CELEX: 52012PC0496
Language: en
Date: 2012-09-11
Title: Amended 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 Council Regulation (EC) No 1083/2006

EUROPEAN COMMISSION
                                                 Brussels, 11.9.2012
                                                 COM(2012) 496 final
                                                 2011/0276 (COD)
                                 Amended 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
                         Council Regulation (EC) No 1083/2006
EN                                                                                   EN
 ---pagebreak---                                EXPLANATORY MEMORANDUM
   1.        CONTEXT OF THE PROPOSAL
   The Commission presented its proposals for a regulation laying down common
   provisions on the ERDF, the ESF, the CF, the EAFRD and the EMFF and general
   provisions on cohesion policy funds on 6 October 2011 (COM(2011) 615 final).
   This proposed Common Provisions Regulation (CPR) foresaw the adoption of a
   Common Strategic Framework (CSF) which:
   "…translates the objectives of the Union into key actions for the CSF Funds, in order to
   provide clearer strategic direction to the programming process at the level of Member
   States and regions. The Common Strategic Framework should facilitate sectoral and
   territorial coordination of Union intervention under the CSF Funds and with other
   relevant Union policies and instruments.
   The Common Strategic Framework should therefore establish the key areas of support,
   territorial challenges to be addressed, policy objectives, priority areas for cooperation
   activities, coordination mechanisms and mechanisms for coherence and consistency with
   the economic policies of Member States and the Union." (Recitals 14 and 15)
   The Commission's proposal set out the objectives and content of the CSF in Articles 10
   and 11 of the CPR. Article 12 of the proposal foresaw that the Common Strategic
   Framework would be adopted by the Commission as a delegated act.
   Both the Council and the REGI committee of the European Parliament have signalled
   that they wish to see the CSF adopted as an annex to the regulation and not as a delegated
   act. In view of this and in order to facilitate a compromise between the institutions, the
   Commission presents this amended legislative proposal which splits the elements of the
   CSF between a new annex (Annex I) to the CPR and a delegated act. The Commission
   maintains, however, that all elements, whether included in the annex or in the delegated
   act, remain non-essential elements for the purpose of Article 290 Treaty of the
   Functioning of the European Union and can thus be amended by delegated act. The
   essential elements are contained in Articles 11 and 12 of the CPR.
   2.        RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES
             AND IMPACT ASSESSMENTS
   In order to facilitate the discussion, a Commission staff working document setting out the
   main elements of the CSF was published on 14 March 2012 (SWD (2012) 61).
   Following examination of the staff working document, the Council and the REGI
   committee of the European Parliament have maintained their position that the CSF
   should be adopted as an annex to the CPR. Both consider that the CSF is an essential
   element of the legislative act, as they argue that the CSF expresses political choices on
   the fundamental aspects of cohesion policy. Corresponding amendments have been
   included in the partial general approach adopted by the General Affairs Council on 24
   April 2012 and in the draft reports from the REGI committee of the EP.
EN                                                  2                                         EN
 ---pagebreak---    An Impact Assessment has been carried out for the original legislative proposals.
   3.       LEGAL ELEMENTS OF THE PROPOSAL
   The amended legislative proposal splits the elements of the CSF between a new annex
   (Annex I) to the CPR and a delegated act. The provisions on the CSF contained in the
   annex are non-essential elements of the legislative act in terms of Article 290 TFEU and
   can thus be modified by delegated act.
   The new annex contains four sections on 1) means to achieve coherence and consistency
   with the economic policies of Member States and the Union, 2) coordination mechanisms
   among CSF Funds and with other relevant Union policies and instruments, 3) horizontal
   principles and cross-cutting policy objectives and 4) arrangements to address territorial
   challenges. These sections will largely build on sections 3, 4 and 5 of the Commission
   staff working document and relevant elements of its Annexes I and II, adapting the
   language to the requirements of regulatory text.
   The delegated act will in turn contain two sections: 1) sections on indicative actions of
   high European added value and corresponding principles for delivery and 2) priorities for
   cooperation. These largely build on Annexes I and II to the staff working document,
   again with the necessary legal adaptations.
   The figures contained in the section on the financial framework and in the legislative
   financial statement have been updated to take account of the Commission's amended
   proposal for the multiannual financial framework 2014-20201.
   4.       BUDGETARY IMPLICATIONS
   The amended proposal will have no budgetary implications. The availability of new
   data and macro-economic forecasts as well as the accession of the Republic of
   Croatia results however in changes of the cohesion envelope.
   5.       SUMMARY OF AMENDMENTS
   The amendment concerns changes to Recitals 14, 15, 16, 83, 84 and 88, and Articles 2,
   10, 11, 12, 14, 141 and 142. A new Annex I has also been added, which has caused
   changes in the numbering of the annexes in some additional articles (19, 83, 86, 87, 105,
   106 and 107). The legislative financial statement has also been updated.
   1
           COM(2012)388 final
EN                                                3                                          EN
 ---pagebreak---                                                            2011/0276 (COD)
                                     Amended 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 Council Regulation (EC) No 1083/2006
   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 177 thereof,
   Having regard to the proposal from the European Commission,
   After transmission of the draft legislative act to the national Parliaments,
   Having regard to the opinion of the European Economic and Social Committee2,
   Having regard to the opinion of the Committee of the Regions3,
   Having regard to the opinion of the Court of Auditors4,
   Acting in accordance with the ordinary legislative procedure,
   Whereas:
   (1)     Article 174 of the Treaty provides that, in order to strengthen its economic, social
           and territorial cohesion, the Union shall aim at reducing disparities between the
           levels of development of the various regions and the backwardness of the least
           favoured regions or islands, particular rural areas, areas affected by industrial
           transition, and regions which suffer from severe and permanent natural or
           demographic handicaps. Article 175 of the Treaty requires that the Union would
           support the achievement of these objectives by action it takes through the
           European Agricultural Guidance and Guarantee Fund, Guidance Section, the
           European Social Fund, the European Regional Development Fund, the European
           Investment Bank and other instruments.
   (2)     In line with the conclusions of the European Council of 17 June 2010, whereby
           the Union strategy for smart, sustainable and inclusive growth was adopted, the
   2
           OJ C , , p. .
   3
           OJ C , , p. .
   4
           OJ C , , p. .
EN                                                  4                                           EN
 ---pagebreak---        Union and Member States should implement the delivery of smart, sustainable
       and inclusive growth, while promoting harmonious development of the Union and
       reducing regional disparities.
   (3) In order to improve coordination and harmonise implementation of the Funds
       providing support under the cohesion policy, namely the European Regional
       Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion
       Fund (CF), with the Funds for rural development, namely the European
       Agricultural Fund for Rural Development (EAFRD), and for the maritime and
       fisheries sector, namely the European Maritime and Fisheries Fund (EMFF),
       common provisions should be established for all these Funds (the 'CSF Funds'). In
       addition this Regulation contains provisions which are common for the ERDF, the
       ESF and the CF, but do not apply to the EAFRD and the EMFF. Due to the
       particularities that exist for each CSF Fund, specific rules applicable to each CSF
       Fund and to the European territorial cooperation goal under the ERDF should be
       specified in separate regulations.
   (4) As regards the Common Agricultural Policy (CAP), significant synergies have
       already been obtained by harmonising and aligning management and control rules
       for the first pillar (EAGF - European Agricultural Guarantee Fund) and the
       second pillar (EAFRD) of the CAP. The strong link between the EAGF and the
       EAFRD should therefore be maintained and the structures already in place in the
       Member States be sustained.
   (5) The outermost regions should benefit from specific measures and additional
       funding to offset the handicaps resulting from the factors referred to in Article
       349 of the Treaty.
   (6) To ensure correct and consistent interpretation of provisions and to contribute to
       the legal certainty of Member States and beneficiaries, it is necessary to define
       certain terms that are used in the Regulation.
   (7) It is set out that this Regulation consists of three parts, of which the first contains
       recitals and definitions, the second contains rules applicable to all CSF Funds and
       the third includes provisions applicable only to the ERDF, the ESF and the CF
       (the 'Funds').
   (8) Under Article 317 of the Treaty, and in the context of shared management, the
       conditions allowing the Commission to exercise its responsibilities for
       implementation of the general budget of the European Union should be specified
       and the responsibilities of cooperation by the Member States clarified. Those
       conditions should enable the Commission to obtain assurance that Member States
       are using the CSF Funds in a legal and regular manner and in accordance with the
       principle of sound financial management within the meaning of Council
       Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial
       Regulation applicable to the general budget of the European Communities
       (hereinafter referred to as the 'Financial Regulation')5. Member States and the
       bodies designated by them for that purpose should be responsible for
       implementing programmes at the appropriate territorial level, in accordance with
       the institutional, legal and financial framework of the Member State. These
   5
       OJ L 248, 16.9.2002, p. 1.
EN                                               5                                             EN
 ---pagebreak---         provisions also ensure that attention is drawn to the need to ensure
        complementarity and consistency of Union intervention, the proportionality of
        administrative arrangements and a reduction of the administrative burden of
        beneficiaries of the CSF Funds.
   (9)  For the Partnership Contract and each programme respectively, a Member State
        should organise a partnership with the representatives of competent regional,
        local, urban and other public authorities, economic and social partners, and bodies
        representing civil society, including environmental partners, non-governmental
        organisations, and bodies responsible for promoting equality and non-
        discrimination. The purpose of such a partnership is to respect the principle of
        multi-level governance, ensure the ownership of planned interventions by
        stakeholders and build on the experience and know-how of relevant actors. The
        Commission should be empowered to adopt delegated acts providing for a code of
        conduct in order to ensure that partners are involved in the preparation,
        implementation, monitoring and evaluation of Partnership Contracts and
        programmes in a consistent manner.
   (10) The activities of the CSF Funds and the operations which they support should
        comply with applicable Union and national law which is directly or indirectly
        linked to the implementation of the operation.
   (11) In the context of its effort to increase economic, territorial and social cohesion,
        the Union should, at all stages of implementation of the CSF Funds, aim at
        eliminating inequalities and promoting equality between men and women, as well
        as combating discrimination based on sex, racial or ethnic origin, religion or
        belief, disability, age or sexual orientation.
   (12) The objectives of the CSF Funds should be pursued in the framework of
        sustainable development and the Union's promotion of the aim of protecting and
        improving the environment as set out in Article 11 and 19 of the Treaty, taking
        into account the polluter pays principle. The Member States should provide
        information on the support for climate change objectives in line with the ambition
        to devote at least 20% of the Union budget to this end, using a methodology
        adopted by the Commission by implementing act.
   (13) In order to achieve the targets and objectives of the Union strategy for smart,
        sustainable and inclusive growth, the CSF Funds should focus their support on a
        limited number of common thematic objectives. The precise scope of each of the
        CSF Funds should be set out in Funds-specific rules and may be limited to only
        some of the thematic objectives defined in this Regulation.
   (14) In order to maximise the contribution of the CSF Funds and to provide clear
        strategic direction to the programming process at the level of Member States
        and the regions, The Commission should adopt by delegated act a Common
        Strategic Framework should be established which translates the objectives of the
        Union into key actions for the CSF Funds, in order to provide clearer strategic
        direction to the programming process at the level of Member States and regions.
        The Common Strategic Framework should facilitate sectoral and territorial
        coordination of Union intervention under the CSF Funds and with other relevant
        Union policies and instruments.
EN                                                6                                         EN
 ---pagebreak---    (15) The Common Strategic Framework should therefore establish the key areas of
        support set out the means to achieve coherence and consistency with the
        economic policies of Member States and the Union, coordination mechanisms
        among the CSF Funds and with other relevant Union policies and
        instruments, horizontal principles and cross-cutting policy objectives, the
        arrangements to address territorial challenges to be addressed, indicative
        actions of high European added value and corresponding principles for
        delivery, and priorities policy objectives, priority areas for cooperation
        activities, coordination mechanisms and mechanisms for coherence and
        consistency with the economic policies of Member States and the Union.
   (16) On the basis of the Common Strategic Framework adopted by the Commission,
        each Member State should prepare, in cooperation with its partners and in
        dialogue with the Commission, a Partnership Contract. The Partnership Contract
        should translate the elements set out in the Common Strategic Framework into the
        national context and set out firm commitments to the achievement of Union
        objectives through the programming of the CSF Funds.
   (17) Member States should concentrate support to ensure a significant contribution to
        the achievement of Union objectives in line with their specific national and
        regional development needs. Ex ante conditionalities should be defined to ensure
        that the necessary framework conditions for the effective use of Union support are
        in place. The fulfilment of those ex ante conditionalities should be assessed by the
        Commission in the framework of its assessment of the Partnership Contract and
        programmes. In cases where there is a failure to fulfil an ex ante conditionality,
        the Commission should have the power to suspend payments to the programme.
   (18) A performance framework should be defined for each programme with a view to
        monitoring progress towards the objectives and targets set for each programme
        over the course of the programming period. The Commission should undertake a
        performance review in cooperation with the Member States in 2017 and 2019. A
        performance reserve should be foreseen and allocated in 2019 where milestones
        set in the performance framework have been attained. Due to their diversity and
        multi-country character, there should be no performance reserve for 'European
        Territorial Cooperation' programmes. In cases where the shortfall in the
        achievement of milestones or targets is significant, the Commission should be
        able to suspend payments to the programme or, at the end of the programming
        period, apply financial corrections, in order to ensure that the Union budget is not
        used in a wasteful or inefficient way.
   (19) Establishing a closer link between cohesion policy and the economic governance
        of the Union will ensure that the effectiveness of expenditure under the CSF
        Funds is underpinned by sound economic policies and that the CSF Funds can, if
        necessary, be redirected to addressing the economic problems a country is facing.
        This process has to be gradual, starting with amendments to the Partnership
        Contract and to the programmes in support of Council recommendations to
        address macroeconomic imbalances and social and economic difficulties. Where,
        despite the enhanced use of CSF Funds, a Member State fails to take effective
        action in the context of the economic governance process, the Commission should
        have the right to suspend all or part of the payments and commitments. Decisions
        on suspensions should be proportionate and effective, taking into account the
EN                                               7                                           EN
 ---pagebreak---         impact of the individual programmes for addressing the economic and social
        situation in the relevant Member State and previous amendments to the
        Partnership Contract. When deciding on suspensions, the Commission should also
        respect equality of treatment between Member States, taking into account in
        particular the impact of the suspension on the economy of the Member State
        concerned. The suspensions should be lifted and funds be made available again to
        the Member State concerned as soon as the Member State takes the necessary
        action.
