption regulations adopted on the basis of Regulation (EC) No 994/98.

The reports shall be provided in computerised form.

Information required for all aid schemes exempted under group exemption regulations adopted pursuant to Article 1 of
Regulation (EC) No 994/98.

1.

2.

3.

Title of aid scheme

Commission exemption regulation applicable

Expenditure

(Separate figures have to be provided for each aid instrument within a scheme or individual aid (e.g. grant, soft loans,
etc.)). The figures have to be expressed in euros or, if applicable, national currency. In the case of tax expenditure,
annual tax losses have to be reported. If precise figures are not available, such losses may be estimated.

These expenditure figures should be provided on the following basis.

For the year under review indicate separately for each aid instrument within the scheme (e.g. grant, soft loan,
guarantee, etc.):

3.1. amounts committed, (estimated) tax losses or other revenue forgone, data on guarantees, etc. for new assisted
projects. In the case of guarantee schemes, the total amount of new guarantees handed out should be provided;

3.2. actual payments, (estimated) tax losses or other revenue forgone, data on guarantees, etc. for new and current
projects. In the case of guarantee schemes, the following should be provided: total amount of outstanding guar-
antees, premium income, recoveries, indemnities paid out, operating result of the scheme under the year under
review;

3.3. number of assisted projects and/or enterprises;

3.4. [Leave blank]

3.5. estimated overall amount of:

— investment aided,

— expenditure for conservation of traditional landscapes and buildings aided,

— expenditure for relocation of farm buildings in the public interest aided,

— aid granted for setting up of young farmers,

— aid granted for early retirement,

— expenditure of producer groups aided,

— expenditure for diseases,

— expenditure for bad weather compensation,

— expenditure for insurance premiums aided,

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— aid granted for land reparcelling,

— aid granted to encourage the production of quality agricultural products,

— expenditure for technical support aided,

— expenditure for support for the animal sector;

3.6. regional breakdown of amounts under points 3.1. by less favoured areas or by areas referred to in Article 36(a)(i), (ii)

and (iii) of Council Regulation (EC) No 1698/2005 and other areas;

3.7. sectoral breakdown of amounts under 3.1. by beneficiaries’ sectors of activity (if more than one sector is covered,

indicate the share of each):

— type of animal product,

— type of plant product.

4. Other information and remarks.