Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the financing, management and monitoring of the common agricultural policy
Date: 2011-10-12
Institutions: European Commission
Subjects: EAGGF, European Regional Development Fund, administration of the Institutions, agricultural production, aid to agriculture, common agricultural policy, dissemination of EU information, management audit, rural development

EUROPEAN COMMISSION 

Brussels, 12.10.2011 
COM(2011) 628 final 

2011/0288 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the financing, management and monitoring of the common agricultural policy 

{SEC(2011) 1153} 
{SEC(2011) 1154} 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

The  Commission  proposal  for  the  Multiannual  Financial  Framework  (MFF)  for  2014-2020 
(the  MFF  proposal)1  sets  the  budgetary  framework  and  main  orientations  for  the  Common 
Agricultural Policy (CAP). On this basis, the Commission presents a set of regulations laying 
down the legislative framework for the CAP in the period 2014-2020, together with an impact 
assessment of alternative scenarios for the evolution of the policy.  

The current reform proposals are based on the Communication on the CAP towards 20202 that 
outlined broad policy options in order to respond to the future challenges for agriculture and 
rural areas and to meet the objectives set for the CAP, namely 1) viable food production; 2) 
sustainable  management  of  natural  resources  and  climate  action;  and  3)  balanced  territorial 
development.  The  reform  orientations  in  the  Communication  have  since  been  broadly 
supported both in the inter-institutional debate3 and in the stakeholder consultation that took 
place in the framework of the impact assessment.  

A common theme that has emerged throughout this process is the need to promote resource 
efficiency with a view to smart, sustainable and inclusive growth for EU agriculture and rural 
areas  in  line  with  the  Europe  2020  strategy,  keeping  the  structure  of  the  CAP  around  two 
pillars that use complementary instruments in pursuit of the same objectives. Pillar I covers 
direct payments and market measures providing a basic annual income support to EU farmers 
and support in case of specific market disturbances, while Pillar II covers rural development 
where  Member  States  draw  up  and  co-finance  multiannual  programmes  under  a  common 
framework.4 

Through  successive  reforms  the  CAP  has  increased  market  orientation  for  agriculture  while 
providing  income  support  to  producers,  improved  the  integration  of  environmental 
requirements  and  reinforced  support  for  rural  development  as  an  integrated  policy  for  the 
development  of  rural  areas  across  the  EU.  However,  the  same  reform  process  has  raised 
demands for a better distribution of support among and within Member States, as well as calls 
for  a  better  targeting  of  measures  aiming  at  addressing  environmental  challenges  and  better 
addressing increased market volatility.  

In the past, reforms mainly responded to endogenous challenges, from huge surpluses to food 
safety crises; they have served the EU well both on the domestic and the international front. 
However, most of today's challenges are driven by factors that are external to agriculture and 
would thus require a broader policy response. 

1 

2 

3 

4 

Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic  and  Social  Committee  and  the  Committee  of  the  Regions  A  budget  for  Europe  2020, 
COM(2011)500 final, 29.6.2011.  
Communication  from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 
Economic and Social Committee and the Committee of the Regions The CAP towards 2020: meeting 
the food, natural resources and territorial challenges of the future, COM(2010)672 final, 18.11.2010. 
See  in  particular  the  European  Parliament  resolution  of  23  June  2011,  2011/2015(INI),  and  the 
Presidency conclusions of 18.3.2011. 
The current legislative framework comprises Council Regulation (EC) No 73/2009 (direct payments), 
Council Regulation (EC) No 1234/2007 (market instruments), Council Regulation (EC) No 1698/2005 
(rural development) and Council Regulation (EC) No 1290/2005 (financing).  

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The pressure on agricultural income is expected to continue as farmers are facing more risks, 
a slowdown in productivity and a margin squeeze due to rising input prices; there is therefore 
a  need  to  maintain  income  support  and  to  reinforce  instruments  to  better  manage  risks  and 
respond to crisis situations. A strong agriculture is vital for the EU food industry and global 
food security. 

At the same time, agriculture and rural areas are being called upon to step up their efforts to 
meet  the  ambitious  climate  and  energy  targets  and  biodiversity  strategy  that  are  part  of  the 
Europe 2020 agenda. Farmers, who are together with foresters the main land managers, will 
need  to  be  supported  in  adopting  and  maintaining  farming  systems  and  practices  that  are 
particularly favourable to environmental and climate objectives because market prices do not 
reflect the provision of such public goods. It will also be essential to best harness the diverse 
potential of rural areas and thus contribute to inclusive growth and cohesion.  

The future CAP will not, therefore, be a policy that caters only for a small, albeit essential, 
part  of  the  EU  economy,  but  also  a  policy  of  strategic  importance  for  food  security,  the 
environment  and  territorial  balance.  Therein  lies  the  EU  added  value  of  a  truly  common 
policy  that  makes  the  most  efficient  use  of  limited  budgetary  resources  in  maintaining  a 
sustainable  agriculture  throughout  the  EU,  addressing  important  cross-border  issues  such  as 
climate  change  and  reinforcing  solidarity  among  Member  States,  while  also  allowing 
flexibility in implementation to cater for local needs.  

The framework set out in the MFF proposal foresees that the CAP should maintain its two-
pillar structure with the budget for each pillar maintained in nominal terms at its 2013 level 
and with a clear focus on delivering results on the key EU priorities. Direct payments should 
promote sustainable production by assigning 30 % of their budgetary envelope to mandatory 
measures  that  are  beneficial  to  climate  and  the  environment.  Payment  levels  should 
progressively converge and payments to large beneficiaries be subject to progressive capping. 
Rural  development  should  be  included  in  a  Common  Strategic  Framework  with  other  EU 
shared  management  funds  with  a  reinforced  outcome-orientated  approach  and  subject  to 
clearer,  improved  ex-ante  conditionalities.  Finally,  on  market  measures  the  financing  of  the 
CAP should be reinforced with two instruments outside the MFF: 1) an emergency reserve to 
react  to  crisis  situations;  and  2)  the  extension  of  the  scope  of  the  European  Globalization 
Adjustment Fund.  

On this basis, the main elements of the legislative framework for the CAP during the period 
2014-2020 are set out in the following regulations:  

– 

– 

– 

Proposal for a Regulation of the European Parliament and of the Council establishing 
rules for direct payments to farmers under support schemes within the framework of 
the common agricultural policy ('the direct payments regulation'); 

Proposal for a Regulation of the European Parliament and of the Council establishing 
a  common  organisation  of  the  markets  in  agricultural  products  (Single  CMO 
Regulation) ('the Single CMO regulation'); 

Proposal for a Regulation of the European Parliament and of the Council on support 
for  rural  development  by  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD) ('the rural development regulation'); 

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– 

– 

– 

– 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  the 
financing,  management  and  monitoring  of  the  common  agricultural  policy  ('the 
horizontal regulation'); 

Proposal  for  a  Council  regulation  determining  measures  on  fixing  certain  aids  and 
refunds related to the common organisation of the markets in agricultural products; 

Proposal for a Regulation of the European Parliament and of the Council amending 
Council Regulation (EC) No 73/2009 as regards the application of direct payments to 
farmers in respect of the year 2013; 

Proposal for a Regulation of the European Parliament and of the Council amending 
Council Regulation (EC) No 1234/2007 as regards the regime of the single payment 
scheme and support to vine-growers. 

The rural development regulation builds on the proposal presented by the Commission on 6 
October 2011 that sets out common rules for all funds operating under a Common Strategic 
Framework5.  A  regulation  will  follow  on  the  scheme  for  most  deprived  persons,  for  which 
funding is now placed under a different heading of the MFF. 

In addition, new rules on the publication of information on beneficiaries taking account of the 
objections expressed by the Court of Justice of the European Union are also under preparation 
with a view to finding the most appropriate way to reconcile beneficiaries' right to protection 
of personal data with the principle of transparency. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENT 

On  the  basis  of  the  evaluation  of  the  current  policy  framework  and  an  analysis  of  future 
challenges  and  needs,  the  impact  assessment  assesses  and  compares  the  impact  of  three 
alternative scenarios. This is the result of a long process started in April 2010 and steered by 
an  inter-service  group  that  brought  together  extensive  quantitative  and  qualitative  analysis, 
including setting a baseline in the form of medium-term projections for agricultural markets 
and  income  up  to  2020  and  modelling  the  impact  of  the  different  policy  scenarios  on  the 
economics of the sector. 

The  three  scenarios  elaborated  in  the  impact  assessment  are:  1)  an  adjustment  scenario  that 
continues  with  the  current  policy  framework  while  addressing  its  most  important 
shortcomings,  such  as  the  distribution  of  direct  payments;  2)  an  integration  scenario  that 
entails  major  policy  changes  in  the  form  of  enhanced  targeting  and  greening  of  direct 
payments  and  reinforced  strategic  targeting  for  rural  development  policy  in  better 
coordination with other EU policies, as well as extending the legal base for a broader scope of 
producer cooperation; and 3) a refocus scenario that reorients the policy exclusively towards 

5 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  laying  down  common 
provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund,  the  Cohesion 
Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries 
Fund  covered  by  the  Common  Strategic  Framework  and  laying  down  general  provisions  on  the 
European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing 
Regulation (EC) No 1083/2006, COM(2011)615 of 6.10.2011. 

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the environment with a progressive phasing out of direct payments, assuming that productive 
capacity can be maintained without support and that the socio-economic needs of rural areas 
can be served by other policies. 

Against the background of the economic crisis and the pressure on public finances, to which 
the  EU  has  responded  with  the  Europe  2020  strategy  and  the  MFF  proposal,  all  three 
scenarios  attach  different  weight  to  each  of  the  three  policy  objectives  of  the  future  CAP 
which  aims  at  a  more  competitive  and  sustainable  agriculture  in  vibrant  rural  areas.  With  a 
view  to  a  better  alignment  with  the  Europe  2020  strategy,  notably  in  terms  of  resource 
efficiency,  it  will  be  increasingly  essential  to  improve  agricultural  productivity  through 
research,  knowledge  transfer  and  promoting  cooperation  and  innovation  (including  through 
the European Innovation Partnership on agricultural productivity and sustainability). Whereas 
EU  agricultural  policy  does  not  any  more  operate  within  a  trade  distorting  policy 
environment, additional pressure on the sector is expected from further liberalization, notably 
in the framework of the DDA or the FTA with Mercosur.  

The three policy scenarios were drawn up taking into account the preferences expressed in the 
consultation which was conducted in the context of the impact assessment. Interested parties 
were  invited  to  submit  contributions  between  23.11.2010  and  25.1.2011  and  an  advisory 
committee was organised on 12.1.2011. The main points are summarized below:6  

–  There  is  broad  agreement  among  stakeholders  on  the  need  for  a  strong  CAP  based  on  a 
two-pillar-structure  in  order  to  address  the  challenges  of  food  security,  sustainable 
management of natural resources and territorial development. 

–  Most respondents find that the CAP should play a role in stabilizing markets and prices.  

–  Stakeholders  have  diverse  opinions  concerning  the  targeting  of  support  (especially 

redistribution of direct aid and capping payments).  

–  There  is  agreement  that  both  pillars  can  play  an  important  role  in  stepping  up  climate 
action  and  increasing  environmental  performance  for  the  benefit  of  EU  society.  Whereas 
many farmers believe that this already takes place today, the wider public argues that Pillar 
I payments can be more efficiently used. 

–  The respondents want all parts of the EU, including less favoured areas, to be part of future 

growth and development.  

–  The  integration  of  the  CAP  with  other  policies,  such  as  environmental,  health,  trade, 

development, was emphasised by many respondents. 

–  Innovation,  development  of  competitive  businesses  and  provision  of  public  goods  to  EU 

citizens are seen as ways to align the CAP with the Europe 2020 strategy. 

The impact assessment thus compared the three alternative policy scenarios: 

The refocus scenario would accelerate structural adjustment in the agricultural sector, shifting 
production  to  the  most  cost  efficient  areas  and  profitable  sectors.  While  significantly 
increasing funding for the environment, it would also expose the sector to greater risks due to 

6 

See Annex 9 of the impact assessment for an overview of the 517 contributions received. 

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limited scope for market intervention. Furthermore, it would come at a significant social and 
environmental cost as the less competitive areas would face a considerable income loss and 
environmental  degradation,  since  the  policy  would  lose  the  leverage  of  direct  payments 
coupled with the cross compliance requirements.  

At  the  other  end  of  the  spectrum,  the  adjustment  scenario  would  best  allow  for  policy 
continuity  with  limited  but  tangible  improvements  both  in  agricultural  competitiveness  and 
environmental  performance.  There  are  however  serious  doubts  as  to  whether  this  scenario 
could  adequately  address  the  important  climate  and  environmental  challenges  of  the  future, 
which also underpin the long-term sustainability of agriculture. 

The  integration  scenario  breaks  new  ground  with  enhanced  targeting  and  greening  of  direct 
payments.  The  analysis  shows  that  greening  is  possible  at  a  reasonable  cost  to  farmers 
although  some  administrative  burden  cannot  be  avoided.  Similarly,  a  new  impetus  in  rural 
development  is  possible  provided  that  the  new  possibilities  are  efficiently  used  by  Member 
States and regions and that the common strategic framework with the other EU funds does not 
remove synergies with Pillar I or weaken rural development's distinctive strengths. If the right 
balance is struck, this scenario would best address the long term sustainability of agriculture 
and rural areas.  

On  this  basis  the  impact  assessment  concludes  that  the  integration  scenario  is  the  most 
balanced in progressively aligning the CAP with the EU's strategic objectives and this balance 
is  also  found  in  the  implementation  of  the  different  elements  in  the  legislative  proposals.  It 
will also be essential to develop an evaluation framework to measure the performance of the 
CAP with a common set of indicators linked to policy objectives. 

Simplification  has  been  an  important  consideration  throughout  the  process  and  should  be 
enhanced  in  a  variety  of  ways,  for  instance  in  the  streamlining  of  cross  compliance  and 
market  instruments,  or  the  design  of  the  small  farmers  scheme.  In  addition,  the  greening  of 
direct  payments  should  be  designed  in  such  a  way  as  to  minimize  administrative  burden 
including the costs of controls.  

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

It  is  proposed  to  maintain  the  current  structure  of  the  CAP  in  two  pillars  with  annual 
mandatory  measures  of  general  application  in Pillar I complemented by voluntary measures 
better  tailored  to  national  and  regional  specificities  under  a  multi-annual  programming 
approach  in  Pillar  II.  However,  the  new  design  of  direct  payments  seeks  to  better  exploit 
synergies  with  Pillar  II,  which  is  in  turn  placed  under  a  Common  Strategic  Framework  to 
better coordinate with other EU shared management funds.  

On  this  basis,  the  current  structure  of  four  basic  legal  instruments  is  also  maintained,  albeit 
with the scope of the financing regulation enlarged to bring together common provisions into 
what is now called the horizontal regulation.  

The proposals comply with the principle of subsidiarity. The CAP is a truly common policy: it 
is an area of shared competence between the EU and the Member States that is being handled 
at EU level with  a view  to  maintaining a sustainable and diverse agriculture throughout the 
EU,  addressing  important  cross-border  issues  such  as  climate  change  and  reinforcing 
solidarity among Member States. In the light of the importance of future challenges for food 

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security,  the  environment  and  territorial  balance,  the  CAP  remains  a  policy  of  strategic 
importance  to  ensure  the  most  effective  response  to  the  policy  challenges  and  the  most 
efficient  use  of  budgetary  resources.  In  addition,  it  is  proposed  to  maintain  the  current 
structure  of  instruments  in  two  pillars  where  Member  States  have  more  leeway  to  tailor 
solutions  to  their  local  specificities  and  also  co-finance  Pillar  II.  The  new  European 
Innovation  Partnership  and  risk  management  toolkit  are  also  placed  within  Pillar  II.  At  the 
same  time  the  policy  will  be  better  aligned  with  the  Europe  2020  strategy  (including  a 
common framework with other EU funds) and a number of improvements and simplification 
elements  introduced.  Finally,  the  analysis  carried  out  in  the  framework  of  the  impact 
assessment clearly shows the cost of no action in terms of negative economic, environmental 
and social consequences. 

In addition to financing provisions, the horizontal regulation brings together relevant rules for 
all instruments, such as provisions on cross compliance, checks and penalties. As a result, the 
regulation  now  lays  down  rules  on  financing,  the  farm  advisory  system,  management  and 
control systems, cross compliance and clearance of accounts. 

The  aim  is  to  adjust  financing  rules  on  the  basis  of  experience  to  date,  to  streamline  and 
enhance cross compliance and to strengthen the farm advisory system.  

In relation to cross compliance in particular, the current rules were reviewed with a view to 
simplification,  strengthening  the  climate  change  dimension  within  GAEC  and  ensuring 
consistency with the provisions of greening and of relevant environmental measures offered 
under rural development. 

Finally, the regulation provides the basis for a common monitoring and evaluation framework 
to measure the performance of the CAP during the next period. 

This  regulation  includes  various  simplification  elements.  First  of  all,  it  regroups  all  cross-
compliance rules in one single legislative act, thereby improving their readability.  

Furthermore, it foresees reducing the number of paying agencies and reinforcing the role of 
the coordinating body. This will render the system more transparent and less burdensome for 
both national administrations and the Commission services. There will be fewer accreditations 
and declarations of assurance required at Member State level and the number of Commission 
audits can be reduced. 

The rules on management and controls will be aligned, as far as possible, for the two pillars of 
the  CAP  so  as  to  bring  legal  clarity  and  harmonised  procedures.  Moreover,  the  regulation 
foresees empowering the Commission to allow for a reduction of the number of on-the-spot 
checks for Member States with properly functioning control systems and low error rates. This 
could reduce the administrative burdens for both farmers and national administrations.  

4. 

BUDGETARY IMPLICATION  

The  MFF  proposal  provides  that  a  significant  part  of  the  EU  budget  should  continue  to  be 
dedicated to agriculture, which is a common policy of strategic importance. Thus, in current 
prices, it is proposed that the CAP should focus on its core activities with EUR 317.2 billion 
allocated to Pillar I and EUR 101.2 billion to Pillar II over the 2014-2020 period.  

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The Pillar I and Pillar II funding is complemented by additional funding of EUR 17.1 billion 
consisting of EUR 5.1 billion for research and innovation, EUR 2.5 billion for food safety and 
EUR 2.8 billion for food support for the most deprived persons in other headings of the MFF, 
as well as of EUR 3.9 billion in a new reserve for crises in the agricultural sector and up to 
EUR  2.8  billion  in  the  European  Globalization  Adjustment  Fund  outside  the  MFF,  thus 
bringing the total budget to EUR 435.6 billion over the 2014-2020 period.  

As  regards  distribution  of  support  among  Member  States,  it  is  proposed  that  all  Member 
States  with  direct  payments  below  90%  of  the  EU  average  will  see  one  third  of  this  gap 
closed. The national ceilings in the direct payments regulation are calculated on this basis.  

The  distribution  of  rural  development  support  is  based  on  objective  criteria  linked  to  the 
policy  objectives  taking  into  account  the  current  distribution.  As  is  the  case  today,  less 
developed regions should continue to benefit from higher co-financing rates, which will also 
apply  to  certain  measures  such  as  knowledge  transfer,  producer  groups,  cooperation  and 
Leader.  

Some  flexibility  for  transfers  between  pillars  is  introduced  (up  to  5%  of  direct  payments): 
from Pillar I to Pillar II to allow Member States to reinforce their rural development policy, 
and  from  Pillar  II  to  Pillar  I  for  those  Member  States  where  the  level  of  direct  payments 
remains below 90% of the EU average.  

Details  on  the  financial  impact  of  the  CAP  reform  proposals  are  set  out  in  the  financial 
statement accompanying the proposals. 

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2011/0288 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the financing, management and monitoring of the common agricultural policy 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 43(2) thereof, 

Having regard to the proposal from the European Commission7, 

After transmission of the draft legislative act to the national parliaments, 

Having regard to the opinion of the European Economic and Social Committee8, 

Having consulted the European Data Protection Supervisor9, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

The  Communication  from  the  Commission  to  the  European  Parliament,  the  Council, 
the European Economic and Social Committee and the Committee of the Regions on 
"The CAP towards 2020: Meeting the food, natural resources and territorial challenges 
of  the  future"10  set  out  potential  challenges,  objectives  and  orientations  for  the 
Common  Agricultural  Policy  (CAP)  after  2013.  In  the  light  of  the  debate  on  that 
Communication, the CAP should be reformed with effect from 1 January 2014. That 
reform  should  cover  all  the  main  instruments  of  the  CAP,  including  Council 
Regulation  (EC)  No  1290/2005  of  21  June  2005  on  the  financing  of  the  common 
agricultural  policy11  as  amended  by  Regulation  of  the  European  Parliament  and 
[COM(2010)…(Lisbon  alignement)]12.  Experience  drawn 
Council 
the 
implementation  of  that  Regulation  shows  that  certain  elements  of  the  financing  and 
monitoring  mechanism  need  to  be  adjusted.  In  view  of  the  scope  of  the  reform,  it  is 
appropriate to repeal Regulation (EC) No 1290/2005 and to replace it with a new text. 
The  reform  should  also,  as  far  as  possible,  harmonise,  streamline  and  simplify 
provisions. 

from 

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10 
11 
12 

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
COM(2010) 672 final, 18.11.2010. 
OJ L 209, 11.8.2005, p. 1. 
OJ L , , p . 

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(2) 

(3) 

(4) 

(5) 

Since  the  objectives  of  this  Regulation  cannot  be  achieved  sufficiently  by  Member 
States given the links between it and the other instruments of the CAP, the limits on 
the financial resources of the Member States in an enlarged Union, and can therefore 
be better achieved at Union level through the multiannual guarantee of Union finance 
and  by  concentrating  on  its  priorities,  the  Union  may  adopt  measures,  in  accordance 
with the principle of subsidiarity as set out in Article 5(3) of the Treaty on European 
Union. In accordance with the principle of proportionality as set out in Article 5(4) of 
that Treaty, this Regulation does not go beyond what is necessary in order to achieve 
that objective. 

In order to supplement or amend certain non-essential elements of this Regulation, the 
power to adopt delegated acts in accordance with Article 290 of the Treaty should be 
delegated to the Commission in respect of the accreditation of the paying agencies and 
coordinating  bodies,  the  content  of  the  Farm  Advisory  System,  the  measures  to  be 
financed  by  Union  budget  under  public  intervention  and  the  valuation  of  the 
operations in connection with public intervention, the reductions and suspension of the 
reimbursements  to  the  Member  States,  the  compensation  between  expenditure  and 
revenues under the Funds, the recovery of debts, the penalties applied to beneficiaries 
in  case  of  non-compliance  with  the  eligibility  conditions,  in  respect  of  rules  on 
securities,  on  the  functioning  of  the  integrated  administration  and  control  system,  of 
the  measures  excluded  from  the  scrutiny  of  transactions,  the  penalties  applied  under 
cross  compliance,  the  rules  on  maintenance  of  permanent  grassland,  the  rules  on  the 
operative event and the exchange rate to be used by the Member States not using the 
euro  and  in  respect  of  the  content  of  the  common  evaluation  framework  of  the 
measures adopted under the CAP. It is of particular importance that the Commission 
carry  out  appropriate  consultations  during  its  preparatory  work,  including  at  expert 
level. The Commission, when preparing and drawing-up delegated acts, should ensure 
a  simultaneous,  timely  and  appropriate  transmission  of  relevant  documents  to  the 
European Parliament and Council. 

The CAP consists of a series of measures, some of which relate to rural development. 
It is important that financing be provided for those measures in order to contribute to 
the  achievement  of  the  objectives  of  the  CAP.  Since  the  measures  have  certain 
elements in common but do also differ in a number of respects, their financing should 
be combined in the same set of provisions which allows for different treatment where 
necessary.  Regulation  (EC)  No  1290/2005  created  two  European  agricultural  funds, 
namely  the  European  Agricultural  Guarantee  Fund  (hereinafter  ‘EAGF’),  and  the 
European  Agricultural  Fund  for  Rural  Development  (hereinafter  ‘EAFRD’).  Those 
two Funds should be maintained. 

Regulation (EU) No [FR]/xxx of the European Parliament and of the Council of […] 
on the financial rules applicable to the annual budget of the Union13 and the provisions 
adopted  pursuant  to  it  should  apply  to  the  measures  set  out  in  this  Regulation.  In 
particular the Regulation lays down provisions related to the shared management with 
Member States based on the principles of sound financial management, transparency 
and non-discrimination, as well as provisions on the function of accredited bodies, the 
budgetary  principles,  provisions  which  should  be  respected  in  the  framework  of  this 
Regulation. 

13 

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(6) 

(7) 

The  Union  budget  should  finance  CAP  expenditure,  including  that  on  rural 
development,  through  both  Funds  either  directly  or  in  the  context  of  shared 
management  with  the  Member  States.  The  types  of  measures  that  can  be  financed 
using those Funds should be specified. 

Provision should be made for the accreditation of paying agencies by Member States, 
for  the  establishment  of  procedures  for  obtaining  the  requisite  management 
declarations  of  assurance,  and  the  certification  of  management  and  monitoring 
systems,  as  well  as  the  certification  of  annual  accounts  by  independent  bodies. 
Moreover,  in  order  to  ensure  the  transparency  of  national  checks,  in  particular  as 
regards authorisation, validation and payment procedures, to reduce the administrative 
and audit burden for the Commission services as well as for the Member States where 
accreditation  of  each  individual paying agency is required, the number of authorities 
and  bodies  to  which  those  responsibilities  are  delegated  should  be  restricted  taking 
account of the constitutional arrangements of each Member State.  

(8)  Where a Member State accredits more than one paying agency, it is important that it 
designates a single coordinating body to ensure consistency in the management of the 
funds, to provide liaison between the Commission and the various accredited paying 
agencies and to ensure that the information requested by the Commission concerning 
the operations of several paying agencies is made rapidly available. The coordinating 
body should also be responsible for ensuring that remedial action is taken and that the 
Commission  is  kept  informed  of  the  follow-up  and  it  should  ensure  homogeneous 
application of common rules and standards.  

(9) 

(10) 

Only paying agencies accredited by the Member States offer reasonable assurance that 
the necessary checks have been carried out before granting Union aid to beneficiaries. 
It should therefore be explicitly laid down that only expenditure effected by accredited 
paying agencies can be reimbursed from the Union budget. 

In  order  to  help  beneficiaries  to  become  more  aware  of  the  relationship  between 
agricultural  practices  and  management  of  farms  on  the  one  hand,  and  standards 
relating to the environment, climate change, good agricultural condition of land, food 
safety, public health, animal health, plant health and animal welfare on the other, it is 
necessary  that  Member  States  establish  a  comprehensive  farm  advisory  system 
offering  advice  to  beneficiaries.  That  farm  advisory  system  should  in  any  way  not 
affect the obligation and responsibility of beneficiaries to respect those standards. Also 
a clear separation between advice and checks should be ensured by the Member States. 

(11)  The  farm  advisory  system  should  cover  at  least  the  requirements  and  standards 
forming  the  scope  of  cross  compliance.  That  system  should  also  cover  the 
requirements to be respected in relation to the agricultural practices beneficial for the 
climate  and  the  environment  for  direct  payments,  as  well  as  the  maintenance  of  the 
agricultural area under Regulation (EU) No DP/xxx of the European Parliament and of 
the  Council  of  xxx  establishing  rules  for  direct  payment  to  farmers  under  support 
schemes  within  the  framework  of  the  common  agricultural  policy14.  That  system 
should  finally  cover  certain  elements  related  to  climate  change  mitigation  and 
adaptation, biodiversity, protection of water, animal and plant disease notification and 

14 

OJ L , , p. . 

EN 

11 

   EN 

 
                                                 
innovation  as  well  as  the  sustainable  development  of  the  economical  activity  of  the 
small farms. 

(12)  Entry into the farm advisory system should be on a voluntary basis for beneficiaries. 
All beneficiaries, even if not receiving support under the CAP, should be allowed to 
participate in the system. However priority criteria may be set by the Member States. 
Due to the nature of the system, it is appropriate for the information obtained in the 
course of the advisory activity to be treated as confidential, except in case of serious 
infringements of Union or national law. In order to ensure the efficiency of the system, 
advisors should be suitably qualified and regularly trained. 

(13)  The  financial  resources  required  to  cover  the  expenditure  effected  by  the  accredited 
paying  agencies  in  respect  of  the  EAGF,  are  to  be  made  available  to  the  Member 
States  by  the  Commission  in  the  form  of  reimbursements  against  the  booking  of  the 
expenditure  effected  by  those  agencies.  Until  such  reimbursements,  in  the  form  of 
monthly  payments,  have  been  paid,  financial  resources  are  to  be  mobilised  by  the 
Member States in accordance with the needs of their accredited paying agencies. The 
personnel  costs  and  the  administrative  costs  of  the  Member  States  and  the 
beneficiaries involved in the execution of the CAP should be borne by themselves.  

(14)  The  use  of  the  agro-meteorological  system  and  the  acquisition  and  improvement  of 
satellite  images  should  provide  the  Commission  with  the  means  to  manage  the 
agricultural markets and to facilitate the monitoring of agricultural expenditure. 

(15) 

In  the  context  of  respecting  budget  discipline,  it  is  necessary  to  define  the  annual 
ceiling for the expenditure financed by the EAGF by taking into account the maximum 
amounts laid down for that Fund under the multiannual financial framework provided 
for in the Council Regulation (EU) No xxx/xxx of […] laying down the multiannual 
financial framework for the years 2014-202015 [MFF]. 

(16)  Budget discipline also requires that the annual ceiling for expenditure financed by the 
EAGF  to  be  respected  under  all  circumstances  and  at  all  stages  of  the  budget 
procedure and the execution of the budget. This requires that the national ceiling for 
the direct payments per Member State set out in Regulation (EU) No xxx/xxx[DP] be 
regarded  as  a  financial  ceiling  for  such  direct  payments  for  the  Member  State 
concerned and that the reimbursement of those payments remain within this financial 
ceiling.  Furthermore,  budget  discipline  requires  that  all  acts  proposed  by  the 
Commission  or  adopted  by  the  legislator  or  by  the  Commission  under  the  CAP  and 
financed by the EAGF comply with the annual ceiling for the expenditure financed by 
that Fund. 

(17)  With a view to ensuring that the amounts for the financing of the CAP comply with 
the  annual  ceilings,  the  financial  mechanism  referred  to  in  Council  Regulation  (EC) 
No 73/2009 of 19 January 2009 establishing common rules for direct support schemes 
for  farmers  under  the  common  agricultural  policy  and  establishing  certain  support 
schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, 
(EC) No 378/2007 and repealing Regulation (EC) No 1782/200316 whereby the level 

15 
16 

OJ L , , p. . 
OJ L 30, 31.1.2009, p. 16 

EN 

12 

   EN 

 
                                                 
of direct support is adjusted, should be maintained. In the same context, it is necessary 
to  authorise  the  Commission  to  set  those  adjustments  where  the  Council  do  not  fix 
them before 30 June of the calendar year in respect of which they apply. 