   (20) In order to ensure focus on the achievement of the Union strategy for smart,
        sustainable and inclusive growth, common elements should be defined for all
        programmes. In order to ensure the consistency of programming arrangements for
        the CSF Funds, the procedures for adoption and amendment of programmes
        should be aligned. Programming should ensure consistency with the Common
        Strategic Framework and Partnership Contract, coordination of the CSF Funds
        between themselves and with the other existing financial instruments and the
        European Investment Bank.
   (21) Territorial cohesion has been added to the goals of economic and social cohesion
        by the Treaty, and it is necessary to address the role of cities, functional
        geographies and sub-regional areas facing specific geographical or demographic
        problems. To this end, to better mobilise potential at a local level, it is necessary
        to strengthen and facilitate community-led local development by laying down
        common rules and close coordination for all CSF Funds. Responsibility for the
        implementation of local development strategies should be given to local action
        groups representing the interests of the community, as an essential principle.
   (22) Financial instruments are increasingly important due to their leverage effect on
        CSF Funds, their capacity to combine different forms of public and private
        resources to support public policy objectives, and because revolving forms of
        finance make such support more sustainable over the longer term.
   (23) Financial instruments supported by the CSF Funds should be used to address
        specific market needs in a cost effective way, in accordance with the objectives of
        the programmes, and should not crowd out private financing. The decision to
        finance support measures through financial instruments should be determined
        therefore on the basis of an ex ante analysis.
   (24) Financial instruments should be designed and implemented so as to promote
        substantial participation by private sector investors and financial institutions on an
        appropriate risk-sharing basis. To be sufficiently attractive to private sector,
        financial instruments need to be designed and implemented in a flexible manner.
        Managing authorities should therefore decide on the most appropriate forms to
        implement financial instruments to address the specific needs of the target
        regions, in accordance with the objectives of the relevant programme.
   (25) Managing authorities should have the possibility to contribute resources from
        programmes to financial instruments set up at Union level, or to instruments set
        up at regional level. Managing authorities should also have the possibility to
        implement financial instruments directly, through specific funds or through funds
        of funds.
EN                                               8                                             EN
 ---pagebreak---    (26) The amount of the resources paid at any time from the CSF Funds to financial
        instruments should correspond to the amount necessary to implement planned
        investments and payments to final recipients, including management costs and
        fees, determined on the basis of business plans and cash-flow forecasts for a pre-
        defined period which should not exceed two years.
   (27) It is necessary to lay down specific rules regarding the amounts to be accepted as
        eligible expenditure at closure, to ensure that the amounts, including the
        management costs and fees, paid from the CSF Funds to financial instruments are
        effectively used for investments and payments to final recipients. It is also
        necessary to lay down specific rules regarding the reuse of resources attributable
        to the support from the CSF Funds, including the use of legacy resources after the
        closure of the programmes.
   (28) Member States should monitor programmes in order to review implementation
        and progress towards achieving the programme's objectives. To this end,
        monitoring committees should be set up and their composition and functions
        defined for CSF Funds. Joint Monitoring Committees could be set up to facilitate
        coordination between the CSF Funds In order to ensure effectiveness, monitoring
        committees should be able to issue recommendations to managing authorities
        regarding implementation of the programme and should monitor actions taken as
        a result of its recommendations.
   (29) Alignment of the monitoring and reporting arrangements of the CSF Funds is
        necessary to simplify management arrangements at all levels. It is important to
        ensure proportionate reporting requirements but also the availability of
        comprehensive information on progress made at key review points. Therefore it is
        necessary that reporting requirements reflect information needs in given years and
        are aligned with the timing of the performance reviews.
   (30) With a view to monitoring progress of programmes, an annual review meeting
        should take place between the Member State and the Commission. The Member
        State and the Commission should however be able to agree not to organize the
        meeting in order to avoid unnecessary administrative burden.
   (31) In order for the Commission to monitor progress towards achieving Union
        objectives, Member States should submit progress reports on the implementation
        of their Partnership Contracts. On the basis of such reports, the Commission
        should prepare a strategy report on progress in 2017 and 2019.
   (32) It is necessary to evaluate the effectiveness, efficiency and impact of assistance
        from the CSF Funds in order to improve the quality of implementation and design
        of programmes, and to determine the impact of programmes in relation to the
        targets for the Union strategy for smart sustainable and inclusive growth and in
        relation to GDP and unemployment, where relevant. The responsibilities of
        Member States and the Commission in this regard should be specified.
   (33) In order to improve the quality and design of each programme, and verify that
        objectives and targets can be reached, an ex ante evaluation of each programme
        should be carried out.
EN                                              9                                          EN
 ---pagebreak---    (34) An evaluation plan should be drawn up by the authority responsible for the
        preparation of the programme. During the programming period managing
        authorities should carry out evaluations to assess the effectiveness and impact of a
        programme. The monitoring committee and the Commission should be informed
        about the results of evaluations to facilitate management decisions.
   (35) Ex post evaluations should be carried out in order to assess the effectiveness and
        efficiency of the CSF Funds and their impact on the overall goals of the CSF
        Funds and the Union strategy for smart, sustainable and inclusive growth.
   (36) It is useful to specify the types of action that may be undertaken at the initiative of
        the Commission and of the Member States as technical assistance with support
        from the CSF Funds.
   (37) In order to ensure an effective use of Union resources, and avoid the over-
        financing of revenue generating operations, it is necessary to set out the rules for
        calculating the contribution from the CSF Funds to a revenue-generating
        operation.
   (38) The starting and closing dates for the eligibility of expenditure should be defined
        so as to provide for a uniform and equitable rule applying to the implementation
        of the CSF Funds across the Union. In order to facilitate the execution of
        programmes, it is appropriate to establish that the starting date for the eligibility
        of expenditure may be prior to 1 January 2014 if the Member State concerned
        submits a programme before that date. With a view to ensuring an effective use of
        EU Funds and reducing the risk to the EU budget, it is necessary to put in place
        restrictions on support for completed operations.
   (39) In accordance with the principle of subsidiarity and subject to exceptions
        provided for in Regulation(s) (EU) No […] [ERDF, ESF, CF, ETC, EAFRD,
        EMFF Regulations], Member States should adopt national rules on the eligibility
        of expenditure.
   (40) With a view to simplifying the use of the CSF Funds and reducing the risk of
        errors, while providing for differentiation where needed to reflect the specificities
        of policy, it is appropriate to define the forms of support, harmonized conditions
        of reimbursement of grants and flat rate financing, specific eligibility rules for
        grants and specific conditions on the eligibility of operations depending on
        location.
   (41) To ensure the effectiveness, fairness and sustainable impact of the intervention of
        the CSF Funds, there should be provisions guaranteeing that investments in
        businesses and infrastructures are long-lasting and prevent the CSF Funds from
        being used to undue advantage. Experience has shown that a period of five years
        is an appropriate minimum period to be applied, except where State aid rules
        foresee a different period. It is appropriate to exclude actions supported by the
        ESF and those not entailing productive investment or investment in infrastructure
        from the general requirement of durability, unless such requirements are derived
        from applicable State aid rules, and to exclude contributions to or from financial
        instruments.
EN                                                10                                            EN
 ---pagebreak---    (42) Member States should adopt adequate measures to guarantee the proper set up
        and functioning of their management and control systems to give assurance on the
        legal and regular use of the CSF Funds. The obligations of Member States as
        regards the management and control systems of programmes, and in relation to
        the prevention, detection and correction of irregularities and infringements of
        Union law should therefore be specified.
   (43) In accordance with the principles of shared management, Member States should
        have the primary responsibility, through their management and control systems,
        for the implementation and control of the operations in programmes. In order to
        strengthen the effectiveness of the control over the selection and implementation
        of operations and the functioning of the management and control system, the
        functions of the managing authority should be specified.
   (44) In order to provide assurance ex ante on the set up and design of the main systems
        of management and control, Member States should designate an accrediting body
        that is responsible for the accreditation and withdrawal of accreditation of
        managing and control bodies.
   (45) The powers and responsibilities of the Commission to verify the effective
        functioning of the management and control systems, and to require Member State
        action, should be laid down. The Commission should also have the power to carry
        out audits focused on issues relating to sound financial management in order to
        draw conclusions on the performance of Funds.
   (46) Union budget commitments should be effected annually. In order to ensure
        effective programme management, it is necessary to lay down common rules for
        interim payment requests, the payment of the annual balance, where appropriate,
        and the final balance, without prejudice to specific rules that are required for each
        of the CSF Funds.
   (47) The pre-financing payment at the start of programmes ensures that the Member
        State has the means to provide support to beneficiaries in the implementation of
        the programme from programme adoption. Therefore, provisions should be made
        for initial pre-financing amounts from the CSF Funds. Initial pre-financing should
        be totally cleared at closure of the programme.
   (48) In order to safeguard the Union's financial interests, there should be measures
        limited in time that allow the authorising officer by delegation to interrupt
        payments where there is evidence to suggest a significant deficiency in the
        functioning of the management and control system, evidence of irregularities
        linked to a payment application, or a failure to submit documents for the purpose
        of clearance of accounts.
   (49) In order to ensure that expenditure co-financed by the Union budget in any given
        financial year is used in accordance with the applicable rules, an appropriate
        framework should be created for the annual clearance of accounts. Under this
        framework, the accredited bodies should submit to the Commission, in respect of
        each programme, a management declaration of assurance accompanied by the
        certified annual accounts, a summary report of controls and an independent audit
        opinion and control report.
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 ---pagebreak---    (50) In order to safeguard the Union budget, it may be necessary for the Commission
        to make financial corrections. To ensure legal certainty for the Member States, it
        is important to define the circumstances under which breaches of applicable
        Union or national law can lead to financial corrections by the Commission. In
        order to ensure that financial corrections which the Commission may impose on
        Member States are related to the protection of the EU's financial interests, they
        should be confined to cases where the breach of Union or national law concerns
        directly or indirectly the eligibility, regularity, management or control of
        operations and the corresponding expenditure. To ensure proportionality it is
        important that the Commission considers the nature and the gravity of the breach
        in deciding the amount of financial correction.
   (51) In order to encourage financial discipline, it is appropriate to define the
        arrangements for decommitment of any part of the budget commitment in a
        programme, in particular where an amount may be excluded from decommitment,
        notably when delays in implementation result from circumstances which are
        independent of the party concerned, abnormal or unforeseeable and whose
        consequences cannot be avoided despite the diligence shown.
   (52) Additional general provisions are necessary in relation to the specific functioning
        of the Funds. In particular, in order to increase their added value, and to enhance
        their contribution to the priorities of the Union strategy for smart, sustainable and
        inclusive growth, the functioning of these Funds should be simplified and
        concentrated on the goals of 'Investment for growth and jobs' and 'European
        territorial cooperation'.
   (53) Additional provisions for the specific functioning of the EAFRD and the EMFF
        are set out in the relevant sector-specific legislation.
   (54) In order to promote the Treaty objectives of economic, social and territorial
        cohesion, the 'Investment for growth and jobs' goal should support all regions. To
        provide balanced and gradual support and reflect the level of economic and social
        development, resources under that goal should be allocated from the ERDF and
        the ESF among the less developed regions, the transition regions and the more
        developed regions according to their gross domestic product (GDP) per capita in
        relation to the EU average. In order to ensure the long-term sustainability of
        investment from the Structural Funds, regions whose GDP per capita for the
        2007-2013 period was less than 75% of the average of the EU-25 for the
        reference period but whose GDP per capita has grown to more than 75% of the
        EU-27 average should receive at least two thirds of their 2007-2013 allocation.
        Member States whose per capita gross national income (GNI) is less than 90 % of
        that of the Union average should benefit under the 'Investment for growth and
        jobs' goal from the CF.
   (55) Objective criteria should be fixed for designating eligible regions and areas for
        support from the Funds. To this end, the identification of the regions and areas at
        Union level should be based on the common system of classification of the
        regions established by Regulation (EC) No 1059/2003 of the European Parliament
EN                                                12                                          EN
 ---pagebreak---         and the Council of 26 May 2003 on the establishment of a common classification
        of territorial units for statistics (NUTS)6.
   (56) In order to set out an appropriate financial framework, the Commission should
        establish, by means of implementing acts, the indicative annual breakdown of
        available commitment appropriations using an objective and transparent method
        with a view to targeting the regions whose development is lagging behind,
        including those receiving transitional support.
   (57) It is necessary to fix the limits of those resources for the 'Investment for growth
        and jobs' goal and to adopt objective criteria for their allocation to regions and
        Member States. In order to encourage the necessary acceleration of development
        of infrastructure in transport and energy as well as information and
        communication technologies across the Union, a Connecting Europe Facility
        should be created. The allocation of the annual appropriations from the Funds and
        the amounts transferred from the Cohesion Fund to the Connecting Europe
        Facility to a Member State should be limited to a ceiling that would be fixed
        taking into account the capacity of that particular Member State to absorb these
        appropriations. In addition, in line with the headline target on poverty reduction,
        it is necessary to reorient the scheme for food support for the most deprived
        persons to promote social inclusion and the harmonious development of the
        Union. A mechanism is envisaged which transfers resources to this instrument
        and ensures that these will be constituted from ESF allocations through an
        implicit corresponding decrease of the minimum percentage of the Structural
        Funds to be allocated to the ESF in each country.
   (58) In order to strengthen the focus on results and achievement of the Europe 2020
        objectives and targets, five per cent of the resources for the 'Investment for
        growth and jobs' goal should be set aside as a performance reserve for each Fund,
        and category of region in each Member State.
   (59) As regards the Funds and with a view to ensuring an appropriate allocation to
        each category of regions, resources should not be transferred between less
        developed, transition and more developed regions except in duly justified
        circumstances linked to the delivery of one or more thematic objectives and for
        no more than 2 % of the total appropriation for that category of region.
   (60) In order to ensure a genuine economic impact, support from the Funds should not
        replace public expenditure or equivalent structural expenditure by Member States
        under the terms of this Regulation. In addition, so that the support from the Funds
        takes into account a broader economic context, the level of public expenditure
        should be determined with reference to the general macroeconomic conditions in
        which the financing takes place based on the indicators provided in the Stability
        and Convergence Programmes submitted annually by Member States in
        accordance with Regulation (EC) No. 1466/1997 of 7 July 1997 on the
        strengthening of the surveillance of budgetary positions and the surveillance and
        coordination of economic policies7. Verification by the Commission of the
        principle of additionality should concentrate on the Member States in which less
   6
        OJ L 154, 21.6.2003, p. 1.
   7
        OJ L 209, 2.8.1997, p. 1.
EN                                               13                                         EN
 ---pagebreak---         developed and transition regions cover at least 15% of the population because of
        the scale of the financial resources allocated to them.
