Council Regulation (EC) No 378/2007 of 27 March 2007 laying down rules for voluntary modulation of direct payments provided for in Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers, and amending Regulation (EC) No 1290/2005
Date: 2007-03-27
Institutions: Council of the European Union
Subjects: aid system, aid to agriculture, common agricultural policy, principle of additionality, regional aid, rural development

5.4.2007

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Official Journal of the European Union

L 95/1

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 378/2007

of 27 March 2007

laying down rules for voluntary modulation of direct payments provided for in Regulation (EC)
No 1782/2003 establishing common rules for direct support schemes under the common
and amending
agricultural policy and establishing certain support

schemes

farmers,

for

Regulation (EC) No 1290/2005

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 37 thereof,

establishing the European

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

Whereas:

(1)

Certain Member States are facing particular difficulties in
financing their rural development programmes pursuant
to Council Regulation (EC) No 1698/2005 of 20
September 2005 on support for rural development by
the European Agricultural Fund for Rural Development
(EAFRD) (1). With a view to strengthening their rural
development policy,
these Member States should be
given the possibility to apply a system of voluntary
modulation. This possibility should be offered to those
Member States where voluntary modulation is already
to Commission Regulation (EC)
applied according
No 1655/2004 of 22 September 2004 laying down
rules for the transition from the optional modulation
system established by Article 4 of Council Regulation
(EC) No 1259/1999 to the mandatory modulation
system established by Council Regulation (EC) No
1782/2003 (2), or which were granted a derogation by
virtue of Article 70(4a) of Regulation (EC) No
1698/2005
co-finance
Community support. The voluntary modulation should
take the form of reducing direct payments within the

requirement

from the

to

the
pursuant

meaning of Article 2(d) of Regulation (EC) No
1782/2003 (3), using the funds corresponding to that
rural development
financing of
reduction for
programmes
(EC) No
to
1698/2005. Reductions of direct payments applied in
respect of voluntary modulation should be additional
to those resulting from the application of compulsory
modulation provided for in Article 10 of Regulation
(EC) No 1782/2003.

Regulation

(2)

(3)

In order to facilitate its administrative implementation,
the rules applicable to voluntary modulation should be
aligned to those applicable to compulsory modulation
under Article 10 of Regulation (EC) No 1782/2003,
including the calculation basis.

In order to take account of the particular situation of
small farmers, an additional amount of aid should be
granted in case of application of voluntary modulation
as is the case for compulsory modulation. That additional
amount should be equal to the amount resulting from
the application of voluntary modulation to the first EUR
5 000 of direct payments, within ceilings to be fixed by
the Commission.

(4) With regard to Member States where voluntary modu-
lation is already used,
the new voluntary modulation
arrangements laid down in this Regulation should, to
refrain from deviating from the
the extent possible,
existing mechanism so as to avoid triggering unnecessary
administrative burden,
interfering with implementing
arrangements that have been in place for several years
farmers have adapted to in practice and in
and that
economic terms. Therefore, it appears to be appropriate
that Member States applying voluntary modulation upon

(1) OJ L 277, 21.10.2005, p. 1. Regulation as last amended by Regu-

lation (EC) No 2012/2006 (OJ L 384, 29.12.2006, p. 8).

(2) OJ L 298, 23.9.2004, p. 3.

(3) OJ L 270, 21.10.2003, p. 1. Regulation as last amended by Regu-

lation (EC) No 2013/2006 (OJ L 384, 29.12.2006, p. 13).

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5.4.2007

system, whilst

the entry into force of this Regulation be given the right
to maintain certain well-established patterns of
their
avoiding unjustified unequal
current
treatment between farmers. Moreover,
to ensure the
new arrangements to be consistent with the implemen-
tation patterns of the single payment scheme, the appli-
cation of regionally differentiated voluntary modulation
rates should only be available to Member States which
apply the single payment scheme at regional
level as
foreseen in Article 58 of Regulation (EC) No 1782/2003.

The use of the funds resulting from the application of
voluntary modulation may not be subject to the ceilings
of the EAFRD contribution pursuant to Regulation (EC)
No 1698/2005. Derogation from that Regulation should
therefore be provided for. The prefinancing arrangements
applicable to the EAFRD pursuant to Council Regulation
(EC) No 1290/2005 of 21 June 2005 on the financing of
the common agricultural policy (1) should not apply to
those funds.

in particular as
the farmers subject

In order to take informed decisions on the application of
voluntary modulation, Member States should carry out
impact of such
thorough assessments of the potential
economic
the
regards
modulation,
situation of
to such modulation
and the effect on their comparative position in the agri-
cultural sector. The impact of
the implementation of
voluntary modulation should be closely monitored by
the Member States applying voluntary modulation. The
Commission should be informed about
the impact
assessment and the monitoring results with a view to
any further policy developments.

defining the annual ceiling for the expenditure financed
by the European Agricultural Guarantee Fund and the
possibility to adopt detailed rules concerning in particular
voluntary modulation should be included in Regulation
(EC) No 1290/2005.