(18)  The  measures  taken  to  determine  the  financial  contribution  from  the  EAGF  and  the 
EAFRD in respect of the calculation of financial ceilings do not affect the powers of 
the budgetary authority designated by the Treaty. Those measures should therefore be 
based  on  the  reference  amounts  fixed  in  accordance  with  the  Interinstitutional 
Agreement of […] between the European Parliament, the Council and the Commission 
on  cooperation  in  budgetary  matters  and  on  sound  financial  management17  and 
Regulation (EU) No xxx/xxx [MFF]. 

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

(20)  When  implementing  the  budget,  the  Commission  should  operate  a  monthly  early-
warning and monitoring system for agricultural expenditure, so that, if there is a risk 
of the annual ceiling being exceeded, the Commission may at the earliest opportunity 
take  the  appropriate  measures  under  the  management  powers  at  its  disposal  and 
propose other measures if those measures appear to be insufficient. A periodic report 
by  the  Commission  to  the  European  Parliament  and  the  Council  should  compare  the 
evolution  of  the  expenditure  effected  in  relation  to  the  profiles  so  far  and  give  an 
assessment of the foreseeable implementation for the remainder of the budget year. 

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

(22)  Regulation  (EU)  No  CR/xxx  of  the  European  Parliament  and  of  the  Council  of  […] 
laying  down  common  provisions  common  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund,  the  Cohesion  Fund,  the  European 
Agricultural  Fund  for  Rural  Development  and  the  European  Maritime  and  Fisheries 
Fund  covered  by  the  Common  Strategic  Framework  and  laying  down  general 
provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 

17 

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13 

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and the Cohesion Fund and repealing Regulation (EC) No 1083/200618 provides rules 
applying to the financial support from the Funds covered by that Regulation, including 
the  EAFRD.  Those  provisions  also  include  certain  rules  on  the  eligibility  of 
expenditure, on financial management as well as the management and control systems. 
As  regards  the  financial  management  of  the  EAFRD,  for  sake  of  legal  clarity  and 
coherence  between  the  agricultural  Funds,  reference  should  be  made  to  the  relevant 
provisions  on  the  budget  commitments,  payment  deadlines  and  decommitment  of 
Regulation (EU) No CR/xxx. 

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

(24)  Prefinancing  apart,  a  distinction  should  be  drawn  between  payments  by  the 
Commission  to  the  accredited  paying  agencies.  Interim  payments  and  payment  of 
balances, and rules on their payment should be set. The automatic decommitment rule 
should  help  speed  up  execution  of  programmes  and  contribute  to  sound  financial 
management. 

(25)  Union  aid  should  be  paid  to  beneficiaries  in  good  time  so  that  they  may  use  it 
efficiently. A failure by the Member States to comply with the payment deadlines laid 
down  in  Union  legislation  could  create  serious  difficulties  for  the  beneficiaries  and 
could  jeopardise  the  Union's  yearly  budgeting.  Therefore,  expenditure  made  without 
respecting deadlines for payments should be excluded from Union financing. In order 
to respect the principle of proportionality, the Commission should be able to provide 
for  exceptions  to  this  general  rule.  This  principle,  laid  down  in  Regulation  (EC)  No 
1290/2005  should  be  maintained  and  apply  to  both  the  EAGF  and  the  EAFRD.  If 
Member States pay late, they should add interests on the principal amount at their own 
cost  to  compensate  the  beneficiaries.  Such  a  provision  could  create  an  incentive  to 
Member States to better respect payment deadlines, and could give more assurance to 
beneficiaries to be paid in time, or at least to be compensated in case of late payment.  

(26)  Regulation (EC) No 1290/2005 provides for reductions and suspensions of monthly or 
interim payments for the EAGF and the EAFRD. Despite the rather broad wording of 
those provisions, it is noticed that in practice those provisions are used essentially to 
reduce  payments  for  non-respect  of  payment  deadlines,  ceilings  and  similar 
"accounting issues" which can readily be detected in the declarations of expenditure. 
Those  provisions  also  allow  reductions  and  suspensions  in  case  of  serious  and 
persistent  deficiencies  in  national  control  systems,  but  including  rather  restrictive 
substantive conditions for doing so and providing for a special, two-step procedure to 
be followed. The budgetary authority has repeatedly asked the Commission to suspend 
payments to non-compliant Member States. Against this background, it is necessary to 
clarify  the  system  provided  for  in  Regulation  (EC)  No  1290/2005  and  to  merge  the 
rules  on  reductions  and  suspensions  for  both  the  EAGF  and  the  EAFRD  into  one 
single Article. The system of reductions for "accounting issues" should be maintained 
with a clearer wording in line with the existing administrative practice. The possibility 

18 

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14 

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for reducing or suspending payments in case of significant and persistent deficiencies 
in national control systems should be extended by including negligence in the recovery 
of irregular payments, while maintaining the two-step procedure for such reductions or 
suspensions. 

(27)  Sectoral  agricultural  legislation  requires  Member  States  to  send  information  on  the 
numbers  of  checks  carried  out  and  their  outcome  within  specified  deadlines.  Those 
control  statistics  are  used  to  determine  the  level  of  error  at  Member  State  level  and, 
more  generally,  for  the  purposes  of  checking  the  management  of  the  EAGF  and  the 
EAFRD.  They  are  an  important  source  for  the  Commission  to  satisfy  itself  as  to  the 
correct management of funds and are an essential element for the annual declaration of 
assurance. Given the vital nature of this statistical information and in order to ensure 
that Member States respect their obligation to send it in time, it is necessary to provide 
a deterrent to late provision of the data required in a manner proportionate to the extent 
of  the  data  deficit.  Therefore,  provisions  should  be  put  in  place  whereby  the 
Commission  can  suspend  part  of  the  monthly  or  interim  payments  for  which  the 
relevant statistical information has not been sent in time.  

(28) 

In  order  to  allow  reuse  of  EAGF  and  EAFRD  funds,  rules  are  needed  on  the 
assignment  of  specific  sums.  The  list  contained  in  Regulation  (EC)  No  1290/2005 
should be completed with the sums relating to late payments and to the clearance of 
accounts as regards expenditure under the EAGF. Also Council Regulation (EEC) No 
352/78  of  20  February  1978  on  the  crediting  of  securities,  deposits  and  guarantees 
furnished  under  the  common  agricultural  policy  and  subsequently  forfeited19  laid 
down rules on  the  destinations  of the sums resulting  from  forfeited  securities.  Those 
provisions should be harmonised and merged with the existing provisions on assigned 
revenue. Regulation (EEC) No 352/78 should therefore be repealed.  

(29)  Council  Regulation  (EC)  No  814/2000  of  17  April  2000  on  information  measures 
relating  to  the  common  agricultural  policy20  and  its  implementing  rules  define  the 
information  measures  relating  to  the  CAP  which  may  be  financed  under  point  (c)  of 
Article 5 of Regulation (EC) No 1290/2005. Regulation (EC) No 814/2000 contains a 
list of those measures and their objectives and fixes the rules of their financing and the 
implementation of the corresponding projects. Since the adoption of that Regulation, 
rules  have  been  adopted  by  Regulation  (EU)  No  xxx/xxx[FR]  as  regards  grants  and 
procurement.  Those  rules  should  apply  also  to  the  information  measures  under  the 
CAP.  For  reasons  of  simplification  and  coherence,  Regulation  (EC)  No  814/2000 
should be repealed while maintaining the specific provisions relating to the objectives 
and  types  of  measures  to  be  financed.  Those measures  should also take into  account 
the  need  to  ensure  more  efficiency  in  communication  to  the  public  at  large  and 
stronger synergies between the communication activities undertaken at the initiative of 
the  Commission  and  to  ensure  that  the  Union's  political  priorities  are  communicated 
effectively. Therefore they should also cover information measures relevant to CAP in 
the  framework  of  the  corporate  communication  as  referred  to  in  the  Communication 
from  the  Commission  to  the  European  Parliament,  the  Council,  the  European 

19 
20 

OJ L 50, 22.2.1978, p. 1. 
OJ L 100, 20.04.2000, p. 7. 

EN 

15 

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Economic  and  Social  Committee  and  the  Committee  of  the  Regions:  A  Budget  for 
Europe 2020 - Part II: Policy fiches21. 

(30)  The financing of measures and operations under the CAP will in part involve shared 
management.  To  ensure  that  Union  funds  are  soundly  managed,  the  Commission 
should  perform  checks  on  the  management  of  the  Funds  by  the  Member  State 
authorities responsible for making payments. It is appropriate to define the nature of 
the checks to be made by the Commission, to specify the terms of its responsibilities 
for implementing the budget and to clarify the Member States' cooperation obligations. 

(31) 

(32) 

(33) 

In  order  to  allow  the  Commission  to  fulfil  its  obligation  to  check  the  existence  and 
proper  functioning  of  management  and  inspection  systems  for  Union  expenditure  in 
the  Member  States,  provision  should  be  made,  irrespective  of  the  inspection  carried 
out by Member States themselves, for checks by persons delegated by the Commission 
who should be able to request assistance from the Member States in their work. 

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

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

(34)  The Commission, which is responsible for the proper application of Union law under 
Article  17  of  the  Treaty  on  European  Union,  should  decide  whether  the  expenditure 
incurred by the Member States complies with Union legislation. Member States should 
be given the right to justify their decisions to make payments and should have recourse 
to  conciliation  where  there  is  no  common  agreement  between  them  and  the 
Commission.  In  order  to  give  Member  States  legal  and  financial  assurances  as  to 
expenditure effected in the past, a maximum period should be set for the Commission 
to  decide  which  financial  consequences  should  follow  from  non-compliance.  The 
conformity  clearance  procedure  should  be  ,  as  regards  EAFRD,  in  line  with  the 
provisions  on  the  financial  corrections  by  the  Commission  as  laid  down  in  Part  2  of 
Regulation (EU) No CR/xxx . 

(35)  As  regards  the  EAGF,  sums  recovered  should  be  paid  back  to  that  Fund  where  the 
expenditure  is  not  in  conformity  with  Union  legislation  and  no  entitlement  existed. 
Provision should be made for a system of financial responsibility for irregularities in 
the  absence  of  total  recovery.  In  this  respect  a  procedure  should  be  established 
permitting the Commission to safeguard the interests of the Union budget by deciding 
on  the  charging  to  the  Member  State  concerned  of  the  sums  lost  as  a  result  of 
irregularities and not recovered within reasonable deadlines. The rules should apply to 
all  sums  not  yet  recovered  by  the  time  of  the  entry  into  force  of  this  Regulation.  In 
certain  cases  of  negligence  on  the  part  of  the  Member  State,  it  is  also  justified  to 

21 

COM(2011) 500 final, p. 7. 

EN 

16 

   EN 

 
                                                 
charge  the  full  sum  to  the  Member  State  concerned.  Same  rules  should  apply  to  the 
EAFRD, keeping however the specificity that sums recovered or cancelled following 
irregularities should remain available to the approved rural development programmes 
of  the  Member  State  concerned  as  those  sums  have  been  allocated  to  that  Member 
State. Provisions on the reporting obligation for Member States should be set also. 

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

(37) 

In  order  to  protect  the  financial  interests  of  the  Union  budget,  measures  should  be 
taken by Member States to satisfy themselves that transactions financed by the EAGF 
and  the  EAFRD  are  actually  carried  out  and  are  executed  correctly.  Member  States 
should  also  prevent,  detect  and  deal  effectively  with  any  irregularities  or  non-
compliance  with  obligations  committed  by  beneficiaries.  To  this  end,  Council 
Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the 
European Communities financial interests22 should apply. 

(38)  Provisions  relating  to  general  principles  on  checks,  withdrawals,  reductions  or 
exclusions from payments and to the imposition of penalties are contained in various 
sectoral  agricultural  regulations.  Those  rules  should  be  gathered  in  the  same  legal 
framework  at  a  horizontal  level.  They  should  cover  the  obligations  of  the  Member 
States  as  regards  administrative  and  on-the-spot  checks,  the  rules  on  the  recovery, 
reduction and exclusions of aid. Rules on checks of obligations not necessarily linked 
to the payment of an aid should be laid down as well. 

(39)  Various  provisions  of  the  sectoral  agricultural  legislation  require  that  a  security  be 
lodged  to  ensure  the  payment  of  a  sum  due  if  an  obligation  is  not  met.  To  all  those 
provisions a single horizontal rule should apply so as to strengthen the framework for 
securities. 

(40)  Member  State  should  operate  an  integrated  administration  and  control  system  for 
certain payments provided for in Regulation (EU) No xxx/xxx [DP] and in Regulation 
(EU) No RD/xxx of the European Parliament and of the Council of Xxx on support for 
rural  development  by  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD)23.  In  order  to  improve  the  effectiveness  and  monitoring  of  Union  support, 
Member  States  should  be  authorised  to  make  use  of  that  integrated  system  also  for 
other Union support schemes. 

(41)  The  main  elements  of  that  integrated  system  and,  in  particular,  the  provisions 
concerning a computerised database, an identification system for agricultural parcels, 
aid applications or payment claims and a system for the identification and recording of 
payment entitlements should be maintained. 

(42)  Payments  provided  for  in  Union  support  schemes  covered  by  the  integrated  system 
should be made by the competent national authorities to beneficiaries in full, subject to 

22 
23 

OJ L 312, 23.12.1995, p.1. 
OJ L , , p. . 

EN 

17 

   EN 

 
                                                 
any reductions provided for in this Regulation, and within prescribed periods. In order 
to render the management of direct payments more flexible, Member States should be 
allowed to pay payments covered by the integrated system in up to two instalments per 
year. 

(43)  Scrutiny of the commercial documents of undertakings receiving or making payments 
can  be  a  very  effective  means  of  surveillance  of  transactions  forming  part  of  the 
system of financing by the EAGF. The provisions on the scrutiny of the commercial 
documents are laid down in Council Regulation (EC) No 485/2008 of 26 May 2008 on 
scrutiny by Member States of transactions forming part of the system of financing by 
the European Agricultural Guarantee Fund24. That scrutiny supplements other checks 
already carried out by the Member States. Furthermore, national provisions relating to 
scrutiny which are more extensive than those provided for in that Regulation are not 
affected by it.  

(44)  Under  Regulation  (EC)  No  485/2008,  Member  States  are  to  take  the  measures 
necessary to ensure effective protection of the financial interests of the Union budget, 
and  particularly  in  order  to  check  the  genuineness  and  compliance  of  operations 
financed  by  the  EAGF.  In  the  interests  of  clarity  and  rationality,  the  relevant 
provisions  should  be  integrated  into  the  same  act.  Regulation  (EC)  No  485/2008 
should therefore be repealed. 

(45)  The documents used as a basis for such scrutiny should be determined in such a way 
as to enable a full scrutiny to be carried out. The undertakings to be scrutinised should 
be  selected  on  the  basis  of  the  nature  of  the  transactions  carried  out  on  their 
responsibility  and the breakdown per sector of the undertakings receiving or making 
payments  according  to  their  financial  importance  in  the  system  of  financing  by  the 
EAGF. 

(46)  The  powers  of  the  officials  responsible  for  scrutiny  and  the  obligations  on 
undertakings to make commercial documents available to such officials for a specified 
period and to supply such information as may be requested by them should be defined. 
Provision  should  be  made  allowing  commercial  documents  to  be  seized  in  certain 
cases. 

(47)  Having regard to the international structure of agricultural trade and in the interest of 
the functioning of the internal market, it is necessary to organise cooperation among 
the Member States. It is also necessary to set up a centralised documentation system at 
Union  level  concerning  undertakings  receiving  or  making  payments  established  in 
third countries. 

(48)  While it is the responsibility of the Member States to adopt their scrutiny programmes, 
it is necessary that those programmes be communicated to the Commission so that it 
can  assume  its  supervisory  and  coordinating  role,  in  order  to  ensure  that  the 
programmes are adopted on the basis of appropriate criteria and to guarantee that the 
scrutiny is concentrated on sectors or undertakings where the risk of fraud is high.  

24 

OJ L 143, 3.6.2008, p. 1. 

EN 

18 

   EN 

 
                                                 
(49) 

It  is  essential  that  each  Member  State  has  a  special  department  responsible  for 
monitoring  the  scrutiny  of  commercial  documents  provided  for  in  this  Regulation  or 
for  coordinating  that  scrutiny.  Those  special  departments  should  be  organised 
independently of the departments carrying out scrutiny prior to payment. Information 
collected during that scrutiny should be protected by professional secrecy. 

(50)  Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common 
rules  for  direct  support  schemes  under  the  common  agricultural  policy  and 
establishing certain support schemes for farmers and amending Regulations (EEC) No 
2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) 1868/94, 
(EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and 
(EC)  No  2529/200125,  which  was  replaced  by  Regulation  (EC)  No  73/2009, 
established the principle that the full payment to beneficiaries of some supports under 
the  CAP  should  be  linked  to  compliance  with  rules  relating  to  land  management, 
agricultural  production  and  agricultural  activity.  That  principle  was  subsequently 
reflected in Council Regulation (EC) No 1698/2005 of 20 September 2005 on support 
for  rural  development  by  the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD)26  and  Council  Regulation  (EC)  No  1234/2007  of  22  October  2007 
establishing a common organisation of agricultural markets and on specific provisions 
for  certain  agricultural  products  (Single  CMO  Regulation)27.  Under  this  so-called 
'cross  compliance'  system  Member  States  are  to  impose  penalties  in  the  form  of 
reduction or exclusion of support received under the CAP in whole or in part. 

(51)  The  cross  compliance  system  incorporates  in  the  CAP  basic  standards  for  the 
environment, climate change, good agricultural and environmental condition of land, 
public  health,  animal  health,  plant  health  and  animal  welfare.  This  link  aims  at 
contributing to the development of a sustainable agriculture through a better awareness 
of  beneficiaries  of  the  need  to  respect  those  basic  standards.  It  aims  also  at 
contributing  to  make  the  CAP  more  compatible  with  the  expectation  of  the  society 
through a better consistency of that policy with the environment, public health, animal 
health, plant health and animal welfare policies. 

(52)  The cross compliance system forms an integral part of the CAP and should therefore 
be maintained. However, its scope, which consists so far in separate lists of statutory 
management  requirements  and  standards  of  good  agricultural  and  environmental 
condition  of  land  should  be  streamlined  so  that  its  consistency  is  ensured  and  made 
more visible. For this purpose the requirements and standards should be organised in a 
single list and grouped by areas and issues. Experience has also shown that a number 
of the requirements within the scope of cross compliance are not sufficiently relevant 
to farming activity or the area of the holding or concern national authorities rather than 
beneficiaries. It is therefore appropriate to adjust this scope in this respect. Provision 
should furthermore be made for the maintenance of permanent grassland in 2014 and 
2015. 

25 
26 
27 

OJ L 270, 21.10.2003, p. 1. 
OJ L 277, 21.10.2005, p. 1. 
OJ L 299, 16.11.2007, p. 1. 

EN 

19 

   EN 

 
                                                 
(53)  Statutory management requirements need to be fully implemented by Member States 
in order to become operational at farm level and ensure the necessary equal treatment 
between farmers.  

(54)  As regards Directive 2000/60/EC of the European Parliament and of the Council of 23 
October  2000  establishing  a  framework  for  Community  action  in  the  field  of  water 
policy28  the  provisions  will  only  be  operational  under  cross  compliance  when  all 
Member States will have fully implemented them in particular with clear obligations 
for farmers. According to the Directive the requirements at farm level will be applied 
at the latest by 1 January 2013. 

(55)  As regards Directive 2009/128/EC of the European Parliament and of the Council of 
21  October  2009  establishing  a  framework  for  Community  action  to  achieve  the 
sustainable  use  of  pesticides29  the  provisions  will  only  be  operational  under  cross 
compliance  when  all  Member  States  will  have  fully  implemented  them  in  particular 
with clear obligations for farmers. According to the Directive the requirements at farm 
level  will  be  progressively  applied  following  a  time  schedule  and  in  particular  the 
general  principles  of  integrated  pest  management  will  be  applied  at  the  latest  by  1 
January 2014. 

(56)  According to Article 22 of Directive 2000/60/EC, Council Directive 80/68/EEC of 17 
December 1979 on the protection of groundwater against pollution caused by certain 
dangerous substances30 shall be repealed on 23 December 2013. In order to maintain 
the rules under cross compliance related to protection of groundwater, it is appropriate, 
while  awaiting  the  inclusion  of  Directive  2000/60/EC  in  cross  compliance,  to  adjust 
the  scope  of  cross-compliance  and  to  define  a  standard  of  good  agricultural  and 
environnemental condition encompassing the requirements of Articles 4 and 5 of the 
Directive 80/68/EEC. 

(57)  The  cross  compliance  system  implies  certain  administrative  constraints  for  both 
beneficiaries  and  national  administrations  since  record  keeping  must  be  ensured, 
checks  must  be  carried  out  and  penalties  have  to  be  applied  where  necessary.  Those 
penalties  should  be  proportionate,  effective  and  dissuasive.  Such  penalties  should  be 
without  prejudice  to  other  penalties  laid  down  under  other  provisions  of  Union  or 
national law. For the sake of consistency, it is appropriate to merge the relevant Union 
provisions  into  one  single  legal  instrument.  For  farmers  participating  in  the  small 
farmers scheme referred to in Title V of Regulation (EU) No xxx/xxx[DP], the efforts 
to  be  made  under  the  cross  compliance  system  may  be  considered  as  exceeding  the 
benefit  of  keeping  those  farmers  under  that  system.  For  reasons  of  simplification, 
those  farmers  should  therefore  be  exempted from  cross  compliance  and  in  particular 
from its control system and from the risk of cross compliance penalties. However, that 
exemption  should  be  without  prejudice  to  the  obligation  to  respect  the  applicable 
provisions  of  the  sectoral  legislation  and  to  the  possibility  to  be  checked  and  to  be 
imposed penalties under that legislation. 

28 
29 
30 

OJ L 327, 22.12.2000, p. 1. 
OJ L 309, 24.11.2009, p. 71. 
OJ L 20, 26.1.1980, p. 43. 

EN 

20 

   EN 

 
                                                 
(58)  Regulation  (EC)  No  1782/2003  established  a  framework  of  standards  of  good 
agricultural and environmental condition of the land within which Member States are 
to  adopt  national  standards  taking  account  of  the  specific  characteristics  of  the  areas 
concerned, including soil and climatic conditions and existing farming systems (land 
use,  crop  rotation,  farming  practices)  and  farm  structures.  Those  standards  of  good 
agricultural and environmental condition of the land aim at contributing to prevent soil 
erosion,  maintain  soil  organic  matter  and  soil  structure,  ensure  a  minimum  level  of 
maintenance,  avoid  the  deterioration  of  habitats  and  protect  and  manage  water.  The 
wider  scope  of  the  cross  compliance  system  as  laid  down  in  this  Regulation  should 
therefore  include  a  framework  within  which  Member  States  should  adopt  national 
standards  of  good  agricultural  and  environmental  condition.  The  Union  framework 
should also include rules to better address water, soil, carbon stock, biodiversity and 
landscape issues as well as minimum level of maintenance of the land. 

(59)  Beneficiaries  should  know  clearly  what  they  have  to  comply  with  in  relation  to  the 
rules  on  cross  compliance.  For  that  purpose,  all  requirements  and  standards  forming 
part  of  those  rules  should  be  communicated  by  Member  States  in  an  exhaustive, 
understandable and explanatory way, including, where possible, by electronic means. 

(60)  An effective implementation of cross compliance requires verification at beneficiaries' 
level that obligations are respected. Where a Member State decides to make use of the 
option not to apply a reduction or exclusion where the amount concerned is less than 
EUR 100, the competent control authority should, for a sample of beneficiaries in the 
following  year,  verify  that  the  findings  of  the  non-compliance  concerned  have  been 
remedied. 

(61)  To  ensure  harmonious  cooperation  between  the  Commission  and  the  Member  States 
regarding  the  financing  of  CAP  expenditure  and,  more  particularly,  to  allow  the 
Commission to monitor the financial management by the Member States and clear the 
accounts  of 
to  be 
communicated by the Member States or to be kept available to the Commission. 

the  accredited  paying  agencies,  certain 

information  has 

(62)  For the purposes of compiling the data to be sent to the Commission, and to allow the 
Commission  to  have  full  immediate  access  to  expenditure  data  in  both  paper  and 
electronic form, suitable rules on the presentation and transmission of data, including 
rules on time limits, need to be laid down. 

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

(64) 

In the interests of sound financial management of the Union budget and impartiality of 
treatment  at  both  Member  State  and  beneficiary  level,  rules  on  the  use  of  the  euro 
should be laid down. 

(65)  The rate of exchange of the euro into national currency may vary in the course of the 
period  during  which  an  operation  is  carried  out.  Therefore  the  rate  applicable  to  the 
amounts concerned should be determined taking into account the event through which 
the  economic  objective  of  the  operation  is  achieved.  The  rate  of  exchange  applied 
should  be  that  of  the  date  on  which  this  event  occurs.  It  is  necessary  to  specify  this 

EN 

21 

   EN 

 
operative event or to waive its application, observing certain criteria and in particular 
the rapidity with which currency movements are passed on. Those rules are laid down 
in  Council  Regulation  (EC)  No  2799/98  of  15  December  1998  establishing 
agrimonetary  arrangements  for  the  euro31  and  they  complete  similar  provisions  of 
Regulation (EC) No 1290/2005. In the interests of clarity and rationality the relevant 
provisions should be integrated into the same act. Regulation (EC) No 2799/98 should 
therefore be repealed. 

(66)  Special  rules  should  be  laid  down  for  dealing  with  exceptional  monetary  situations 
arising either within the Union or on the world market and requiring immediate action 
to ensure that the arrangements established under the CAP operate effectively. 

(67)  Member  States  not  having  adopted  the  euro  should  have  the  option  of  making 
payments  for  expenditure  resulting  from  the  CAP  legislation  in  euro  rather  than  in 
national currency. Specific rules are needed to ensure that this option does not lead to 
any unjustified advantage for parties making or receiving payment. 

(68)  Each measure under the CAP should be subject to monitoring and evaluation in order 
to  improve  its  quality  and  demonstrate  its  achievements.  In  this  context  a  list  of 
indicators  should  be  determined  and  the  impact  of  the  CAP  policy  assessed  by  the 
Commission  in  relation  to  policy  objectives.  The  Commission  should  set  up  a 
framework  for  a  common  monitoring  and  evaluation  ensuring  among  others  that 
relevant  data,  including  information  from  Member  States  is  available  on  a  timely 
manner. In so doing it should take into account the data needs and synergies between 
potential  data  sources.  Moreover,  the  Communication  from  the  Commission  to  the 
European Parliament, the Council, the European Economic and Social Committee and 
the  Committee  of  the  Regions:  A  Budget  for  Europe  2020  -  Part  II  stated  that  the 
climate  related  expenditure  in  the  overall  Union  budget  should  increase  to  at  least 
20%, with contribution from different policies. The Commission  should  therefore be 
able  to  assess  the  impact  of  the  Union's  support  in  the  framework  of  the  CAP  to 
climate objectives. 

(69)  Union  legislation  concerning  the  protection  of  individuals  with  regard  to  the 
processing  of  personal  data  and  on  the  free  movement  of  such  data,  in  particular 
Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 
on the protection of individuals with regard to the processing of personal data and on 
the  free  movement  of  such  data32  and  Regulation  (EC)  No  45/2001  of  the  European 
Parliament and of the Council of 18 December 2000 on the protection of individuals 
with  regard  to  the  processing  of  personal  data  by  the  Community  institutions  and 
bodies and on the free movement of such data33 are applicable. 

(70) 

In  its  judgment  in  Joined  Cases  C-92/09  and  93/0934  the  Court  of  Justice  of  the 
European  Union  declared  the  relevant  provisions  in  Regulation  (EC)  No  1290/2005 
concerning the obligation of Member States to publish information on natural persons 
benefiting  from  the  European  agricultural  funds  invalid.  Since  it  is  in  the  interest  of 

31 
32 
33 
34 

OJ L 349, 24.12.1998, p. 1. 
OJ L 281, 23.11.1995, p. 31. 
OJ L 8, 12.1.2001, p. 1. 
Judgement  in  joined  cases  C-92/09  and  C-93/09,  Volker  und  Markus  Schecke  GbR  and  Hartmut 
Eifert/Land Hessen, [2010] ECR I-0000 

EN 

22 

   EN 

 
                                                 
natural persons that their personal data are protected, and with  a view to reconciling 
the  different  objectives  underlying  the  obligation  to  publish  information  on  the 
beneficiaries of funds, as provided for in Commission Regulation (EC) No 259/2008 
laying  down  detailed  rules  for  the  application  of  Council  Regulation  (EC)  No 
1290/2005  as  regards  the  publication  of  information  on  the  beneficiaries  of  funds 
deriving  from  the  European  Agricultural  Guarantee  Fund  (EAGF)  and  the  European 
Agricultural  Fund  for  Rural  Development  (EAFRD)35,  that  Regulation  was  amended 
in order to lay down explicitly that this obligation does not apply to natural persons. 
The adoption by the European Parliament and the Council of new rules taking account 
of the objections expressed by the Court should be preceded by in depth analysis and 
assessment  in  order  to  find  the  most  appropriate  way  to  reconcile  the  right  to 
protection of personal data of the beneficiaries with the need for transparency. Pending 
that analysis and assessment, the current provisions on the publication of information 
on beneficiaries of the European agricultural funds should be maintained. 

(71) 

In  order  to  ensure  uniform  conditions  for  the  implementation  of  this  Regulation, 
implementing powers should be conferred on the Commission. Those powers should 
be  exercised  in  accordance  with  Regulation  (EU)  No  182/2011  of  the  European 
Parliament and of the Council of 16 February 2011 laying down the rules and general 
principles concerning mechanisms for control by Member States of the Commission's 
exercise of implementing powers36. 

(72)  The advisory procedure should be used for the adoption of certain implementing acts. 
With  regard  to  the  implementing  acts  involving  the  calculations  of  amounts  by  the 
Commission  the  advisory  procedure  enables  the  Commission  to  fully  assume  its 
responsibility of managing the budget and aims at increased efficiency, predictability 
and  rapidity,  taking  into  account  the  time  limits  and  the  budgetary  procedures.  With 
regard  to  the  implementing  acts  within  the  framework  of  the  payments  made  to  the 
Member States and the operation of the clearance of accounts procedure, the advisory 
procedure enables the Commission to fully assume its responsibility of managing the 
budget and verifying the annual accounts of the national paying agencies with a view 
to  accepting  such  accounts  or,  in  the  case  of  expenditure  not  effected  in  compliance 
with Union rules, to excluding such expenditure from Union financing. In other cases, 
the examination procedure should be used for the adoption of implementing acts. 

(73)  The Commission should  further  be empowered to carry out certain  administrative or 
management tasks, in particular concerning the setting of the net balance available for 
EAGF expenditure. To those empowerments Regulation (EU) No 182/2011 should not 
apply.  