   (61) It is necessary to lay down additional provisions concerning the programming,
        management, monitoring and control of operational programmes supported by the
        Funds. Operational programmes should set out priority axes corresponding to
        thematic objectives, elaborate a consistent intervention logic to tackle the
        development needs identified, and set out the framework for performance
        assessment. They should also contain other elements necessary to underpin the
        effective and efficient implementation of these Funds.
   (62) With a view to improving complementarities and simplifying implementation, it
        should be possible to combine support from the CF and the ERDF with support
        from the ESF in joint operational programmes under the growth and jobs goal.
   (63) Major projects represent a substantial share of Union spending and are frequently
        of strategic importance with respect to the achievement of the Union strategy for
        smart, sustainable and inclusive growth. Therefore it is justified that operations of
        substantial size continue to be subject to approval by the Commission under this
        regulation. To ensure clarity, it is appropriate to define the content of a major
        project for this purpose. The Commission should also have the possibility to
        refuse support for a major project where the granting of such support is not
        justified.
   (64) In order to give Member States the option of implementing part of an operational
        programme using a result-based approach, it is useful to provide for a joint action
        plan comprising a set of actions to be carried out by a beneficiary to contribute to
        the objectives of the operational programme. In order to simplify and reinforce
        the result orientation of the Funds the management of the joint action plan should
        be exclusively based on jointly agreed milestones, outputs and results as defined
        in the Commission decision adopting the joint action plan. Control and audit of a
        joint action plan should also be limited to the achievement of these milestones,
        outputs and results. Consequently, it is necessary to lay down rules on its
        preparation, content, adoption, financial management and control of joint action
        plans.
   (65) Where an urban or territorial development strategy requires an integrated
        approach because it involves investments under more than one priority axis of one
        or several operational programmes, action supported by the Funds should be
        carried out as an integrated territorial investment within an operational
        programme.
   (66) It is necessary to adopt specific rules in relation to the functions of the monitoring
        committee and the annual reports on implementation of operational programmes
        supported by the Funds. Additional provisions for the specific functioning of the
        EAFRD are set out in the relevant sector specific legislation.
   (67) To ensure the availability of essential and up to date information on programme
        implementation, it is necessary that Member States provide the Commission with
        the key data on a regular basis. In order to avoid an additional burden on Member
        States, this should be limited to data collected continuously, and the transmission
        should be performed by way of electronic data exchange.
EN                                               14                                            EN
 ---pagebreak---    (68) In accordance with Article 175 of the Treaty, the Commission submits Cohesion
        Reports to the European Parliament, the Council, the Economic and Social
        Committee and the Committee of the Regions every three years on the progress
        made towards achieving the Union's economic, social and territorial cohesion. It
        is necessary to lay down the content of this report.
   (69) It is considered appropriate that the Commission, in cooperation with the Member
        States, carries out the ex post evaluation for the Funds to obtain information at the
        appropriate level on the results and impact of interventions financed. Specific
        provisions are also needed to establish a procedure for the approval of the
        evaluation plans for the Funds.
   (70) It is important to bring the achievements of the Union's Funds to the attention of
        the general public. Citizens have the right to know how the Union's financial
        resources are invested. The responsibility to ensure that the appropriate
        information is communicated to the public should lie with both the managing
        authorities and the beneficiaries. 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, the resources allocated to
        communication actions under this Regulation shall also contribute to cover the
        corporate communication of the political priorities of the European Union as far
        as they are related to the general objectives of this Regulation.
   (71) For the purpose of ensuring a wide dissemination of information about the
        achievements of the Funds and the role of the Union therein and to inform
        potential beneficiaries about funding opportunities, detailed rules about
        information and communication measures, as well as certain technical
        characteristics of such measures, should be defined in this Regulation.
   (72) With a view to strengthening accessibility and transparency of information about
        funding opportunities and project beneficiaries, in each Member State a single
        website or website portal providing information on all the operational
        programmes, including the lists of operations supported under each operational
        programme, should be made available.
   (73) It is necessary to determine the elements for modulating the co-financing rate
        from the Funds to operational programmes, in particular, to increase the
        multiplier effect of Union resources. It is also necessary to establish the maximum
        rates of co-financing by category of region in order to ensure respect of the
        principle of co-financing through an appropriate level of national support.
   (74) It is necessary for Member States to designate a managing authority, a certifying
        authority and a functionally independent auditing authority for each operational
        programme. To provide flexibility for Member States in the set up of control
        systems, it is appropriate to provide the option for the functions of the certifying
        authority to be carried out by the managing authority. The Member State should
        also be allowed to designate intermediate bodies to carry out certain tasks of the
        managing authority or the certifying authority. The Member State should in that
        case lay down clearly their respective responsibilities and functions.
   (75) The managing authority bears the main responsibility for the effective and
        efficient implementation of the Funds and thus fulfils a substantial number of
EN                                               15                                           EN
 ---pagebreak---         functions related to programme management and monitoring, financial
        management and controls as well as project selection. Its responsibilities and
        functions should be set out.
   (76) The certifying authority should draw up and submit to the Commission payment
        applications. It should draw up the annual accounts, certifying the completeness,
        accuracy and veracity of the annual accounts and that the expenditure entered in
        the accounts complies with applicable Union and national rules. Its
        responsibilities and functions should be set out.
   (77) The audit authority should ensure that audits are carried out on the management
        and control systems, on an appropriate sample of operations and on the annual
        accounts. Its responsibilities and functions should be set out.
   (78) In order to take account of the specific organisation of the management and
        control systems for the ERDF, ESF and CF and the need to ensure a proportionate
        approach, specific provisions are required for the accreditation and withdrawal of
        accreditation of the managing authority and the certifying authority.
   (79) Without prejudice to the Commission's powers as regards financial control,
        cooperation between the Member States and the Commission in this field should
        be increased and criteria should be established which allow the Commission to
        determine, in the context of its strategy of control of national systems, the level of
        assurance it should obtain from national audit bodies.
   (80) In addition to common rules on financial management, additional provisions are
        necessary for the ERDF, ESF and CF. In particular, with a view to ensuring
        reasonable assurance for the Commission prior to the annual clearance of
        accounts, applications for interim payments should be reimbursed at a rate of 90
        % of the amount resulting from applying the co-financing rate for each priority
        axis as laid down in the decision adopting the operational programme to the
        eligible expenditure for the priority axis. The outstanding amounts due should be
        paid to the Member States upon annual clearance of accounts, provided that
        reasonable assurance has been attained in regard to the eligibility of expenditure
        for the year covered by the clearance procedure.
   (81) To ensure that beneficiaries receive the support as soon as possible and to
        reinforce the assurance for the Commission it is appropriate to require that
        payment applications include only expenditure for which the support has been
        paid to beneficiaries. Pre-financing each year should be foreseen to ensure that
        Member State have sufficient means to operate under such arrangements. Such
        pre-financing should be cleared each year with the clearance of accounts.
   (82) To ensure the appropriate application of the general rules on decommitment, the
        rules established for the Funds should detail how the deadlines for decommitment
        are established and how the respective amounts are calculated.
   (83) It is necessary to specify the detailed procedure for the annual clearance of
        accounts applicable to the Funds to ensure a clear basis and legal certainty for
        these arrangements. It is important to envisage a limited possibility for the
        Member State to define a provision in its annual accounts for an amount, which is
        subject to an ongoing procedure with the audit authority.
EN                                               16                                            EN
 ---pagebreak---    (84) The process of annual clearance of accounts should be accompanied by an annual
        closure of completed operations (for the ERDF and the CF) or expenditure (for
        the ESF). In order to reduce the costs associated with the final closure of
        operational programmes, to reduce the administrative burden for beneficiaries and
        to provide legal certainty, annual closure should be obligatory thereby limiting the
        period during which the supporting documents need to be maintained and during
        which operations can be audited and financial corrections imposed.
   (85) In order to safeguard the Union's financial interests and provide the means to
        ensure effective programme implementation, there should be measures allowing
        for the suspension by the Commission of payments at the level of priority axis or
        operational programme.
   (86) It is appropriate to lay down the specific arrangements and procedures for
        financial corrections by Member States and by the Commission in respect of the
        Funds to provide legal certainty for Member States.
   (87) The frequency of audits on operations should be proportionate to the extent of the
        Union's support from the Funds. In particular, the number of audits s carried out
        should be reduced where the total eligible expenditure for an operation does not
        exceed EUR 100 000. Nevertheless, it should be possible to carry out audits at
        any time where there is evidence of an irregularity or fraud, or, following closure
        of a completed operation, as part of an audit sample. In order that the level of
        auditing by the Commission is proportionate to the risk, the Commission should
        be able to reduce its audit work in relation to operational programmes where there
        are no significant deficiencies or where the audit authority can be relied on.
   (88) In order to supplement and amend certain non-essential elements of this
        Regulation, the power to adopt acts in accordance with Article 290 of the Treaty
        should be delegated to the Commission in respect of a code of conduct on the
        objectives and criteria to support the implementation of partnership, the adoption
        of the elements of the a Common Strategic Framework related to indicative
        actions of high European added value and corresponding principles for
        delivery, and priorities for cooperation, additional rules on the allocation of the
        performance reserve, the definition of the area and population covered by the
        local development strategies, detailed rules on financial instruments (ex ante
        assessment, combination of support, eligibility, types of activities not supported),
        the rules on certain types of financial instruments set up at national, regional,
        transnational or cross-border level, rules concerning funding agreements, transfer
        and management of assets, the arrangements for management and control, the
        rules on payment requests, and establishment of a system of capitalisation of
        annual instalments, the definition of the flat rate for revenue generating
        operations, the definition of the flat rate applied to indirect costs for grants based
        on existing methods and corresponding rates applicable in Union policies, the
        responsibilities of Member States concerning the procedure for reporting
        irregularities and recovery of sums unduly paid, the modalities of exchange of
        information of operations, the arrangements for the adequate audit trail, the
        conditions of national audits, the accreditation criteria for managing authorities
        and certifying authorities, the identification of commonly accepted data carriers,
        and the criteria for establishing the level of financial correction to be applied. The
        Commission should also be empowered to amend, by means of delegated acts,
EN                                               17                                            EN
 ---pagebreak---         Annexes I and VI, both of which contain non-essential elements to this
        Regulation, in order to address future adaptation needs. It is of particular
        importance that the Commission carry out appropriate consultations during its
        preparatory work, including at expert level.
   (89) 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.
   (90) The Commission should be empowered to adopt, by means of implementing acts,
        as regards all CSF Funds, decisions approving the Partnership Contracts,
        decisions on the allocation of the performance reserve, decisions suspending
        payments linked to Member States' economic policies, and, in the case of
        decommitment, decisions to amend decisions adopting programmes; and as
        regards the Funds, decisions identifying the regions and Member States fulfilling
        the Investment for growth and jobs criteria, decisions setting out the annual
        breakdown of commitment appropriations to the Member States, decisions setting
        out the amount to be transferred from each Member State's CF allocation to the
        Connecting Europe Facility, decisions setting out the amount to be transferred
        from each Member State's Structural Funds allocation for food for deprived
        people, decisions adopting and amending operational programmes, decisions on
        major projects, decisions on joint action plans, decisions suspending payments
        and decisions on financial corrections.
   (91) In order to ensure uniform conditions for the implementation of this Regulation,
        the implementing powers relating to the methodology concerning climate change
        objectives, standard terms and conditions for monitoring of financial instruments,
        the uniform conditions concerning the monitoring and provision of monitoring
        information for financial instruments, the methodology for the calculation of net
        revenue for revenue-generating projects, the electronic data exchange system
        between the Member State and the Commission, the model of operational
        programme for the Funds, the nomenclature for the categories of intervention, the
        format for information on major projects and methodology to be used in carrying
        out the cost-benefit analysis on major projects, the model for the joint action plan,
        the model of the annual and final implementation reports, certain technical
        characteristics of information and publicity measures and related instructions,
        rules on the exchange of information between beneficiaries and managing
        authorities, certifying authorities, audit authorities and intermediate bodies, the
        model of the management declaration, the models for the audit strategy, opinion
        and annual control report and methodology for the sampling method, the rules
        concerning use of data collected during audits, and the model for payment
        applications 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 powers8.
   (92) This Regulation replaces Council Regulation (EC) No 1083/2006 of 11 July 2006
        laying down general provisions on the European Regional Development Fund, the
   8
        OJ L 55, 28.2.2011, p.13.
EN                                              18                                            EN
 ---pagebreak---            European Social Fund and the Cohesion Fund and repealing Regulation (EC) No
           1260/19999. That Regulation should be therefore repealed.
   (93)    Since the objective of this Regulation, namely to reduce disparities between levels
           of development of the various regions and the backwardness of the least favoured
           regions or islands, particular rural areas, areas affected by industrial transition,
           and regions which suffer from severe and permanent natural or demographic
           handicaps, cannot be sufficiently achieved by Member States but can be better
           achieved at Union level, the Union may adopt measures, in accordance with the
           principle of subsidiarity as set out in Article 5 of the Treaty on European Union.
           In accordance with the principle of proportionality, as set out in that Article, this
           Regulation does not go beyond what is necessary in order to achieve that
           objective,
   HAVE ADOPTED THIS REGULATION
                                         PART ONE
                     SUBJECT-MATTER AND DEFINITIONS
                                             Article 1
                                          Subject-matter
   This Regulation lays down the common rules applicable to the European Regional
   Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF),
   the European Agricultural Fund for Rural Development (EAFRD) and the European
   Maritime and Fisheries Fund (EMFF), which are operating under the Common Strategic
   Framework (the 'CSF Funds'). It also defines the provisions necessary to ensure the
   effectiveness of the CSF Funds and their coordination with one another and with other
   Union instruments.
   This Regulation also lays down the general rules governing the ERDF, the ESF (together
   referred to as the 'Structural Funds') and the CF. The Regulation defines the tasks,
   priority objectives and organisation of the Structural Funds and the CF (the 'Funds'), the
   criteria for Member States and regions to be eligible for support from the CSF Funds, the
   financial resources available and the criteria for their allocation.
   The rules set out in this Regulation apply without prejudice to the provisions laid down
   in Regulation (EU) No […]/2012 of the European Parliament and of the Council on the
   financing, management and monitoring of the common agriculture policy10 (hereinafter
   referred as the 'CAP' Regulation) and to the specific provisions laid down in the
   following Regulations:
   9
            OJ L 210, 31.7.2006, p. 25.