(10)

Regulation (EC) No 1290/2005 should therefore be
amended accordingly,

HAS ADOPTED THIS REGULATION:

CHAPTER I

VOLUNTARY MODULATION

Article 1

1. Without prejudice to Article 10 of Regulation (EC)
No 1782/2003, Member States:

(a) where at the entry into force of this Regulation the system
of additional reductions of direct payments referred to in
Article 1 of Regulation (EC) No 1655/2004 is applied; or

(b) which were granted a derogation by virtue of Article 70(4a)
of Regulation (EC) No 1698/2005 from the requirement to
co-finance Community support,

Voluntary modulation should be considered in the
broader context of Community funding for rural devel-
opment.
Its contribution should be analysed among
others in the light of Member States' impact assessments.
the Commission will submit
Based on this analysis,
before the end of 2008 a report
to the European
Parliament and to the Council presenting the experience
gained so far with its implementation.

may apply a reduction, hereinafter referred to as ‘voluntary
modulation’, to all the amounts of direct payments within the
meaning of Article 2(d) of Regulation (EC) No 1782/2003 to be
granted in their territory in a given calendar year within the
meaning of Article 2(e) of that Regulation, during the period
2007 to 2012.

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 Commission (2).

The net amounts

they were generated as Community support

2.
resulting from the application of
voluntary modulation shall be available in the Member State
where
for
measures under rural development programming financed by
in
the European Agricultural Fund for Rural Development
accordance with Regulation (EC) No 1698/2005.

(5)

(6)

(7)

(8)

(9)

The amounts resulting from the application of voluntary
modulation should be taken into consideration when

(1) OJ L 209, 11.8.2005, p. 1. Regulation as amended by Regulation

(EC) No 320/2006 (OJ L 58, 28.2.2006, p. 42).

(2) OJ L 184, 17.7.1999, p. 23. Decision as amended by Decision

2006/512/EC (OJ L 200, 22.7.2006, p. 11).

3.
Reductions under voluntary modulation shall be made on
the same basis of calculation as that applicable to modulation
pursuant to Article 10 of Regulation (EC) No 1782/2003. Addi-
tional amounts granted to farmers under Article 12 of that
Regulation shall not be subject to such reductions.

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farmers

In case of application of reductions under voluntary modu-
lation,
receiving direct payments under Regulation
(EC) No 1782/2003 shall be granted an additional amount of
aid which shall be equal to the amount resulting from the
first
application of
EUR 5 000 or
less of direct payments. That additional
amount shall not be subject to the reductions under voluntary
modulation or to modulation pursuant to Article 10 of Regu-
lation (EC) No 1782/2003.

the percentage of

reduction to the

The total additional amounts of aid resulting from the appli-
cation of the second subparagraph which may be granted in a
Member State in a calendar year shall not be higher than the
ceilings to be fixed by the Commission in accordance with the
procedure referred to in Article 144(2) of Regulation (EC) No
1782/2003. Where necessary, Member States shall proceed to a
linear percentage adjustment of additional amounts of aid in
order to respect those ceilings.

Each Member State shall apply a single rate of voluntary
4.
modulation per calendar year. The rate may be subject
to
progressive modifications according to pre-established steps.
The maximum rate of reduction shall be 20 %.

Article 2

1. Within two months of the entry into force of this Regu-
lation, Member States shall decide on and communicate to the
Commission the annual rate of voluntary modulation that will
apply for the period 2007 to 2012.

2. Member States intending to apply voluntary modulation
shall conduct an assessment in order to gauge the impact of the
in particular on the
application of voluntary modulation,
taking into
economic situation of
account
treatment
between farmers.

the need to avoid unjustified unequal

the farmers concerned,

Member States intending to apply rates that are regionally
differentiated according to Article 3(1) shall also gauge the
impact of such differentiated rates,
the
need to avoid unjustified unequal treatment between farmers.

taking into account

The Member States concerned shall
impact
assessments to the Commission together with the communi-
cation referred to in paragraph 1.

transmit

their

Article 3

Any Member State where at the entry into force of this
1.
reductions of direct
Regulation the system of additional
payments
referred to in Article 1 of Regulation (EC)
No 1655/2004 is applied and the single payment scheme is
applied at regional level as foreseen in Article 58 of Regulation
(EC) No 1782/2003 may, for the period 2007 to 2012 choose:

(b) by derogation from Article 1(4), to apply rates that are
regionally differentiated according to objective criteria. The
maximum rate for any of the regions of each Member State
concerned shall be 20 %.