(74)  The  transition  from  the  provisions  of  the  Regulations  repealed  by  this  Regulation  to 
those in this Regulation could give rise to practical and specific difficulties. In order to 
deal with those possible difficulties, provision should be made for the Commission to 
adopt the necessary and duly justified measures.  

(75)  As  the  programming  period  for  the  rural  development  programmes  financed  on  the 
basis  of  this  Regulation  runs  from  1  January  2014,  this  Regulation  should  be 

35 
36 

OJ L 76, 19.3.2008, p. 28. 
OJ L 55, 28.2.2011, p. 13. 

EN 

23 

   EN 

 
                                                 
applicable  as  from  that  date.  However,  certain  provisions  related  in  particular  to  the 
financial management of the funds should apply as from an earlier date corresponding 
to the beginning of the financial year, 

HAVE ADOPTED THIS REGULATION: 

EN 

24 

   EN 

 
TABLE OF CONTENTS 

EXPLANATORY MEMORANDUM ....................................................................................... 2 

1. 

2. 

3. 

4. 

CONTEXT OF THE PROPOSAL............................................................................... 2 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENT ............................................................................................ 4 

LEGAL ELEMENTS OF THE PROPOSAL .............................................................. 6 

BUDGETARY IMPLICATION .................................................................................. 7 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the 
financing, management and monitoring of the common agricultural policy .Error! Bookmark 
not defined. 

TITLE I SCOPE AND DEFINITIONS ................................................................................... 27 

TITLE II GENERAL PROVISIONS ON AGRICULTURAL FUNDS.................................. 28 

Chapter I Agricultural Funds.................................................................................................... 28 

Chapter II Paying agencies and other bodies ........................................................................... 30 

TITLE III FARM ADVISORY SYSTEM ............................................................................... 33 

TITLE IV FINANCIAL MANAGEMENT OF THE FUNDS ................................................ 35 

Chapter I EAGF ....................................................................................................................... 35 

Section 1 Financing of Expenditure ......................................................................................... 35 

Section 2 Budget discipline...................................................................................................... 38 

Chapter II EAFRD ................................................................................................................... 41 

Section 1 General provisions for EAFRD................................................................................ 41 

Section 2 Financing of rural development programmes .......................................................... 41 

Section 3 Financial Contribution to rural development programmes ...................................... 42 

Section 4 Financing of the Prize for innovative, local cooperation ......................................... 45 

Chapter III Common Provisions .............................................................................................. 46 

Chapter IV Clearance of accounts............................................................................................ 51 

EN 

25 

   EN 

 
Section I General provisions .................................................................................................... 51 

Section II Clearance ................................................................................................................. 53 

Section III Irregularities ........................................................................................................... 55 

TITLE V CONTROL SYSTEMS AND PENALTIES ............................................................ 58 

Chapter I General rules ............................................................................................................ 58 

Chapter II Integrated Administration and Control System ...................................................... 63 

Chapter III Scrutiny of transactions ......................................................................................... 69 

Chapter IV Other provisions on checks ................................................................................... 74 

TITLE VI CROSS COMPLIANCE......................................................................................... 77 

Chapter I Scope ........................................................................................................................ 77 

Chapter II Control system and penalties in relation to cross compliance ................................ 79 

TITLE VII COMMON PROVISIONS .................................................................................... 83 

Chapter I Communication ........................................................................................................ 83 

CHAPTER II Use of the euro .................................................................................................. 85 

CHAPTER III  Report and evaluation ..................................................................................... 87 

TITLE VIII FINAL PROVISIONS.......................................................................................... 89 

ANNEX I.................................................................................................................................. 91 

ANNEX II ................................................................................................................................ 94 

ANNEX III............................................................................................................................... 97 

LEGISLATIVE FINANCIAL STATEMENT....................................................................... 102 

EN 

26 

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TITLE I 
SCOPE AND DEFINITIONS 

This Regulation lays down the rules on: 

Article 1 
Scope 

(a) 

(b) 

(c) 

(d) 

(e) 

1. 

2. 

the  financing  of  expenditure  under  the  common  agricultural  policy,  including 
expenditure on rural development; 

the farm advisory system; 

the management and control systems to be put in place by the Member States; 

the cross-compliance system; 

clearance of accounts. 

Article 2 
Terms used in this Regulation 

The definitions of "farmer", "agricultural activity", "agricultural area", "holding" laid 
down  in  Article  4  of  Regulation  (EU)  xxx/xxx[DP]  shall  apply  for  the  purposes  of 
this Regulation, save as otherwise provided for in this Regulation. 

The terms "direct payments" referred to in Article 1 of Regulation (EU) xxx/xxx[DP] 
shall apply for the purposes of this Regulation. 

Force majeure and exceptional circumstances as used in this Regulation in relation 
to Regulation (EU) xxx/xxx[DP], Regulation  (EU) xxx/xxx[sCMO] and Regulation 
(EU) xxx/xxx[RD] may in particular be recognised in cases such as: 

(a) 

the death of the beneficiary; 

(b) 

long-term professional incapacity of beneficiary; 

(c) 

a severe natural disaster gravely affecting the holding; 

(d) 

the accidental destruction of livestock buildings on the holding; 

(e) 

an epizootic affecting part or all of the beneficiary's livestock; 

(f) 

expropriation  of  a  large  part  of  the  holding  if  that  could  not  have  been 
anticipated on the day of lodging the application. 

EN 

27 

   EN 

 
TITLE II 
GENERAL PROVISIONS ON AGRICULTURAL 
FUNDS 

Chapter I 
Agricultural Funds 

Article 3 
Funds financing agricultural expenditure 

1. 

In order to achieve the objectives of the common agricultural policy defined by the 
Treaty,  the  financing  of  the  various  measures  falling  under  it,  including  rural 
development shall be made by: 

(a) 

(b) 

the  European  Agricultural  Guarantee  Fund,  hereinafter  referred  to  as  the 
‘EAGF’; 

the European Agricultural Fund for Rural Development, hereinafter referred to 
as the ‘EAFRD’. 

2. 

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

Article 4 
EAGF expenditure 

1. 

The EAGF shall be implemented in shared management between the Member States 
and the Union and shall finance the following expenditure, which shall be effected in 
accordance with Union legislation: 

(a)  measures regulating or supporting agricultural markets; 

(b)  direct payments to farmers under the common agricultural policy; 

(c) 

(d) 

the  Union's  financial  contribution  to  information  and  promotion  measures  for 
agricultural products on the internal market of the Union and in third countries, 
undertaken  by  Member  States  on  the  basis  of  programmes  other  than  those 
referred to in Article 5 and selected by the Commission; 

the Union’s financial contribution to the Union School Fruit Scheme and to the 
measures  in  relation  to  animal  diseases  and  loss  of  consumer  confidence 
referred  to  in  Articles  21  and  155  of  Regulation  (EU)  No  xxx/xxx  [sCMO] 
respectively. 

2. 

The  EAGF  shall  finance  the  following  expenditure  in  a  direct  manner  and  in 
accordance with Union legislation: 

EN 

28 

   EN 

 
(a) 

promotion  of  agricultural  products,  undertaken  either  directly  by 
Commission or via international organisations; 

the 

(b)  measures,  undertaken  in  accordance  with  Union  legislation,  to  ensure  the 
conservation, characterisation, collection and utilisation of genetic resources in 
agriculture; 

(c) 

establishment and maintenance of agricultural accounting information systems; 

(d) 

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

Article 5 
EAFRD expenditure 

The EAFRD shall be implemented in shared management between the Member States and the 
Union and shall finance the Union's financial contribution to rural development programmes 
implemented  in  accordance with the Union legislation on support for rural development, as 
well  as  the  expenditure  related  to  the  Prize  for  innovative,  local  cooperation  referred  to  in 
Chapter IV of Title III of Regulation (EU) No RD/xxx.. 

Article 6 
Other expenditure, including technical assistance 

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

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

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

the acquisition by the Commission of the satellite images required for the checks in 
accordance with Article 21; 

the measures taken by the Commission via remote-sensing applications used for the 
monitoring of agricultural resources in accordance with Article 22; 

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

provision  of  information  on  the  common  agricultural  policy  in  accordance  with 
Article 47; 

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

EN 

29 

   EN 

 
(g) 

(h) 

(i) 

1. 

2. 

where  relevant,  executive  agencies  set  up  in  accordance  with  Council  Regulation 
(EC) No 58/200337, acting in connection with the common agricultural policy; 

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

measures  required  for  the  development,  registration  and  protection  of  logos  within 
the  framework  of  the  Union  quality  policies  and  for  the  protection  of  intellectual 
property  rights  linked  to  it,  as  well  as  the  necessary  information  technology  (IT) 
developments. 

Chapter II 
Paying agencies and other bodies 

Article 7 
Accreditation and withdrawal of accreditation of paying agencies 
and coordinating bodies 

Paying  agencies  shall  be  dedicated  departments  or  bodies  of  the  Member  States 
responsible for the management and control of expenditure referred to in Article 4(1) 
and Article 5. 

With the exception of payment, the execution of those tasks may be delegated. 

Member States shall accredit as paying agencies departments or bodies which fulfil 
the accreditation criteria to be laid down by the Commission pursuant to Article 8(a). 

Each Member State shall, taking into account its constitutional provisions, restrict the 
number of its accredited paying agencies to one per Member State or one per region, 
where applicable. However, where paying agencies are established at regional level, 
Member  States  shall,  in  addition,  accredit  a  paying  agency  at  national  level  for  aid 
schemes which, by their nature, have to be managed at national level. 

3. 

By  [1  February]  of  the  year  following  the  financial  year  concerned,  the  person  in 
charge of the accredited paying agency shall draw up: 

(a) 

(b) 

the  annual  accounts  for  the  expenditure  made  in  the  execution  of  the  tasks 
entrusted  to  their  accredited  paying  agencies,  accompanied  by  the  requisite 
information for their clearance in accordance with Article 53; 

a  management  declaration  of  assurance  as  to  the  completeness,  accuracy  and 
veracity of the accounts, the proper functioning of the internal control systems 
as well as to the legality and regularity of the underlying transactions and the 
respect of the principle of sound financial management; 

37 

OJ L 11, 16.1.2003, p. 1. 

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(c) 

a  summary  of  the  results  of  all  available  audits  and  checks  carried  out, 
including  an  analysis  of  systematic  or  recurrent  weaknesses  as  well  as 
corrective actions taken or planned. 

4. 

Where more than one paying agency is accredited, the Member State shall designate 
a  body,  hereinafter  referred  to  as  the  "coordinating  body",  to  which  it  assigns  the 
following tasks: 

(a) 

(b) 

to collect the information to be made available to the Commission and to send 
that information to the Commission; 

to  establish  a  synthesis  report  providing  an  overview  at  national  level  of  all 
management  declarations  of  assurance  referred  to  in  point  (b)  of  paragraph  3 
and the audit opinions thereon referred to in Article 9; 

(c) 

to ensure that remedial action is taken as regards any deficiencies of a common 
nature and that the Commission is kept informed of the follow-up; 

(d) 

to promote and ensure harmonised application of the Union rules. 

The  coordinating  body  shall  be  subject  to  specific  accreditation  by  the  Member 
States as regards the processing of the financial information referred to in point (a) of 
the first subparagraph. 

Where an accredited paying agency does not meet or no longer meets one or more of 
the accreditation criteria referred to in paragraph 2, the Member State shall withdraw 
its  accreditation  unless  the  paying  agency  makes  the  necessary  changes  within  a 
period to be determined according to the severity of the problem. 

The paying agencies shall manage and ensure control of the operations linked to 
public  intervention  for  which  they  are  responsible  and  they  shall  retain  overall 
responsibility in that field.  

Article 8 
Commission powers 

To  ensure  the  sound  operation  of  the  system  provided  for  in  Article  7,  the 
Commission shall be empowered to adopt delegated acts in accordance with Article 
111 concerning: 

(a)  minimum conditions for the accreditation of paying agencies with regard to the 
internal  environment,  control  activities,  information  and  communication,  and 
monitoring,  as  well  as  rules  on  the  procedure  for  issuing  and  withdrawing 
accreditation;  

(b) 

rules  relating  to  supervision  and  the  procedure  for  reviewing  accreditation  of 
paying agencies; 

(c)  minimum  conditions  for  the  accreditation  of  coordination  bodies  as  well  as 

rules on the procedure for issuing and withdrawing accreditation. 

5. 

6. 

1. 

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2 

The Commission shall lay down, by means of implementing acts, rules on: 

(a) 

(b) 

the obligations of the paying agencies as regards public intervention, as well as 
on the content of their management and control responsibilities.  

the functioning of the coordinating body and the notification of information to 
the Commission as referred to in Article 7(4). 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance with the examination procedure referred to in Article 112(3). 

1. 

2. 

Article 9 
Certification bodies 

The  certification  body  shall  be  a  public  or  private  audit  body  designated  by  the 
Member  State  which  shall  provide  an  opinion  on  the  management  declaration  of 
assurance covering the completeness, accuracy and veracity of the annual accounts of 
the  paying  agency,  the  proper functioning of its internal control system, the legality 
and regularity of the underlying transactions, as well as the respect of the principle of 
sound financial management. 

It shall be operationally independent from both the paying agency concerned and the 
authority which has accredited that agency. 

The  Commission  shall,  by  means  of  implementing  acts,  lay  down  rules  concerning 
the status of the certification bodies, the specific tasks, including the checks, which 
they  have  to  carry  out  as  well  as  the  certificates  and  the  reports,  together  with  the 
documents  accompanying 
those  bodies.  Those 
implementing  acts  shall  be  adopted  in  accordance  with  the  examination  procedure 
referred to in Article 112(3). 

to  be  drawn  up  by 

them, 

Article 10 
Admissibility of payments made by the paying agencies 

The  expenditure  referred  to  in  Article  4(1)  and  in  Article  5  may  be  covered  by  Union 
financing only if it has been effected by accredited paying agencies. 

Article 11 
Payment in full to beneficiaries 

Save explicitly provided otherwise in the Union legislation, payments relating to the financing 
provided for in this Regulation shall be disbursed in full to the beneficiaries. 

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TITLE III 
FARM ADVISORY SYSTEM 

Article 12 
Principle and scope 

1. 

Member  States  shall  establish  a  system  of  advising  beneficiaries  on  land  and  farm 
management (hereinafter referred to as the ‘farm advisory system’) operated by one 
or more designated bodies. The designated bodies may be public or private. 

2. 

The farm advisory system shall cover at least: 

(a) 

(b) 

(c) 

(d) 

the statutory management requirements and the standards for good agricultural 
and environmental condition of land as laid down in Chapter I of Title VI;  

the agricultural practices beneficial for the climate and the environment as laid 
down  in  Chapter  2  of  Title  III  of  Regulation  (EU)  No  xxx/xxx  [DP]  and  the 
maintenance  of  the  agricultural  area  as  referred  to  in  Article  4(1)(c)  of 
Regulation (EU) No xxx/xxx [DP]; 

the requirements or actions related to climate change mitigation and adaptation, 
biodiversity,  protection  of  water,  animal  and  plant  disease  notification  and 
innovation at minimum as laid down in Annex I to this Regulation; 

the  sustainable  development  of  the  economical  activity  of  the  small  farms  as 
defined  by  the  Member  States  and  at  least  of  the  farms  participating  in  the 
small  farmers  scheme  referred  to  in  Title  V  of  Regulation  (EU)  No 
xxx/xxx[DP]. 

3. 

The farm advisory system may also cover in particular: 

(a) 

(b) 

the sustainable development of the economical activity of holdings other than 
those referred to in paragraph (2)(d); 

the minimum requirements established by national legislation, as referred to in 
Article 29(3) and 30(2) of Regulation (EU) No xxx/xxx [RD] 

Article 13 
Specific requirements relating to the farm advisory system 

1. 

2. 

Member  States  shall  ensure  that  the  advisors  within  the  farm  advisory  system  are 
suitably qualified and regularly trained. 

Member States shall ensure the separation between advice and control. In this respect 
and without prejudice to national legislation concerning public access to documents, 
Member States shall ensure that the designated bodies referred to in Article 12 do not 
disclose  personal  or  individual  information  and  data  they  obtain  in  their  advisory 
activity to persons other than the beneficiary managing the holding concerned, with 

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the exception of any irregularity or infringement found during their activity which is 
covered  by  an  obligation  laid  down  in  Union  or  national  law  to  inform  a  public 
authority, in particular in the case of criminal offences. 

3. 

The competent national authority shall provide the beneficiary, where appropriate by 
the use of electronic means, with the appropriate list of designated bodies. 

Article 14 
Access to the farm advisory system 

Beneficiaries,  whether  or  not  they  receive  support  under  the  common  agricultural  policy, 
including rural development, may use the farm advisory system on a voluntary basis. 

However Member States may determine, in accordance with objective criteria, the categories 
of  beneficiaries  that  have  priority  access  to  the  farm  advisory  system.  Member  States  shall 
nevertheless ensure that priority is given to farmers whose access to an advisory service other 
than the farm advisory system is most limited. 

The farm advisory system shall ensure that beneficiaries have access to advice reflecting the 
specific situation of their holding. 

Article 15 
Commission powers 

1. 

2. 

In  order  to  guarantee  the  proper  functioning  of  the  farm  advisory  system,  the 
Commission shall be empowered to adopt delegated acts in accordance with Article 
111 concerning provisions aiming at rendering that system fully operational. Those 
provisions may relate, amongst others, to the accessibility criteria for farmers. 

The Commission may, by means of implementing acts, adopt rules for the uniform 
implementation  of  the  farm  advisory  system.  Those  implementing  acts  shall  be 
adopted in accordance with the examination procedure referred to in Article 112(3). 

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TITLE IV 
FINANCIAL MANAGEMENT OF THE FUNDS 

Chapter I 
EAGF 

SECTION 1 
FINANCING OF EXPENDITURE 

Article 16 
Budget ceiling 

1. 

2. 

1. 

2. 

1. 

2. 

The  annual  ceiling  for  EAGF  expenditure  shall  be  constituted  by  the  maximum 
amounts set for it under Regulation (EU) No xxx/xxx [MFF]. 

In  the  event  that  the  Union  legislation  provides  for  sums  to  be  reduced  from  the 
amount referred to in paragraph 1, the Commission shall, by means of implementing 
acts,  set  the  net  balance  available  for  EAGF  expenditure  on  the  basis  of  the  data 
referred to in that legislation. 

Article 17 
Monthly payments 

The  appropriations  necessary  to  finance  the  expenditure  referred  to  in  Article  4(1) 
shall be made available to Member States by the Commission in the form of monthly 
payments, on the basis of the expenditure effected by the accredited paying agencies 
during a reference period. 

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

Article 18 
Procedure for monthly payments 

Monthly  payments  shall  be  made  by  the  Commission,  without  prejudice  to  the 
implementing  acts  referred  to  in  Articles  53  and  54,  for  expenditure  effected  by 
accredited paying agencies during the reference month. 

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

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

The  Commission  shall,  by  means  of  implementing  acts,  determine  the  monthly 
payments  which  it  makes,  on  the  basis  of  a  declaration  of  expenditure  from  the 
Member  States  and  the  information  supplied  in  accordance  with  Article  102(1), 
taking  account  reductions  or  suspensions  applied  under  Article  43  or  any  other 
corrections.  Those  implementing  acts  shall  be  adopted  in  accordance  with  the 
advisory procedure referred to in Article 112(2). 

The  Commission  may,  by  means  of 
to  make 
supplementary payments or deductions. In such cases, the Committee referred to in 
Article 112(1) shall be informed at its next meeting. 

implementing  acts,  decide 

3. 

4. 

Article 19 
Administrative and personnel costs 

Expenditure relating to administrative and personnel costs incurred by Member States and by 
beneficiaries of aid from the EAGF shall not be borne by the Fund. 

Article 20 
Public intervention expenditure 

1. 

2. 

Where, within the framework of the common organisation of the markets, a sum per 
unit is not determined in respect of a public intervention, the EAGF shall finance the 
measure concerned on the basis of standard amounts uniform throughout the Union, 
in particular for funds originating in the Member States used for buying-in products, 
for material operations arising from storage and, where appropriate, for processing of 
intervention products. 

In  order  to  ensure  the  funding  by  the  EAGF  of  the  public  intervention  expenditure 
the  Commission  shall  be  empowered  to  adopt  delegated  act  in  accordance  with 
Article 111 concerning: 

(a) 

(b) 

the  type  of  measures  eligible  for  Union  financing  and  the  reimbursement 
conditions; 

the  eligibility  conditions  and  calculation  methods  on  the  basis  of  the 
information  actually  observed  by  the  paying  agencies  or  on  the  basis  of  flat-
rates determined by the Commission, or on the basis of flat-rate or non-flat-rate 
amounts provided for by the sectoral agricultural legislation. 

3. 

The amounts referred to in the paragraph 1 shall be set by the Commission by means 
of implementing acts. Those implementing acts shall be adopted in accordance with 
the advisory procedure referred to in Article 112(2). 

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Article 21 
Acquisition of satellite images 

The list of the satellite images required for checks shall be agreed by the Commission and the 
Member States in accordance with the specification prepared by each Member State. 

The Commission shall supply those satellite images free of charge to the control bodies or to 
suppliers of services authorised by those bodies to represent them. 

The Commission shall remain the owner of the images and shall recover them on completion 
of the work. It may also provide that work is carried out on enhancing techniques and working 
methods in connection with the inspection of agricultural areas by remote sensing. 

Article 22 
Monitoring of agricultural resources 

The measures financed pursuant to point (c) of Article 6 shall aim to give the Commission the 
means  to  manage  Union  agricultural  markets  in  a  global  context,  to  ensure  agri-economic 
monitoring of agricultural land and of the condition of crops so as to enable estimates to be 
made, in particular as regards yields and agricultural production, to share the access to such 
estimates  in  an  international  context,  such  as  initiatives  coordinated  by  United  Nations 
organisations or other international agencies, to contribute to transparency of world markets, 
and to ensure technological follow-up of the agri-meteorological system.  

The measures financed pursuant to point (c) of Article 6 concern the collection or purchase of 
data needed to implement and monitor the common agricultural policy, including satellite data 
and  meteorological  data,  the  creation  of  a  spatial  data  infrastructure  and  a  website,  the 
carrying out of specific studies on climatic conditions and the updating of agri-meteorological 
and  econometric  models.  Where  necessary,  those  measures  shall  be  carried  out  in 
collaboration with national laboratories and bodies. 

Article 23 
Implementing powers 

The Commission may, by means of implementing acts, adopt rules relating to the financing 
pursuant to points (b) and (c) of Article 6, the procedure under which the measures referred to 
in  Articles  21  and  22  shall  be  carried  out  in  order  to  meet  the  objectives  assigned,  the 
framework  governing  the  acquisition,  enhancing  and  utilisation  of  satellite  images  and 
meteorological data, and the applicable deadlines. Those implementing acts shall be adopted 
in accordance with the examination procedure referred to in Article 112(3). 

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SECTION 2  
BUDGET DISCIPLINE 

Article 24 
Compliance with the ceiling 

1. 

2. 

3. 

1. 

2. 

3. 

4. 

the  budget  procedure  and 

the  budget, 
Throughout 
appropriations relating to EAGF expenditure shall not exceed the amount referred to 
in Article 16. 

implementation  of 

the 

All  legislative  instruments  proposed  by  the  Commission  and  adopted  by  the 
European Parliament and the Council, the Council or the Commission and having an 
influence  on  the  EAGF  budget  shall  comply with  the  amount  referred  to  in  Article 
16. 

Where  Union  legislation  provides  for  a  financial  ceiling  in  euro  for  agricultural 
expenditure  in  respect  of  a  Member  State,  such  expenditure  shall  be  reimbursed 
subject  to  that  limit  set  in  euro,  with  any  necessary  adjustments  being  made  if 
Article 43 applies. 

National ceilings for direct payments referred to in Article 7 of Regulation (EU) No 
xxx/xxx[DP], corrected by the adjustments laid down in Article 25 of this Regulation, 
shall be deemed to be financial ceilings in euro. 

Article 25 
Financial discipline 

With a view to ensuring that the annual ceilings set out in the Regulation (EU) No 
xxx/xxx  [MFF]  for  the  financing  of  the  market  related  expenditure  and  direct 
payments  are  respected,  an  adjustment  rate  of  the  direct  payments  shall  be 
determined when the forecasts for the financing of the measures financed under that 
subceiling for a given financial year indicate that the applicable annual ceilings will 
be exceeded. 

The Council, acting on a proposal from the Commission presented no later than 31 
March  of  the  calendar  year  in  respect  of  which  the  adjustment  referred  to  in 
paragraph 1 applies, shall determine the adjustment no later than 30 June of the same 
calendar year. 

If by 30 June in any year the adjustment rate has not been set, the Commission shall 
set  it  by  means  of  an  implementing  act  and  shall  inform  the  Council  immediately. 
Such implementing act shall be adopted in accordance with the advisory procedure 
referred to in Article 112(2). 

Until 1 December, on a proposal by the Commission, on the basis of new information 
in its possession, the Council may adapt the adjustment rate for direct payments set 
in accordance with paragraphs 2 or 3. 

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5. 

6. 

1. 

2. 

3. 

4. 

The Commission may by means of implementing act  adopt the terms and conditions 
applicable  to  appropriations  carried  over  in  accordance  with  Article  [149(3)]  of 
Regulation (EU) No FR/xxx in order to finance the expenditure referred to in Article 
4(1)(b) of this Regulation. Those implementing acts shall be adopted in accordance 
with the advisory procedure referred to in Article 112(2). 

Before applying this Article, account shall first be taken of the amount authorised by 
the budget authority for the Reserve for crises in the agricultural sector referred to in 
point  14  of  the  Interinstitutional  Agreement  between  the  European  Parliament,  the 
Council  and  the  Commission  on  cooperation  in  budgetary  matters  and  on  sound 
financial management. 

Article 26 
Budget discipline procedure 

The Commission shall present to the European Parliament and to the Council, at the 
same time as the draft budget for financial year N, its forecasts for financial years N - 
1, N and N + 1. 

If, on drawing up the draft budget for financial year N, there appears to be a risk that 
the  amount  referred  to  in  Article  16  for  financial  year  N  will  be  exceeded,  the 
Commission  shall  propose  to  the  European  Parliament  and  the  Council  or  to  the 
Council the measures necessary to ensure compliance with that amount. 

At any time, if the Commission considers that there is a risk of the amount referred to 
in Article 16 being exceeded and that it cannot take adequate measures to remedy the 
situation under its powers, it shall propose other measures to ensure compliance with 
that amount. These measures shall be adopted by the Council on the basis of Article 
43(3)  of  the  Treaty  or  by  the  European  Parliament  and  the  Council  on  the  basis  of 
Article 43(2) of the Treaty. 

If,  at  the  end  of  financial  year  N,  reimbursement  requests  from  the  Member  States 
exceed or are likely to exceed the amount referred to in Article 16, the Commission 
shall: 

(a) 

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

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

(c) 

set, by means of implementing act the total amount of Union financing broken 
down by Member State, on the basis of a single rate of Union financing, within 
the limit of the budget which was available for the monthly payments; 

(d) 

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

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The  implementing  acts  provided  for  in  points  (a)  and  (c)  of  the  first  subparagraph 
shall  be  adopted  in  accordance  with  the  advisory  procedure  referred  to  in  Article 
112(2). 

Article 27 
Early-warning system 

In order to ensure that the budget ceiling referred to in Article 16 will not be exceeded, the 
Commission  shall  implement  a  monthly  early-warning  and  monitoring  system  in  respect  of 
EAGF expenditure. 

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

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

Article 28 
Reference exchange rates 

1. 

2. 

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

When adopting a draft amending and supplementary budget or a letter of amendment 
thereto, in so far as those documents concern appropriations relating to the measures 
referred to in Article 4(1)(a), the Commission shall use: 

(a) 

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

(b) 

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

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Chapter II 
EAFRD 

SECTION 1 
GENERAL PROVISIONS FOR EAFRD 

Article 29 
No double funding 

Without  prejudice  to  the  eligibility  for  support  under  Article  30(2)  of  Regulation  (EU)  No 
RD/xxx, expenditure financed under the EAFRD shall not be subject of any other financing 
under the EU budget. 

Article 30 
Provisions applying to all payments 

1. 

In  accordance  with  Article  67(1)  of  Regulation  (EU)  No  CR/xxx  payments  by  the 
Commission of the EAFRD contribution as referred to in Article 5 shall not exceed 
the budget commitments. 

They shall be assigned to the earliest open budget commitment. 

2. 

Article [81] of Regulation (EU) No FR/xxx shall apply. 

SECTION 2 
FINANCING OF RURAL DEVELOPMENT PROGRAMMES 

Article 31 
Financial contribution from the EAFRD 

The  financial  contribution  from  the  EAFRD  towards  expenditure  under  rural  development 
programmes  shall  be  determined  for  each  programme,  within  the  ceilings  established  by 
Union legislation concerning support for rural development by the EAFRD. 

Article 32 
Budget commitments 

As regards the Union's budget commitments for rural development programmes, Article 66 of 
Regulation (EU) No CR/xxx shall apply.  

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SECTION 3 
FINANCIAL CONTRIBUTION TO RURAL DEVELOPMENT PROGRAMMES 

Provisions applying to payments for rural development programmes 

Article 33 

The appropriations necessary to finance the expenditure referred to in Article 5 shall 
be made available to Member States in the  form of  prefinancing, interim payments 
and the payment of a balance, as described in this Section. 

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

In accordance with Article 70(2) of Regulation (EU) No CR/xxx, when the ceiling of 
95 % is reached, the Member States shall continue transmitting request for payments 
to the Commission. 

Article 34 
Prefinancing arrangements 

Following the Commission decision approving the programme, an initial prefinancing 
amount  for  the  whole  programming  period  shall  be  paid  by  the  Commission.  This 
initial pre-financing amount shall represent 4% of the EAFRD contribution to the 
programme  concerned.  It  may  be  split  into  a  maximum  of  three  instalments 
depending  on  budget  availability.  The  first  instalment  shall  represent  2%  of  the 
EAFRD contribution to the programme concerned. 

The  total  amount  paid  as  prefinancing  shall  be  reimbursed  to  the  Commission  if  no 
expenditure is incurred and no declaration of expenditure for the rural development 
programme is sent within 24 months of the date on which the Commission pays the 
first instalment of the prefinancing amount. 

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

The  total  prefinancing  amount  shall  be  cleared  in  accordance  with  the  procedure 
referred to in Article 53 before the rural development programme is closed. 

Article 35 
Interim payments 

Interim payments shall be made for each rural development programme. They shall be 
calculated by  applying the co-financing rate  for  each  measure  to  the  incurred  public 
expenditure pertaining to it. 

1. 

2. 

1. 

2. 

3. 

4. 

1. 

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42 

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2. 

3. 

4. 

5. 

6. 

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

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

(a) 

transmission to the Commission of a declaration of expenditure signed by the 
accredited paying agency, in accordance with Article 102(1)(c); 

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

period covered by the programme concerned; 

(c) 

transmission  to  the  Commission  of  the  last  annual  progress  report  on  the 
implementation of the rural development programme. 