   10
EN                                                 19                                            EN
 ---pagebreak---    (1)      Regulation (EU) No […]/2012 of the European Parliament and of the Council
            on the European Regional Development Fund and repealing Regulation (EC) No
            1080/200611 (the 'ERDF Regulation');
   (2)      Regulation (EU) No […]/2012 of the European Parliament and of the Council
            on the European Social Fund and repealing Regulation (EC) No 1081/200612
            (the 'ESF Regulation');
   (3)      Regulation (EU) No […]/2012 of the European Parliament and of the Council
            establishing a Cohesion Fund and repealing Regulation (EC) No 1084/200613
            (the 'CF Regulation');
   (4)      Regulation (EU) No […]/2012 of the European Parliament and of the Council
            on European territorial cooperation14 (the 'ETC Regulation');
   (5)      Regulation (EU) No […]/2012 of the European Parliament and of the Council
            on the European Agricultural Fund for Rural Development and repealing
            Regulation (EC) No 1698/200515 (the 'EAFRD Regulation'); and
   (6)      Regulation (EU) No […]/2012 of the European Parliament and of the Council
            on the European Maritime and Fisheries Fund and repealing Regulation (EC) No
            1198/200616 (the 'EMFF Regulation').
                                             Article 2
                                           Definitions
   For the purposes of this Regulation, the definitions on financial instruments as laid down
   in the Financial Regulation shall apply to financial instruments supported by the CSF
   Funds, except where otherwise provided in this Regulation.
   In addition, the following definitions shall apply:
   (1)      'Union strategy for smart, sustainable and inclusive growth' means the targets
            and shared objectives guiding the action of Member States and the Union set out
            in the Communication of the Commission: Europe 2020: A strategy for smart,
            sustainable and inclusive growth, and contained in the Conclusions adopted by
            the European Council of 17 June 2010 as Annex I (New European Strategy for
            Jobs and Growth, EU Headline Targets), Council Recommendation of 13 July
            2010 on broad guidelines for the economic policies of the Member States and
            the Union17 and Council Decision of 21 October 2010 on guidelines for the
            employment policies of the Member States18, and any revision of such targets
            and shared objectives.
   11
   12
   13
           OJ L , , p. .
   14
   15
   16
   17
           OJ L 191, 23.7.2010, p.28.
   18
           OJ L 308, 24.11.2010, p.46.
EN                                                 20                                         EN
 ---pagebreak---    (2)  'Common Strategic Framework' means the document translating the objectives
        and targets of the Union strategy for smart, sustainable and inclusive growth into
        key actions for the CSF Funds, establishing for each thematic objective the key
        actions to be supported by each CSF Fund and the mechanisms for ensuring the
        coherence and consistency of the programming of the CSF Funds with the
        economic and employment policies of the Member States and of the Union;
        elements that provide clear strategic direction to the programming process
        and facilitate sectoral and territorial coordination of Union intervention
        under the CSF Funds and with other relevant Union policies and
        instruments in line with the objectives and targets of the Union strategy for
        smart, sustainable and inclusive growth;
   (3)  'action' means a type of operation to be supported by the CSF Funds to
        achieve the objectives of a progamme;
   (4)  'indicative action of high European added value' means an action which can
        be expected to make a significant contribution to the achievement of the
        targets and objectives of the Union strategy for smart, sustainable and
        inclusive growth and which shall act as a reference point in the preparation
        of programmes;
   (5)  'Fund-specific rules' means the provisions laid down in or established on the
        basis of Part Three of this Regulation or a specific or generic regulation
        governing one or more of the CSF Fund(s) referred to or listed in the third sub-
        paragraph of Article 1;
   (6)  ‘programming’ means the process of organisation, decision-making and
        allocation of financial resources in several stages intended to implement, on a
        multi-annual basis, the joint action by the Union and the Member States to
        achieve Union strategy for smart, sustainable and inclusive growth;
   (7)  ‘programme’ means ‘operational programme’ referred to in Part Three of this
        Regulation and in the EMFF Regulation, and ‘rural development programme’
        referred to in the EAFRD Regulation;
   (8)  ‘priority’ means the ‘priority axis’ referred to in Part Three of this Regulation
        and the ‘Union priority’ referred to in the EMFF Regulation and in the EAFRD
        Regulation;
   (9)  'operation' means a project, contract, action or group of projects selected by the
        managing authorities of the programmes concerned, or under their
        responsibility, contributing to the objectives of the priority or priorities to which
        it relates; in the context of financial instruments, the operation is constituted by
        the financial contributions from a programme to financial instruments and the
        subsequent financial support provided by these financial instruments;
   (10) 'beneficiary' means a public or private body responsible for initiating or
        initiating and implementing operations; in the context of State aid, the term
        'beneficiary' means the body which receives the aid; in the context of financial
        instruments, the term 'beneficiary' means the body that implements the financial
        instrument;
EN                                              21                                            EN
 ---pagebreak---    (11)  'final recipient' means a legal or natural person that receives financial support
         from a financial instrument;
   (12)  'State aid' means aid falling under Article 107(1) of the Treaty which shall be
         deemed for the purposes of this Regulation also to include de minimis aid within
         the meaning of Commission Regulation (EC) No 1998/2006 of 15 December
         2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid19,
         Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the
         application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector
         of agricultural production20 and Commission Regulation (EC) No 875/2007 of
         24 July 2007 on the application of Articles 87 and 88 of the EC Treaty to de
         minimis aid in the fisheries sector and amending Regulation (EC)
         No 1860/200421;
   (13)  'completed operation' means an operation that has been physically completed or
         fully implemented and in respect of which all related payments have been made
         by beneficiaries and the corresponding public contribution has been paid to the
         beneficiaries;
   (14)  ‘public support' means any financial support to the financing of an operation the
         origin of which is the budget of national, regional or local public authorities, the
         budget of the Union related to the CSF Funds, the budget of public law bodies
         or the budget of associations of public authorities or public law bodies;
   (15)  'public law body' means any body governed by public law in the meaning of
         Article 1(9) of Directive 2004/18/EC of the European Parliament and of the
         Council22 and any European grouping of territorial cooperation (EGTC)
         established in accordance with Regulation (EC) No 1082/2006 of the European
         Parliament and of the Council23, regardless of whether the relevant national
         implementing provisions consider the EGTC a public law body or a private law
         body;
   (16)  'document' means a paper or an electronic medium bearing information relevant
         in the framework of this Regulation;
   (17)  'intermediate body' means any public or private body which acts under the
         responsibility of a managing or certifying authority, or which carries out duties
         on behalf of such an authority vis-à-vis beneficiaries' implementing operations;
   (18)  ‘local development strategy’ means a coherent set of operations to meet local
         objectives and needs, which contributes to meeting the Union strategy for smart,
         sustainable and inclusive growth and which is implemented in partnership at the
         appropriate level;
   (19)  ‘rolling closure’ means closure of operations as a result of the annual clearance
         of account exercise and before the general closure of the programme;
   19
        OJ L 379, 28.12.2006, p. 5.
   20
        OJ L 337, 21.12.2007, p. 35.
   21
        OJ L 193, 25.7.2007, p. 6.
   22
        OJ L 134, 30.4.2004, p. 114.
   23
        OJ L 210, 31.7.2006, p. 19.
EN                                             22                                             EN
 ---pagebreak---    (20)     'Partnership Contract' means the document prepared by the Member State with
            the involvement of partners in line with the multi-level governance approach,
            which sets out the Member State's strategy, priorities and arrangements for using
            the CSF Funds in an effective and efficient way to pursue the Union strategy for
            smart, sustainable and inclusive growth, and which is approved by the
            Commission following assessment and dialogue with the Member State;
   (21)     'category of regions' means the categorisation of regions as 'less developed
            regions', 'transition regions' or 'more developed regions' according to Article
            82(2);
   (22)     'request for payment' means a payment application or declaration of expenditure
            submitted by the Member State to the Commission;
   (23)     'EIB' means the European Investment Bank, the European Investment Fund or
            any subsidiary of the European Investment Bank;
   (24)     'SME' means a micro, small or medium sized enterprise in the meaning of
            Commission Recommendation 2003/361/EC, or subsequent amendments
            thereof;
   (25)     'accounting year, means, for the purposes of Part Three, the period from 1 July
            to 30 June, except for the first accounting year, in respect of which it means the
            period from the start date for eligibility of expenditure until 30 June 2015. The
            final accounting year shall be from 1 July 2022 to 30 June 2023;
   (26)     'financial year, means, for the purposes of Part Three, the period from 1 January
            to 31 December.
                                         PART TWO
     COMMON PROVISIONS APPLICABLE TO CSF FUNDS
                                           TITLE I
                Principles of Union support for the CSF Funds
                                              Article 3
                                               Scope
   The rules set out in this Part shall apply without prejudice to the provisions laid down in
   Part Three.
EN                                                  23                                         EN
 ---pagebreak---                                         Article 4
                                  General principles
   1. The CSF Funds shall provide support, through multi-annual programmes, which
      complements national, regional and local intervention, to deliver the Union
      strategy for smart, sustainable and inclusive growth, taking account of the
      Integrated Guidelines, the country-specific recommendations under Article
      121(2) of the Treaty and the relevant Council recommendations adopted under
      148(4) of the Treaty.
   2. The Commission and the Member States shall ensure that support from the CSF
      Funds is consistent with the policies and priorities of the Union and
      complementary to other instruments of the Union.
   3. Support from the CSF Funds shall be implemented in close cooperation between
      the Commission and the Member States.
   4  Member States and the bodies designated by them for that purpose shall be
      responsible for implementing programmes and carrying out their tasks under
      this Regulation and the Fund-specific rules at the appropriate territorial level, in
      accordance with the institutional, legal and financial framework of the Member
      State and subject to compliance with this Regulation and the Fund-specific
      rules.
   5. Arrangements for the implementation and use of the CSF Funds, and in
      particular the financial and administrative resources required for the
      implementation of the CSF Funds, in relation to the reporting, evaluation,
      management and control shall take into account the principle of proportionality
      having regard to the level of support allocated.
   6. In accordance with their respective responsibilities, the Commission and the
      Member States shall ensure coordination among the CSF Funds, and with other
      Union policies and instruments, including those in the framework of the Union's
      external action.
   7. The part of the Union budget allocated to the CSF Funds shall be implemented
      within the framework of shared management between the Member States and
      the Commission, in accordance with Article 53(b) of the Financial Regulation,
      with the exception of the amount of the CF transferred to the Connecting Europe
      Facility referred to in Article 84(4) and innovative actions at the initiative of the
      Commission under Article 9 of the ERDF Regulation, and technical assistance
      at the initiative of the Commission.
   8. The Commission and the Member States shall apply the principle of sound
      financial management in accordance with Article 27 of the Financial Regulation.
   9. The Commission and the Member States shall ensure the effectiveness of the
      CSF Funds, in particular through monitoring, reporting and evaluation.
EN                                            24                                            EN
 ---pagebreak---    10.     The Commission and the Member States shall carry out their respective roles in
           relation to the CSF Funds with the aim of reducing the administrative burden for
           beneficiaries.
                                            Article 5
                           Partnership and multi-level governance
   1.      For the Partnership Contract and each programme respectively, a Member State
           shall organise a partnership with the following partners:
           (a)    competent regional, local, urban and other public authorities;
           (b)    economic and social partners; and
           (c)    bodies representing civil society, including environmental partners, non-
                  governmental organisations, and bodies responsible for promoting equality
                  and non-discrimination.
   2.      In accordance with the multi-level governance approach, the partners shall be
           involved by Member States in the preparation of Partnership Contracts and
           progress reports and in the preparation, implementation, monitoring and
           evaluation of programmes. The partners shall participate in the monitoring
           committees for programmes.
   3.      The Commission shall be empowered to adopt delegated acts in accordance with
           Article 142 to provide for a European code of conduct that lays down objectives
           and criteria to support the implementation of partnership and to facilitate the
           sharing of information, experience, results and good practices among Member
           States.
   4.      At least once a year, for each CSF Fund, the Commission shall consult the
           organisations which represent the partners at Union level on the implementation
           of support from the CSF Funds.
                                            Article 6
                          Compliance with Union and national law
   Operations financed by the CSF Funds shall comply with applicable Union and national
   law.
                                            Article 7
         Promotion of equality between men and women and non-discrimination
   The Member States and the Commission shall ensure that equality between men and
   women and the integration of gender perspective is promoted in the preparation and
   implementation of programmes.
EN                                                25                                        EN
 ---pagebreak---    The Member States and the Commission shall take appropriate steps to prevent any
   discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or
   sexual orientation during the preparation and implementation of programmes.
                                              Article 8
                                     Sustainable development
   The objectives of the CSF Funds shall be pursued in the framework of sustainable
   development and the Union's promotion of the aim of protecting and improving the
   environment, as set out in Article 11 of the Treaty, taking into account the polluter pays
   principle.
   The Member States and the Commission shall ensure that environmental protection
   requirements, resource efficiency, climate change mitigation and adaptation, disaster
   resilience and risk prevention and management are promoted in the preparation and
   implementation of Partnership Contracts and programmes. Member States shall provide
   information on the support for climate change objectives using the methodology adopted
   by the Commission. The Commission shall adopt this methodology by means of an
   implementing act. The implementing act shall be adopted in accordance with the
   examination procedure referred to in Article 143(3).
                                           TITLE II
                              STRATEGIC APPROACH
                                         CHAPTER I
   Thematic objectives for the CSF Funds and Common Strategic
                                          Framework
                                              Article 9
                                       Thematic objectives
   Each CSF Fund shall support the following thematic objectives in accordance with its
   mission in order to contribute to the Union strategy for smart, sustainable and inclusive
   growth:
   (1)      strengthening research, technological development and innovation;
   (2)      enhancing access to, and use and quality of, information and communication
            technologies;
EN                                                  26                                          EN
 ---pagebreak---    (3)      enhancing the competitiveness of small and medium-sized enterprises, the
            agricultural sector (for the EAFRD) and the fisheries and aquaculture sector (for
            the EMFF);
   (4)      supporting the shift towards a low-carbon economy in all sectors;
   (5)      promoting climate change adaptation, risk prevention and management;
   (6)      protecting the environment and promoting resource efficiency;
   (7)      promoting sustainable transport and removing bottlenecks in key network
            infrastructures;
   (8)      promoting employment and supporting labour mobility;
   (9)      promoting social inclusion and combating poverty;
   (10)     investing in education, skills and lifelong learning;
   (11)     enhancing institutional capacity and an efficient public administration.
   Thematic objectives shall be translated into priorities specific to each CSF Fund and set
   out in the Fund-specific rules.
                                             Article 10
                                 Common Strategic Framework
   In order to promote the harmonious, balanced and sustainable development of the Union,
   a Common Strategic Framework shall provide clear strategic direction to the
   programming process and facilitate sectoral and territorial coordination of Union
   intervention under the CSF Funds and with other relevant Union policies and
   instruments in line with the objectives and targets of the Union strategy for smart,
   sustainable and inclusive growth translate the objectives and targets of the Union
   strategy for smart, sustainable and inclusive growth into key actions for the CSF Funds.