2.
By derogation from Article 2(1), any Member State
applying regionally differentiated rates of voluntary modulation
as provided for in paragraph 1 of this Article shall submit to the
Commission, within two months of the entry into force of this
Regulation, for the period 2007 to 2012, the following infor-
mation subject to examination by the Commission:

(a)

the annual rates of voluntary modulation for each region
and for the whole territory;

(b) the annual total amounts to be reduced under voluntary

modulation;

(c) where appropriate,

total additional amounts
needed to cover the additional amount of aid referred to
in the second subparagraph of Article 1(3);

the annual

(d) statistical and other supportive data used to establish the

amounts referred to in points (b) and (c).

shall

States

If necessary, Member

3.
to the
Commission an update of the amounts referred to in para-
graphs 2(b) and (c). That updated data shall be sent to the
Commission before 31 December of the year preceding the
calendar year
to within the
meaning of Article 2(e) of Regulation (EC) No 1782/2003.

to which the amounts

submit

refer

If

concerning

clarifications

4.
in
accordance with paragraphs 2 and 3 are requested by the
Commission, Member States shall reply to this request within
one month.

submitted

data

the

Article 4

The net amounts

1.
resulting from the application of
voluntary modulation shall be fixed by the Commission based
on:

(a) a calculation in case of a single national rate of voluntary

modulation;

(b) in the case of Member States applying regionally differen-
tiated rates, the amounts communicated by the Member
States in their application as provided for in Article 3(2)
or the updated amounts as provided for in Article 3(3).

(a) by derogation from Article 1(3) not to apply the provisions
of the second subparagraph of that paragraph; and/or

Those net amounts shall be added to the annual breakdown by
Member State referred to in Article 69(4) and (5) of Regulation
(EC) No 1698/2005.

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to apply the ceilings
2. Member States may decide not
referred to in Article 70(3) of Regulation (EC) No 1698/2005
to the net amounts added to the annual breakdown by Member
State pursuant to paragraph 1 of this Article.

Article 25 of Regulation (EC) No 1290/2005 shall not apply to
the net amounts added to the annual breakdown by Member
State pursuant to paragraph 1 of this Article.

Article 5

The Member States applying voluntary modulation and the
Commission shall monitor closely the impact of the implemen-
in particular as regards the
tation of voluntary modulation,
economic situation of the farms, taking into account the need
to avoid unjustified unequal treatment between farmers. To this
end,
to the
shall
Commission by 30 September 2008.

those Member States

submit a report

Article 6

Detailed rules for the application of
adopted in accordance:

this Chapter shall be

(a) with the procedure referred to in Article 90(2) of Regulation
in particular,
(EC) No 1698/2005, which shall cover,
provisions for the integration of voluntary modulation in
the rural development programming, or, as appropriate;

for

(b) with the procedure referred to in Article 41(2) of Regulation
in particular,
(EC) No 1290/2005, which shall cover,
provisions
the financial management of voluntary
modulation and the incorporation of the system of addi-
tional reductions of direct payments referred to in Article 1
of Regulation (EC) No 1655/2004 into the scheme provided
for by this Regulation.

Article 7

Before 31 December 2008, the Commission shall submit to the
European Parliament and to the Council a report on the appli-
cation of voluntary modulation, accompanied,
if needed, by
appropriate proposals.

CHAPTER II

AMENDMENT OF REGULATION (EC) No 1290/2005 AND FINAL
PROVISION

Article 8

Regulation (EC) No 1290/2005 is amended as follows:

1.

in Article 12, paragraph 2 is replaced by the following:

The Commission shall

‘2.
amounts which,
pursuant to Articles 10(2), 143d and 143e of Regulation
(EC) No 1782/2003 and Article 4(1) of Council Regulation
(EC) No 378/2007 (*), are made available to the EAFRD.

the

set

___________
(*) OJ L 95, 5.4.2007, p. 1.’;

2.

in the introductory terms of Article 42 the second sentence
is replaced by the following:

‘Those rules shall include in particular:’

Article 9

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

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

Done at Brussels, 27 March 2007.

For the Council
The President

P. STEINBRÜCK