If one of the requirements laid down in paragraph 3 is not met, the Commission shall 
forthwith inform the accredited paying agency or the coordinating body, where one 
has  been  appointed.  If  one  of  the  requirements  laid  down  in  point  (a)  or  (c)  of 
paragraph 3 is not respected, the declaration of expenditure shall be inadmissible. 

The  Commission  shall  make  interim  payments  within  45  days  of  registering  a 
declaration of expenditure for which the requirements set out in paragraph 3 of this 
Article  are  met,  without  prejudice  to  the  Article  39  and  to  the  implementing  acts 
referred to in Articles 53 and 54. 

Accredited  paying  agencies  shall  establish  and  forward,  either  directly  or  via  the 
intermediary  of  the coordinating  body, where one has been appointed, intermediate 
declarations  of  expenditure  relating  to  rural  development  programmes  to  the 
Commission, within periods set by the Commission by means of implementing acts 
adopted in accordance with the examination procedure referred to in Article 112(3). 

Declarations  of  expenditure  shall  cover  expenditure  that  the  paying  agencies  have 
incurred during each of the periods concerned. However, in cases where expenditure 
referred to in Article 55(7) of Regulation (EU) No CR/xxx cannot be declared to the 
Commission  in  the  period  concerned  due  to  pending  approval  of  the  program 
modification by the Commission, it may be declared in subsequent periods. 

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

7. 

Article 74 of Regulation (EU) No CR/xxx shall apply. 

Article 36 
Payment of the balance and closure of the programme 

1. 

After  receiving  the  last  annual  progress  report  on  the  implementation  of  a  rural 
development programme, the Commission shall pay the balance, subject to resource 
availability, on the basis of the financial plan in force, the annual accounts for the last 

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execution  year  for  the  relevant  rural  development  programme  and  of  the 
corresponding  clearance  decision.  Those  accounts  shall  be  presented  to  the 
Commission no later than 6 months after the final eligibility date of expenditure as 
referred to in Article 55(2) of Regulation (EU) No xxx/xxx[CR] and shall cover the 
expenditure  incurred  by  the  paying  agency  up  to  the  last  eligibility  date  of 
expenditure. 

The  balance  shall  be  paid  not  later  than  six  months  after  the  information  and 
documents referred to in paragraph 1 of this Article are considered receivable by the 
Commission  and  the  last  annual  account  have  been  cleared.  The  amounts  still 
committed after the balance is paid shall be decommitted by the Commission within 
a period of six months, without prejudice to Article 37(5). 

If by the time limit set out in paragraph 1 the Commission has not been sent the last 
annual progress report and the documents needed for clearance of the accounts of the 
last execution year for the programme the balance shall be automatically decommitted 
in accordance with Article 37. 

Article 37 
Automatic decommitment for rural development programmes 

The Commission shall automatically decommit any portion of a budget commitment 
for  a  rural  development  programme  that  has  not  been  used  for  the  purpose  of 
prefinancing or making interim payments or for which no declaration of expenditure 
fulfilling  the  requirements  laid  down  in  Article  35(3)  has  been  presented  to  it  in 
relation to expenditure incurred by 31 December of the second year following that of 
the budget commitment. 

That part of budget commitments still open on the last eligibility date of expenditure 
as  referred  to  in  Article  55(2)  of  Regulation  (EU)  No  xxx/xxx[CR]  for  which  a 
declaration of expenditure has not been made by within 6 months after that date shall 
be automatically decommitted. 

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

2. 

3. 

1. 

2. 

3. 

4. 

The following shall be disregarded in calculating the automatic decommitment: 

(a) 

(b) 

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

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

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5. 

6. 

The Member State shall send the Commission information on the exceptions referred 
to in the first subparagraph by 31 January for the amount to be declared by the end of 
the preceding year. 

The  Commission  shall  inform  Member  States  in  good  time  if  there  is  a  risk  of 
automatic decommitment. It shall inform them of the amount involved as indicated 
by the information in its possession. The Member States shall have two months from 
receiving this information to agree to the amount in question or present observations. 
The  Commission  shall  carry  out  the  automatic  decommitment  not  later  than  nine 
months after the last time-limit resulting from the application of paragraphs 1 to 3. 

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

SECTION 4 
FINANCING OF THE PRIZE FOR INNOVATIVE, LOCAL COOPERATION 

Article 38 

Budget commitments 

The Commission Decision adopting the list of the projects to which the Prize for innovative, 
local cooperation is awarded, as referred to in Article 58(4) of Regulation (EU) No RD/xxx 
shall constitute a financing decision within the meaning of Article [75(2)] of Regulation (EU) 
No FR/xxx. 

Following  the  adoption  of  the  Decision  referred  to  in  the  first  paragraph,  the  Commission 
shall made a budget commitment by Member State for the total amount of the prizes granted 
to  projects  in  that  Member  State  within  the  limit  referred  to  in  Article  51(2)  of  Regulation 
(EU) No RD/xxx. 

Article 39 

Payments to the Member States 

1. 

2. 

Within  the  framework  of  the  interim  payments  referred  to  in  Article  35,  the 
Commission shall make payments in order to reimburse the expenditure incurred by 
accredited  paying  agencies  in  awarding  the  Prizes  referred  to  in  this  Section  in  the 
limits of the available budget commitments for the Member States concerned. 

Each payment shall be subject to the transmission to the Commission of a declaration 
of  expenditure  signed  by  the  accredited  paying  agency,  in  accordance  with  Article 
102(1)(c).  

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3. 

Accredited  paying  agencies  shall  establish  and  forward,  either  directly  or  via  the 
intermediary of the coordinating body, where one has been appointed, declarations of 
expenditure relating to the Prize for innovative, local cooperation to the Commission, 
within  periods  set  by  the  Commission  by  means  of  implementing  acts  adopted  in 
accordance with the examination procedure referred to in Article 112(3). 

Declarations  of  expenditure  shall  cover  expenditure  that  the  paying  agencies  have 
incurred during each of the periods concerned.  

Automatic decommitment for the Prize for innovative, local cooperation 

Article 40 

The  Commission  shall  automatically  decommit  the  amounts  referred  to  in  the  second 
subparagraph of Article 38 that have not been used for reimbursing the Member States as laid 
down  in  Article  39  or  for  which  no  declaration  of  expenditure  meeting  the  conditions  laid 
down  in  that  Article  has  been  presented  to  it  in  relation  to  expenditure  incurred  by  31 
December of the second year following that of the budget commitment. 

Article 37(3), (4) and (5) shall apply mutatis mutandis. 

Chapter III 
Common Provisions 

Article 41 
Agricultural financial year 

Without  prejudice  to  the  special  provisions  on  declarations  of  expenditure  and  revenue 
relating to public intervention laid down by the Commission pursuant to Article 48(7)(a), the 
agricultural  financial  year  shall  cover  expenditure  paid  and  revenue  received  and  entered  in 
the accounts of the EAGF and EAFRD budget by the paying agencies in respect of financial 
year «N» beginning on 16 October of year «N-1» and ending on 15 October of year «N». 

Article 42 
Compliance with payment deadlines 

1. 

Where payment deadlines are laid down by Union legislation, any payment made by 
the paying agencies to the beneficiaries before the earliest possible date of payment 
and after the latest possible date of payment shall make the payments ineligible for 
Union financing, except in the cases, conditions and limits to be determined taking 
into account the principle of proportionality. 

In order to make the financial impact proportional to the payment delay observed, the 
Commission shall be empowered to adopt delegated acts in accordance with Article 
111 concerning rules on the reduction of payments in relation to the non-respect of 
the payment period. 

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2. 

1. 

Where  the  latest  possible  date  of  payment  is  not  respected  by  the  Member  States, 
they shall pay the beneficiaries default interests, supported from the national budget.  

Article 43 
Reduction and suspension of monthly and interim payments 

Where  the  declarations  of expenditure or the information referred to in Article 102 
enable  the  Commission  to  establish  that  expenditure  has  been  effected  by  bodies 
which are not accredited paying agencies, that payment periods or financial ceilings 
set  by  Union  legislation  have  not  been  respected  or  that  expenditure  has  otherwise 
not  been  effected  in  accordance  with  Union  rules,  the  Commission  may  reduce  or 
suspend the monthly or interim payments to the Member State concerned under the 
decision on monthly payments referred to in Article 18(3) or in the framework of the 
interim  payments  referred  to  in  Article  35,  after  giving  the  Member  State  an 
opportunity to submit its comments. 

Where  the declarations  of expenditure or the information referred to in Article 102 
do not enable the Commission to establish that the expenditure has been effected in 
accordance with Union rules, the Commission shall ask the Member State concerned 
to  supply  further  information  and  submit  its  comments  within  a  period  which  may 
not  be  less  than  30  days.  If  the  Member  State  fails  to  respond  to  the  Commission 
request within the period determined or if the response is considered unsatisfactory 
or demonstrates that the expenditure has not been effected in accordance with Union 
rules,  the  Commission  may  reduce  or  suspend  the  monthly  or  interim  payments  to 
the Member State concerned under the decision on monthly payments referred to in 
Article 18(3) or in the framework of the interim payments referred to in Article 35. 

2. 

The Commission may, by way of implementing acts, reduce or suspend the monthly 
or interim payments to a Member State if all of the following conditions are met: 

(a) 

(b) 

one or more of the key components of the national control system in question 
do  not  exist  or  are  not  effective  due  to  the  gravity  or  persistence  of  the 
deficiencies  found,  or  irregular  payments  are  not  being  recovered  with  the 
necessary diligence; 

the  deficiencies  referred  to  in  point  (a)  are  of  a  continuous  nature  and  have 
been  the  reason  for  at  least  two  implementing  acts  pursuant  to  Article  54, 
the  Member  State 
excluding  from  Union  financing  expenditure  from 
concerned; and 

(c) 

the Commission concludes that the Member State concerned is not in a position 
to implement the necessary measures to remedy the situation in the immediate 
future. 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance with the advisory procedure referred to in Article 112(2). 

The reduction or suspension shall be applied to the relevant expenditure effected by 
the paying agency where the deficiencies exist for a period to be determined in the 
implementing  acts  referred  to  in  the  first  subparagraph,  which  shall  not  exceed 
twelve months but which may be prolonged for further periods not exceeding twelve 

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months if the conditions for the reduction or suspension continue to be met. It shall 
not be continued if those conditions are no longer met. 

Before  adopting  the  implementing  acts  referred  to  in  the  first  subparagraph,  the 
Commission shall inform the Member State concerned of its intention and shall ask it 
to react within a period which may not be less than 30 days. 

The decisions on the monthly payments referred to in Article 18(3) or on the interim 
payments  referred  to  in  Article  35  shall  take  account  of  the  implementing  acts 
adopted under this paragraph. 

Reductions  and  suspensions  under  this  Article  shall  be  applied  in  accordance  with 
the  principle  of  proportionality  and  are  without  prejudice  to  the  implementing  acts 
referred to in Articles 53 and 54. 

Reductions and suspensions under this Article shall be without prejudice to Articles 
17,  20 and 21 of Regulation (EU) No CR/xxx. 

3. 

4. 

The  suspensions  referred  to  in  Articles  17  and  20  of  Regulation  (EU)  No  CR/xxx 
shall be applied following the procedure laid down in paragraph 2 of this Article. 

Article 44 
Suspension of payments in case of late submission 

When  sectoral  agricultural  legislation  requires  Member  States  to  submit,  within  a  specific 
period of time, information on the numbers of checks carried out and their outcome and the 
Member  States  overrun  that  period,  the  Commission  may  suspend  the  monthly  payments 
referred  to  in  Article  18  or  the  interim  payments  referred  to  in  Article  35  for  which  the 
relevant statistical information has not been sent in time. 

Article 45 
Assignment of revenue 

1. 

The following shall be regarded as assigned  revenue  within  the  meaning  of  Article 
[18] of Regulation (EU) No FR/xxx: 

(a) 

(b) 

(c) 

sums which, under Articles 42, Article 53 as regards expenditure under EAGF, 
54 and 56, must be paid to the Union budget, including interest thereon; 

sums which are collected or recovered under Chapter III of Title I of Part II of 
Regulation  (EU)  No  sCMO  align/xxx  of  European  parliament  and  of  the 
Council38; 

sums  which  have  been  collected  as  a  consequence  of  penalties  in  accordance 
with the specific rules laid down in sectoral agricultural legislation, save if that 
legislation  explicitly  provides  that  those  amounts  may  be  retained  by  the 
Member States; 

38 

OJ L […], […], p. […]. 

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48 

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(d) 

(e) 

amounts  corresponding  to  penalties  applied  in  accordance  with  the  rules  on 
cross-compliance  laid  down  in  Chapter  II  of  Title  VI,  as  regards  expenditure 
under EAGF; 

any  security,  deposit  or  guarantee  furnished  pursuant  to  Union  legislation 
adopted within the framework of Common Agricultural Policy, excluding rural 
development,  which  is  forfeited.  However,  forfeited  securities  lodged  when 
issuing  export  or  import  licences  or  under  a  tendering  procedure  for  the  sole 
purpose  of  ensuring  the  submission  by  tenderers  of  genuine  tenders  shall  be 
retained by the Member States. 

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

This  Regulation  shall  apply  mutatis  mutandis  to  assigned  revenue  referred  to  in 
paragraph 1. 

As  regards  the  EAGF,  Articles  [150  and  151]  of  Regulation  (EU)  No FR/xxx  shall 
apply mutatis mutandis to the keeping of accounts on assigned revenue referred to in 
this Regulation. 

2. 

3. 

4. 

Article 46 
Keeping of separate accounts 

Each paying agency shall keep a set of separate accounts for the appropriations entered in the 
budget of the Union for the EAGF and the EAFRD. 

Article 47 
Financing of information measures 

1. 

The provision of information financed pursuant to point (e) of Article 6 shall aim, in 
particular,  at  helping  to  explain,  implement  and  develop  the  common  agricultural 
policy  and  raising  public  awareness  of  the  content  and  objectives  of  that  policy,  at 
reinstating consumer confidence following crises through information campaigns, at 
informing farmers and other parties active in rural areas and promoting the European 
model of agriculture and helping people understand it. 

It  shall  supply  coherent,  objective  and  comprehensive  information,  both  inside  and 
outside the Union, in order to give an overall picture of that policy. 

2. 

The measures referred to in paragraph 1 may be: 

(a) 

annual work programmes or other specific measures presented by third parties; 

(b) 

activities implemented at the Commission's initiative. 

The measures which are required by law or the measures already receiving financing 
under another Union action shall be excluded. 

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49 

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In  order  to  implement  activities  as  referred  to  in  point  (b)  the  Commission  may  be 
assisted by external experts. 

The measures referred to  in the first  subparagraph  shall also  contribute  to covering 
the corporate communication of the Union's political priorities provided that  they are 
related to the general objectives of this Regulation. 

The  Commission  shall  publish  by  31  October  of  each  year  a  call  of  proposal 
respecting the conditions laid down in Regulation (EU) No FR/xxx. 

The Committee referred to in Article 112(1) shall be notified of measures envisaged 
and taken pursuant to this Article. 

The Commission shall present a report on the implementation of this Article to the 
European Parliament and the Council every two years. 

Article 48 
Commission powers 

In  order  to  take  account  of  revenue  collected  by  paying  agencies  for  the  Union's 
budget when making payments on the basis of the expenditure declarations submitted 
by  Member  States,  the  Commission  shall  be  empowered  to  adopt  delegated  act  in 
accordance with Article 111 concerning the conditions under which certain types of 
expenditure and revenue under the EAGF and the EAFRD are to be compensated. 

In order to ensure the proper management of the appropriations entered in the budget 
of the Union for the EAGF and the EAFRD, the Commission shall be empowered to 
adopt delegated acts in accordance with Article 111 containing rules pertaining to the 
valuation of operations in connection with public intervention and the measures to be 
taken  in  case  of  loss  or  deterioration  of  products  under  the  public  intervention  and 
the determination of amounts to be financed. 

In order to enable the equitable distribution of the appropriations available between 
the Member States, if the Union's budget has not been adopted by the beginning of 
the financial year or if the total amount of the commitments scheduled exceeds the 
threshold  laid  down  in  Article  [150(3)]  of  Regulation  (EU)  No  FR/xxx,  the 
Commission  shall  be  empowered  to  adopt  delegated  act  in  accordance  with  Article 
111  of  this  Regulation  on  the  provisions  for  the  method  applicable  to  the 
commitments and the payment of the amounts. 

In  order  to  verify  the  consistency  of  the  data  notified  by  the  Member  States  in 
relation to the expenditure or other information provided for in this Regulation, and 
to  ensure  compliance  with  the  obligation  to  notify  pursuant  to  Article  102,  the 
Commission shall be empowered to adopt delegated acts in accordance with Article 
111 on the conditions governing the reduction and suspension of payment to Member 
States, with regard to expenditure under the EAGF and the EAFRD respectively. 

In order to ensure the respect of the proportionality principle when applying Article 
44, the Commission shall be empowered to adopt delegated acts in accordance with 
Article 111 pertaining to rules on: 

3. 

4. 

5. 

1. 

2. 

3. 

4. 

5. 

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50 

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(a) 

the list of measures which fall under Article 44; 

(b) 

the rate and period of suspension of payments referred to in that Article; 

(c) 

the conditions for lifting the suspension. 

6. 

The Commission may lay down, by means of implementing acts, further details on 
the obligation laid down in Article 46 as well as the specific conditions applying to 
the  information  to  be  booked  in  the  accounts  kept  by  the  paying  agencies.  Those 
implementing  acts  shall  be  adopted  in  accordance  with  the  examination  procedure 
referred to in Article 112(3). 

7. 

The Commission may, by means of implementing acts, adopt rules pertaining to: 

(a) 

(b) 

(c) 

rules on the financing and accounting of intervention measures in the form of 
public storage, and other expenditure financed by the EAGF and the EAFRD; 

the  terms  and  conditions  governing  the  implementation  of  the  automatic 
decommitment procedure; 

rules  on  the  payment  by  the  Member  States  of  default  interests  to  the 
beneficiaries as referred to in Article 42(2). 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance with the examination procedure referred to in Article 112(3). 

Chapter IV 
Clearance of accounts 

SECTION I 
GENERAL PROVISIONS 

Article 49 
On-the-spot checks by the Commission 

1. 

Without prejudice to the checks carried out by Member States under national laws, 
regulations and administrative provisions or Article 287 of the Treaty or any check 
organised under Article 322 of the Treaty or based on Council Regulation (EC) No 
2185/9639, the Commission may organise on-the-spot checks in Member States with 
a view to verifying in particular: 

(a) 

compliance of administrative practices with Union rules; 

39 

OJ L 292, 15.11.1996, p. 2. 

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51 

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(b) 

(c) 

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

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

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

The powers to carry out on-the-spot checks shall not affect the application of national 
provisions  which  reserve  certain  acts  for  agents  specifically  designated  by  national 
legislation.  Without  prejudice  to  the  specific  provisions  of  Regulations  (EC)  No 
1073/199940 and  (EC) No 2185/96, persons delegated by the Commission shall not 
take part, inter alia, in home visits or the formal questioning of persons on the basis 
of  legislation  of  the  Member  State  concerned.  However,  they  shall  have  access  to 
information thus obtained. 

2. 

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

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

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

Article 50 
Access to information 

1. 

2. 

3. 

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

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

Member  States  shall  make  available  to  the  Commission  all  information  about 
irregularities and suspected fraud cases detected, and about the steps taken to recover 

40 

OJ L 136, 31.5.1999, p. 1. 

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52 

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undue  payments  in  connection  with  those  irregularities  and  frauds  pursuant  to 
Section III of this Chapter. 

Article 51 
Access to documents 

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

Where  those  documents  are  kept  by  an  authority  acting  under  delegation  from  a  paying 
agency  and  responsible  for  authorising  expenditure,  that  authority  shall  send  reports  to  the 
accredited paying agency on the number of checks made, their content and the measures taken 
in the light of their results. 

Article 52 
Implementing powers 

The Commission may, by means of implementing acts, lay down rules regarding:  

(a) 

(b) 

the specific obligations which the Member States have to comply with in relation to 
the checks provided for in this Chapter; 

the  cooperation  obligations  to  be  complied  with  by  the  Member  States  for  the 
implementation of Articles 49 and 50; 

(c) 

the modalities for the reporting obligation referred to in Article 50(3). 

The implementing acts provided for in the first paragraph shall be adopted in accordance with 
the examination procedure referred to in Article 112(3). 

SECTION II 
CLEARANCE 

Article 53 
Clearance of accounts 

1. 

2. 

Prior to 30 April of the year following the budget year in question and on the basis of 
the  information  transmitted  in  accordance  with  Article  102(1)(c),  the  Commission 
shall, by means of implementing acts, decide on the clearance of the accounts of the 
accredited paying agencies. Those implementing acts shall be adopted in accordance 
with the advisory procedure referred to in Article 112(2). 

The  clearance  decision  referred  to  in  paragraph  1  shall  cover  the  completeness, 
accuracy  and  veracity  of  the  annual  accounts  submitted.  The  decision  shall  be 
adopted without prejudice to decisions adopted subsequently pursuant to Article 54. 

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53 

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Article 54 
Conformity clearance 

1. 

2. 

3. 

The Commission shall, by means of implementing acts, decide on the amounts to be 
excluded from Union financing when it finds that expenditure as indicated in Article 
4(1) and Article 5 has not been incurred in conformity with Union legislation and, for 
EAFRD,  with  the  applicable  Union  and  national  law  referred  to  in  Article  77  of 
Regulation  (EU)  No  CR/xxx.  Those  implementing  acts  shall  be  adopted  in 
accordance with the advisory procedure referred to in Article 112(2). 

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

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

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

4. 

Financing may not be refused for: 

(a) 

(b) 

(c) 

expenditure as indicated in Article 4(1) which is incurred more than 24 months 
before  the  Commission  notifies  the  Member  State  in  writing  of  its  inspection 
findings; 

expenditure  on  multiannual  measures  falling  within  the  scope  of  Article  4(1) 
or  within  the  scope  of  the  programmes  as  indicated  in  Article  5,  where  the 
final  obligation  on  the  recipient  occurs  more  than  24  months  before  the 
Commission notifies the Member State in writing of its inspection findings; 

expenditure  on  measures  in  programmes,  as  indicated  in  Article  5,  other  than 
those referred to in point (b) of this paragraph, for which the payment or, as the 
case  may be, the  final payment, by the paying agency, is made more than 24 
months  before  the  Commission  notifies  the  Member  State  in  writing  of  its 
inspection findings. 

5. 

Paragraph 4 shall not apply in the case of: 

(a) 

irregularities covered by Section III of this Chapter; 

(b)  national aids or infringements for which the procedure laid down in Article 108 

or Article 258 of the Treaty respectively has begun; 

(c) 

infringements by Member States of their obligations under Chapter III of Title V 
of this Regulation, provided that the Commission notifies the Member State in 
writing  of  its  inspection  findings  within  12  months  following  receipt  of  the 

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Member  State’s  report  on  the  results  of  its  checks  of  the  expenditure 
concerned. 

Article 55 
Implementing powers 

The Commission shall, by means of implementing acts, lay down rules for the implementation 
of: 

(a) 

(b) 

the clearance of accounts provided for in Article 53 with regard to the measures to be 
taken  in  connection  with  the  adoption  of  the  decision  and  its  implementation, 
including  the  information  exchange  betweeen  the  Commission  and  the  Member 
States and the deadlines to be respected; 

the conformity clearance provided for in Article 54 with regard to the measures to be 
taken  in  connection  with  the  adoption  of  the  decision  and  its  implementation, 
including the information exchange between the Commission and the Member States 
and the deadlines to be respected as well as the conciliation procedure provided for 
in  that  Article,  including  the  establishment,  tasks,  composition  and  working 
arrangements of the conciliation body. 

The implementing acts provided for in the first paragraph shall be adopted in accordance with 
the examination procedure referred to in Article 112(3). 

SECTION III 
IRREGULARITIES 

Article 56 
Common Provisions  

1. 

2. 

For  any  undue  payment  following  the  occurrence  of  irregularity  or  negligence, 
Member  States  shall  request  recovery  from  the  beneficiary  within  one  year  of  the 
first  indication  that  such  an  irregular  has  taken  place  and  shall  record  the 
corresponding amounts in the debtors' ledger of the paying agency. 

If recovery has not taken place within four years of the date of the recovery request, 
or  within  eight  years  where  recovery  is  taken  in  the  national  courts,  the  financial 
consequences  of  non-recovery  shall  be  borne  by  the  Member  State  concerned, 
without prejudice to the requirement that the Member State concerned must pursue 
recovery procedures in compliance with Article 60. 

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

3. 

On  duly  justified  grounds,  Member  States  may  decide  not  to  pursue  recovery.  A 
decision to this effect may be taken only in the following cases: 

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(a) 

(b) 

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

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

Where  the  decision  referred  to  in  the  first  subparagraph  of  this  paragraph  is  taken 
before the outstanding amount has been subject to the rules referred to in paragraph 
2, the financial consequence of non-recovery is borne by the Union budget. 

4. 

5. 

Member States shall enter in the annual accounts to be sent to the Commission under 
Article  102(1)(c)(iv)  the  amounts  to  be  borne  by  them  under  paragraph  2  of  this 
Article.  The  Commission  shall  check  that  this  has  been  done  and  make  any 
adjustments needed as part of the implementing act specified in Article 53(1). 

The  Commission  may,  by  means  of  implementing  acts,  decide  to  exclude  from 
Union financing sums charged to the Union budget in the following cases: 

(a) 

if the Member State has not respected the time limits referred to in paragraph 1; 

(b) 

(c) 

if it considers that the decision not to pursue recovery taken by a Member State 
pursuant to paragraph 3 is not justified; 

if  it  considers  that  the  irregularity  or  lack  of  recovery  is  the  outcome  of 
irregularity  or  negligence  attributable  to  the  administrative  authorities  or 
another official body of the Member State. 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance  with  the  advisory  procedure  referred  to  in  Article  112(2).  Before  the 
adoption of such implementing acts, the procedure  laid down in Article 54(3) shall 
apply. 

Article 57 
Provisions specific to the EAGF  

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

When the Union budget is credited as referred in the first paragraph, the Member State may 
retain  10  %  of  the  corresponding  amounts  as  flat  rate  recovery  costs,  except  in  cases  of 
irregularity or negligence attributable to its administrative authorities or other official bodies. 

Article 58 
Provisions specific to the EAFRD 

Member  States  shall  make  financial  adjustments  where  irregularities  or  negligence  are 
detected in rural development operations or programmes by totally or partially cancelling the 

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Union  financing  concerned.  Member  States  shall  take  into  consideration  the  nature  and 
gravity of the irregularities detected and the level of the financial loss to the EAFRD. 

Amounts  of  the  Union  financing  under  the  EAFRD  which  are  cancelled  and  amounts 
recovered,  as  well  as  the  interest  thereon,  shall  be  reallocated  to  the  programme  concerned. 
However, the cancelled or recovered Union funds may be reused by Member States only for 
an  operation  under  the  same  rural  development  programme  and  provided  the  funds  are  not 
reallocated  to  operations  which  have  been  the  subject  of  a  financial  adjustment.  After  the 
closure of a rural development programme, the Member State shall refund the sums recovered 
to the Union budget. 

Article 59 
Delegated powers 

In order to ensure correct and efficient application of the provisions relating to recovery set 
out in this Section, the Commission shall be empowered to adopt delegated act in accordance 
with Article 111 concerning specific obligations to be complied with by the Member States. 

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TITLE V 
CONTROL SYSTEMS AND PENALTIES 

Chapter I 
General rules 

Article 60 
Protection of the financial interests of the Union 

1. 

Member States shall within the framework of the common agricultural policy, adopt 
all legislative, regulatory and administrative provisions and take any other measures 
necessary  to  ensure  effective  protection  of  the  financial  interests  of  the  Union  and 
particularly to: 

(a) 

check the legality and regularity of operations financed by the EAGF and the 
EAFRD; 

(b)  offer effective prevention against fraud, especially as regards the areas with a 
higher  level  of  risk,  and  which  shall  act  as  a  deterrent,  having  regard  to  the 
costs and benefits as well as the proportionality of the measures; 

(c) 

prevent, detect and correct irregularities and fraud; 

(d) 

impose  penalties  which  are  effective,  dissuasive  and  proportionate  in 
accordance with Union legislation, or failing this, national law, and bring legal 
proceedings to that effect, as necessary; 

(e) 

recover undue payments plus interest, and bring legal proceedings to that effect 
as necessary. 

2. 

3. 

Member  States  shall  set  up  efficient  management  and  control  systems  in  order  to 
ensure compliance with the legislation governing Union support schemes. 

Member States shall inform the Commission of the provisions adopted and measures 
taken under paragraphs 1 and 2. 

Any conditions which the Member States establish to supplement the conditions laid 
down  by  Union  rules  for  receiving  support  financed  by  the  EAGF  or  the  EAFRD 
shall be verifiable. 

4. 

The  Commission  may,  by  means  of  implementing  acts,  adopt  rules  aiming  at 
reaching a uniform application of paragraphs 1 and 2 of this Article. 

Those  implementing  acts  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 112(3). 

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Article 61 
General principles of checks 

1. 

2. 

3. 

4. 

The  system  set  up  by  the  Member  States  in  accordance  with  Article  60(2)  shall 
include, except where otherwise provided, systematic administrative checking of all 
aid applications and shall be supplemented by on-the-spot checks. 

As  regards  the  on-the-spot  checks,  the  authority  responsible  shall  draw  its  check 
sample  from  the  entire  population  of  applicants  comprising,  where  appropriate,  a 
random part and a risk-based part in order to obtain a representative error rate, while 
targeting also highest errors. 

The authority responsible shall draw up a report on each on-the-spot check. 

Where  appropriate,  all  on-the-spot  checks  provided  for  in  Union  rules  regarding 
agricultural subsidies and rural development support shall be carried out at the same 
time. 

Article 62 
Circumvention clause 

Without  prejudice  to  specific  provisions,  no  advantage  provided  for  under  the  sectoral 
agricultural  legislation  shall  be  granted  in  favour  of  a  natural  or  legal  person  in  respect  of 
whom it is established that the conditions required for obtaining such advantages were created 
artificially, contrary to the objectives of that legislation.  

Article 63 
Compatibility of support schemes for the purposes of checks 

For  the  purposes  of  applying  the  support  schemes  in  the  wine  sector  as  referred  to  in 
Regulation (EU) No xxx/xxx[sCMO], Member States shall ensure that the administration and 
control  procedures  applied  to  those  schemes  are  compatible  with  the  integrated  system 
referred to in Chapter II of this Title as regards the following elements: 

(a) 

(b) 

(c) 

the computerised database; 

the identification systems for agricultural parcels; 

the administrative checks. 

The procedures shall allow a common functioning or the exchange of data with the integrated 
system. 

Article 64 
Commission powers as regards checks 

1. 