                                             Article 11
                                             Content
   The Common Strategic Framework shall establish:
   (fa)    mechanisms for ensuring means to achieve coherence and consistency of the
   programming of the CSF Funds with the country-specific recommendations under Article
   121(2) of the Treaty and the relevant Council recommendations adopted under 148(4) of
   the Treaty;
   (eb) coordination mechanisms among the CSF Funds, and with other relevant Union
   policies and instruments, including external instruments for cooperation;
EN                                                 27                                         EN
 ---pagebreak---    (c)      horizontal principles and cross-cutting policy objectives for the implementation
   of the CSF Funds;
   (bd) arrangements to address the key territorial challenges and the steps to be
   taken to encourage an integrated approach that reflects the role of for urban, rural,
   coastal and fisheries areas, as well as the specific challenges for areas with particular
   territorial features referred to in Articles 174 and 349 of the Treaty, to be addressed by
   the CSF Funds;
   (ae) for each thematic objective, the key indicative actions of high European added
   value to be supported by each CSF Fund and the corresponding principles for
   delivery;
   (df) prioritiesy areas for cooperation activities for each of the CSF Funds, where
   appropriate, taking account of macro-regional and sea basin strategies;.
                                              Article 12
                                       Adoption and review
   The elements of Commission shall be empowered to adopt a delegated act in accordance
   with Article 142 on the Common Strategic Framework related to coherence and
   consistency with the economic policies of Member States and the Union, the
   coordination mechanisms among the CSF Funds and with other relevant Union
   policies and instruments, the horizontal principles and cross-cutting policy
   objectives and the arrangements to address territorial challenges are laid down in
   Annex Iwithin 3 months of the adoption of this Regulation.
   The Commission shall be empowered to adopt delegated acts in accordance with
   Article 142 laying down the specific elements of the Common Strategic Framework
   related to the establishment of indicative actions of high European added value and
   corresponding principles for delivery for each thematic objective and of priorities
   for cooperation.
   Where there are major changes in the Union strategy for smart, sustainable and inclusive
   growth, the Commission shall review the Common Strategic Framework and, where
   appropriate, adopt by means of delegated acts in accordance with Article 142,
   amendments to Annex Ia revised Common Strategic Framework.
   Within 6 months of adoption of a revision to the revisedCommon Strategic Framework,
   Member States shall propose amendments, where necessary, to their Partnership Contract
   and programmes to ensure their consistency with the revised Common Strategic
   Framework.
EN                                                  28                                        EN
 ---pagebreak---                                  CHAPTER II
                           Partnership Contract
                                      Article 13
                     Preparation of the Partnership Contract
   1. Each Member State shall prepare a Partnership Contract for the period from
      1 January 2014 to 31 December 2020.
   2. The Partnership Contract shall be drawn up by Member States in cooperation
      with the partners referred to in Article 5. The Partnership Contract shall be
      prepared in dialogue with the Commission.
   3. The Partnership Contract shall cover all support from the CSF Funds in the
      Member State concerned.
   4. Each Member State shall transmit its Partnership Contract to the Commission
      within 3 months of the adoption of the Common Strategic Framework.
                                      Article 14
                        Content of the Partnership Contract
      The Partnership Contract shall set out:
      (a)   arrangements to ensure alignment with the Union strategy for smart,
            sustainable and inclusive growth, including:
            (i)   an analysis of disparities and development needs with reference to
                  the thematic objectives, and key actions defined in, the Common
                  Strategic Framework and the targets set in the country-specific
                  recommendations under Article 121(2) of the Treaty and the relevant
                  Council recommendations adopted under Article 148(4) of the
                  Treaty;
            (ii)  a summary analysis of the ex ante evaluations of the programmes
                  justifying the selection of the thematic objectives and the indicative
                  allocations of the CSF Funds;
            (iii) for each thematic objective, a summary of the main results expected
                  for each of the CSF Funds;
            (iv) the indicative allocation of support by the Union by thematic
                  objective at national level for each of the CSF Funds, as well as the
                  total indicative amount of support foreseen for climate change
                  objectives;
EN                                          29                                           EN
 ---pagebreak---        (v)   the main priority areas for cooperation, taking account, where
             appropriate, of macro-regional and sea basin strategies;
       (vi) horizontal principles and policy objectives for the implementation of
             the CSF Funds;
       (vii) the list of the programmes under the ERDF, the ESF and the CF,
             except those under the European territorial cooperation goal, and of
             the programmes of the EAFRD and the EMFF, with the respective
             indicative allocations by CSF Fund and by year;
   (b) an integrated approach to territorial development supported by the CSF
       Funds setting out:
       (i)   the mechanisms at national and regional level that ensure
             coordination between the CSF Funds and other Union and national
             funding instruments and with the EIB;
       (ii)  the arrangements to ensure an integrated approach to the use of the
             CSF Funds for the territorial development of urban, rural, coastal
             and fisheries areas and areas with particular territorial features, in
             particular the implementation arrangements for Articles 28, 29 and
             99 accompanied, where appropriate, by a list of the cities to
             participate in the urban development platform referred to in Article 8
             of the ERDF Regulation;
   (c) an integrated approach to address the specific needs of geographical areas
       most affected by poverty or of target groups at highest risk of
       discrimination or exclusion, with special regard to marginalised
       communities, where appropriate, including the indicative financial
       allocation for the relevant CSF Funds;
   (d) arrangements to ensure effective implementation, including:
       (i)   a consolidated table of milestones and targets established in
             programmes for the performance framework referred to in Article
             19(1), together with the methodology and mechanism to ensure
             consistency across programmes and CSF Funds;
       (ii)  a summary of the assessment of the fulfilment of ex ante
             conditionalities and of the actions to be taken at national and
             regional level, and the timetable for their implementation, where
             ex ante conditionalities are not fulfilled;
       (iii) the information required for ex ante verification of compliance with
             the rules on additionality as they are defined in Part Three of this
             Regulation;
       (iv) the actions taken to involve the partners and their role in the
             preparation of the Partnership Contract and the progress report as
             defined in Article 46 of this Regulation;
EN                                     30                                           EN
 ---pagebreak---       (e)   arrangements to ensure efficient implementation of the CSF Funds,
            including:
            (i)    an assessment of whether there is a need to reinforce the
                   administrative capacity of the authorities and, where appropriate,
                   beneficiaries, and actions to be taken for this purpose;
            (ii)   a summary of the actions planned and corresponding targets in the
                   programmes to achieve a reduction in the administrative burden for
                   beneficiaries;
            (iii) an assessment of the existing systems for electronic data exchange,
                   and the actions planned to permit all exchanges of information
                   between beneficiaries and authorities responsible for management
                   and control of programmes to be carried out solely by electronic data
                   exchange.
                                       Article 15
             Adoption and amendment of the Partnership Contract
   1. The Commission shall assess the consistency of the Partnership Contract with
      this Regulation, with the Common Strategic Framework, and the country-
      specific recommendations under Article 121(2) of the Treaty and the Council
      recommendations adopted under 148(4) of the Treaty, taking account of the
      ex ante evaluations of the programmes, and shall make observations within three
      months of the date of submission of the Partnership Contract. The Member State
      shall provide all necessary additional information and, where appropriate, shall
      revise the Partnership Contract.
   2. The Commission shall adopt a decision, by means of implementing acts,
      approving the Partnership Contract no later than six months after its submission
      by the Member State, provided that any observations made by the Commission
      have been satisfactorily taken into account. The Partnership Contract shall not
      enter into force before 1 January 2014.
   3. Where a Member State proposes an amendment to the Partnership Contract, the
      Commission shall carry out an assessment in accordance with paragraph 1 and,
      where appropriate, shall adopt a decision, by means of implementing acts,
      approving the amendment.
EN                                           31                                          EN
 ---pagebreak---                                        CHAPTER III
           Thematic concentration, ex ante conditionalities and
                                  performance review
                                            Article 16
                                    Thematic concentration
   Member States shall concentrate support, in accordance with the Fund-specific rules, on
   actions bringing the greatest added value in relation to the Union strategy for smart,
   sustainable and inclusive growth, addressing the challenges identified in the country-
   specific recommendations under Article 121(2) of the Treaty and the relevant Council
   recommendations adopted under 148(4) of the Treaty, and taking into account national
   and regional needs.
                                            Article 17
                                    Ex ante conditionalities
   1.       Ex ante conditionalities shall be defined for each CSF Fund in the Fund-specific
            rules.
   2.       Member States shall assess whether the applicable ex ante conditionalities are
            fulfilled.
   3.       Where ex ante conditionalities are not fulfilled at the date of transmission of the
            Partnership Contract, Member States shall set out in the Partnership Contract a
            summary of the actions to be taken at national or regional level and the
            timetable for their implementation, to ensure their fulfilment not later than two
            years after the adoption of the Partnership Contract or by 31 December 2016,
            whichever is earlier.
   4.       Member States shall set out the detailed actions relating to the fulfilment of
            ex ante conditionalities, including the timetable for their implementation, in the
            relevant programmes.
   5.       The Commission shall assess the information provided on the fulfilment of
            ex ante conditionalities in the framework of its assessment of the Partnership
            Contract and programmes. It may decide, when adopting a programme, to
            suspend all or part of interim payments to the programme pending the
            satisfactory completion of actions to fulfil an ex ante conditionality. The failure
            to complete actions to fulfil an ex ante conditionality by the deadline set out in
            the programme shall constitute a basis for suspending payments by the
            Commission.
   6.       Paragraphs 1 to 5 shall not apply to programmes under the European territorial
            cooperation goal.
EN                                                32                                            EN
 ---pagebreak---                                             Article 18
                                      Performance reserve
   5% of the resources allocated to each CSF Fund and Member State, with the exception of
   resources allocated to the European territorial cooperation goal and to Title V of the
   EMFF Regulation, shall constitute a performance reserve to be allocated in accordance
   with Article 20.
                                            Article 19
                                       Performance review
   1.       The Commission, in cooperation with the Member States, shall undertake a
            review of the performance of the programmes in each Member State in 2017 and
            2019, with reference to the performance framework set out in the respective
            Partnership Contract and programmes. The method for establishing the
            performance framework is set out in Annex II.
   2.       The review shall examine the achievement of the milestones of the programmes
            at the level of priorities, on the basis of the information and the assessments
            presented in the progress reports submitted by the Member States in the years
            2017 and 2019.
                                            Article 20
                              Allocation of performance reserve
   1.       Where the review of performance undertaken in 2017 reveals that a priority
            within a programme has not attained its milestones set for the year 2016, the
            Commission shall make recommendations to the Member State concerned.
   2.       On the basis of the review undertaken in 2019, the Commission shall adopt a
            decision, by means of implementing acts, to determine for each CSF Fund and
            Member State the programmes and priorities which have attained their
            milestones. The Member State shall propose the attribution of the performance
            reserve for the programmes and priorities set out in that Commission decision.
            The Commission shall approve the amendment of the programmes concerned in
            accordance with Article 26. Where a Member State fails to submit the
            information in accordance with Article 46(2) and (3), the performance reserve
            for the programmes or the priorities concerned shall not be allocated.
   3.       Where there is evidence resulting from a performance review that a priority has
            failed to achieve the milestones set out in the performance framework, the
            Commission may suspend all or part of an interim payment of a priority of a
            programme in accordance with the procedure laid down in Fund-specific rules.
   4.       Where the Commission, based on the examination of the final implementation
            report of the programme, establishes a serious failure to achieve the targets set
            out in the performance framework, it may apply financial corrections in respect
EN                                                33                                          EN
 ---pagebreak---           of the priorities concerned in accordance with Fund-specific rules. The
          Commission shall be empowered to adopt delegated acts in accordance with
          Article 142 to establish criteria and the methodology for determining the level of
          financial correction to be applied. .
   5.     Paragraph 2 shall not apply to programmes under the European territorial
          cooperation goal and to Title V of the EMFF Regulation.
                                     CHAPTER IV
                          Macroeconomic conditionalities
                                           Article 21
      Conditionality linked to the coordination of Member States' economic policies
   1.     The Commission may request a Member State to review and propose
          amendments to its Partnership Contract and the relevant programmes, where this
          is necessary:
          (a)    to support the implementation of a Council recommendation, addressed to
                 the Member State concerned and adopted in accordance with Articles
                 121(2) and/or 148(4) of the Treaty, or to support the implementation of
                 measures addressed to the Member State concerned and adopted in
                 accordance with Article 136(1) of the Treaty;
          (b)    to support the implementation of a Council recommendation addressed to
                 the Member State concerned and adopted in accordance with Article
                 126(7) of the Treaty;
          (c)    to support the implementation of a Council recommendation addressed to
                 the Member State concerned and adopted in accordance with Article 7(2)
                 of Regulation (EU) No …/2011 [on the prevention and correction of
                 macroeconomic imbalances], provided that these amendments are deemed
                 necessary to help correct the macroeconomic imbalances; or
          (d)    to maximise the growth and competitiveness impact of the available CSF
                 Funds pursuant to paragraph 4, if a Member State meets one of the
                 following conditions:
                 (i)    Union financial assistance is made available to it under Council
                        Regulation (EU) No 407/2010;
                 (ii)   medium-term financial assistance is made available to it in
                        accordance with Council Regulation (EC) No 332/200224;
   24
         OJ L 53, 23.2.2002, p. 1.
EN                                               34                                          EN
 ---pagebreak---             (iii) financial assistance in the form of an ESM loan is made available to
                  it in accordance with the Treaty establishing the European Stability
                  Mechanism.
   2. The Member State shall submit a proposal for amending the Partnership
      Contract and the relevant programmes within one month. If necessary, the
      Commission shall make observations within one month from the submission of
      the amendments, in which case the Member State shall re-submit its proposal
      within one month.
   3. Where the Commission has not made observations or where its observations
      have been satisfactorily taken into account, the Commission shall adopt a
      decision approving the amendments to the Partnership Contract and the relevant
      programmes without undue delay.
   4. By derogation to paragraph 1, where financial assistance is made available to a
      Member State in accordance with paragraph 1(d) and is linked to an adjustment
      programme, the Commission may without any proposal from the Member State
      amend the Partnership Contract and the programmes with a view to maximising
      the growth and competitiveness impact of the available CSF Funds. To ensure
      effective implementation of the Partnership Contract and the relevant
      programmes, the Commission shall become involved in their management as
      detailed in the adjustment programme or the Memorandum of Understanding
      signed with the Member State concerned.
   5. Where the Member State fails to respond to the Commission's request referred
      to in paragraph 1 or does not reply satisfactorily within one month to the
      observations of the Commission referred to in paragraph 2, the Commission
      may, within three months following its observations, adopt a decision, by means
      of implementing acts, suspending part or all of the payments for the programmes
      concerned.