In  order  to  ensure  correct  and  efficient  application  of  the  checks  and  that  the 
verification  of  the  eligibility  conditions  is  carried  out  in  an  efficient,  coherent  and 
non-discriminatory  way  which  protects  the  financial  interest  of  the  Union,  the 

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Commission shall be empowered to adopt delegated acts in accordance with Article 
111  concerning  the  situations  where  beneficiaries  or  their  representatives  prevent 
checks from being carried out. 

2. 

The  Commission  shall,  by  means  of  implementing  acts,  adopt  the  necessary  rules 
aiming  at  reaching  a  uniform  application  of  this  Chapter  in  the  Union.  Those  rules 
may, in particular, relate to the following: 

(a) 

(b) 

(c) 

(d) 

the rules concerning administrative and on-the-spot checks to be conducted by 
the Member States with regard to the respect of obligations, commitments and 
eligibility criteria resulting from the application of Union legislation; 

the rules on the minimum level of on-the-spot checks necessary for an effective 
management of the risks, as well as the conditions under which Member States 
have to increase such checks, or may reduce them where the management and 
control systems function properly and the error rates are at an acceptable level; 

the  rules  and  methods  on  the  reporting  of  the  checks  and  verification  carried 
out and their results; 

the authorities responsible for performing the checks for compliance as well as 
to  the  content,  the  frequency  and  the  marketing  stage  to  which  those  checks 
shall apply; 

(e)  where the specific needs for proper management of the system so require, rules 
introducing  additional  requirements  with  respect  to  customs  procedures,  in 
particular  as  laid  down  in  Regulation  (EC)  No  450/2008  of  the  European 
Parliament and of the Council41; 

(f)  with regard to hemp as referred to in Article 38 of Regulation (EU) No xxx/xxx 
[DP],  rules  on  the  specific  control  measures  and  methods  for  determining 
tetrahydrocannabinol levels ; 

(g)  with  regard  to  cotton  as  referred  to  in  Article  42  of  Regulation  (EU)  No 

xxx/xxx [DP], a system for checks on the approved interbranch organisations; 

(h)  with regard to wine as referred to in Regulation (EU) No sCMO/xxx, rules on 
the measurement of areas, as well as relating to checks and rules governing the 
specific financial procedures for the improvement of checks; 

(i) 

the tests and methods to be applied for establishing the eligibility of products 
for  public  intervention  and  private  storage,  as  well  as  the  use  of  tendering 
procedures, both for public intervention and for private storage. 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance  with  the  examination  procedure  referred  to  in  Article  112(3)  or  in  the 
corresponding  Article  of  Regulation  (EU)  No  xxx/xxx[DP],  Regulation  (EU)  No 
xxx/xxx[RD] or Regulation (EU) No xxx/xxx[sCMO] respectively. 

41 

OJ L 145, 4.6.2008, p. 1. 

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1. 

2. 

3. 

1. 

Article 65 
Withdrawals, reductions and exclusions of aid 

Where  it  is  found  that  a  beneficiary  does  not  comply  with  the  eligibility  criteria  or 
the commitments relating to the conditions for granting the aid as provided for in the 
sectoral agricultural legislation the aid shall be withdrawn in full or in part. 

Where Union law so provides, Member States shall also impose penalties by way of 
reductions  or  exclusions  of  the  payment  or  part  of  the  payment  granted  or  to  be 
granted in respect of which the eligibility criteria or the commitments have been met. 

The  amount  of  the  reduction  of  aid  shall  be  graduated  according  to  the  severity, 
extent, duration and reoccurrence of the non compliance found and may go as far as 
total exclusion from one or several aid schemes or support measures for one or more 
calendar years.  

The  amounts  concerned  by  the  withdrawal  referred  to  in  paragraph  1  and  by  the 
penalties referred to in paragraph 2 shall be recovered in full. 

Article 66 
Commission powers as regards penalties 

In order to strike a balance between a deterrent effect of charges and penalties to be 
imposed  for  non-compliance  with  any  of  the  obligations  resulting  from  the 
application  of  the  sectoral  agricultural  legislation  on  the  one  hand,  and  a  flexible 
application of the system on the other hand, the Commission shall be empowered to 
adopt  delegated  acts  in  accordance  with  Article  111  concerning  the  rules  and 
conditions relating to the following: 

(a) 

(b) 

(c) 

(d) 

the  suspension  of  the  right  to  participate  in  an  aid  scheme,  the  exclusion  and 
suspension of payment or a reduction rate of aids, payments or refunds or any 
other  penalty,  in  particular  in  case  time  limits  have  not  been  respected,  the 
product,  size  or  quantity  is  not  in  conformity  with  the  application,  the 
evaluation of a scheme or the notification of information did not take place, is 
incorrect or is not notified on time; 

the  reduction  of  the  payment  to  the  Member  States  concerning  their 
agricultural expenditure in case the time limits established for the recovery of 
the contribution to payment of surplus levy have not been met, or suspension of 
monthly  payments  in  case  Member  States  fail  to  send  or  to  send  on  time,  or 
send incorrect information to the Commission; 

the  extra  amount,  additional  charges  or  interest  rate  to  be  applied  in  case  of 
fraud,  irregularity,  absence  of  proof  that  an  obligation  has  been  fulfilled  or 
over-time declarations; 

the conditions for lodging, releasing and forfeiting of securities, as well as the 
rate  of  reduction  to  be  applied  on  release  of  securities  for  refunds,  licences, 
offers,  tenders  or  specific  applications  when  an  obligation  covered  by  that 
security has partially or totally not been met; 

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(e) 

the retention by Member States of the amounts recovered as penalties; 

(f) 

(g) 

the  exclusion  of  an  operator  or  an  applicant  from  public  intervention  and 
private  storage,  from  the  licence  application  system  or  from  the  tariff  quota 
systems in case of fraud or submission of incorrect information; 

the  withdrawal  or  suspension  of  an  approval  or  a  recognition,  in  particular 
when an operator, producer organisation, association of producer organisations, 
producer group or inter-branch organisation fails to respect or no longer meets 
the conditions required, including failure to make notifications; 

(h) 

the  application  of  appropriate  national  penalties  on  operators  involved  in  the 
production in excess of quotas; 

(i) 

obvious errors, force majeure and exceptional circumstances. 

2. 

The Commission shall, by means of implementing acts, adopt the following: 

(a) 

the  procedures  and  technical  criteria  related  to  the  measures  and  penalties 
referred  to  in  paragraph  1  where  non-compliance  with  any  of  the  obligations 
resulting from the application of the relevant legislation is found; 

(b) 

the  rules  and  procedures  regarding  the  recovery  of  undue  payments  resulting 
from the application of the relevant legislation. 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance  with  the  examination  procedure  referred  to  in  Article  112(3)  or  in  the 
corresponding  Article  of  Regulation  (EU)  No  xxx/xxx[DP],  Regulation  (EU)  No 
xxx/xxx[RD] or Regulation (EU) No xxx/xxx[sCMO] respectively. 

Article 67 
Securities 

1. 

2. 

3. 

The  Member  States  shall,  when  the  sectoral  agricultural  legislation  so  provides, 
request  the  lodging  of  a  security  guaranteeing  that  an  obligation  under  sectoral 
agricultural legislation is fulfilled. 

Except in cases of force majeure, the security shall be forfeited in whole or in part 
where the execution of a particular obligation is not carried out, or is carried out only 
partially. 

In  order  to  ensure  a  non  discriminatory  treatment,  equity  and  the  respect  of 
proportionality  when  lodging  a  security,  the  Commission  shall  be  empowered  to 
adopt delegated acts in accordance with Article 111 concerning rules on: 

(a) 

the meaning of terms for the application of the first and second paragraphs; 

(b) 

the responsible party in the event that an obligation is not met; 

(c) 

specific situations when the competent authority may waive the requirement of 
a security; 

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(d) 

the conditions applying to the security to be lodged and the guarantor; 

(e) 

(f) 

specific conditions related to the security lodged in the framework of advance 
payments; 

the primary, secondary or subordinate requirements in relation to securities, as 
well as the consequences of breaching those requirements; 

4. 

The Commission may adopt, by means of implementing acts, rules on: 

(a) 

the form of the security to be lodged and the procedure for lodging the security, 
for accepting it, and for replacing the original security; 

(b) 

the procedures for the release of a security; 

(c) 

the notifications to be made by Member States and by the Commission. 

The  implementing  acts  referred  to  in  the  first  subparagraph  shall  be  adopted  in 
accordance  with  the  examination  procedure  referred  to  in  Article  112(3)  or  in  the 
corresponding  Article  of  Regulation  (EU)  No  xxx/xxx[DP],  Regulation  (EU)  No 
xxx/xxx[RD] or Regulation (EU) No xxx/xxx[sCMO] respectively. 

Chapter II 
Integrated Administration and Control System 

Article 68 
Scope 

1. 

2. 

Each Member State shall set up and operate an integrated administration and control 
system (hereinafter referred to as the ‘integrated system’). 

The  integrated  system  shall  apply  to  the  support  schemes  listed  in  Annex  I  of 
Regulation  (EU)  No  xxx/xxx  [DP]  and  to  the  support  granted  in  accordance  with 
Articles 22(1)(a) and (b), 29 to 32, 34 and 35 of Regulation xxx/xxx [RD] and where 
applicable Article 28(1)(b) of regulation (EU) CR/xxx.. 

However,  this  Chapter  shall  not  apply  to  measures  referred  to  in  Article  29(9)  of 
Regulation (EU) No xxx/xxx[RD], as well as to measures under Article 22(1)(a) and 
(b) of that Regulation as far as the establishment cost is concerned. 

3. 

To the extent necessary, the integrated system shall also apply to the control of cross-
compliance as laid down in Title VI. 

Article 69 
Elements of the integrated system 

1. 

The integrated system shall comprise the following elements: 

(a) 

a computerised database; 

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(b) 

an identification system for agricultural parcels; 

(c) 

a system for the identification and registration of payment entitlements; 

(d) 

aid applications; 

(e) 

an integrated control system; 

(f) 

a single system to record the identity of each beneficiary of the support referred 
to in Article 68(2) who submits an aid application or a payment claim.  

Where  applicable,  the  integrated  system  shall  incorporate  a  system  for  the 
identification and registration of animals set up in accordance with Regulations (EC) 
No  1760/2000  of  the  European  Parliament  and  of  the  Council42  and  Council 
Regulation (EC) No 21/200443. 

to 

the  responsibilities  of 

the 
Without  prejudice 
implementation and application of the integrated system, the Commission may seek 
the assistance of specialised bodies or persons in order to facilitate the establishment, 
monitoring  and  utilisation  of  the  integrated  system,  in  particular  with  a  view  to 
providing  the  competent  authorities  of  the  Member  States  with  technical  advice, 
should they request it. 

the  Member  States  for 

2. 

3. 

Article 70 
Computerised database 

1. 

The computerised database shall record, for each beneficiary of the support referred 
to in Article 68(2), the data obtained from aid applications and payment claims.  

This database shall in particular allow consultation through the competent authority 
of  the  Member  State,  of  the  data  relating  to  the  calendar  and/or  marketing  years, 
starting from 2000. It shall also allow direct and immediate consultation of the data 
relating to at least the previous five consecutive calendar years. 

2. 

Member  States  may  set  up  decentralised  databases  on  condition  that  these,  and  the 
administrative  procedures  for  recording  and  accessing  data,  are  designed 
homogeneously  throughout  the  territory  of  the  Member  State  and  are  compatible 
with one another in order to allow for cross-checks. 

Article 71 
Identification system for agricultural parcels 

The identification system for agricultural parcels shall be established on the basis of maps or 
land registry documents or other cartographic references. Use shall be made of computerised 
geographical information system techniques, including aerial or spatial orthoimagery, with a 

42 
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OJ L 204, 11.8.2000, p. 1. 
OJ L 5, 9.1.2004, p. 8. 

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homogenous  standard  guaranteeing  accuracy  at  least  equivalent  to  cartography  at  a  scale  of 
1:5000. 

1. 

2. 

1. 

2. 

Article 72 
System for the identification and registration of payment entitlements 

The system for the identification and registration of payment entitlements shall allow 
for verification of the entitlements and for cross-checks with the aid applications and 
the identification system for agricultural parcels. 

The system referred to in paragraph 1 shall allow direct and immediate consultation, 
through the competent authority of the Member State, of the data relating to at least 
the previous four consecutive calendar years. 

Article 73 
Aid applications and payment claims 

Each  year,  a  beneficiary  of  the  support  referred  to  in  Article  68(2)  shall  submit  an 
application for direct payments or a payment claim respectively for the relevant area 
and animal-related rural development measures indicating, where applicable: 

(a) 

all the agricultural parcels on the holding, as well as the non-agricultural area 
for which support referred to in Article 68(2) is claimed; 

(b) 

the payment entitlements declared for activation; 

(c) 

any other information provided for in this Regulation or required with a view 
to the implementation of the relevant sectoral agricultural legislation or by the 
Member State concerned. 

As  regards  the  area-related  payment,  each  Member  State  shall  determine  the 
minimum  size  of  agricultural  parcels  in  respect  of  which  an  application  may  be 
made. However, the minimum size may not exceed 0,3 ha. 

By way of derogation from point (a) of the first subparagraph, Member States may 
decide that a farmer who does not apply for any area-based direct payment does not 
have  to  declare  his  agricultural  parcels  in  the  case  where  the  total  area  does  not 
exceed one hectare. That farmer shall however indicate in his application that he has 
agricultural  parcels  at  his  disposal  and  shall,  at  the  request  of  the  competent 
authorities, indicate their location. 

Member  States  shall  provide,  inter  alia  by  the  use  of  electronic  means,  pre-
established  forms  based  on  the  areas  determined  in  the  previous  year  as  well  as 
graphic material indicating the location of those areas. A Member State may decide 
that  the  aid  application  needs  to  contain  only  changes  with  respect  to  the  aid 
application  submitted  the  previous  year.  However,  as  concerns  the  small  farmers 
scheme  as  provided  for  in  Title  V  of  Regulation  (EU)  No  DP/xxx  this  possibility 
shall be given to all farmers concerned. 

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3. 

A  Member  State  may  decide  that  a  single  application  shall  cover  several  or  all 
support schemes and measures referred to in Article 68 or other support schemes and 
measures. 

Article 74 
System for the identification of beneficiaries 

The single system to record the identity of each beneficiary of support referred to in Article 
68(2)  shall  guarantee  that  all  aid  applications  and  payment  claims  submitted  by  the  same 
beneficiary can be identified as such. 

Article 75 
Verification of eligibility conditions and reductions 

1. 

2. 

3. 

In  accordance  with  Article  61,  Member  States,  through  the  paying  agencies  or  the 
bodies delegated by them, shall carry out administrative checks on the aid application 
to verify the eligibility conditions for the aid. Those checks shall be supplemented by 
on-the-spot checks.  

For the purpose of on the spot checks Member States shall draw up a sampling plan 
of agricultural holdings and/or beneficiaries. 

Member  States  may  use  remote  sensing  and  Global  Navigation  Satellite  System 
(GNSS)  techniques  as  a  means  of  carrying  out  on-the-spot  checks  on  agricultural 
parcels.  

4. 

In case of non compliance with the eligibility conditions Article 65 shall apply. 

Article 76 
Payment to beneficiaries 

1. 

2. 

The payments under the support schemes and measures referred to in Article 68(2) 
shall  be  made  within  the  period  from  1  December  to  30  June  of  the  following 
calendar year.  

Payments shall be made in up to two instalments within that period. 

However Member States may pay advances up to 50 % as regards direct payments 
and  75%  for  the  support  granted  under  rural  development  as  referred  to  in  Article 
68(2) prior to 1 December and not before 16 October. 

Payments referred to in the paragraph 1 shall not be made before the verification of 
eligibility conditions, to be carried out by the Member States pursuant to Article 75, 
has been finalised.  

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1. 

2. 

Article 77 
Delegated powers 

In  order  to  ensure  that  the  integrated  system  provided  for  in  this  Chapter  is 
implemented in an efficient, coherent and non-discriminatory way which protects the 
financial  interests  of  the  Union,  the  Commission  shall  be  empowered  to  adopt 
delegated acts in accordance with Article 111 concerning:  

(a) 

(b) 

specific  definitions  needed  to  ensure  a  harmonised  implementation  of  the 
integrated system; 

rules on any further measures to be taken by the Member States for the proper 
application of this Chapter as well as arrangements for any mutual assistance 
needed between Member States. 

In  order  to  ensure  a  correct  distribution  of  the  funds  resulting  from  the  aid 
applications provided for in Article 73 to the entitled beneficiaries and to allow for 
verification  of  the  fulfilment  by  them  of  the  obligations  related  thereto,  the 
Commission  shall,  by  means  of  delegated  acts  in  accordance  with  Article  111,  lay 
down the following: 

(a) 

rules  on  the  minimum  size  of  agricultural  parcels  to  be  declared  in  order  to 
reduce the administrative burden for the beneficiaries and authorities; 

(b)  provisions required for a harmonised definition of the basis for calculation of 
aid,  including  rules  on  how  to  deal  with  certain  cases  where  eligible  areas 
contain landscape features or trees; 

(c) 

a derogation from Regulation (EEC, Euratom) No 1182/71 of the Council [of 3 
June 1971 determining the rules applicable to periods, dates and time limits]44 
in order to safeguard the beneficiaries' rights to payments where the final date 
for submission of applications or amendments is a public holiday, Saturday or 
Sunday; 

(d) 

in the case of late application for payment or for allocation of entitlements, the 
maximum delay and reductions in case of such delay. 

3. 

In  order  to  ensure  that  the  calculation  and  application  of  refusal,  reductions, 
exclusions and recoveries are carried out in accordance with the principle laid down 
in Article 65 and in an efficient, coherent and non-discriminatory way which protects 
the  financial  interests  of  the  Union,  the  Commission  shall  be  empowered  to  adopt 
delegated acts in accordance with Article 111 concerning:  

(a)  provisions on refusal, reductions, exclusions in relation to the correctness and 
completeness of the information in the application such as over-declarations of 
areas or animals or lacking declaration of areas, as well as in relation to the non 
respect of the eligibility criteria or the commitments relating to the conditions 
for granting of the aid; 

44 

OJ L 124, 8.6.1971, p. 1. 

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(b)  provisions  to  ensure  a  harmonised  and  proportionate  treatment  of  intentional 
irregularities,  situations  of  minor  errors,  accumulation  of  reductions  and 
simultaneous application of different reductions; 

(c) 

(d) 

rules  providing  for  the  non-application  of  refusal,  reductions,  exclusions  in 
certain cases, ensuring proportionality when applying reductions; 

rules  on  the  recovery  of  unduly  paid  amounts  of  aid  and  unduly  allocated 
payment entitlements. 

Article 78 
Implementing powers 

The Commission shall, by means of implementing acts, lay down the following:  

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

the basic features, definitions and quality requirements for the computerised database 
provided for in Article 70; 

the basic features, definitions and quality requirements for the identification system 
for  agricultural  parcels  provided  for  in  Article  71  and  for  the  identification  of  the 
beneficiaries as provided for in Article 74; 

the  basic  features,  definitions  and  quality  requirements  for  the  system  for  the 
identification and registration of payment entitlements provided for in Article 72; 

rules on the aid application and payments claims provided for in Article 73, and the 
application  for  payment  entitlements,  including  the  final  date  for  submission  of 
applications,  the  requirements  as  to  the  minimum  amount  of  information  to  be 
included  in  the  application,  provisions  for  amendments  to  or  the  withdrawal  of  aid 
applications,  exemption  from  the  requirement  to  submit  an  aid  application  and 
provisions which allow Member  States to apply simplified procedures or to correct 
obvious errors; 

rules  on  the  carrying  out  of  checks  in  order  to  verify  compliance  with  obligations, 
and  the  correctness  and  completeness  of  the  information  provided  in  the  aid 
application or payment claim; 

technical  definitions  needed  for  the  purpose  of  the  uniform  implementation  of  this 
Chapter; 

rules  on  situations  of  transfer  of  holdings  accompanied  by  the  transfer  of  any 
obligation concerning eligibility in respect of the aid in question which still needs to 
be fulfilled; 

(h) 

rules on the payment of the advances referred to in Article 76. 

The implementing acts provided for in the first paragraph shall be adopted in accordance with 
the  examination  procedure  referred  to  in  Article  112(3)  or  in  the  corresponding  Article  of 
Regulation (EU) No xxx/xxx[DP] or Regulation (EU) No xxx/xxx[RD] respectively. 

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Chapter III 
Scrutiny of transactions 

Article 79 
Scope and definitions 

1. 

2. 

3. 

1. 

2. 

3. 

This Chapter sets specific rules on the scrutiny of the commercial documents of those 
entities receiving or making payments relating directly or indirectly to the system of 
financing by the EAGF, or their representatives, hereinafter ‘undertakings’, in order 
to  ascertain  whether  transactions  forming  part  of  the  system  of  financing  by  the 
EAGF have actually been carried out and have been executed correctly. 

This Chapter shall not apply to measures covered by the integrated system referred to 
in Chapter II of this Title. 

For the purposes of this Chapter the following definitions shall apply: 

(a) 

'commercial  documents’  means  all  books,  registers,  vouchers  and  supporting 
documents,  accounts,  production  and  quality  records,  and  correspondence 
relating  to  the  undertaking’s  business  activity,  as  well as  commercial  data,  in 
whatever form they may take, including electronically stored data, in so far as 
these documents or data relate directly or indirectly to the transactions referred 
to in paragraph 1; 

(b) 

'third party’ means any natural or legal person directly or indirectly connected 
with transactions carried out within the financing system by the EAGF. 

Article 80 
Scrutiny by Member States 

Member  States  shall  carry  out  systematic  scrutiny  of  the  commercial  documents  of 
undertakings  taking  account  of  the  nature  of  the  transactions  to  be  scrutinised. 
Member States shall ensure that the selection of undertakings for scrutiny gives the 
best  possible  assurance  of  the  effectiveness  of  the  measures  for  preventing  and 
detecting  irregularities.  The  selection  shall  take  account  inter  alia  of  the  financial 
importance of the undertakings in that system and other risk factors. 

In  appropriate  cases,  the  scrutiny  provided  for  in  paragraph  1  shall  be  extended  to 
natural and legal persons with whom undertakings are associated and to such other 
natural or legal persons as may be relevant for the pursuit of the objectives set out in 
Article 81. 

The  scrutiny  carried  out  pursuant  to  this  Chapter  shall  not  prejudice  the  checks 
undertaken pursuant to Articles 49 and 50. 

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Article 81 
Objectives of the scrutiny 

1. 

The accuracy of primary data under scrutiny shall be verified by a number of cross-
checks,  including,  where  necessary,  the  commercial  documents  of  third  parties, 
appropriate to the degree of risk presented, including: 

2. 

3. 

1. 

2. 

3. 

(a) 

comparisons with the commercial documents of suppliers, customers, carriers 
and other third parties; 

(b)  physical checks, where appropriate, upon the quantity and nature of stocks; 

(c) 

(d) 

comparison with the records of financial flows leading to or consequent upon 
the transactions carried out within the financing system by the EAGF; and 

checks, in relation to bookkeeping, or records of financial movements showing, 
at  the  time  of  the  scrutiny,  that  the  documents  held  by  the  paying  agency  as 
justification for the payment of aid to the beneficiary are accurate. 

In  particular,  where  undertakings  are  required  to  keep  particular  book  records  of 
stock in accordance with Union or national provisions, scrutiny of those records shall 
in  appropriate  cases  include  a  comparison  with  the  commercial  documents  and, 
where appropriate, with the actual quantities in stock. 

In  the  selection  of  transactions  to  be  checked,  full  account  shall  be  taken  of  the 
degree of risk presented. 

Article 82 
Access to commercial documents 

The  persons  responsible  for  the  undertaking,  or  a  third  party,  shall  ensure  that  all 
commercial  documents  and  additional  information  are  supplied  to  the  officials 
responsible  for  the  scrutiny  or  to  the  persons  empowered  for  that  purpose. 
Electronically stored data shall be provided on an appropriate data support medium. 

The officials responsible for the scrutiny or the persons empowered for that purpose 
may  require  that  extracts  or  copies  of  the  documents  referred  to  in  paragraph  1  be 
supplied to them. 

Where,  during  scrutiny  carried  out  pursuant  to  this  Chapter,  the  commercial 
documents  maintained  by  the  undertaking  are  considered  inadequate  for  scrutiny 
purposes, the undertaking shall be directed to maintain in future such records as are 
required  by  the  Member  State  responsible  for  the  scrutiny,  without  prejudice  to 
obligations laid down in other Regulations relating to the sector concerned. 

Member  States  shall  determine  the  date  as  of  which  such  records  are  to  be 
established. 

Where all or part of the commercial documents required to be scrutinised pursuant to 
this  Chapter  are  located  with  an  undertaking  in  the  same  commercial  group, 
partnership  or  association  of  undertakings  managed  on  a  unified  basis  as  the 

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undertaking  scrutinised,  whether  located  inside  or  outside  Union  territory,  the 
to  officials 
undertaking  shall  make 
responsible  for  the  scrutiny,  at  a  place  and  time  to  be  determined  by  the  Member 
States responsible for carrying out the scrutiny. 

those  commercial  documents  available 

4. 

Member States shall ensure that officials responsible for scrutiny are entitled to seize 
commercial documents, or have them seized. This right shall be exercised with due 
regard to the relevant national provisions and shall not affect the application of rules 
governing proceedings in criminal matters concerning the seizure of documents. 

Article 83 
Mutual assistance 

1. 

Member  States  shall  assist  each  other  for  the  purposes  of  carrying  out  the  scrutiny 
provided for in this Chapter in the following cases: 

2. 

4. 

(a)  where an undertaking or third party is established in a Member State other than 
that in which payment of the amount in question has or should have been made 
or received; 

(b)  where an undertaking or third party is established in a Member State other than 
that  in  which  the  documents  and  information  required  for  scrutiny  are  to  be 
found. 

The Commission may coordinate joint actions involving mutual assistance between 
two or more Member States. 

During  the  first  three  months  following  the  EAGF  financial  year  of  payment, 
Member States shall send the Commission a list of undertakings established in a third 
country for which payment of the amount in question has or should have been made 
or received in that Member State. 

If additional information is required in another Member State as part of the scrutiny 
of  an  undertaking  in  accordance  with  Article  80,  and  in  particular  cross-checks  in 
accordance  with  Article  81,  specific  scrutiny  requests  may  be  made  indicating  the 
reasons  for  the  request.  An  overview  of  such  specific  requests  shall  be  sent  to  the 
Commission on a quarterly basis within one month after the end of each quarter. The 
Commission may demand that a copy of individual requests be provided. 

The scrutiny request shall be met not later than six months after its receipt; the results 
of the scrutiny shall be communicated without delay to the requesting Member State 
and  to  the  Commission.  The  communication  to  the  Commission  shall  be  on  a 
quarterly basis within one month after the end of each quarter. 

Article 84 
Programming  

1. 

Member States shall draw up programmes for scrutinies to be carried out pursuant to 
Article 80 during the subsequent scrutiny period. 

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2. 

Each  year,  before  15  April,  the  Member  States  shall  send  the  Commission  their 
programme as referred to in paragraph 1 and shall specify: 

(a) 

the number of undertakings to be scrutinised and their breakdown by sector on 
the basis of the amounts relating to them; 

(b) 

the criteria adopted for drawing up the programme. 

3. 

4. 

5. 

6. 

The  programmes  established  by  the  Member  States  and  forwarded  to  the 
Commission shall be implemented by the Member States, if, within eight weeks, the 
Commission has not made known its comments. 

Paragraph 3 shall aplly mutatis mutandis to the amendments to the programme made 
by the Member States. 

At any stage, the Commission may request the inclusion of a particular category of 
undertaking in the programme of a Member States. 

Undertakings  for  which  the  sum  of  the  receipts  or  payments  amounted  to  less  than 
EUR  40000  shall  be  scrutinised  in  accordance  with  this  Chapter  only  for  specific 
reasons to be indicated by the Member States in their annual programme referred to 
in  paragraph  1  or  by  the  Commission  in  any  proposed  amendment  to  that 
programme. 

Article 85 
Special departments 

1. 

In  each  Member  State  a  special  department  shall  be  responsible  for  monitoring  the 
application of this Chapter. Those departments shall in particular be responsible for: 

(a) 

(b) 

the  performance  of  the  scrutiny  provided  for  in  this  Chapter  by  officials 
employed directly by that special department; or 

the coordination and general surveillance of the scrutiny carried out by officials 
belonging to other departments. 

Member  States  may  also  provide  that  scrutiny  to  be  carried  out  pursuant  to  this 
Chapter is allocated between the special departments and other national departments, 
provided that the former is responsible for their coordination. 

2. 

3. 

The department or departments responsible for the application of this Chapter shall 
be organised in such a way as to be independent of the departments or branches of 
departments  responsible  for  the  payments  and  the  scrutiny  carried  out  prior  to 
payment. 

In  order  to  ensure  that  this  Chapter  is  properly  applied,  the  special  department 
referred  to  in  paragraph  1  shall  take  all  the  measures  necessary  and  it  shall  be 
entrusted by the Member State concerned with all the powers necessary to perform 
the tasks referred to in this Chapter. 

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4. 

Member States shall adopt appropriate measures to penalise natural or legal persons 
who fail to fulfil their obligations under this Chapter. 

1. 

2. 

1. 

2. 

3. 

4. 

Article 86 
Reports 

Before  1  January  following  the  scrutiny  period  Member  States  shall  send  the 
Commission a detailed report on the application of this Chapter. 

The  Member  States  and  the  Commission  shall  have  regular  exchanges  of  views  on 
the application of this Chapter. 

Article 87 
Access to information and on-the-spot checks by the Commission 

In  accordance  with  the  relevant  national  laws,  Commission  officials  shall  have 
access  to  all  documents  prepared  either  with  a  view  to  or  following  the  scrutiny 
organised under this Chapter and to the data held, including those stored in the data-
processing systems. Those data shall be provided upon request on an appropriate data 
support medium. 

The  scrutinies  referred  to  in  Article  80  shall  be  carried  out  by  the  officials  of  the 
Member  States.  Officials  of  the  Commission  may  participate  in  those  scrutinies. 
They  may  not  themselves  exercise  the  powers  of  scrutiny  accorded  to  national 
officials.  However,  they  shall  have  access  to  the  same  premises  and  to  the  same 
documents as the officials of the Member States. 

In  the  case  of  scrutinies  taking  place  under  Article  83,  officials  of  the  requesting 
Member State may be present, with the agreement of the requested Member State, at 
the scrutiny in the requested Member State and have access to the same premises and 
the same documents as the officials of that Member State. 

Officials  of  the  requesting  Member  State  present  at  scrutinies  in  the  requested 
Member State shall at all time be able to furnish proof of their official capacity. The 
scrutinies shall at all times be carried out by officials of the requested Member State. 