   6. The Commission shall suspend, by means of implementing acts, part or all of
      the payments and commitments for the programmes concerned where:
      (a)   the Council decides that the Member State does not comply with the
            specific measures set out by the Council in accordance with Article 136(1)
            of the Treaty;
      (b)   the Council decides in accordance with Article 126(8) or Article 126(11)
            of the Treaty that the Member State concerned has not taken effective
            action to correct its excessive deficit;
      (c)   the Council concludes in accordance with Article 8(3) of Regulation (EU)
            No […]/2011 [on the prevention and correction of macroeconomic
            imbalances] that, on two successive instances, the Member State has not
            submitted a sufficient corrective action plan or the Council adopts a
            decision declaring non-compliance in accordance with Article 10(4) of
            that Regulation;
      (d)   the Commission concludes that the Member State has not taken measures
            to implement the adjustment programme referred to in Council Regulation
EN                                           35                                        EN
 ---pagebreak---             (EU) No 407/2010 or Council Regulation (EC) No 332/2002 and as a
            consequence decides not to authorise the disbursement of the financial
            assistance granted to this Member State; or
      (e)   the Board of Directors of the European stability mechanism concludes that
            the conditionality attached to an ESM financial assistance in the form of
            an ESM loan to the concerned Member State was not met and as a
            consequence decides not to disburse the stability support granted to it.
   7. When deciding to suspend part or all of the payments or commitments in
      accordance with paragraphs 5 and 6 respectively, the Commission shall ensure
      that the suspension is proportionate and effective, taking into account the
      economic and social circumstances of the Member State concerned, and respects
      equality of treatment between Member States, in particular with regard to the
      impact of the suspension on the economy of the Member State concerned.
   8. The Commission shall without delay lift the suspension of payments and
      commitments where the Member State has proposed amendments to the
      Partnership Contract and the relevant programmes as requested by the
      Commission, which the Commission has approved and, where applicable:
      (a)   the Council has decided that the Member State complies with the specific
            measures set out by the Council in accordance with Article 136(1) of the
            Treaty;
      (b)   the excessive deficit procedure is held in abeyance in accordance with
            Article 9 of Regulation (EC) No 1467/97 or the Council has decided in
            accordance with Article 126(12) of the Treaty to abrogate the decision on
            the existence of an excessive deficit;
      (c)   the Council has endorsed the corrective action plan submitted by the
            concerned Member State in accordance with Article 8(2) of Regulation
            (EU) No […] [EIP Regulation] or the excessive imbalance procedure is
            placed in a position of abeyance in accordance with Article 10(5) of that
            Regulation or the Council has closed the excessive imbalance procedure in
            accordance with Article 11 of that Regulation;
      (d)   the Commission has concluded that the Member State has taken measures
            to implement the adjustment programme referred to in Council Regulation
            (EU) No 407/2010 or Council Regulation (EC) No 332/2002 and as a
            consequence has authorised the disbursement of the financial assistance
            granted to this Member State; or
      (e)   the Board of Directors of the European stability mechanism has concluded
            that the conditionality attached to a financial assistance in the form of an
            ESM loan to the concerned Member State is met and as a consequence has
            decided to disburse the stability support granted to it.
      At the same time, the Council shall decide, on a proposal from the Commission,
      to re-budget the suspended commitments in accordance with Article 8 of
      Council Regulation (EU) No […] laying down the multiannual financial
      framework for the years 2014 to 2020.
EN                                           36                                          EN
 ---pagebreak---                                              Article 22
      Increase in payments for Member State with temporary budgetary difficulties
   1.      On the request of a Member State, interim payments and payments of the final
           balance may be increased by 10 percentage points above the co-financing rate
           applicable to each priority for the ERDF, ESF and CF or to each measure for the
           EAFRD and the EMFF. The increased rate, which may not exceed 100%, shall
           apply to requests for payment relating to the accounting period in which the
           Member State has submitted its request and in subsequent accounting periods
           during which the Member State meets one of the following conditions:
           (a)      where the Member State concerned has adopted the euro, it receives
                    macro-financial assistance from the Union under Council Regulation (EU)
                    No 407/201025;
           (b)      where the Member State concerned has not adopted the euro, it receives
                    medium-term financial assistance in accordance with Council Regulation
                    (EC) No 332/200226;
           (c)      financial assistance is made available to it in accordance with the Treaty
                    establishing the European Stability Mechanism signed on 11 July 2011.
           The first sub-paragraph shall not apply to programmes under the ETC
           Regulation.
   2.      Notwithstanding paragraph 1, Union support through interim payments and
           payments of the final balance shall not be higher than the public support and the
           maximum amount of support from the CSF Funds for each priority for the
           ERDF, ESF and CF, or for each measure for the EAFRD and the EMFF, as laid
           down in the decision of the Commission approving the programme.
   25
          OJ L 118, 12.5.2010, p.1.
   26
          OJ L 53, 23.2.2002, p. 1.
EN                                                 37                                          EN
 ---pagebreak---                                     TITLE III
                             PROGRAMMING
                                  CHAPTER I
                General provisions on the CSF Funds
                                       Article 23
                            Preparation of programmes
   1. The CSF Funds shall be implemented through programmes in accordance with
      the Partnership Contract. Each programme shall cover the period from 1 January
      2014 to 31 December 2020.
   2. Programmes shall be drawn up by Member States or any authority designated by
      them, in cooperation with the partners.
   3. Programmes shall be submitted by the Member States at the same time as the
      Partnership Contract, with the exception of European territorial cooperation
      programmes, which shall be submitted within six months of the approval of the
      Common Strategic Framework. All programmes shall be accompanied by the ex
      ante evaluation as set out in Article 48.
                                       Article 24
                              Content of programmes
   1. Each programme shall set out a strategy for the programme's contribution to the
      Union strategy for smart, sustainable and inclusive growth consistent with the
      Common Strategic Framework and Partnership Contract. Each programme shall
      include the arrangements to ensure effective, efficient and coordinated
      implementation of the CSF Funds and actions to achieve a reduction of
      administrative burden for beneficiaries.
   2. Each programme shall define priorities setting out specific objectives, financial
      appropriations of support from the CSF Funds and corresponding national co-
      financing.
   3. Each priority shall set out indicators to assess progress of programme
      implementation towards achievement of objectives as the basis for monitoring,
      evaluation and review of performance. These shall include:
      (a)   financial indicators relating to expenditure allocated;
      (b)   output indicators relating to the operations supported;
EN                                           38                                         EN
 ---pagebreak---       (c)    result indicators relating to the priority.
      For each CSF Fund, the Fund-specific rules shall set out common indicators and
      may provide for programme-specific indicators.
   4. Each programme, except those which cover exclusively technical assistance,
      shall include a description of the actions to take into account the principles set
      out in Articles 7 and 8.
   5. Each programme, except those where technical assistance is undertaken under a
      specific programme, shall set out the indicative amount of support to be used for
      climate change objectives.
   6. Member States shall draft the programme in accordance with the Fund-specific
      rules.
                                         Article 25
                     The procedure for adoption of programmes
   1. The Commission shall assess the consistency of programmes with this
      Regulation, the Fund-specific rules, their effective contribution to the thematic
      objectives and the Union priorities specific to each CSF Fund, the Common
      Strategic Framework, the Partnership Contract, the country-specific
      recommendations under Article 121(2) of the Treaty and the Council
      recommendations adopted under 148(4) of the Treaty, taking account of the ex
      ante evaluation. The assessment shall address, in particular, the adequacy of the
      programme strategy, the corresponding objectives, indicators, targets and the
      allocation of budgetary resources.
   2. The Commission shall make observations within three months of the date of
      submission of the programme. The Member State shall provide to the
      Commission all necessary additional information and, where appropriate, revise
      the proposed programme.
   3. In accordance with the Fund-specific rules, the Commission shall approve each
      programme no later than six months following its formal submission by the
      Member State(s), provided that any observations made by the Commission have
      been satisfactorily taken into account, but not before 1 January 2014 or before
      adoption by the Commission of a decision approving the Partnership Contract.
                                         Article 26
                             Amendment of programmes
   1. Requests for amendment of programmes submitted by a Member State shall be
      duly substantiated and shall in particular set out the expected impact of the
      changes to the programme on achieving the Union strategy for smart,
      sustainable and inclusive growth and the specific objectives defined in the
      programme, taking account of the Common Strategic Framework and the
EN                                             39                                        EN
 ---pagebreak---       Partnership Contract. They shall be accompanied by the revised programme and,
      where appropriate, a revised Partnership Contract.
      In the case of amendment of programmes under the European territorial
      cooperation goal, the relevant Partnership Contract shall not be amended.
   2. The Commission shall assess the information provided in accordance with
      paragraph 1, taking account of the justification provided by the Member State.
      The Commission may make observations and the Member State shall provide to
      the Commission all necessary additional information. In accordance with Fund-
      specific rules, the Commission shall approve requests for amendment of a
      programme no later than five months after their formal submission by the
      Member State provided that any observations made by the Commission have
      been satisfactorily taken into account. The Commission shall, where necessary,
      amend at the same time the decision approving the Partnership Contract in
      accordance with Article 15(3).
                                       Article 27
                 Participation of the European Investment Bank
   1. The EIB may, at the request of Member States, participate in the preparation of
      the Partnership Contract, as well as in activities relating to the preparation of
      operations, in particular major projects, financial instruments and public-private
      partnerships.
   2. The Commission may consult the EIB before the adoption of the Partnership
      Contract or the programmes.
   3. The Commission may request the EIB to examine the technical quality and
      economic and financial viability of major projects and to assist it as regards the
      financial instruments to be implemented or developed.
   4. The Commission, in implementing the provisions of this Regulation, may award
      grants or service contracts to the EIB covering initiatives implemented on a
      multi-annual basis. The commitment of the Union budget contributions in
      respect of these grants or service contracts shall be effected annually.
                                  CHAPTER II
                  Community-led local development
                                       Article 28
                        Community-led local development
   1. Community-led local development, which is designated as LEADER local
      development in relation to the EAFRD, shall be:
EN                                           40                                          EN
 ---pagebreak---       (a)    focused on specific sub-regional territories;
      (b)    community-led, by local action groups composed of representatives of
             public and private local socio-economic interests, where at the decision-
             making level neither the public sector nor any single interest group shall
             represent more than 49 % of the voting rights;
      (c)    carried out through integrated and multi-sectoral area-based local
             development strategies;
      (d)    designed taking into consideration local needs and potential, and include
             innovative features in the local context, networking and, where
             appropriate, cooperation.
   2. Support from the CSF Funds to local development shall be consistent and
      coordinated between the CSF Funds. This shall be ensured inter alia through
      coordinated capacity-building, selection, approval and funding of local
      development strategies and local development groups.
   3. Where the selection committee for the local development strategies set up under
      Article 29(3) determines that the implementation of the local development
      strategy selected requires support from more than one Fund, a lead Fund may be
      designated.
   4. Where a lead Fund is designated, the running costs, animation and networking
      activities for the local development strategy shall be financed from the lead
      Fund only.
   5. Local development supported by the CSF Funds shall be carried out under one
      or more priorities of the programme.
                                        Article 29
                            Local development strategies
   1. A local development strategy shall contain at least the following elements:
      (a)    the definition of the area and population covered by the strategy;
      (b)    an analysis of the development needs and potential of the area, including
             an analysis of strengths, weaknesses, opportunities and threats;
      (c)    a description of the strategy and its objectives, a description of the
             integrated and innovative character of the strategy and a hierarchy of
             objectives, including clear and measurable targets for outputs or results.
             The strategy shall be coherent with the relevant programmes of all the
             CSF Funds involved;
      (d)    a description of the process of community involvement in the development
             of the strategy;
      (e)    an action plan demonstrating how objectives are translated into actions;
EN                                            41                                        EN
 ---pagebreak---       (f)    a description of the management and monitoring arrangements of the
             strategy, demonstrating the capacity of the local action group to
             implement the strategy and a description of specific arrangements for
             evaluation;
      (g)    the financial plan of the strategy, including the planned allocation of each
             of the CSF Funds.
   2. Member States shall define criteria for the selection of local development
      strategies. The Fund-specific rules may set out selection criteria.
   3. Local development strategies shall be selected by a committee set up for this
      purpose by the relevant managing authorities of the programmes.
   4. The selection and approval of all local development strategies shall be
      completed by 31 December 2015 at the latest.
   5. The decision to approve a local development strategy by the managing authority
      shall set out the allocations of each CSF Fund. It shall also set out the roles of
      the authorities responsible for the implementation of the relevant programmes
      for all implementation tasks relating to the strategy.
   6. The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 concerning the definition of the area and population covered by the
      strategy referred in paragraph 1(a).
                                       Article 30
                                  Local action groups
   1. Local action groups shall design and implement the local development
      strategies.
      Member States shall define the respective roles of the local action group and the
      authorities responsible for the implementation of the relevant programmes, for
      all implementation tasks relating to the strategy.
   2. The managing authority shall ensure that the local action groups either select
      one partner within the group as a lead partner in administrative and financial
      matters, or come together in a legally constituted common structure.
   3. The tasks of local action groups shall include the following:
      (a)    building the capacity of local actors to develop and implement operations;
      (b)    drawing up a non-discriminatory and transparent selection procedure and
             criteria for the selection of operations, which avoid conflicts of interest,
             that shall ensure that at least 50% of the votes in selection decisions are
             from the non public sector partners, providing for the possibility of appeal
             against selection decisions and allowing selection by written procedure;
EN                                            42                                          EN
 ---pagebreak---            (c)    ensuring coherence with the local development strategy when selecting
                  operations, by prioritising them according to their contribution to meeting
                  the strategies' objectives and targets;
           (d)    preparing and publishing calls for proposals or an ongoing project
                  submission procedure, including definition of selection criteria;
           (e)    receiving applications for support and assessing them;
           (f)    selecting operations and fixing the amount of support and, where relevant,
                  presenting the proposals to the responsible body for final verification of
                  eligibility before approval;
           (g)    monitoring the implementation of the local development strategy and the
                  operations supported and carrying out specific evaluation activities linked
                  to the local development strategy.
                                             Article 31
                     Support from the CSF Funds for local development
   Support for local development shall include:
   (a)     the costs of preparatory support;
   (b)     implementation of operations under the local development strategy;
   (c)     preparation and implementation of cooperation activities of the local action
           group;
   (d)     running costs and animation of the local development strategy up to the limit of
           25 % of the total public expenditure incurred within the local development
           strategy.