Without  prejudice  to  the  provisions  of  Regulations  (EC)  No  1073/99  and  (EC)  No 
2185/96,  where  national  provisions  concerning  criminal  procedure  reserve  certain 
acts for officials specifically designated by the national law, neither the officials of 
the  Commission,  nor  the  officials  of  the  Member  State  referred  to  in  paragraph  3, 
shall  take  part  in  these  acts.  In  any  event,  they  shall  not  take  part  in,  in  particular, 
visits to the home or the formal interrogation of persons in the context of the criminal 
law  of  the  Member  State.  They  shall,  however,  have  access  to  information  thus 
obtained. 

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1. 

2. 

Article 88 
Commission powers 

In order to exclude from the application of this Chapter those measures which are by 
their  nature  unsuited  for  ex-post  checks  by  way  of  scrutiny  of  commercial 
documents,  the  Commission  shall  be  empowered  to  adopt  delegated  acts  in 
accordance  with  Article  111  establishing  a  list  of  other  measures  to  which  this 
Chapter  does  not  apply,  and  modifying  the  threshold  of  40000  euros  referred  to  in 
Article 84(6). 

The  Commission  shall,  where  necessary,  by  means  of  implementing  acts  adopt  the 
provisions aiming at reaching a uniform application of this Regulation in the Union, 
in particular relating to the following: 

(a) 

(b) 

the performance of the scrutiny referred to in Article 80 as regards the selection 
of undertakings, rate and calendar of scrutiny;  

conservation of commercial documents and the types of documents to maintain 
or data to record; 

(c) 

the performance and coordination of joint actions referred to in Article 83(1); 

(d)  details and specifications regarding the content, form and way of submission of 
requests,  the  content,  form  and  way  of notification,  submission  and exchange 
of information required in the framework of this Chapter; 

(e) 

conditions  and  means  of  publication  or  specific  rules  and  conditions  for  the 
diffusion or making available by the Commission to the competent authorities 
of  the  Member  States  of  the  information  needed  in  the  framework  of  this 
Regulation; 

(f) 

responsabilities of the special department referred to in Article 85; 

(g) 

the content of reports referred to in Article 86. 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance with the examination procedure referred to in Article 112(3). 

Chapter IV 
Other provisions on checks 

Article 89 
Other checks related to market measures 

1. 

Member States shall take measures to ensure that the products referred to in Annex I 
to Regulation (EU) xxx/xxx [sCMO] which are not labelled in conformity with the 
provisions of that Regulation are not placed on, or is withdrawn from, the market. 

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2. 

3. 

4. 

1. 

2. 

3. 

Without  prejudice  to  any  specific  provisions  which  may  be  adopted  by  the 
Commission, imports into the Union of the products specified in paragraph 1(a) and 
(b) of Article 129 of Regulation (EU) No xxx/xxx [sCMO] shall be subject to checks 
to determine  whether  the  conditions  provided for in  paragraph 1  of that  Article are 
met. 

Member  States  shall  carry  out  checks,  based  on  a  risk  analysis,  in  order  to  verify 
whether  products  referred  to  in  Annex  I  to  Regulation  (EU)  xxx/xxx  [sCMO] 
conform  to  the  rules  laid  down  in  Section  I  of  Chapter  I  of  Title  II  of  Part  II  of 
Regulation  (EU)  No  xxx/xxx[sCMO]  and  shall  apply  administrative  penalties  as 
appropriate. 

In  order  to  protect  Union  funds  and  the  identity,  provenance  and  quality  of  Union 
wine,  the  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance 
with Article 111 pertaining to: 

(a) 

the establishment of an analytical databank of isotopic data that will help detect 
fraud  to  be  constructed  on  the  basis  of  samples  collected  by  Member  States; 
and for rules on the Member States' own databanks; 

(b) 

rules on control bodies and the mutual assistance between them; 

(c) 

rules on the common use of Member States' findings; 

(d) 

rules on the application of penalties in the case of exceptional circumstances. 

Article 90 
Checks related to designation of origin and geographical indications  

Member  States  shall  take  the  necessary  steps  to  stop  unlawful  use  of  protected 
designations of origin and protected geographical indication referred to in Regulation 
(EU) No xxx/xxx[sCMO]. 

Member  State  shall  designate  the  competent  authority  responsible  for  checks  in 
respect of the obligations laid down in Section II of Chapter I of Title II of Part 2 of 
Regulation  (EU)  No  xxx/xxx[sCMO]  in  accordance  with  the  criteria  laid  down  in 
Article  4  of  Regulation  (EC)  No  882/2004  of  the  European  parliament  and  of  the 
Council45  and  shall  ensure  that  any  operator  complying  with  those  obligations  is 
entitled to be covered by a system of checks. 

Within the Union, annual verification of compliance with the product specification, 
during the production and during or after conditioning of the wine shall be ensured 
by  the  competent  authority  referred  to  in  paragraph  2  or  by  one  or  more  control 
bodies  within  the  meaning  of  point  5  of  the  second  subparagraph  of  Article  2  of 
Regulation  (EC)  No  882/2004  operating  as  a  product  certification  body  in 
accordance with the criteria laid down in Article 5 of that Regulation. 

4. 

The Commission shall, by means of implementing acts, adopt the following: 

45 

OJ L 165, 30.4.2004, p.1. 

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(a) 

the communications to be made by the Member States to the Commission; 

(b) 

(c) 

(d) 

rules  on  the  authority  responsible  for  the  verification  of  compliance  with  the 
product  specification,  including  where  the  geographical  area  is  in  a  third 
country; 

the  actions  to  be  implemented  by  the  Member  States  to  prevent  the  unlawful 
use of protected designations of origin and protected geographical indications; 

checks  and  verification  to  be  carried  out  by  the  Member  States,  including 
testing. 

The  implementing  acts  provided  for  in  the  first  subparagraph  shall  be  adopted  in 
accordance  with  the  examination  procedure  referred  to  in  Article  112(3)  or  in  the 
corresponding Article of Regulation (EU) No xxx/xxx[sCMO]. 

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TITLE VI 
CROSS COMPLIANCE 

Chapter I 
Scope 

Article 91 
General principle 

1. 

When a beneficiary referred to in Article 92 does not comply, on the holding, with 
the rules on cross compliance as laid down in Article 93 a penalty shall be applied to 
that beneficiary. 

2. 

The penalty referred to in paragraph 1 shall apply only in so far as  

(a) 

the  non-compliance  is  the  result  of  an  act  or  omission  directly  attributable  to 
the beneficiary concerned;  

(b) 

the non-compliance is related to the agricultural activity of the beneficiary; and 

(c) 

the area of the holding of the beneficiary is concerned. 

However,  for  forest  areas  this  penalty  shall  not  apply  in  so  far  as  no  support  is 
claimed  for  the  concerned  area  in  accordance  with  Articles  22(1)(a),  31  and  35  of 
Regulation (EU) No xxx/xxx[RD]. 

3. 

For  the  purpose  of  this  Title  'holding'  means  all  the  production  units  and  areas 
managed by the beneficiary referred to in Article 92 situated within the territory of 
the same Member State. 

Article 92 
Beneficiaries concerned 

Article  91  shall  apply  to  beneficiaries  receiving  direct  payments  under  Regulation  (EU)  No 
xxx/xxx[DP], payments under Articles 44 and 45 of Regulation (EU) No xxx/xxx[sCMO] and 
the annual premia under Articles 22(1)(a) and (b), 29 to 32, 34 and 35 of Regulation (EU) No 
xxx/xxx[RD]. 

However, Article 91 shall not apply to beneficiaries participating in the small farmers scheme 
referred to in Title V of Regulation (EU) No xxx/xxx[DP] and to the beneficiaries receiving 
aid under Article 29(9) of Regulation (EU) No RD/xxx. 

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Article 93 
Rules on cross compliance 

The rules on cross compliance shall be the statutory management requirements under Union 
legislation  and  the  standards  for  good  agricultural  and  environmental  condition  of  land 
established at national level as listed in Annex II, relating to the following areas: 

(a) 

(b) 

(c) 

environment, climate change and good agricultural condition of land; 

public, animal and plant health; 

animal welfare. 

The  acts  referred  to  in  Annex  II  in  relation  to  the  statutory  management  requirements  shall 
apply as in force and, in case of Directives, as implemented by the Member States. 

Directive 2000/60/EC of 23 October 2000 establishing a framework for Community action in 
the field of water policy will be considered as being part of Annex II once this Directive is 
implemented  by  all  Member  States  and  the  obligations  directly  applicable  to  farmers  have 
been  identified.  In  order  to  take  account  of  those  elements  the  Commission  shall  be 
empowered  to  adopt  delegated  acts  in  accordance  with  Article  111  for  the  purpose  of 
amending the Annex II within 12 months starting at the moment the last Member State has 
notified the implementation of the Directive to the Commission. 

Directive  2009/128/EC  of  the  European  Parliament  and  of  the  Council  of  21  October  2009 
establishing a framework  for  Community  action to achieve the sustainable use of pesticides 
will  be  considered  as  being  part  of  Annex  II  once  this  Directive  is  implemented  by  all 
Member  States  and  the  obligations  directly  applicable  to  farmers  have  been  identified.  In 
order  to  take  account  of  those  elements  the  Commission  shall  be  empowered  to  adopt 
delegated  acts  in  accordance  with  Article  111  for  the  purpose  of  amending  the  Annex  II 
within  12  months  starting  at  the  moment  the  last  Member  State  has  notified  the 
implementation  of  the  Directive  to  the  Commission,  including  the  obligations  relating  to 
integrated pest management. 

In  addition,  as  regards  the  years  2014  and  2015,  the  rules  on  cross  compliance  shall  also 
comprise the maintenance of permanent grassland. The Member States which were Member 
of the Union at 1 January 2004 shall ensure that land which was under permanent grassland at 
the  date  provided  for  the  area  aid  applications  for  2003  is  maintained  under  permanent 
grassland within defined limits. The Member States which became Member of the Union in 
2004  shall  ensure  that  land  which  was  under  permanent  grassland  on  1  May  2004  is 
maintained  under  permanent  grassland  within  defined  limits.  Bulgaria  and  Romania  shall 
ensure that land which was under permanent grassland on 1 January 2007 is maintained under 
permanent grassland within defined limits.  

The  preceding  subparagraph  shall  not  apply  to  land  under  permanent  grassland  to  be 
afforested, if such afforestation is compatible with the environment and with the exclusion of 
plantations of Christmas trees and fast growing species cultivated in the short term. 

In  order  to  take  account  of  the  elements  in  the  two  preceding  paragraphs  the  Commission 
shall  be  empowered  to  adopt  delegated  acts  in  accordance  with  Article  111  containing  the 
rules on maintenance of permanent grassland, in particular to ensure that measures are taken 
to maintain the land under permanent grassland at the level of farmers, including individual 

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obligations  to  be  respected  such  as  obligation  to  reconvert  areas  into  permanent  grassland 
where it is established that the ratio of land under permanent grassland is decreasing.  

Furthermore,  the  Commission  shall,  by  means  of  implementing  acts,  adopt  the  methods  for 
the  determination  of  the  ratio  of  permanent  grassland  and  agricultural  land  that  has  to  be 
maintained.  Those  implementing  acts  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 112(3). 

Article 94 
Obligations of Member States relating to good agricultural and environmental condition 

Member States shall ensure that all agricultural area, including land which is no longer used 
for  production  purposes,  is  maintained  in  good  agricultural  and  environmental  condition. 
Member States shall define, at national or regional level, minimum standards for beneficiaries 
for good agricultural and environmental condition of land on the basis of Annex II, taking into 
account  the  specific  characteristics  of  the  areas  concerned,  including  soil  and  climatic 
condition,  existing  farming  systems,  land  use,  crop  rotation,  farming  practices,  and  farm 
structures. Member States shall not define minimum requirements which are not established 
in Annex II.  

Article 95 
Information to beneficiaries 

Member  States  shall  provide  the  beneficiaries  concerned,  where  appropriate  by  the  use  of 
electronic  means,  with  the  list  of  and  information  on  the  rules  on  cross  compliance  to  be 
respected. 

Chapter II 
Control system and penalties in relation to cross compliance 

Article 96 
Checks of cross compliance 

1. 

Member States shall make use, where appropriate, of the integrated system laid down 
in  Chapter  II  of  Title  V  and  in  particular  of  elements  referred  to  in  Article  69(1) 
points (a), (b), (d), (e) and (f). 

Member States may make use of their existing administration and control systems to 
ensure compliance with the rules on cross compliance. 

Those  systems,  and  notably  the  system  for  the  identification  and  registration  of 
animals set up in accordance with Council Directive 2008/71/EC of 15 July 2008 on 
the identification and registration of pigs46 and Regulations (EC) No 1760/2000 and 
(EC)  No  21/2004,  shall  be  compatible  with  the  integrated  system  referred  to  in 
Chapter II of Title V of this Regulation. 

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2. 

3. 

4. 

1. 

2. 

Depending  on  the  requirements,  standards,  acts  or  areas  of  cross  compliance  in 
question, Member States may decide to carry out administrative checks, in particular 
those  already  provided  for  under  the  control  systems  applicable  to  the  respective 
requirement, standard, act or area of cross compliance. 

Member  States  shall  carry  out  on-the-spot  checks  to  verify  whether  a  beneficiary 
complies with the obligations laid down in this Title. 

The Commission shall, by means of implementing acts, adopt rules on the carrying 
out  of  checks  in  order  to  verify  compliance  with  the  obligations  referred  to  in  this 
Title. 

Those  implementing  acts  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 112(3). 

Article 97 
Application of the penalty 

The  penalty  provided  for  in  Article  91  shall  be  applied  when  the  rules  on  cross 
compliance are not complied with at any time in a given calendar year (hereinafter 
referred to as ‘the calendar year concerned’), and the non-compliance in question is 
attributable  to  the  beneficiary  who  submitted  the  aid  application  or  the  payment 
claim in the calendar year concerned. 

The first subparagraph shall apply mutatis mutandis to beneficiaries which are found 
not  to  have  complied  with  the  rules  on  cross  compliance,  at  any  time  during  three 
years  from  1  January  of  the  year  following  the  calendar  year  in  which  the  first 
payment was granted under the support programmes for restructuring and conversion 
or at any time during one year from 1 January of the year following the calendar year 
in  which  the  payment  was  granted  under  the  support  programmes  for  green 
harvesting referred to in Regulation (EU) No [sCMO] (hereinafter referred to as ‘the 
years concerned’). 

In case where the land is transferred during the calendar year concerned or the years 
concerned, paragraph 1 shall also apply where the non-compliance in question is the 
result of an act or omission directly attributable to the person to whom or from whom 
the  agricultural  land  was  transferred.  By  way  of  derogation,  where  the  person  to 
whom the act or omission is directly attributable has submitted an aid application or 
a payment claim in the calendar year concerned or the years concerned, the penalty 
shall  be  applied  on  the  basis  of  the  total  amounts  of  the  payments  referred  to  in 
Article 92 granted or to be granted to that person.  

For  the  purpose  of  this  paragraph,  ‘transfer’  shall  mean  any  type  of  transaction 
whereby the agricultural land ceases to be at the disposal of the transferor. 

3. 

Notwithstanding paragraph 1, Member States may decide not to apply a penalty per 
beneficiary and per calendar year when the amount of the penalty is  EUR 100 or less 
subject to the rules to be adopted pursuant to Article 101. 

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Where  a  Member  State  decides  to  make  use  of  the  option  provided  for  in  the  first 
subparagraph, the competent authority shall, for a sample of beneficiaries, take in the 
following year the actions necessary to verify that the beneficiary has remedied the 
findings  of  non-compliance  concerned.  The  finding  and  the  obligation  to  take 
remedial action shall be notified to the beneficiary. 

4. 

The penalty does not affect the legality and regularity of the payments on which the 
reduction or exclusion applies.  

Article 98 
Application of the penalty in Bulgaria and Romania 

For Bulgaria and Romania, the penalties referred to in Article 91 shall be applied at the latest 
from 1 January 2016 as regards the statutory management requirements in the area of animal 
welfare referred to in Annex II. 

Article 99 
Calculation of the penalty 

1. 

The  penalty  provided  for  in  Article  91  shall  be  applied  by  means  of  reduction  or 
exclusion  of  the  total  amount  of  the  payments  listed  in  Article  92  granted  or  to  be 
granted  to  that  beneficiary  related  to  the  calendar  year  concerned  or  the  years 
concerned. 

For the calculation of those reductions and exclusions account shall be taken of the 
severity, extent, permanence and reoccurrence of the non-compliance found as well 
as of the criteria set out in paragraphs 2, 3 and 4. 

2. 

In  the  case  of  non  compliance  due  to  negligence,  the  percentage  of  reduction  shall 
not exceed 5 % and, in the case of repeated non-compliance, 15 %. 

In duly justified cases Member States may decide that no reduction shall be applied 
where,  given  its  severity,  extent  and  duration,  a  case  of  non-compliance  is  to  be 
considered  as  minor.  However,  cases  of  non-compliance  which  constitute  a  direct 
risk to public or animal health shall not be considered as minor. The finding and the 
obligation to take remedial action shall be notified to the beneficiary. 

3. 

4. 

In  the  case  of  intentional  non-compliance,  the  percentage  of  reduction  shall    in 
principle  not  be  less  than  20  %  and  may  go  as  far  as  total  exclusion  from  one  or 
several aid schemes and apply for one or more calendar years. 

In any case, the total amount of reductions and exclusions for one calendar year shall 
not be more than the total amount referred to in the first subparagraph of paragraph 
1. 

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Article 100 
Amounts resulting from cross compliance 

Member  States  may  retain  10%  of  the  amounts  resulting  from  the  application  of  the 
reductions and exclusions referred to in Article 99. 

Article 101 
Delegated powers 

1. 

2. 

In order to ensure a correct distribution of the funds to the entitled beneficiaries, the 
Commission shall be empowered to adopt delegated acts in accordance with Article 
111  to  establish  a  harmonised  basis  for  calculation  of  penalties  due  to  cross 
compliance,  taking into account reductions due to financial discipline. 

In order to ensure that cross compliance is carried out in an efficient, coherent and 
non discriminatory way, the Commission shall be empowered to adopt delegated acts 
in  accordance  with  Article  111  concerning  the  calculation  and  application  of 
penalties. 

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TITLE VII 
COMMON PROVISIONS 

Chapter I 
Communication 

Article 102 
Communication of information 

1. 

In  addition  to  the  provisions  laid  down  in  the  sectoral  Regulations,  Member  States 
shall send to the Commission the following information, declarations and documents: 

(a) 

for accredited paying agencies and accredited coordinating bodies: 

(i) 

their accreditation document; 

(ii) 

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

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

(b) 

for certification bodies: 

(i) 

their name; 

(ii) 

their address details, 

(c) 

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

(i) 

(ii) 

declarations  of  expenditure,  which  also  act  as  payment  requests,  signed 
by the accredited paying agency or the accredited coordinating body and 
accompanied by the requisite information; 

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

(iii)  by 15 February of the year following the financial year concerned, when 
a Member State has accredited more than one paying agency, a synthesis 
report  consisting  of  an  overview  at  national  level  of  all  management 
declarations  of  assurances  and  the  audit  opinions  thereon  from  the 
certification bodies;  

(iv) 

the management declaration of assurance and the annual accounts of the 
accredited paying agencies; 

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(v) 

a summary of the results of all available audits and checks carried out in 
accordance  with  the  schedule  and  detailed  provisions  laid  down  in  the 
sector specific rules. 

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

Member  States  shall  inform  the  Commission  in  detail  of  the  measures  taken  to 
implement  the  good  agricultural  and  environmental  condition  referred  to  in  Article 
94 and the details of the farm advisory system referred to in Title III. 

Member  State  shall  inform  the  Commission  regularly  of  the  application  of  the 
integrated system referred to in Chapter II of Title V. The Commission shall organise 
exchanges of views on this subject with the Member States. 

Article 103 
Confidentiality 

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

The  rules  laid  down  in  Article  8  of  Council  Regulation  (Euratom,  EC)  No 
2185/9647shall apply to that information. 

Without  prejudice  to  national  provisions  relating  to  legal  proceedings,  information 
collected in the course of scrutiny as provided for in Chapter III of Title V shall be 
protected by professional secrecy. It may not be communicated to any persons other 
than those who, by reason of their duties in the Member States or in the institutions 
of the Union, are required to have knowledge thereof for the purposes of performing 
those duties. 

2. 

3. 

1. 

2. 

Article 104 
Commission powers 

The Commission may, by means of implementing acts, adopt rules pertaining to: 

(a) 

the form, content, intervals, deadlines and  arrangements  for  transmitting  or  making 
available to the Commission: 

(i) 

declarations  of  expenditure  and  estimates  of  expenditure  and  their  updates, 
including assigned revenue; 

(ii)  management  declaration  of  assurance  and  annual  accounts  of  the  paying 

agencies, as well as the results of all available audits and controls carried out; 

(iii) 

the account certification reports; 

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(iv) 

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

(v) 

arrangements  for  taking  account  of  and  paying  expenditure  financed  by  the 
EAGF and the EAFRD; 

(vi)  notifications  of  financial  adjustments  made  by  Member  States  in  connection 
with rural development operations or programmes, and summary reports on the 
recovery  procedures  undertaken  by  the  Member  States  in  response  to 
irregularities; 

(vii)  information on the measures taken pursuant to Article 60. 

(b) 

the  arrangements  governing  exchanges  of  information  and  documents  between  the 
Commission and the Member States, and the implementation of information systems, 
including the type, format and content of data to be processed by these systems and 
the corresponding data storage rules; 

(c) 

the  notification  to  the  Commission  by  Member  States  of  information,  documents, 
statistics and reports, as well as the deadlines and methods for their notification. 

The implementing acts provided for in the first subparagraph shall be adopted in accordance 
with the examination procedure referred to in Article 112(3). 

CHAPTER II 
Use of the euro 

Article 105 
General principles 

1. 

2. 

1. 

The  amounts  given  in  the  Commission  decisions  adopting  rural  development 
programmes, the amounts of commitments and payments by the Commission and the 
amounts  of  expenditure  attested  or  certified  and  amounts  in  declarations  of 
expenditure by the Member States shall be expressed and paid in euro.  

The  prices  and  amounts  fixed  in  the  sectoral  agricultural  legislation  shall  be 
expressed in euro. 

They shall be granted or collected in euro in the Member States which have adopted 
the euro and in the national currency in the Member States which have not. 

Article 106 
Exchange rate and operative event 

The  prices  and  amounts  referred  to  in  Article  105(2)  shall  be  converted  in  the 
Member States which have not adopted the euro into the national currency by means 
of an exchange rate. 

2. 

The operative event for the exchange rate shall be: 

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(a) 

(b) 

the completion of customs import or export formalities in the case of amounts 
collected or granted in trade with third countries; 

the  event  whereby  the  economic  objective  of  the  operation  is  attained  in  all 
other cases. 

Where a direct payment as provided for in Regulation (EU) No DP/xxx is made to a 
beneficiary  in  a  currency  other  than  the  euro,  Member  States  shall  convert  the 
amount of aid expressed in euro into the national currency on the basis of the most 
recent exchange rate set by the European Central Bank prior to 1 October of the year 
for which the aid is granted. 

As  regards  EAGF,  when  drawing  up  their  declarations  of  expenditure,  Member 
States  which  have  not  adopted  the  euro  shall  apply  the  same  exchange  rate  as  that 
which they used to make payments to beneficiaries or receive revenue, in accordance 
with the provisions of this Chapter. 

In  order  to  specify  the  operative  event  referred  to  in  paragraph  2  or  to  fix  it  for 
reasons  peculiar  to  the  market  organisation  or  the  amount  in  question,  the 
Commission shall be empowered to adopt delegated acts in accordance with Article 
111 containing rules on those operative events and the exchange rate to be used. The 
specific operative event shall be determined taking account of the following criteria:  

(a) 

actual applicability as soon as possible of adjustments to the exchange rate; 

(b) 

(c) 

similarity of the operative events for analogous operations carried out under the 
market organisation; 

coherence in the operative events for the various prices and amounts relating to 
the market organisation. 

(d)  practicability  and  effectiveness  of  checks  on  the  application  of  suitable 

exchange rates. 

In order to avoid the application by the Member States which have not adopted the 
euro  of  different  exchange  rates  in  accounts  of  revenue  received  or  aid  paid  to 
beneficiaries  in  a  currency  other  than  the  euro,  on  the  one  hand,  and  in  the 
establishment of the declaration of expenditure drawn up by the paying agency, on 
the other, the Commission shall be empowered to adopt delegated acts in accordance 
with Article 111 containing rules on the exchange rate applicable when declarations 
of expenditure are drawn up and public storage operations recorded in the accounts 
of the paying agency. 

Article 107 
Safeguard measures and derogations 

The  Commission  may,  by  means  of  implementing  acts,  adopt  measures  in  order  to 
safeguard  the  application  of  Union  legislation  if  exceptional  monetary  practices 
related  to  national  currency  are  likely  to  jeopardise  it.  Those  measures  may,  where 
necessary, derogate from the existing rules. 

3. 

4. 

5. 

6. 

1. 

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Those  implementing  acts  shall  be  adopted  in  accordance  with  the  examination 
procedure referred to in Article 112(3). 

The  European  Parliament  and  the  Council  and  the  Member  States  shall  be  notified 
forthwith of the measures referred to in the first subparagraph. 

2. 

Where  exceptional  monetary  practices  concerning  a  national  currency  are  liable  to 
jeopardise the application of Union legislation, the Commission shall be empowered 
to adopt delegated acts in accordance with Article 111 derogating from this Section, 
in particular in the following cases: 

(a)  where a country uses abnormal exchange techniques such as multiple exchange 

rates or operates barter agreements; 

(b)  where  countries  have  currencies  which  are  not  quoted  on  official  foreign 
exchange  markets  or  where  the  trend  in  such  currencies  is  likely  to  create 
distortion in trade. 

Article 108 
Use of the euro by non-euro Member States 

1. 

2. 

If  a  Member  State  which  has  not  adopted  the  euro  decides  to  pay  the  expenditure 
resulting  from  sectoral  agricultural  legislation  in  euro  rather  than  in  its  national 
currency,  the  Member  State  shall  take  measures  to  ensure  that  the  use  of  the  euro 
does not provide a systematic advantage compared with the use of national currency. 

The Member State shall notify the Commission of the measures planned before they 
come  into  effect.  The  measures  may  not  take  effect  until  the  Commission  has 
notified its agreement thereto. 

CHAPTER III  
Report and evaluation  

Article 109 
Annual financial report 

By end  September of each year following the budget year, the Commission shall draw up a 
financial  report  on  the  administration  of  the  EAGF  and  the  EAFRD  during  the  previous 
financial year and shall submit it to the European Parliament and the Council. 

Article 110 
Monitoring and evaluation of common agricultural policy 

1. 

A common monitoring and evaluation framework shall be established with a view to 
measuring  the  performance  of  the  common  agricultural  policy.  It  shall  include  all 
instruments related to the monitoring and evaluation of common agricultural policy 
measures  and  in  particular  of  the  direct  payments  provided  for  in  Regulation  (EU) 
No DP/xxx, the market measures provided for in Regulation (EU) No CMO/xxx, the 

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rural development measures provided for in Regulation (EU) No RD/xxx and of the 
application of the cross compliance provided for in this Regulation. 

In  order  to  ensure  an  effective  performance  measurement  the  Commission  shall  be 
empowered  to  adopt  delegated  acts  in  accordance  with  Article  111  regarding  the 
content and construction of that framework. 

2. 

The  impact  of  the  common  agricultural  policy  measures  referred  to  in  paragraph  1 
shall be measured in relation to the following objectives: 

(a) 

(b) 

(c) 

viable  food  production,  with  a  focus  on  agricultural  income,  agricultural 
productivity and price stability; 

sustainable management of natural resources and climate action, with a focus 
on greenhouse gas emissions, biodiversity, soil and water; 

balanced  territorial  development,  with  a  focus  on  rural  employment,  growth 
and poverty in rural areas. 

The Commission shall define, by means of implementing acts, the set of indicators 
specific  to  the  objectives  referred  to  in  the  first  subparagraph.  Those  implementing 
acts  shall  be  adopted  in  accordance  with  the  examination  procedure  referred  to  in 
Article 112(3). 

3. 

Member  States  shall  provide  the  Commission  with  all  the  information  necessary  to 
permit the monitoring and evaluation of the measures concerned.  

The  Commission  shall  take  into  account  the  data  needs  and  synergies  between 
potential  data  sources,  in  particular  their  use  for  statistical  purposes  when 
appropriate. 

The  Commission  shall  adopt,  by  means  of  implementing  acts,  rules  on  the 
information  to  be  sent  by  the  Member  States,  as  well  as  on  the  data  needs  and 
synergies between potential data sources. Those implementing acts shall be adopted 
in accordance with the examination procedure referred to in Article 112(3). 

4. 

The Commission shall present a report on the implementation of this Article to the 
European  Parliament  and  the  Council  every  four  years.  The  first  report  shall  be 
presented not later than 31 December 2017. 

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TITLE VIII 
FINAL PROVISIONS 

Article 111 
Exercise of the delegation 

1. 

2. 

3. 

4. 

5. 

1. 

2. 

3. 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in this Article. 

The  delegation  of  power  referred  to  in  this  Regulation  shall  be  conferred  on  the 
Commission  for  an  indeterminate  period  of  time  from  the  entry  into  force  of  this 
Regulation. 

The delegation of powers referred to in this Regulation may be revoked at any time 
by the European Parliament or by the Council. A decision of revocation shall put an 
end to the delegation of the power specified in that decision. It shall take effect the 
day following the publication of the decision in the Official Journal of the European 
Union  or  at  a  later  date  specified  therein.  It  shall  not  affect  the  validity  of  any 
delegated acts already in force. 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to 
the European Parliament and to the Council. 

A delegated act adopted pursuant to this Regulation shall enter into force only if no 
objection  has  been  expressed  either  by  the  European  Parliament  or  the  Council 
within a period of two months of notification of that act to the European Parliament 
and the Council or if, before the expiry of that period, the European Parliament and 
the  Council  have  both  informed  the  Commission  that  they  will  not  object.  That 
period shall be extended by two months at the initiative of the European Parliament 
or the Council. 

Article 112 
Committee procedure 

The  Commission  shall  be  assisted  by  a  Committee  called  "Committee  on  the 
Agricultural  Funds".  That  committee  shall  be  a  committee  within  the  meaning  of 
Regulation (EU) No 182/2011. 

Where  reference  is  made  to  this  paragraph,  Article  4  of  Regulation  (EU)  No 
182/2011 shall apply. 

Where  reference  is  made  to  this  paragraph,  Article  5  of  Regulation  (EU)  No 
182/2011 shall apply. 

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Article 113 
Repeal 

1. 

2. 

Regulations  (EEC)  No  352/78,  (EC)  No  2799/98,  (EC)  No  814/2000,  (EC)  No 
1290/2005 and (EC) No 485/2008 are repealed.  

However, Article 44a of Regulation (EC) No 1290/2005 shall continue to apply. 

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

Article 114 
Transitional measures 

In order to ensure the smooth transition from  the arrangements provided for in the repealed 
Regulations referred to in Article 113 to those laid down in this Regulation, the Commission 
shall be empowered to adopt delegated acts in accordance with Article 111. 

Article 115 
Entry into force and application 

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

It shall apply from 1 January 2014. 

However, the following provisions shall apply from 16 October 2013: 

(a) 

(b) 

Articles 7, 8 and 9; 

Articles 18, 42, 43 and 45 as regards expenditure incurred from 16 October 2013. 

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

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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ANNEX I 

Minimum scope of the farm advisory system in the field of climate change mitigation 
and adaptation, biodiversity, the protection of water, animal and plant disease 
notification and innovation, as laid down in Article 12(2)(c) 

Requirements or actions and advices at the level of beneficiaries as defined by Member States 
where appropriate under: 

Climate change mitigation and adaptation:  

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Information on prospective impacts of climate change in the relevant regions, of the 
green house gas emissions of the relevant farming practices and on the contribution 
of  the  agricultural  sector  to  mitigation  through  improved  farming  and  agroforestry 
practices  and  through  the  development  of  renewable  energy  projects  on  farm  and 
energy efficiency improvement on farm.. 

Investments in physical assets as provided for under Article 18(1) (c) of Regulation 
(EU) N° xx/xxx [RD]. 

Restoration  of  agricultural  production  potential  and  introduction  of  appropriate 
prevention  action  as  provided  for  under  Article  19  of  Regulation  (EU)  N°  xx/xxx 
[RD]. 

Afforestation  and  creation  of  woodland  as  provided  for  under  Article  22(1)(a)  of 
Regulation (EU) N° xx/xxx [RD]. 

Establishment  of  agro-forestry  systems  as  provide  for  under  Article  22(1)(b)  of 
Regulation (EU) N° xx/xxx [RD]. 

Prevention and restoration of damages to forest from forest fires and natural disasters 
as provided for under Article 22(1)(c) of Regulation (EU) N° xx/xxx [RD]. 

Investments  improving  the  resilience  and  environmental value of forest ecosystems 
as provided for under Article 22(1)(d) of Regulation (EU) N° xx/xxx [RD]. 

Investments in new forestry technologies and in processing and marketing of forest 
products as provided for under Article 22(1)(e) of Regulation (EU) N° xx/xxx [RD]. 

Agri-environment operations addressing climate change mitigation and adaptation as 
provided for under Article 29 of Regulation (EU) N° xx/xxx [RD]. 

Organic farming addressing climate change mitigation and adaptation as provided for 
under Article 30 of Regulation (EU) N° xx/xxx [RD]. 

Environmental  services  from  forests  and  forest  conservation  addressing  climate 
change  mitigation  and  adaptation  as  provided  for  under  Article  35  of  Regulation 
(EU) N° xx/xxx [RD]. 

Biodiversity: 

EN 

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– 

– 

– 

– 

– 

– 

– 

– 

Directive  2009/147/EC  of  the  European  Parliament  and  of  the  Council  on  the 
conservation of wild birds. 

Council  Directive  92/43/EEC  on  the  conservation  of  natural  habitats  and  of  wild 
fauna and flora. 

Investments in physical assets as provided for under Article 18(1) (d) of Regulation 
(EU) N° xx/xxx [RD]. 

Establishment  of  agro-forestry  systems  as  provided  for  under  Article  22(1)(b)  of 
Regulation (EU) N° xx/xxx [RD]. 

Investments  improving  the  resilience  and  environmental value of forest ecosystems 
as provided for under Article 22(1)(d) of Regulation (EU) N° xx/xxx [RD]. 

Agri-environment  operations  addressing  biodiversity  as  provided  for  under  Article 
29 of Regulation (EU) N° xx/xxx [RD]. 

Organic  farming  addressing  biodiversity  as  provided  for  under  Article  30  of 
Regulation (EU) N° xx/xxx [RD]. 

Environmental services from forests and forest conservation addressing biodiversity 
as provided for under Article 35 of Regulation (EU) N° xx/xxx [RD]. 

Protection of water: 

– 

– 

– 

– 

– 

Article  11  (3)  of  Directive  2000/60/EC  establishing  a  framework  for  Community 
action in the field of water policy.  

Proper use of plant protection product as laid down in Article 55 of Regulation (EC) 
No 1107/2009, in particular the compliance with the general principles of integrated 
pest management as referred to in Article 14 of Directive 2009/128/EC establishing a 
framework for Community action to achieve the sustainable use of pesticide.  

Investments  in  physical  assets  for  water  management  as  provided  for  under  Article 
18(1)(c) of Regulation (EU) N° xx/xxx [RD]. 

Agri-environment  operations  addressing  water  management  as  provided  for  under 
Article 29 of Regulation (EU) N° xx/xxx [RD]. 

Organic farming addressing water management as provided for under Article 30 of 
Regulation (EU) N° xx/xxx [RD]. 

Notification of animal and plant diseases: 

– 

– 

Council  Directive  2003/85/EC  of  29  September  2003  on  Community  measures  for 
the control of foot-and-mouth disease. 

Council  Directive  92/119/EEC  of  17  December  1992 
introducing  general 
Community  measures  for  the  control  of  certain  animal  diseases  and  specific 
measures relating to swine vesicular disease. 

EN 

92 

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– 

– 

Council  Directive  2000/75/EC  of  20  November  2000  laying  down  specific 
provisions for the control and eradication of bluetongue. 

Council  Directive  2000/29/EC  of  8  May  2000  on  protective  measures  against  the 
introduction  into  the  Community  of  organisms  harmful  to  plants  or  plant  products 
and against their spread within the Community. 

Innovation: 

– 

– 

– 

Information on actions targeted towards innovation. 

Dissemination  of  the  activities  in  the  framework  of  the  [European  Innovation 
Partnership] Network provided for in Article 53 of Regulation (EU) N° xx/xxx [RD]. 

Cooperation as provided for under Article 36 of Regulation (EU) N° xx/xxx [RD]. 

EN 

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ANNEX II 

Rules on cross compliance pursuant to Article 93 

SMR:  Statutory management requirement 

GAEC:  Standards for good agricultural and environmental condition of land 

Area 

Main Issue 

Requirements and standards 

Environment, 
climate change, 
good 
agricultural 
condition of 
land 

Water 

SMR 1 

Council Directive 91/676/EEC of 12 December 1991 
concerning  the  protection  of waters  against  pollution 
caused  by  nitrates  from  agricultural  sources  (OJ  L 
375, 31.12.1991, p. 1) 

Articles 4 
and 5 

GAEC 1 

Establishment of buffer strips along water courses48  

GAEC 2  Where  use  of  water  for  irrigation  is  subject  to 
authorisation 

compliance  with 

authorisation, 
procedures 

GAEC 3 

Protection  of  ground  water  against  pollution: 
prohibition  of  direct  discharge  into  groundwater  and 
measures to prevent indirect pollution of groundwater 
through  discharge  on  the  ground  and  percolation 
through the soil of dangerous substances, as listed in 
the Annex to the Directive 80/68/EEC 

Soil 
carbon stock 

and 

GAEC 4  Minimum soil cover  

GAEC 5  Minimum  land  management  reflecting  site  specific 

conditions to limit erosion  

GAEC 6  Maintenance  of  soil  organic  matter  level  including 

ban on burning arable stubble 

GAEC 7 

Protection of wetland and carbon rich soils including 
a ban of first ploughing49 

48 

49 

The GAEC buffer strips must respect, both within and outside vulnerable zones designated pursuant to 
Article  3(2)  of  Directive  91/676/EEC,  at  least  the  requirements  relating  to  the  conditions  for  land 
application of fertiliser near water courses, referred to in point A.4 of Annex II to Directive 91/676/EEC 
to  be  applied  in  accordance  with  the  action  programmes  of  Member  States  established  under  Article 
5(4) of Directive 91/676/EEC. 
Ploughing of wetland and carbon rich land which has been defined in 2011 at the latest as arable land in 
accordance  with  Article  2  point  (a)  of  Regulation  (EC)  No  1120/2009  and  which  complies  with  the 
definition of arable land as laid down in Article 4 point (f) of the Regulation (EU) No DP/xxx shall not 
be considered as first ploughing. 

EN 

94 

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Area 

Main Issue 

Requirements and standards 

Biodiversity 

SMR 2 

Directive 2009/147/EC of the European Parliament 
and of the Council of 30 November 2009 on the 
conservation of wild birds (OJ L 20, 26.1.2010, p. 7)  

Landscape, 
minimum level 
of 
maintenance,  

SMR 3 

GAEC 8 

Council Directive 92/43/EEC of 21 May 1992 on the 
conservation of natural habitats and of wild flora and 
fauna (OJ L 206, 22.7.1992, p. 7) 

Retention  of  landscape  features,  including  where 
appropriate,  hedges,  ponds,  ditches,  trees  in  line,  in 
group  or  isolated,  field  margins  and  terraces,  and 
including a ban on cutting hedges and trees during the 
bird  breeding  and  rearing  season  and  possible 
measures for avoiding invasive species and pests 

Article 
3(1), 
Article 
3(2)(b), 
Article 4 
(1), (2) and 
(4) 

Article 6 
(1) and (2) 

health, 
Public 
animal 
health 
and plant health 

Food safety 

SMR 4 

Regulation  (EC)  No  178/2002  of  the  European 
Parliament  and  of  the  Council  of  28  January  2002 
laying  down  the  general  principles  and  requirements 
of  food  law,  establishing  the  European  Food  Safety 
Authority  and  laying  down  procedures  in  matters  of 
food safety (OJ L 31, 1.2.2002, p. 1) 

Articles 14 
and 15, 
Article 
17(1) 50 and 
Articles 18, 
19 and 20 

SMR 5 

Council  Directive  96/22/EC  of  29  April  1996 
concerning the prohibition on the use in stockfarming 
of certain substances having a hormonal or thyrostatic 
action and beta-agonists (OJ L125, 23.5.1996, p.3) 

Article 3(a), 
(b), (d) and 
(e) and 
Articles 4, 
5 and 7 

Identification 
and 
registration of 
animals 

SMR 6 

SMR 7 

Council  Directive  2008/71/EC  of  15  July  2008  on 
identification  and  registration  of  pigs  (OJ  L  213, 
8.8.2005, p. 31) 

Articles 3, 
4 and 5 

Regulation  (EC)  No  1760/2000  of  the  European 
Parliament  and  of  the  Council  of  17  July  2000 
establishing  a  system  for  the  identification  and 
registration  of  bovine  animals  and  regarding  the 
labelling  of  beef  and  beef  products  (OJ  L  204, 
11.8.2000, p. 1)  

Articles 4 
and 7 

As implemented in particular by: 

50 
— Regulation (EEC) No 2377/90: Articles 2, 4 and 5, 
— Regulation (EC) No 852/2004: Article 4(1) and Annex I part A (II 4 (g, h, j), 5 (f, h), 6; III 8 (a, b, d, e), 9 (a, 

c)), 

— Regulation (EC) No 853/2004: Article 3(1) and Annex III Section IX Chapter 1 (I-1 b, c, d, e; I-2 a (i, ii, iii), 
b (i, ii), c; I-3; I-4; I-5; II-A 1, 2, 3, 4; II-B 1(a, d), 2, 4 (a, b)), Annex III Section X Chapter 1(1), 
— Regulation (EC) No 183/2005: Article 5(1) and Annex I, part A (I-4 e, g; II-2 a, b, e), Article 5(5) and Annex 

III (1, 2), Article 5(6), and 
— Regulation (EC) No 396/2005: Article 18. 

EN 

95 

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Area 

Main Issue 

Requirements and standards 

SMR 8 

Council Regulation (EC) No 21/2004 of 17 December 
2003  establishing  a  system  for  the  identification  and 
registration  of  ovine  and  caprine  animals  (OJ  L  5, 
9.1.2004, p. 8)  

Articles 3, 
4 and 5 

Animal 
diseases 

SMR 9 

Plant 
protection 
products 

SMR 10 

Regulation  (EC)  No  999/2001  of  the  European 
Parliament and of the Council of 22 May 2001 laying 
down rules for the prevention, control and eradication 
of certain transmissible spongiform encephalopathies 
(OJ L 147, 31.5.2001, p. 1)  

Articles 7, 
11, 12, 13 
and 15 

Regulation  (EC)  No  1107/2009  of  the  European 
Parliament  and  of  the  Council  of  21  October  2009 
concerning the placing of plant protection products on 
the  market  and 
repealing  Council  Directives 
79/117/EEC and 91/414/EEC (OJ L 309, 24.11.2009, 
p.1) 

Article 55, 
first and 
second 
sentence 

Animal welfare  Animal 
welfare 

SMR 11 

Council Directive 2008/119/EC of 18 December 2008 
laying down minimum standards for the protection of 
calves (OJ L 10, 15.1.2009, p. 7) 

Articles 3 
and 4 

SMR 12 

SMR 13 

Council Directive 2008/120/EC of 18 December 2008 
laying down minimum standards for the protection of 
pigs (OJ L 47, 18.2.2009, p. 5)  

Article 3 
and Article 
4 

Council  Directive  98/58/EC  of  20  July  1998 
concerning the protection of animals kept for farming 
purposes (OJ L 221, 8.8.1998, p. 23)  

Article 4 

EN 

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ANNEX III 

CORRELATION TABLE 

1. Regulation (EEC) No 352/78 

Regulation (EEC) No 352/78 

This Regulation 

Article 1 

Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 45(1)(e) 

Article 45(2) 

Article 48(1) 

-  

-  

-  

2. Regulation (EC) No 2799/98 

Regulation (EC) No 2799/98 

This Regulation 

Article 1 

Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

- 

Article 105(2) and 106 

Article 106 

-  

- 

- 

Article 107 

Article 108 

-  

-  

-  

3. Regulation (EC) 814/2000 

Regulation (EC) 814/2000 

This Regulation 

Article 1 

Article 47(1) 

EN 

97 

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Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 47(2) 

- 

- 

- 

- 

- 

Article 47(5) 

- 

Articles 47(4) and 112 

- 

4. Regulation (EC) No 1290/2005 

Regulation (EC) No 1290/2005 

This Regulation 

Article 1 

Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 12 

Article 13 

Article 14 

Article 1 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 9 

Article 102 

Article 60 

Article 10 

Article 11 

Article 16 

Article 19 

Article 17 

EN 

98 

   EN 

 
Article 15 

Article 16 

Article 17 

Article 17a 

Article 18 

Article 19 

Article 20 

Article 21 

Article 22 

Article 23 

Article 24 

Article 25 

Article 26 

Article 27 

Article 27a 

Article 28 

Article 29 

Article 30 

Article 31 

Article 32 

Article 33 

Article 34 

Article 35 

Article 36 

Article 37 

Article 38 

EN 

Article 18 

Article 42 

Article 43(1) 

Article 43(2) 

Article 24 

Article 26 

Article 27 

Article 28 

Article 31 

Article 32 

Article 33 

Article 34 

Article 35 

Article 43(1) 

Article 43(2) 

Article 36 

Article 37 

Article 53 

Article 54 

Article 56 and 57 

Article 56 and 58 

Article 45 

- 

Article 50 

Article 49 

- 

99 

   EN 

 
Article 39 

Article 40 

Article 41 

Article 42 

Article 43 

Article 44 

Article 44a 

Article 45 

Article 46 

Article 47 

Article 48 

Article 49 

- 

- 

Article 112 

- 

Article 109 

Article 103 

Article 113(1) 

Article 105(1) and 106(3) and (4) 

- 

Article 113 

Article 114 

Article 115 

5. Regulation (EC) No 485/2008 

Regulation (EC) No 485/2008 

This Regulation 

Article 1 

Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 12 

Article 79 

Article 80 

Article 81 

- 

Article 82(1), (2) and (3) 

Article 82(4) 

Article 83 

Article 103(2) 

Article 86 

Article 84 

Article 85 

Article 106(3) 

EN 

100 

   EN 

 
Article 13 

Article 14 

Article 15 

Article 16 

Article 17 

-  

-  

Article 87 

-  

-  

EN 

101 

   EN 

 
LEGISLATIVE FINANCIAL STATEMENT 

1. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

1.1. 

Title of the proposal/initiative  

- 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing 
rules  for  direct  payments  to  farmers  under  support  schemes  within  the  framework  of  the 
common agricultural policy; 

Proposal for a Regulation of the European Parliament and of the Council establishing a 

- 
common organisation of the markets in agricultural products (Single CMO Regulation); 

Proposal for a Regulation of the European Parliament and of the Council on support for 

- 
rural development by the European Agricultural Fund for Rural Development (EAFRD); 

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  on  the 

- 
financing, management and monitoring of the common agricultural policy;  

Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  amending 
- 
Council Regulation (EC) No 73/2009 as regards the application of direct payments to farmers 
in respect of the year 2013; 

Proposal  for  a  Council  Regulation  determining  measures  on  fixing  certain  aids  and 

- 
refunds related to the common organisation of the markets in agricultural products; 

- 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  amending 
Council Regulation (EC) No 1234/2007 as regards the regime of the single payment scheme 
and support to vine-growers. 

1.2. 

Policy area(s) concerned in the ABM/ABB structure51  

Policy Area Title 05 of Heading 2 

1.3. 

Nature of the proposal/initiative (Legislative framework for the CAP post 2013) 

x The proposal/initiative relates to a new action  

(cid:133) The proposal/initiative relates to a new action following a pilot project/preparatory action52  

x The proposal/initiative relates to the extension of an existing action  

x The proposal/initiative relates to an action redirected towards a new action  

51 
52 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 

EN 

102 

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1.4. 

Objectives 

1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

In order to promote resource efficiency with a view to smart, sustainable and inclusive growth 
for EU agriculture and rural development in line with the Europe 2020 Strategy, the objectives 
of the CAP are: 

- Viable food production; 

- Sustainable management of natural resources and climate action; 

- Balanced territorial development. 

1.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned 

Specific objectives for Policy area 05: 

Specific objective No 1:  

To provide environmental public goods 

Specific objective No 2:  

To compensate for production difficulties in areas with specific natural constraints 

Specific objective No 3:  

To pursue climate change mitigation and adaptation actions 

Specific objective No 4:  

To manage the EU budget (CAP) in accordance with high standards of financial management 

Specific objective for ABB 05 02 - Interventions in agricultural markets:  

Specific objective No 5:  

To improve  the competitiveness of the  agricultural sector and enhance its value share in the 
food chain 

Specific objective for ABB 05 03 - Direct aids: 

Specific objective No 6: 

To contribute to farm incomes and limit farm income variability 

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Specific objectives for ABB 05 04 – Rural development: 

Specific objective No 7  

To foster green growth through innovation 

Specific objective No 8:  

To support rural employment and maintain the social fabric of rural areas 

Specific objective No 9  

To improve the rural economy and promote diversification 

Specific objective No 10  

To allow for structural diversity in farming systems 

1.4.3.  Expected result(s) and impact 

It  is  not  possible  to  set  quantitative  targets  for  impact  indicators  at  this  stage.  Although  the 
policy can steer in a certain direction, the broad economic, environmental and social outcomes 
measured  by  such  indicators  would  ultimately  also  depend  on  the  impact  from  a  range  of 
external factors, which recent experience indicates have become significant and unpredictable. 
Further analysis is on-going, to be ready for the period post-2013. 

As regards the direct payments, Member States will have the possibility to decide, to a limited 
degree, on the implementation of certain components of the direct payment schemes. 

For rural development, the expected results and impact will depend on the rural development 
programmes that Member States will submit to the Commission. Member States will be asked 
to set targets in their programmes.  

1.4.4. 

Indicators of results and impact  

The  proposals  provide  for  the  establishment  of  a  common  monitoring  and  evaluation 
framework  with  a  view  to  measuring  the  performance  of  the  Common  Agricultural  Policy. 
That framework shall include all instruments related to the monitoring and evaluation of CAP 
measures  and  in  particular  of  the  direct  payments,  market  measures,  rural  development 
measures and of the application of cross compliance. 

The impact of these CAP measures shall be measured in relation to the following objectives: 

(a) 

(b) 

viable  food  production,  with  a  focus  on  agricultural  income,  agricultural  productivity 
and price stability; 

sustainable  management  of  natural  resources  and  climate  action,  with  a  focus  on 
greenhouse gas emissions, biodiversity, soil and water; 

EN 

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(c) 

balanced territorial development, with a focus on rural employment, growth and poverty 
in rural areas. 

By means of implementing acts, the Commission shall define the set of indicators specific to 
these objectives and areas. 

Moreover,  as  regards  rural  development,  a  reinforced  common  monitoring  and  evaluation 
system  is  proposed.  That  system  aims  (a)  to  demonstrate  the  progress  and  achievements  of 
rural  development  policy  and  assess  the  impact,  effectiveness,  efficiency  and  relevance  of 
rural development policy interventions, (b) to  contribute  to  better  targeted  support  for  rural 
development,  and  (c)  to  support  a  common  learning  process  related  to  monitoring  and 
evaluation. The Commission will establish, by means of implementing act, a list of common 
indicators linked to the policy priorities. 

1.5. 

Grounds for the proposal/initiative  

1.5.1.  Requirement(s) to be met in the short or long term  

In order to meet the multi-annual strategic objectives of the CAP which are a direct translation 
of the Europe 2020 strategy for European rural areas and to fulfil the relevant requirements of 
the  Treaty,  the  proposals  aim  to  lay  down  the  legislative  framework  for  the  Common 
Agricultural Policy for the period after 2013. 

1.5.2.  Added value of EU involvement 

The future CAP will not only be a policy that caters for a small, albeit essential, part of the EU 
economy,  but  also  a  policy  of  strategic  importance  for  food  security,  the  environment  and 
territorial balance. Thus, the CAP, as a truly common policy, makes the most efficient use of 
limited  budgetary  resources  in  maintaining  a  sustainable  agriculture  throughout  the  EU, 
addressing  important  cross-border  issues  such  as  climate  change  and  reinforcing  solidarity 
among Member States. 

As mentioned in the Commission communication "A Budget for Europe 2020"53, the CAP is a 
genuinely European policy. Instead of operating 27 separate agricultural policies and budgets, 
Member  States  pool  resources  to  operate  a  single  European  policy  with  a  single  European 
budget.  This  naturally  means  that  the  CAP  accounts  for  a  significant  proportion  of  the  EU 
budget. However, this approach is both more efficient and economical than an uncoordinated 
national approach. 

1.5.3.  Lessons learned from similar experiences in the past 

On the basis of the evaluation of the current policy framework, an extensive consultation with 
stakeholders  as  well  as  an  analysis  of  future  challenges  and  needs,  a  comprehensive  impact 
assessment has been carried out. More details can be found in the impact assessment and the 
explanatory memorandum that are accompanying the legal proposals. 

53 

COM(2011)500 final of 29 June 2011. 

EN 

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1.5.4.  Coherence and possible synergy with other relevant instruments 

The legislative proposals concerned by this financial statement should be seen in the broader 
context of the proposal for a single framework regulation with common rules for the common 
strategic  framework  funds  (EAFRD,  ERDF,  ESF,  Cohesion  Fund  and  EMFF).  That 
framework regulation will make an important contribution to reducing administrative burden, 
to  spending  EU  funds  in  an  effective  way,  and  to  put  simplification  into  practice.  This  also 
underpins  the  new  concepts  of  the  common  strategic  framework  for  all  these  funds  and  the 
upcoming Partnership Contracts which will also cover these funds. 

The common strategic framework, which will be established, will translate the objectives and 
priorities of the Europe 2020 Strategy into priorities for the EAFRD together with the ERDF, 
ESF, Cohesion Fund and EMFF, which will ensure an integrated use of the funds to deliver 
common objectives.  

The  common  strategic  framework  will  also  set  out  coordination  mechanisms  with  other 
relevant Union policies and instruments. 

Moreover, as regards the CAP, significant synergies and simplification effects will be obtained 
by  harmonising  and  aligning  the  management  and  control  rules  for  the  first  (EAGF)  and 
second  (EAFRD)  pillar  of  the  CAP.  The  strong  link  between  the  EAGF  and  the  EAFRD 
should be maintained and the structures already in place in the Member States be sustained. 

1.6. 

Duration and financial impact  

x  Proposal/initiative  of  limited  duration  (for  the  draft  regulations  on  direct  payment 
schemes, rural development and transitional regulations) 

–  x  Proposal/initiative in effect from 01/01/2014 to 31/12/2020  

–  x  Financial impact for the period of the next multi-annual financial framework. For rural 

development, impact on payments to 2023. 

x  Proposal/initiative  of  unlimited  duration  (for  the  draft  regulation  on  the  single  CMO 
and the horizontal regulation) 

–  Implementation from 2014. 

1.7.  Management mode(s) envisaged54  

x Centralised direct management by the Commission  

(cid:133) Centralised indirect management with the delegation of implementation tasks to: 

–  (cid:133)  executive agencies  

–  (cid:133)  bodies set up by the Communities55  

54 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the  BudgWeb  site: 
http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 

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–  (cid:133)  national public-sector bodies/bodies with public-service mission  

–  (cid:133)  persons entrusted with the implementation of specific actions pursuant to Title V of the 
Treaty  on  European  Union  and  identified  in  the  relevant  basic  act  within  the  meaning  of 
Article 49 of the Financial Regulation  

x Shared management with the Member States  

(cid:133) Decentralised management with third countries  

(cid:133) Joint management with international organisations (to be specified) 

Comments  

No substantive change compared to the present situation, i.e. the bulk of expenditure concerned by the 
legislative  proposals  on  the  CAP  reform  will  be  managed  by  shared  management  with  the  Member 
States.  However,  a  very  minor  part  will  continue  to  fall  under  centralised  direct  management  by  the 
Commission. 

55 

As referred to in Article 185 of the Financial Regulation. 

EN 

107 

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2. 

MANAGEMENT MEASURES  

2.1.  Monitoring and reporting rules  

In terms of monitoring and evaluation of the CAP, the Commission will present a report to the 
European Parliament and the Council every 4 years, with the first report to be presented not 
later than end 2017. 

This  is  complemented  by  specific  provisions  in  all  areas  of  the  CAP,  with  various 
comprehensive  reporting  and  notifications  requirements  to  be  specified  in  the  implementing 
rules.  

As  regards  rural  development,  rules  are  also  provided  for  monitoring  at  programme  level, 
which will be aligned with the other funds, and which will be coupled with ex ante, on-going 
and ex post evaluations. 

2.2.  Management and control system  

2.2.1.  Risk(s) identified  

There are more than seven million beneficiaries of the CAP, receiving support under a large 
variety  of  different  aid  schemes,  each  of  which  having  detailed  and  sometimes  complex 
eligibility criteria. 

The reduction in the error rate in the domain of the common agricultural policy can already be 
considered  as  a  trend.  Thus,  most  recently  an  error  rate  close  to  2%  confirms  the  overall 
positive  assessment  of  previous  years.  It  is  the  intention  to  continue  the  efforts  in  order  to 
achieve an error rate below 2%. 

2.2.2.  Control method(s) envisaged  

The  legislative  package,  in  particular  the  proposal  for  the  regulation  on  the  financing, 
management  and  monitoring  of  the  common  agricultural  policy,  envisages  maintaining  and 
reinforcing the current system established by Regulation (EC) No 1290/2005. It provides for a 
compulsory administrative structure at Member State level, centred around accredited paying 
agencies,  which  are  responsible  for  carrying  out  controls  at  final  beneficiary  level  in 
accordance  with  the  principles  set  out  under  point  2.3.  Every  year,  the  head  of  each  paying 
agency  is  required  to  provide  a  management  declaration  of  assurance  which  covers  the 
completeness,  accuracy  and  veracity  of  the  accounts,  the  proper  functioning  of  the  internal 
control systems and the legality and regularity of the underlying transactions. An independent 
audit body is required to provide an opinion on all these three elements. 

The Commission will continue to audit agricultural expenditure, using a risk-based approach 
in order to ensure that its audits are targeted to the areas of highest risk. Where these audits 
reveal that expenditure has been incurred in breach of Union rules, it will exclude the amounts 
concerned from Union financing under the conformity clearance system. 

EN 

108 

   EN 

 
As  regards  the  cost  of  controls,  a  detailed  analysis  is  provided  in  annex  8  to  the  impact 
assessment accompanying the legislative proposals. 

2.3.  Measures to prevent fraud and irregularities  

The  legislative  package,  in  particular  the  proposal  for  the  regulation  on  the  financing, 
management  and  monitoring  of  the  common  agricultural  policy,  envisages  maintaining  and 
reinforcing the current detailed systems for controls and penalties to be applied by the paying 
agencies, with common basis features and special rules tailored to the specificities of each aid 
regime. The systems generally provide for exhaustive administrative controls of 100% of the 
aid  applications,  cross-checks  with  other  databases  where  this  is  considered  appropriate  as 
well as pre-payment on-the-spot checks of a minimum number of transactions, depending on 
the  risk  associated  with  the  regime  in  question.  If  these  on-the-spot  checks  reveal  a  high 
number of irregularities, additional checks must be carried out. In this context, the by far most 
important  system  is  the  Integrated  Administration  and  Control  System  (IACS),  which  in 
financial  year  2010  covered  around  80%  of  total  expenditure  under  the  EAGF  and  the 
EAFRD. For Member States with properly functioning control systems and low error rates, the 
Commission will be empowered to allow for a reduction of the number of on-the-spot checks. 

The  package  further  envisages  that  Member  States  shall  prevent,  detect  and  correct 
irregularities and fraud, impose effective, dissuasive and proportionate penalties as laid down 
in  Union  legislation  or  national  law,  and  recover  any  irregular  payments  plus  interests.  It 
includes  an  automatic  clearance  mechanism  for  irregularity  cases,  which  provides  that  if 
recovery has not taken place within four years of the date of the recovery request, or within 
eight years in the case of legal proceedings, the amounts not recovered shall be borne by the 
Member  State  concerned.  This  mechanism  will  be  a  strong  incentive  for  Member  States  to 
recover irregular payments as quickly as possible.  

EN 

109 

   EN 

 
3. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

The  amounts  indicated  in  this  financial  statement  are  expressed  in  current  prices  and  in 
commitments. 

In  addition  to  the  changes  resulting  from  the  legislative  proposals  as  listed  in  the 
accompanying  tables  below,  the  legislative  proposals  imply  further  changes  which  have  no 
financial impact. 

For any of the years in the period 2014-2020, the application of financial discipline cannot be 
excluded at this stage. However, this will not depend on the reform proposals as such, but on 
other  factors,  such  as  the  execution  of  direct  aids  or  future  developments  in  the  agricultural 
markets. 

As concerns direct aids, the extended  net ceilings for 2014 (calendar year 2013)  included in 
the proposal regarding transition are higher than the amounts allocated to direct aids indicated 
in the accompanying tables. The purpose of this extension is to ensure a continuation of the 
existing  legislation  in  a  scenario  in  which  all  the  other  elements  would  remain  unchanged, 
without prejudice to the possible need for applying the financial discipline mechanism.  

The  reform  proposals  contain  provisions  giving  Member  States  a  set  degree  of  flexibility  in 
relation  to  their  allocation  of  direct  aids  respectively  rural  development.  In  case  Member 
States  decide  to  use  that  flexibility,  this  will  have  financial  consequences  within  the  given 
financial amounts, which cannot be quantified at this stage.  