                                          TITLE IV
                           FINANCIAL INSTRUMENTS
                                             Article 32
                                      Financial instruments
   1.      The CSF Funds may be used to support financial instruments under a
           programme, including when organised through funds of funds, in order to
           contribute to the achievement of specific objectives set out under a priority,
           based on an ex ante assessment which has identified market failures or sub-
           optimal investment situations, and investment needs.
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 ---pagebreak---       Financial instruments may be combined with grants, interest rate subsidies and
      guarantee fee subsidies. In this case, separate records must be maintained for
      each form of financing.
      The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 laying down detailed rules concerning the ex ante assessment of
      financial instruments, the combination of support provided to final recipients
      through grants, interest rate subsidies, guarantee fee subsidies and financial
      instruments, additional specific rules on eligibility of expenditure and rules
      specifying the types of activities which shall not be supported through financial
      instruments.
   2. Final recipients supported by financial instruments may also receive grants or
      other assistance from a programme or from another instrument supported by the
      budget of the Union. In this case, separate records must be maintained for each
      source of financing.
   3. Contributions in kind are not eligible expenditure in respect of financial
      instruments, except for contributions of land or real estate in respect of
      investments with the objective of supporting urban development or urban
      regeneration, where the land or real estate forms part of the investment. Such
      contributions of land or real estate shall be eligible provided that the conditions
      in Article 59 are met.
                                      Article 33
                     Implementation of financial instruments
   1. In implementing Article 32, managing authorities may provide a financial
      contribution to the following financial instruments:
      (a)   financial instruments set up at Union level, managed directly or indirectly
            by the Commission;
      (b)   financial instruments set up at national, regional, transnational or cross-
            border level, managed by or under the responsibility of the managing
            authority.
   2. Title [VIII] of the Financial Regulation shall apply to financial instruments
      referred to in paragraph 1(a). Contributions from the CSF Funds to financial
      instruments under paragraph 1(a) shall be placed in separate accounts and used,
      in accordance with the objectives of the respective CSF Funds, to support
      actions and final recipients consistent with the programme or programmes from
      which such contributions are made.
   3. For financial instruments under paragraph 1(b), the managing authority may
      provide a financial contribution to the following financial instruments:
      (a)   financial instruments complying with the standard terms and conditions
            laid down by the Commission, by means of implementing acts in
            accordance with the examination procedure referred to in Article 143(3);
EN                                          44                                            EN
 ---pagebreak---       (b)   already existing or newly created financial instruments which are
            specifically designed to achieve the intended purpose and which respect
            the applicable Union and national rules.
      The Commission shall adopt delegated acts in accordance with Article 142
      laying down the specific rules regarding certain types of financial instruments
      referred to in point (b), as well as the products that may be delivered through
      such instruments.
   4. When supporting financial instruments referred to in paragraph 1(b) the
      managing authority may:
      (a)   invest in the capital of existing or newly created legal entities, including
            those financed from other CSF Funds, dedicated to implementing financial
            instruments consistent with the objectives of the respective CSF Funds,
            which will undertake implementations tasks; the support to such
            investments shall be limited to the amounts necessary to implement new
            financial instruments consistent with the objectives of this Regulation; or
      (b)   entrust implementation tasks to:
            (i)   the European Investment Bank;
            (ii)  international financial institutions in which a Member State is a
                  shareholder, or financial institutions established in a Member State
                  aiming at the achievement of public interest under the control of a
                  public authority, selected in accordance with applicable Union and
                  national rules;
            (iii) a body governed by public or private law selected in accordance
                  with applicable Union and national rules.
      (c)   undertake implementation tasks directly, in the case of financial
            instruments consisting solely of loans or guarantees.
      The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 laying down rules concerning funding agreements, the role and
      responsibility of the entities to which the implementation tasks are entrusted, as
      well as management costs and fees.
   5. The entities referred to in paragraph 4(b)(i) and (ii), when implementing
      financial instruments through funds of funds, may further entrust part of the
      implementation to financial intermediaries provided that these entities ensure
      under their responsibility that the financial intermediaries satisfy the criteria laid
      down in [Articles 57 and 131 (1), (1a) and (3)] of the Financial Regulation.
      Financial intermediaries shall be selected on the basis of open, transparent,
      proportionate and non-discriminatory procedures, avoiding conflicts of interests.
   6. The entities referred to in paragraph 4(b) to which implementation tasks have
      been entrusted shall open fiduciary accounts in their name and on behalf of the
      managing authority. The assets held on such fiduciary accounts shall be
EN                                           45                                              EN
 ---pagebreak---        managed in accordance with the principle of sound financial management
       following appropriate prudential rules and shall have appropriate liquidity.
   7.  The Commission shall be empowered to adopt delegated acts in accordance with
       Article 142 laying down detailed rules concerning specific requirements
       regarding the transfer and management of assets managed by the entities to
       which implementation tasks are entrusted, as well as conversion of assets
       between euro and national currencies.
                                        Article 34
                  Implementation of certain financial instruments
   1.  The bodies accredited in accordance with Article 64 shall not carry out on-the-
       spot verifications of operations comprising financial instruments implemented
       under Article 33(1)(a). They shall receive regular control reports from the
       bodies entrusted with the implementation of these financial instruments.
   2.  The bodies responsible for the audit of programmes shall not carry out audits of
       operations comprising financial instruments implemented under Article 33(1)(a)
       and of management and control systems relating to these instruments. They shall
       receive regular control reports from the auditors designated in the agreements
       setting up of these financial instruments.
   3.  The Commission shall be empowered to adopt delegated acts in accordance with
       Article 142 concerning the arrangements for management and control of
       financial instruments implemented under Articles 33(1)(a) and 33(4)(b)(i), (ii)
       and (iii).
                                        Article 35
      Requests for payment including expenditure for financial instruments
   1.  As regards financial instruments referred to in Article 33(1)(a), the request for
       payment shall include and separately disclose the total amount of support paid to
       the financial instrument.
   2.  As regards financial instruments referred to in Article 33(1)(b) implemented in
       accordance with Article 33(4)(a) and (b), the total eligible expenditure presented
       in the request for payment shall include and separately disclose the total amount
       of support paid or expected to be paid to the financial instrument for investments
       in final recipients to be made over a pre-defined period of maximum two years,
       including management costs or fees.
   3.  The amount determined in accordance with paragraph 2 shall be adjusted in
       subsequent requests for payment, to take account of the difference between the
       amount of support previously paid to the financial instrument concerned, and the
       amounts effectively invested in final recipients, plus management costs and fees
       paid. These amounts shall be separately disclosed in the payment request.
EN                                            46                                          EN
 ---pagebreak---    4. As regards financial instruments referred to in Article 33(1)(b) implemented in
      accordance with Article 33(4)(c), the request for payment shall include the total
      amount of the payments effected by the managing authority for investments in
      final recipients. These amounts shall be separately disclosed in the payment
      request.
   5. The Commission shall be empowered to adopt, by means of delegated acts in
      accordance with Article 142, the specific rules concerning payments and
      withdrawal of payments to financial instruments and possible consequences in
      respect of requests of payments.
                                       Article 36
                           Eligible expenditure at closure
   1. At closure of a programme, the eligible expenditure of the financial instrument
      shall be the total amount effectively paid or, in the case of guarantee funds
      committed, by the financial instrument within the eligibility period indicated in
      Article 55(2), corresponding to:
      (a)   payments to final recipients;
      (b)   resources committed for guarantee contracts, whether outstanding or
            already come to maturity, in order to honour possible guarantee calls for
            losses, calculated according to a prudent ex ante risk assessment, covering
            a multiple amount of underlying new loans or other risk-bearing
            instruments for new investments in final recipients;
      (c)   capitalised interest rate subsidies or guarantee fee subsidies, due to be paid
            for a period not exceeding 10 years after the eligibility period laid down in
            Article 55(2), used in combination with financial instruments, paid into an
            escrow account specifically set up for that purpose, for effective
            disbursement after the eligibility period laid down in Article 55(2), but in
            respect of loans or other risk-bearing instruments disbursed for
            investments in final recipients within the eligibility period laid down in
            Article 55(2);
      (d)   reimbursement of management costs incurred or payment of management
            fees of the financial instrument.
   2. In the case of equity-based instruments and micro-credit, capitalised
      management costs or fees due to be paid for a period not exceeding 5 years after
      the eligibility period laid down in Article 55(2), in respect of investments in
      final recipients which occurred within that eligibility period and which cannot
      be covered by Articles 37 and 38, may be considered as eligible expenditure
      when paid into an escrow account specifically set up for that purpose.
   3. The eligible expenditure determined in accordance with paragraphs 1 and 2 shall
      not exceed the sum of the:
EN                                           47                                            EN
 ---pagebreak---             (i)   total amount of the support from the CSF Funds paid to the financial
                  instrument; and
            (ii)   corresponding national co-financing.
   4.       The Commission shall be empowered to adopt delegated acts in accordance with
            Article 142 concerning the establishment of a system of capitalisation of annual
            instalments for interest rate subsidies and guarantee fee subsidies.
                                              Article 37
      Interest and other gains generated by support from the CSF Funds to financial
                                            instruments
   1.       Support from the CSF Funds paid to financial instruments shall be placed in
            interest-bearing accounts domiciled within financial institutions in Member
            States or invested on a temporary basis according to the principle of sound
            financial management.
   2.       Interest and other gains attributable to support from the CSF Funds paid to
            financial instruments shall be used for the same purposes as the initial support
            from the CSF Funds within the same financial instrument.
   3.       The managing authority shall ensure that adequate records of the use of interest
            and other gains are maintained.
                                              Article 38
   Re-use of resources attributable to the support from the CSF Funds until closure of
                                          the programme
   1.       Capital resources paid back to financial instruments from investments or from
            the release of resources committed for guarantee contracts, which are
            attributable to the support from the CSF Funds, shall be re-used for further
            investments through the same or other financial instruments, in accordance with
            the aims of the programme or programmes.
   2.       Gains and other earnings or yields, including interest, guarantee fees, dividends,
            capital gains or any other income receipts generated by investments, attributable
            to the support from the CSF Funds to the financial instrument, shall be used for
            the following purposes, where applicable, up to the amounts necessary:
            (a)   reimbursement of management costs incurred               and   payment    of
                  management fees of the financial instrument;
            (b)   preferential remuneration of investors operating under the market
                  economy investor principle, who provide counterpart resources to the
                  support from the CSF Funds to the financial instrument or who co-invest
                  at the level of final recipients;
EN                                                  48                                         EN
 ---pagebreak---              (c)   further investments through the same or other financial instruments, in
                   accordance with the aims of the programme or programmes.
   3.        The managing authority shall ensure that adequate records of the use of the
             resources and gains referred to in paragraphs 1 and 2 are maintained.
                                              Article 39
                    Use of legacy resources after closure of the programme
   Member States shall adopt the necessary measures to ensure that the capital resources
   and gains and other earnings or yields attributable to the support from the CSF Funds to
   financial instruments are used in accordance with the aims of the programme for a period
   of at least 10 years after the closure of the programme.
                                              Article 40
                      Report on Implementation of Financial Instruments
   1.        The managing authority shall send to the Commission a specific report covering
             the operations comprising financial instruments as an annex to the annual
             implementation report.
   2.        The report referred to in paragraph 1 shall include, for each financial instrument,
             the following information:
             (a)   identification of the programme and of the priority from which support
                   from the CSF Funds is provided;
             (b)   description of the financial instrument and implementation arrangements;
             (c)   identification of the bodies to whom implementation tasks have been
                   entrusted;
             (d)   total amount of support by programme and priority or measure to the
                   financial instrument included in requests for payment submitted to the
                   Commission;
             (e)   total amount of support paid or committed in guarantee contracts by the
                   financial instrument to the final recipients by programme and priority or
                   measure included in requests for payment submitted to the Commission;
             (f)   revenues of, and repayments to, the financial instrument;
             (g)   multiplier effect of investments made by the financial instrument and
                   value of investments and participations;
             (h)   contribution of the financial instrument to the achievement of the
                   indicators of the programme and of the priority concerned.
EN                                                  49                                           EN
 ---pagebreak---    3. The Commission shall adopt, by means of implementing act, in accordance with
      the examination procedure referred to in Article 143(3), the uniform conditions
      concerning the monitoring and provision of monitoring information to the
      Commission, including in respect of financial instruments referred to in Article
      33(1)(a).
                                   TITLE V
               MONITORING AND EVALUATION
                                  CHAPTER I
                                   Monitoring
                                    SECTION I
                        MONITORING OF PROGRAMMES
                                     Article 41
                               Monitoring committee
   1. Within three months of the date of notification to the Member State of the
      decision adopting a programme, the Member State shall set up a committee to
      monitor implementation of the programme, in agreement with the managing
      authority.
      A Member State may set up a single monitoring committee for programmes co-
      financed by the CSF Funds.
   2. Each monitoring committee shall draw up and adopt its rules of procedure.
                                     Article 42
                     Composition of the monitoring committee
   1. The monitoring committee shall be composed of representatives of the
      managing authority and intermediate bodies and of representatives of the
      partners. Each member of the monitoring committee shall have a voting right.
      The monitoring committee of a programme under the European territorial
      cooperation goal shall also include representatives of any third country
      participating in that programme.
   2. The Commission shall participate in the work of the monitoring committee in an
      advisory capacity.
EN                                         50                                          EN
 ---pagebreak---    3. If the EIB contributes to a programme, it may participate in the work of the
      monitoring committee in an advisory capacity.
   4. The monitoring committee shall be chaired by a representative of the Member
      State or of the managing authority.
                                       Article 43
                       Functions of the monitoring committee
   1. The monitoring committee shall meet at least once a year and shall review
      implementation of the programme and progress towards achieving its objectives.
      In doing so, it shall have regard to the financial data, common and programme-
      specific indicators, including changes in result indicators and progress towards
      quantified target values, and the milestones defined in the performance
      framework.
   2. The monitoring committee shall examine in detail all issues that affect the
      performance of the programme.
   3. The monitoring committee shall be consulted and issue an opinion on any
      amendment of the programme proposed by the managing authority.
   4. The monitoring committee may issue recommendations to the managing
      authority regarding implementation of the programme and its evaluation. It shall
      monitor actions taken as a result of its recommendations.
                                       Article 44
                               Implementation reports
   1. From 2016 until and including 2022, the Member State shall submit to the
      Commission an annual report on implementation of the programme in the
      previous financial year.
      The Member State shall submit a final report on implementation of the
      programme by 30 September 2023 for the ERDF, ESF and Cohesion Fund and
      an annual implementation report for the EAFRD and EMFF.