This  financial  statement  does  not  take  into  account  the  possible  use  of  the  crises  reserve.  It 
should  be  underlined  that  the  amounts  taken  into  account  for  market-related  expenditure  are 
based  on  no  public  intervention  buying-in  and  other  measures  related  to  a  crisis  situation  in 
any sectors. 

3.1. 

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

EN 

110 

   EN 

 
Table 1: Amounts for the CAP including complementary amounts foreseen in the MFF proposals and the CAP reform proposals 

Budget year 

2013 

2013 
adjusted 
(1)

2014 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 
2014-2020 

In million EUR (current prices) 

Inside MFF 

Heading 2 

Direct aids and market-related expenditure (2) (3) (4)
Estimated assigned revenue 
P1 Direct aids and market-related expenditure (with 
assigned revenue) 
P2 Rural development (4)
Total 

   Heading 1 

CSF Agricultural research and innovation 
Most deprived persons
Total 

44 939
672
45 611 

14 817
60 428

N.A.
N.A.
N.A.

45 304
672
45 976 

14 451
60 428

N.A.
N.A.
N.A.

44 830
672
45 502 

14 451
59 953

682
379
1 061

45 054
672
45 726 

14 451
60 177

696
387
1 082

45 299
672
45 971 

14 451
60 423

710
394
1 104

45 519
672
46 191 

14 451
60 642

724
402
1 126

45 508
672
46 180 

45 497
672
46 169 

14 451
60 631

14 451
60 620

738
410
1 149

753
418
1 172

45 485 
672 
46 157 

14 451 
60 608 

768 
427 
1 195 

317 193 
4 704 
321 897 

101 157 
423 054 

5 072 
2 818 
7 889 

   Heading 3 

Food safety 

Outside MFF 

N.A.

N.A.

350

350

350

350

350

350

350 

2 450 

   Reserve for agricultural crises

   European Globalisation Fund (EGF) 

N.A.

N.A.

Of which maximum available for agriculture: (5)

N.A.

N.A.

531

379

541

387

552

394

563

402

574

410

586

418

598 

427 

3 945 

2 818 

TOTAL 

TOTAL  Commission  proposals  (MFF  +  outside  MFF)  + 
assigned revenue 

TOTAL  MFF  proposals  (i.e.  excluding  Reserve  and  EGF)  + 
assigned revenue 

60 428 

60 428 

62 274 

62 537 

62  823 

63 084 

63 114 

63 146 

63 177 

440 156 

60 428 

60 428 

61 364 

61 609 

61 877 

62 119 

62 130 

62 141 

62 153 

433 393 

EN 

111 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
Notes: 

(1) 

(2) 

(3) 

(4) 

(5) 

Taking into account legislative changes already agreed, i.e. voluntary modulation for the UK and Article 136 "unspent amounts" will cease to apply by the end of 2013. 

The  amounts  relate  to  the  proposed  annual  ceiling  for  the  first  pillar.  However,  it  should  also  be  noted  that  it  is  proposed  to  move  negative  expenditure  from  accounting  clearance 
(currently under budget item 05 07 01 06) to assigned revenue (under item 67 03). For details, see estimated revenue table on the page below.  

The 2013 figures include the amounts for veterinary and phytosanitary measures as well as market measures for the fisheries sector. 

The amounts in the table above are in line with those in the Commission communication "A Budget for Europe 2020" (COM(2011)500 final of 29 June 2011). However, it remains to be 
decided if the MFF will reflect the transfer that is proposed for the envelope of one Member State of the cotton national restructuring programme to rural development as from 2014, 
implying  an  adjustment  (4  million  EUR  per  year)  of  the  amounts  for  respectively  the  EAGF  sub-ceiling  and  for  pillar  2.  In  the  tables  in  the  sections  below,  the  amounts  have  been 
transferred, irrespective of them being reflected in the MFF. 

In accordance with the Commission communication "A Budget for Europe 2020" (COM(2011)500 final), a total amount of up to 2.5 billion EUR in 2011 prices will be available under 
the European Globalisation Fund for providing additional support to farmers suffering from effects of globalisation. In the table above, the breakdown by year in current prices is only 
indicative.  The  proposal  for  the  inter-institutional  agreement  between  the  European  Parliament,  the  Council  and  the  Commission  on  cooperation  in  budgetary  matters  and  on  sound 
financial  management  (COM(2011)403  final  of  29  June  2011)  sets  out,  for  the  EGF,  an  overall  maximum  annual  amount  of  429  million  EUR  in  2011  prices. 

EN 

112 

EN 

 
  
 
3.2. 

Estimated impact on expenditure  

3.2.1. 

Summary of estimated impact on expenditure  

Table 2: Estimated revenue as well as expenditure for Policy Area 05 within Heading 2 

In million EUR (current prices) 

Budget year 

2013 

2013 
adjusted 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

REVENUE 

123 – Sugar production charge (own resources) 

123 

123 

123 

123 

67 03 - Assigned revenue 

  of which: ex 05 07 01 06 - Accounting clearance 

Total 

EXPENDITURE 

05 02 - Markets (1) 

672 

0 

795 

672 

0 

795 

741 

69 

864 

741 

69 

864 

741 

69 

741 

741 

69 

741 

741 

69 

741 

741 

69 

741 

741 

69 

741 

3 311 

3 311 

2 622 

2 641 

2 670 

2 699 

2 722 

2 710 

2 699 

18 764 

05 03 - Direct aids (before capping) (2)  

42 170 

42 535 

42 876 

43 081 

43 297 

43 488 

43 454 

43 454 

43 454 

303 105 

05 03 – Direct aids (after capping) 

42 170 

42 535 

42 876 

42 917 

43 125 

43 303 

43 269 

43 269 

43 269 

302 027 

05 04 - Rural development (before capping) 

14 817 

14 451 

14 455 

14 455 

14 455 

14 455 

14 455 

14 455 

14 455 

101 185 

05 04 - Rural development (after capping) 

14 817 

14 451 

14 455 

14 619 

14 627 

14 640 

14 641 

14 641 

14 641 

102 263 

05 07 01 06 - Accounting clearance 

-69 

-69 

0 

0 

0 

0 

0 

0 

0 

0 

Total 

60 229 

60 229 

59 953 

60 177 

60 423 

60 642 

60 631 

60 620 

60 608 

423 054 

NET BUDGET after assigned revenue  

59 212 

59 436 

59 682 

59 901 

59 890 

59 879 

59 867 

417 867 

EN 

113 

EN 

TOTAL 
2014-2020 

246 

5 187 

483 

5 433 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes: 

(1) 

For 2013, preliminary estimate based on Draft Budget 2012 taking into account legal adjustments already agreed for 2013 (e.g. wine ceiling, abolition of potato starch premium, dried 
fodder) as well as some foreseen developments. For all years, the estimates assume that there will be no additional financing need for support measures due to market disturbances or 
crises. 

(2) 

The 2013 amount includes an estimate of wine grubbing-up 2012. 

EN 

114 

EN 

 
  
 
Table 3: Calculation of the financial impact by budget chapter of the CAP reform proposals as regards revenue and CAP expenditure 

Budget year 

2013 

2013 
adjusted 

REVENUE 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

In million EUR (current prices) 

TOTAL 
2014-2020 

123 – Sugar production charge (own resources) 

123 

123 

0 

0 

0 

0 

0 

0 

0 

0 

67 03 - Assigned revenue 

  of which: ex 05 07 01 06 - Accounting clearance 

Total 

EXPENDITURE 

05 02 - Markets (1) 

05 03 - Direct aids (before capping) (2) 

05  03  -  Direct  aids  –  Estimated  product  of  capping  to  be 

672 

0 

795 

672 

0 

795 

69 

69 

69 

3 311 

3 311 

42 170 

42 535 

-689 

-460 

05 04 - Rural development (before capping) 

14 817 

14 451 

05 04 - Rural development – Estimated product of capping to be 

05 07 01 06 - Accounting clearance 

-69 

-69 

69 

0 

4 

0 

69 

69 

69 

-670 

-492 

-164 

4 

164 

69 

69 

69 

69 

-641 

-534 

-172 

4 

172 

69 

69 

69 

69 

-612 

-577 

-185 

4 

185 

69 

69 

69 

69 

-589 

-617 

-186 

4 

186 

69 

69 

69 

69 

-601 

-617 

-186 

4 

186 

69 

69 

69 

69 

-612 

-617 

-186 

4 

186 

69 

483 

483 

483 

-4 413 

-3 913 

-1 078 

28 

1 078 

483 

Total 

60 229 

60 229 

-1 076 

-1 089 

-1 102 

-1 115 

-1 133 

-1 144 

-1 156 

-7 815 

NET BUDGET after assigned revenue  

-1 145 

-1 158 

-1 171 

-1 184 

-1 202 

-1 213 

-1 225 

-8 298 

EN 

115 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes: 

(1) 

For 2013, preliminary estimate based on Draft Budget 2012 taking into account legal adjustments already agreed for 2013 (e.g. wine ceiling, abolition of potato starch premium, dried 
fodder) as well as some foreseen developments. For all years, the estimates assume that there will be no additional financing need for support measures due to market disturbances or 
crises. 

(2) 

The 2013 amount includes an estimate of wine grubbing-up 2012. 

EN 

116 

EN 

 
  
Table 4: Calculation of the financial impact of the CAP reform proposals as regards CAP market-related expenditure 

BUDGET YEAR 

Legal base 

Exceptional  measures:  streamlined  and  extended 
scope of legal base 

Art. 154, 155, 156 

Removal  of 
sorghum 

intervention  for  durum  wheat  and 

ex Art.10 

Food programmes for most deprived 

(2) 

Ex-Art. 27 of Reg 
1234/2007 

Private storage (Flax fibre) 

Art. 16 

Aid for cotton - Restructuring 

(3) 

ex  Art.  5  of  Reg. 
637/2008 

Setting-up aid for F&V producer groups 

School fruit scheme 

Abolition hops PO 

ex Art. 117 

Art. 21 

ex Art. 111 

Optional private storage for skimmed-milk powder 

Art. 16 

Abolition  aid  for  use  of  skimmed  milk/SMP  as 
feedingstuff/casein and use of casein 

ex Art. 101, 102 

In million EUR (current prices) 

Changes to 2013 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

pm 

pm 

pm 

pm 

pm 

pm 

pm 

- 

- 

- 

- 

- 

- 

- 

TOTAL 
2014-2020 

pm 

- 

Estimated 
needs 

2013  
(1) 

pm 

pm 

500.0 

-500.0 

-500.0 

-500.0 

-500.0 

-500.0 

-500.0 

-500.0 

-3 500.0 

N.A. 

10.0 

30.0 

90.0 

2.3 

N.A. 

pm 

pm 

-4.0 

pm 

-4.0 

pm 

-4.0 

pm 

-4.0 

pm 

-4.0 

pm 

-4.0 

pm 

-4.0 

0.0 

0.0 

0.0 

-15.0 

-15.0 

-30.0 

-30.0 

60.0 

60.0 

60.0 

60.0 

60.0 

60.0 

60.0 

-2.3 

pm 

- 

-2.3 

pm 

- 

-2.3 

pm 

- 

-2.3 

pm 

- 

-2.3 

pm 

- 

-2.3 

pm 

- 

-2.3 

pm 

- 

Pm 

-28.0 

-90.0 

420.0 

-15.9 

pm 

- 

Optional private storage for butter 

(4) 

Art. 16 

14.0 

[-1.0] 

[-14.0] 

[-14.0] 

[-14.0] 

[-14.0] 

[-14.0] 

[-14.0] 

[-85.0] 

Abolition milk promotional levy 

ex Art. 309 

pm 

- 

- 

- 

- 

- 

- 

- 

- 

TOTAL 05 02 

Net effect of reform proposals (5) 

-446.3 

-446.3 

-446.3 

-461.3 

-461.3 

-476.3 

-476.3 

-3 213.9 

EN 

117 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes: 

(1) 

(2) 

(3) 

(4) 

(5) 

The 2013 needs are estimated based on the Commission's Draft Budget 2012, except for (a) the fruit & vegetables sectors where the needs are based on the financial statement of the 
respective reforms and (b) any legal changes already agreed. 

The 2013 amount corresponds to Commission proposal COM(2010)486. As from 2014, the measure will be financed within Heading 1. 

The  envelope  for  the  cotton  restructuring  programme  for  Greece  (4  million  EUR/year)  will  be  transferred  to  rural  development  as  from  2014.  The  envelope  for  Spain  (6.1  million 
EUR/year) will go to the Single Payment Scheme as from 2018 (already decided). 

Estimated effect in case of non-application of the measure. 

In addition to expenditure within chapters 05 02 and 05 03, it is anticipated that direct expenditure within chapters 05 01, 05 07 and 05 08 will be financed by revenue that will be assigned 
to the EAGF. 

EN 

118 

EN 

 
  
Table 5: Calculation of the financial impact of the CAP reform proposals as regards direct aids 

In million EUR (current prices) 

Legal base 

Estimated needs 

Changes to 2013 

BUDGET YEAR 

2013 (1) 

2013 
adjusted 
(2) 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 
2014-2020 

Direct aids 

42 169.9 

42 535.4 

341.0 

381.1 

589.6 

768.0 

733.2 

733.2 

733.2

4 279.3 

- Changes already 
decided: 

Phasing-in EU 12 

Cotton 
restructuring 

Health Check  

Previous reforms  

875.0 

1 133.9 

1 392.8 

1 651.6 

1 651.6 

1 651.6 

1 651.6

10 008.1 

0.0 

0.0 

0.0 

0.0 

6.1 

6.1 

6.1

18.4 

-64.3 

-64.3 

-64.3 

-90.0 

-90.0 

-90.0 

-90.0

-552.8 

-9.9 

-32.4 

-32.4 

-32.4 

-32.4 

-32.4 

-32.4

-204.2 

- Changes due to new CAP reform proposals 

-459.8 

-656.1 

-706.5 

-761.3 

-802.2 

-802.2 

-802.2

-4 990.3 

Of which: capping 

0.0 

-164.1 

-172.1 

-184.7 

-185.6 

-185.6 

-185.6

-1 077.7 

TOTAL 05 03 

Net effect of reform proposals 

-459.8 

-656.1 

-706.5 

-761.3 

-802.2 

-802.2 

-802.2

-4 990.3 

TOTAL EXPENDITURE 

42 169.9 

42 535.4 

42 876.4 

42 916.5 

43 125.0 

43 303.4 

43 268.7 

43 268.7 

43 268.7

302 027.3 

EN 

119 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes: 

(1) 

(2) 

The 2013 amount includes an estimate of wine grubbing-up 2012. 

Taking into account legislative changes already agreed, i.e. voluntary modulation for the UK and Article 136 "unspent amounts" will cease to apply by the end of 2013. 

EN 

120 

EN 

 
  
Table 6: Components of direct aids 

BUDGET YEAR 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 
2014-2020 

Annex II 

42 407.2 

42 623.4 

42 814.2 

42 780.3 

42 780.3 

42 780.3

256 185.7 

In million EUR (current prices) 

Payment  for  agricultural  practices  beneficial  for  the  climate  and 
environment (30%) 
Maximum that can be allocated to the Payment for young farmers 
(2%) 

Basic  Payment  Scheme,  Payment  for  areas  with  Natural 
Constraints, Voluntary Coupled Support 
Maximum  that  can  be  taken  from  the  above  lines  to  finance  the 
Small Farmer Scheme (10%) 
Wine transfers included in Annex II56 

Capping 

Cotton 

12 866.5 

12 855.3 

12 844.3 

12 834.1 

12 834.1 

12 834.1

77 068.4 

857.8 

857.0 

856.3 

855.6 

855.6 

855.6

5 137.9 

28 682.9 

28 911.1 

29 113.6 

29 090.6 

29 090.6 

29 090.6

173 979.4 

4 288.8 

4 285.1 

4 281.4 

4 278.0 

4 278.0 

4 278.0

25 689.3 

159.9 

159.9 

159.9 

159.9 

159.9 

159.9

959.1 

-164.1 

-172.1 

-184.7 

-185.6 

-185.6 

-185.6

-1 077.7 

256.0 

256.3 

256.5 

256.6 

256.6 

256.6

1 538.6 

POSEI/Small Aegean Islands 

417.4 

417.4 

417.4 

417.4 

417.4 

417.4

2 504.4 

56 

Direct aids for the period 2014-2020 include an estimate of the wine transfers to SPS based on the decisions taken by the Member States for 2013. 

EN 

121 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
Table 7: Calculation of the financial impact of the CAP reform proposals as regards transitional measures for granting direct aids in 2014 

In million EUR (current prices) 

BUDGET YEAR 

Legal base 

Estimated needs 

Changes to 
2013 

2013  

(1) 

2013 
adjusted 

2014  

(2) 

Annex IV to Council Regulation (EC) No 73/2009 

40 165.0 

40 530.5 

Phasing-in EU 10 

Health Check  

Previous reforms  

TOTAL 05 03 

TOTAL EXPENDITURE 

541.9

616.1

-64.3

-9.9

40 165.0 

40 530.5 

41 072.4

Notes: 

(1) 

(2) 

EN 

The 2013 amount includes an estimate of wine grubbing-up 2012. 

The extended net ceilings include an estimate of the wine transfers to SPS based on the decisions taken by the Member States for 2013. 

122 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 8: Calculation of the financial impact of the CAP reform proposals as regards rural development 

BUDGET YEAR 

Legal base 

Rural development 
allocation 

2013 

2013 
adjusted 
(1) 

Rural development programmes 

14 788.9 

14 423.4 

In million EUR (current prices) 

Changes to 2013 

2014 

2015 

2016 

2017 

2018 

2019 

2020 

TOTAL 
2014-2020 

Aid for cotton - Restructuring 

(2) 

4.0 

4.0 

4.0 

4.0 

4.0 

4.0 

4.0 

28.0 

Product of capping of direct 
aids 

RD envelope excluding 
technical assistance 

Technical assistance 

Prize  for  local  innovative  co-operation 
projects 

(3) 

(3) 

(4) 

TOTAL 05 04 

Net effect of reform proposals 

TOTAL  EXPENDITURE 
capping) 

(before 

164.1 

172.1 

184.7 

185.6 

185.6 

185.6 

1 077.7 

-8.5 

-8.5 

-8.5 

-8.5 

-8.5 

-8.5 

-8.5 

-59.4 

27.6 

27.6 

N.A. 

N.A. 

8.5 

0.0 

3.5 

5.0 

3.5 

5.0 

3.5 

5.0 

3.5 

5.0 

3.5 

5.0 

3.5 

5.0 

29.4 

30.0 

4.0 

168.1 

176.1 

188.7 

189.6 

189.6 

189.6 

1 105.7 

14 816.6 

14 451.1 

14 455.1 

14 455.1 

14 455.1 

14 455.1 

14 455.1 

14 455.1 

14 455.1 

101 185.5 

TOTAL 
capping) 

EN 

EXPENDITURE 

(after 

14 816.6 

14 451.1 

14 455.1 

14 619.2 

14 627.2 

14 639.8 

14 640.7 

14 640.7 

14 640.7 

102 263.2 

123 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes: 

(1) 

(2) 

Adjustments in line with the existing legislation only applicable until the end of financial year 2013. 

The amounts in table 1 (section 3.1) are in line with those in the Commission communication "A Budget for Europe 2020" (COM(2011)500 final). However, it remains to 
be decided if the MFF will reflect the transfer that is proposed for the envelope of one Member State of the cotton national restructuring programme to rural development as 
from 2014, implying an adjustment (4 million EUR per year) of the amounts for respectively the EAGF sub-ceiling and for pillar 2. In table 8 above, the amounts have been 
transferred, irrespective of them being reflected in the MFF. 

(3) 

The 2013 amount for technical assistance was fixed based on the initial rural development envelope (transfers from pillar 1 not included).  

Technical assistance for 2014-2020 is fixed at 0.25% of the total rural development envelope. 

(4) 

Covered by the amount available for technical assistance. 

EN 

124 

EN 

 
  
 
Heading of multiannual financial 
framework:  

5 

" Administrative expenditure " 

EUR million (to 3 decimal places) 

Note: 

It is estimated that the legislative proposals will have no impact on appropriations of an administrative nature, i.e. it is the intention 
that the legislative framework can be implemented with the present level of human resources and administrative expenditure. 

DG: AGRI 

(cid:121) Human resources  
(cid:121) Other administrative expenditure  

Year 
2014 

Year 
2015 

Year 
2016 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

TOTAL 

136.998  136.998  136.998  136.998  136.998  136.998  136.998 

9.704 

9.704 

9.704 

9.704 

9.704 

9.704 

9.704 

958.986 

67.928 

TOTAL DG AGRI 

Appropriations  

146.702  146.702  146.702  146.702  146.702  146.702  146.702 

1 026.914 

TOTAL appropriations 
under HEADING 5 
of the multiannual financial framework  

(Total 
= Total payments) 

commitments 

146.702  146.702  146.702  146.702  146.702  146.702  146.702 

1 026.914 

Year 
N57 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

EUR million (to 3 decimal places) 

57 

Year N is the year in which implementation of the proposal/initiative starts. 

EN 

125 

EN 

 
  
 
 
 
 
 
 
 
 
 
                                                 
TOTAL appropriations  
under HEADINGS 1 to 5 
of the multiannual financial framework  

Commitments 

Payments 

EN 

126 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.2.  Estimated impact on operational appropriations  

–  (cid:133)  The proposal/initiative does not require the use of operational appropriations  

–  x  The proposal/initiative requires the use of operational appropriations, as explained below: 

Year 
2014 

Year 
2015 

Year 
2016 

Year 
2017 

OUTPUTS 

Commitment appropriations in EUR million (to 3 decimal places) 

Year 
2018 

Year 
2019 

Year 
2020 

TOTAL 

Cost 

r
e
b
m
u
N

s
t
u
p
t
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
t
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
t
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
t
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
t
u
o

f
o

Cost 

r
e
b
m
u
N

s
t
u
p
t
u
o

f
o

Cost 

Total 
number 
of 
outputs 

Total  
cost 

830.0 

830.0 

830.0 

830.0 

830.0 

830.0 

830.0 

5 810.0 

Indicate 
objectives and 
outputs  

(cid:216) 

Type 
of 
output 

Average 
r
e
cost  
b
m
of the 
u
output  N

s
t
u
p
t
u
o

f
o

SPECIFIC OBJECTIVE No 5:  

To improve the competitiveness of the 
agricultural  sector  and  enhance  its 
value share in the food chain 

- Fruit & 
vegetables: 
Marketing 
through 
producer 
organisations 
(POs)58 

Propor-
tion of 
the 
value of 
produc-
tion 
marke-
ted 
through 
POs in 
value of 

58 

EN 

Based on past execution and estimates in the 2012 Draft Budget. For the producer organisations in the fruit & vegetables sector, the amounts are in line with the reform of that sector and, 
as already indicated in the activity statements of the 2012 Draft Budget, outputs will only be known in late 2011. 

127 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
the total 
produc-
tion 

- Wine: National 
envelope – 
Restructuring58  

Number 
of 
hectares

- Wine: National 
envelope – 
Investments58 

- Wine: National 
envelope – By-
product 
distillation58 

Hecto-
litres 

- Wine: National 
envelope – 
Potable 
alcohol58 

Number 
of 
hectares

Hecto-
litres 

- Wine: National 
envelope – Use 
of concentrated 
must58 

- Wine: National 
envelope – 
promotion58 

- Other  

Sub-total for specific objective N°5 

54 326 

475.1 

54 326 

475.1 

54 326 

475.1 

54 326 

475.1 

54 326 

475.1 

54 326 

475.1 

54 326 

475.1 

3 326.0 

1 147 

178.9 

1 147 

178.9 

1 147 

178.9 

1 147 

178.9 

1 147 

178.9 

1 147 

178.9 

1 147 

178.9 

1 252.6 

700 000 

98.1 

700 000 

98.1 

700 000 

98.1 

700 000 

98.1 

700 000 

98.1 

700 000 

98.1 

700 000 

98.1 

686.4 

32 754 

14.2 

32 754 

14.2 

32 754 

14.2 

32 754 

14.2 

32 754 

14.2 

32 754 

14.2 

32 754 

14.2 

14.2 

9 

37.4 

9 

37.4 

9 

37.4 

9 

37.4 

9 

37.4 

9 

37.4 

9 

37.4 

261.8 

267.9 

267.9 

267.9 

267.9 

267.9 

267.9 

267.9 

1 875.3 

720.2 

2 621.8 

739.6 

2 641.2 

768.7 

797.7 

820.3 

808.8 

2 670.3 

2 699.3 

2 721.9 

2 710.4 

797.1 

2 698.7 

5 452.3 

18 763.5 

EN 

128 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SPECIFIC OBJECTIVE No 6: 

To contribute to farm incomes and 
limit farm income variability 

- Direct income 
support59 

Number 
of 
hectares 
paid 

(in 
million) 

161.014 

42 876.4 

161.014 

43 080.6 

161.014 

43 297.1 

161.014 

43 488.1 

161.014 

43 454.3 

161.014 

43 454.3 

161.014 

43 454.3 

161.014 

303 105.0 

Sub-total for specific objective N°6 

42 876.4 

43 080.6 

43 297.1 

43 488.1 

43 454.3 

43 454.3 

43 454.3 

303 105.0 

TOTAL COST 

Note: For specific objectives 1 to 4 and 7 to 10, the outputs are still to be determined (see section 1.4.2 above). 

59 

Based on potentially eligible areas for 2009. 

EN 

129 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.  Estimated impact on appropriations of an administrative nature 

3.2.3.1.  Summary  

–  (cid:133)  The  proposal/initiative  does  not 

require 

the  use  of  administrative 

appropriations  

–  x  The  proposal/initiative  requires  the  use  of  administrative  appropriations,  as 

explained below:  

Year 
2014 

Year 
2015 

Year 
2016 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

TOTAL 

EUR million (to 3 decimal places) 

HEADING 5 
of the multiannual 
financial framework 

Human resources 60 

136.998 

136.998 

136.998 

136.998 

136.998 

136.998 

136.998 

958.986 

9.704 

9.704 

9.704 

9.704 

9.704 

9.704 

9.704 

67.928 

Other  administrative 
expenditure  

Subtotal HEADING 5 
of the multiannual 
financial framework  

Outside HEADING 5 
of the multiannual 
financial framework  

Human resources  

Other 
expenditure  
of  an  administrative 
nature 

Subtotal  
outside HEADING 5 
of the multiannual 
financial framework  

TOTAL 

146.702 

146.702 

146.702 

146.702 

146.702 

146.702 

146.702 

1 026.914

60 

Based on an average cost of 127 000 EUR for establishment plan post of officials and temporary agents. 

EN 

130 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
3.2.3.2.   Estimated requirements of human resources  

–  (cid:133)  The proposal/initiative does not require the use of human resources  

–  x  The  proposal/initiative  requires  the  use  of  human  resources,  as  explained 

below: 

Note:  It  is  estimated  that  the  legislative  proposals  will  have  no  impact  on 
appropriations of an administrative nature, i.e. it is the intention that the 
legislative framework can be implemented with the present level of human 
resources and administrative expenditure. The figures for the period 2014-
2020 are based on the situation for 2011. 

Estimate to be expressed in full amounts (or at most to one decimal place) 

Year 
2014 

Year 
2015 

Year 
2016 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

(cid:121) Establishment plan posts (officials and temporary agents) 

XX 01 01 01 (Headquarters and 
Commission’s Representation 
Offices) 

1 034 

1 034 

1 034 

1 034 

1 034 

1 034 

1 034 

XX 01 01 02 (Delegations) 

3 

3 

3 

3 

3 

3 

3 

XX 01 05 01 (Indirect research) 

10 01 05 01 (Direct research) 

(cid:121) External personnel (in Full Time Equivalent unit: FTE)61 

78 

78 

78 

78 

78 

78 

78 

XX 01 02 01 (CA, INT, SNE from 
the "global envelope") 

XX 01 02 02 (CA, INT, JED, LA and 
SNE in the delegations) 

XX 01 04 
yy  

- at 
Headquarte
rs 

- in 
delegations 

XX 01 05 02 (CA, INT, SNE - 
Indirect research) 

10 01 05 02 (CA, INT, SNE - Direct 
research) 

Other budget lines (specify) 

TOTAL62 

1 115 

1 115 

1 115 

1 115 

1 115 

1 115 

1 115 

XX is the policy area or budget title concerned. 

The human resources required will be met by staff from the DG who are already assigned to 
management of the action and/or have been redeployed within the DG, together if necessary 

61 

62 

CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young 
Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert;  
This does not include the sub-ceiling on budget line 05.010404. 

EN 

131 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
with any additional allocation which may be granted to the managing DG under the annual 
allocation procedure and in the light of budgetary constraints. 

Description of tasks to be carried out: 

Officials and temporary agents 

External personnel 

EN 

132 

   EN 

 
 
 
3.2.4.  Compatibility with the current multiannual financial framework  

–  x  Proposal/initiative  is  compatible  with  the  PROPOSALS  FOR  THE  2014-

2020 multiannual financial framework. 

–  (cid:133)  Proposal/initiative  will  entail  reprogramming  of  the  relevant  heading  in  the 

multiannual financial framework. 

–  (cid:133)  Proposal/initiative requires application of the flexibility instrument or revision 

of the multiannual financial framework. 

3.2.5.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties  

–  X  The  proposal  regarding  rural  development  (EAFRD)  provides  for  the  co-

financing estimated below: 

Appropriations in EUR million (to 3 decimal places) 

Year 
2014 

Year 
2015 

Year 
2016 

Year 
2017 

Year 
2018 

Year 
2019 

Year 
2020 

Total 

Specify  the  co-financing 
body  

TOTAL 
cofinanced 63 

appropriations 

MS 

MS 

MS 

MS 

MS 

MS 

MS 

MS 

To be 
determin
ed 

To be 
determin
ed 

To be 
determin
ed 

To be 
determin
ed 

To be 
determin
ed 

To be 
determin
ed 

To be 
determin
ed 

To be 
determined 

63 

This will be set out in the rural development programmes to be submitted by the Member States. 

EN 

133 

   EN 

 
 
 
                                                 
3.3. 

Estimated impact on revenue  

–  x  Proposal/initiative has no financial impact on revenue. 

–  (cid:133)  Proposal/initiative has the following financial impact: 

– 

– 

x  on own resources  

x  on miscellaneous revenue  

Budget revenue line: 

Appropriations 
available for the 
ongoing budget 
year 

EUR million (to 3 decimal places) 

Impact of the proposal/initiative64 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… insert as many columns as necessary 
in order to reflect the duration of the 
impact (see point 1.6) 

For miscellaneous assigned revenue, specify the budget expenditure line(s) affected. 

See tables 2 and 3 in section 3.2.1.  

64 

As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net 
amounts, i.e. gross amounts after deduction of 25% for collection costs. 

EN 

134 

   EN 

 
 
 
 
 
 
 
 
 
 
                                                 
EN 

135 

EN