   2. Annual implementation reports shall set out information on implementation of
      the programme and its priorities by reference to the financial data, common and
      programme-specific indicators and quantified target values, including changes in
      result indicators, and the milestones defined in the performance framework. The
      data transmitted shall relate to values for indicators for fully implemented
      operations and also for selected operations. They shall also set out actions taken
      to fulfil the ex ante conditionalities and any issues which affect the performance
      of the programme, and the corrective measures taken.
   3. The annual implementation report submitted in 2017 shall set out and assess the
      information set out in paragraph 2 and progress towards achieving the objectives
      of the programme, including the contribution of the CSF Funds to changes in
EN                                            51                                         EN
 ---pagebreak---       result indicators, when evidence is available from evaluations. It shall also
      assess the implementation of actions to take into account the principles set out in
      Articles 6, 7 and 8 and report on support used for climate change targets.
   4. The annual implementation report submitted in 2019 and the final
      implementation report for the CSF Funds shall, in addition to the information
      and assessment set out in paragraphs 2 and 3, include information on and assess
      progress towards achieving the objectives of the programme and its contribution
      to achieving the Union strategy for smart, sustainable and inclusive growth.
   5. The annual implementation reports referred to in paragraphs 1 to 4 shall be
      admissible where they contain all the information required in those paragraphs.
      The Commission shall inform the Member State within 15 working days from
      the date of receipt of the annual implementation report if it is not admissible,
      failing which it shall be deemed admissible.
   6. The Commission shall examine the annual implementation report and inform the
      Member State of its observations within two months of the receipt of the annual
      implementation report and within 5 months of receipt of the final report. Where
      the Commission does not provide observations within these deadlines, the
      reports shall be deemed to be accepted.
   7. The Commission may issue recommendations to address any issues which affect
      the implementation of the programme. Where such recommendations are made,
      the managing authority shall inform the Commission within three months of the
      corrective measures taken.
   8. A citizen's summary of the contents of the annual and the final implementation
      reports shall be made public.
                                      Article 45
                               Annual review meeting
   1. An annual review meeting shall be organised every year from 2016 until and
      including 2022 between the Commission and each Member State to examine the
      performance of each programme, taking account of the annual implementation
      report and the Commission's observations and recommendations, where
      applicable.
   2. The annual review meeting may cover more than one programme. In 2017 and
      2019, the annual review meeting shall cover all programmes in the Member
      State and shall also take account of the progress reports submitted by the
      Member State in accordance with Article 46 in those years.
   3. The Member State and the Commission may agree not to organise an annual
      review meeting for a programme in years other than 2017 and 2019.
   4. The annual review meeting shall be chaired by the Commission.
EN                                          52                                            EN
 ---pagebreak---    5. The Member State shall ensure that appropriate follow-up is given to any
      comments of the Commission following the meeting.
                                    SECTION II
                             STRATEGIC PROGRESS
                                      Article 46
                                  Progress report
   1. By 30 June 2017 and by 30 June 2019, the Member State shall submit to the
      Commission a progress report on implementation of the Partnership Contract as
      at 31 December 2016 and 31 December 2018 respectively.
   2. The progress report shall set out information on and assess:
      (a)   changes in the development needs in the Member State since the adoption
            of the Partnership Contract;
      (b)   progress towards achievement of the Union strategy for smart, sustainable
            and inclusive growth, in particular in respect of the milestones set out for
            each programme in the performance framework and the support used for
            climate change objectives;
      (c)   whether the actions taken to fulfil ex ante conditionalities not fulfilled at
            the date of adoption of the Partnership Contract have been implemented in
            accordance with the timetable established;
      (d)   implementation of mechanisms to ensure coordination between the CSF
            Funds and other Union and national funding instruments and with the EIB;
      (e)   progress towards achievement of priority areas established for
            cooperation;
      (f)   actions taken to reinforce the capacity of the Member State authorities
            and, where appropriate, beneficiaries to administer and use the CSF
            Funds;
      (g)   actions planned and corresponding targets in the programmes to achieve a
            reduction in the administrative burden for beneficiaries;
      (h)   the role of the partners referred in Article 5 in the implementation of the
            Partnership Contract.
   3. Where the Commission determines, within three months of the date of
      submission of the progress report that the information submitted is incomplete
      or unclear, it may request additional information from the Member State. The
      Member State shall provide to the Commission the information requested within
EN                                          53                                            EN
 ---pagebreak---        three months and, where appropriate, shall revise the progress report
       accordingly.
   4.  In 2017 and 2019, the Commission shall prepare a strategic report summarising
       the progress reports of the Member States, which it shall submit to the European
       Parliament, the Council, the European Economic and Social Committee and the
       Committee of the Regions.
   5.  In 2018 and 2020, the Commission shall include in its Annual Progress Report
       to the spring meeting of the European Council a section summarising the
       strategic report, in particular with regard to progress made towards Union
       strategy for smart, sustainable and inclusive growth.
                                    CHAPTER II
                                     Evaluation
                                       Article 47
                                    General Provisions
   1.  Evaluations shall be carried out to improve the quality of the design and
       implementation of programmes, as well as to assess their effectiveness,
       efficiency and impact. Impact of programmes shall be evaluated in accordance
       with the mission of the respective CSF Funds in relation to the targets for the
       Union strategy for smart, sustainable and inclusive growth27 as well as in
       relation to Gross Domestic Product (GDP) and unemployment, where
       appropriate.
   2.  Member States shall provide the resources necessary for carrying out
       evaluations, and shall ensure that procedures are in place to produce and collect
       the data necessary for evaluations, including data related to common and where
       appropriate programme-specific indicators.
   3.  Evaluations shall be carried out by experts that are functionally independent of
       the authorities responsible for programme implementation. The Commission
       shall provide guidance on how to carry out evaluations.
   4.  All evaluations shall be made public in their entirety.
   27
      Ref. EU2020 headline targets.
EN                                           54                                          EN
 ---pagebreak---                                         Article 48
                                  Ex ante evaluation
   1. Member States shall carry out ex ante evaluations to improve the quality of the
      design of each programme.
   2. Ex ante evaluations shall be carried out under the responsibility of the authority
      responsible for the preparation of the programmes. They shall be submitted to
      the Commission at the same time as the programme, together with an executive
      summary. The Fund-specific rules may establish thresholds under which the ex
      ante evaluation may be combined with the evaluation for another programme.
   3. Ex ante evaluations shall appraise:
      (a)   the contribution to the Union strategy for smart, sustainable and inclusive
            growth, having regard to the selected thematic objectives and priorities,
            taking into account national and regional needs;
      (b)   the internal coherence of the proposed programme or activity and its
            relation with other relevant instruments;
      (c)   the consistency of the allocation of budgetary resources with the
            objectives of the programme;
      (d)   the consistency of the selected thematic objectives, the priorities and
            corresponding objectives of the programmes with the Common Strategic
            Framework, the Partnership Contract and the country-specific
            recommendations under Article 121(2) of the Treaty and the Council
            recommendations adopted under Article 148(4) of the Treaty;
      (e)   the relevance and clarity of the proposed programme indicators;
      (f)   how the expected outputs will contribute to results;
      (g)   whether the quantified target values for indicators are realistic, having
            regard to the support from the CSF Funds envisaged;
      (h)   the rationale for the form of support proposed;
      (i)   the adequacy of human resources and administrative capacity for
            management of the programme;
      (j)   the suitability of the procedures for monitoring the programme and for
            collecting the data necessary to carry out evaluations;
      (k)   the suitability of the milestones selected for the performance framework;
      (l)   the adequacy of planned measures to promote equal opportunities between
            men and women and to prevent discrimination;
      (m) the adequacy of planned measures to promote sustainable development.
EN                                            55                                         EN
 ---pagebreak---    4.        The ex ante evaluation shall incorporate, where appropriate, the requirements
             for Strategic Environmental Assessment set out in implementation of Directive
             2001/42/EC of the European Parliament and of the Council of 27 June 2001 on
             the assessment of the effects of certain plans and programmes on the
             environment28.
                                                Article 49
                               Evaluation during the programming period
   1.        An evaluation plan shall be drawn up by the managing authority for each
             programme and submitted in accordance with the Fund-specific rules.
   2.        Member States shall ensure that appropriate evaluation capacity is available.
   3.        During the programming period, managing authorities shall carry out
             evaluations including evaluations to assess effectiveness, efficiency and impact,
             for each programme on the basis of the evaluation plan. At least once during the
             programming period, an evaluation shall assess how support from the CSF
             Funds has contributed to the objectives for each priority. All evaluations shall be
             examined by the monitoring committee and sent to the Commission.
   4.        The Commission may carry out, at its own initiative, evaluations of
             programmes.
                                               Article 50
                                           Ex post evaluation
   The ex post evaluations shall be carried out by the Commission or by the Member States,
   in close cooperation. Ex post evaluations shall examine the effectiveness and efficiency
   of the CSF Funds and their contribution to the Union strategy for smart, sustainable and
   inclusive growth in accordance with specific requirements established in the Fund-
   specific rules. Ex post evaluations shall be completed by 31 December 2023.
   28
           OJ L 197, 21.7.2001, p. 30
EN                                                    56                                         EN
 ---pagebreak---                                      TITLE VI
                      TECHNICAL ASSISTANCE
                                       Article 51
             Technical assistance at the initiative of the Commission
   1. At the initiative of, or on behalf of the Commission, the CSF Funds may support
      the preparatory, monitoring, administrative and technical assistance, evaluation,
      audit and control measures necessary for implementing this Regulation.
      Those measures may include but not limited to:
      (a)   assistance for project preparation and appraisal, including with the EIB;
      (b)   support for institutional strengthening and administrative capacity-
            building for the effective management of the CSF Funds;
      (c)   studies linked to the Commission's reporting on the CSF Funds and the
            cohesion report;
      (d)   measures related to the analysis, management, monitoring, information
            exchange and implementation of the CSF Funds, as well as measures
            relating to the implementation of control systems and technical and
            administrative assistance;
      (e)   evaluations, expert reports, statistics and studies, including those of a
            general nature, concerning the current and future operation of the CSF
            Funds, which may be carried out where appropriate by the EIB;
      (f)   actions to disseminate information, support networking, carry out
            communication activities, raise awareness and promote cooperation and
            exchange of experience, including with third countries. To bring about
            greater efficiency in communication to the public at large and stronger
            synergies between the communication activities undertaken at the
            initiative of the Commission, the resources allocated to communication
            actions under this Regulation shall also contribute to the corporate
            communication of the political priorities of the European Union as far as
            they are related to the general objectives of this Regulation;
      (g)   the installation, operation and interconnection of computerised systems for
            management, monitoring, audit, control and evaluation;
      (h)   actions to improve evaluation methods and the exchange of information on
            evaluation practices;
      (i)   actions related to audit;
EN                                            57                                        EN
 ---pagebreak---       (j)   the strengthening of national and regional capacity regarding investment
            planning, needs assessment, preparation, design and implementation of
            financial instruments, joint action plans and major projects, including joint
            initiatives with the EIB.
                                       Article 52
                     Technical assistance of the Member States
   1. At the initiative of a Member State, the CSF Funds may support actions for
      preparation, management, monitoring, evaluation, information and
      communication, networking, complaint resolution, and control and audit. The
      CSF Funds may be used by the Member State to support actions for the
      reduction of administrative burden for beneficiaries, including electronic data
      exchange systems, and actions to reinforce the capacity of Member State
      authorities and beneficiaries to administer and use the CSF Funds. These actions
      may concern preceding and subsequent programming periods.
   2. The Fund-specific rules may add or exclude actions which may be financed by
      the technical assistance of each CSF Fund.
                                   TITLE VII
      FINANCIAL SUPPORT FROM THE CSF FUNDS
                                  CHAPTER I
                      Support from the CSF Funds
                                      Article 53
                        Determination of co-financing rates
   1. The Commission decision adopting a programme shall fix the co-financing rate
      or rates and the maximum amount of support from the CSF Funds according to
      the Fund-specific rules.
   2  Technical assistance measures implemented at the initiative of, or on behalf of,
      the Commission may be financed at the rate of 100%.
EN                                           58                                           EN
 ---pagebreak---                                        Article 54
                           Revenue-generating operations
   1. Net revenue generated after completion of an operation over a specific reference
      period shall be determined in advance by one of the following methods:
      (a)    application of a flat rate revenue percentage for the type of operation
             concerned;
      (b)    calculation of the current value of the net revenue of the operation, taking
             into account the application of the polluter-pays principle and, if
             appropriate, considerations of equity linked to the relative prosperity of
             the Member State concerned.
      The eligible expenditure of the operation to be co-financed shall not exceed the
      current value of the investment cost of the operation less the current value of the
      net revenue, determined according to one of these methods.
      The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 concerning the definition of the flat rate referred to in point (a)
      above.
      The Commission shall adopt the methodology under point (b) by means of
      implementing acts in accordance with the examination procedure referred to in
      Article 143(3).
   2. Where it is objectively not possible to determine the revenue in advance
      according to the methods set out in paragraph 1, the net revenue generated
      within three years of the completion of an operation or by 30 September 2023,
      whichever is earlier, shall be deducted from the expenditure declared to the
      Commission.
   3. Paragraphs 1 and 2 shall apply only to operations whose total cost exceeds
      EUR 1 000 000.
   4. This Article shall not apply to the ESF.
   5. Paragraphs 1 and 2 shall not apply to operations subject to the rules on State aid
      or to support to or from financial instruments.
EN                                           59                                           EN
 ---pagebreak---                                    CHAPTER II
              Eligibility of expenditure and durability
                                        Article 55
                                        Eligibility
   1. The eligibility of expenditure shall be determined on the basis of national rules,
      except where specific rules are laid down in or on the basis of this Regulation or
      the Fund-specific rules.
   2. Expenditure shall be eligible for a contribution from the CSF Funds if it has
      been incurred and paid by a beneficiary between the date of submission of the
      programme to the Commission or from 1 January 2014, whichever is earlier,
      and 31 December 2022. In addition, expenditure shall only be eligible for a
      contribution from the EAFRD and the EMFF if the relevant aid is actually paid
      by the paying agency between 1 January 2014 and 31 December 2022.
   3. In the case of costs reimbursed on the basis of Article 57(1)(b) and (c), the
      actions constituting the basis for reimbursement shall be carried out between 1
      January 2014 and 31 December 2022.
   4. Operations shall not be selected for support by the CSF Funds where they have
      been physically completed or fully implemented before the application for
      funding under the programme is submitted by the beneficiary to the managing
      authority, irrespective of whether all related payments have been made by the
      beneficiary.
   5. This Article shall be without prejudice to the rules on eligibility of technical
      assistance at the initiative of the Commission set out in Article 51.
   6. Net revenue directly generated by an operation during its implementation which
      has not been taken into account at the time of approval of the operation, shall be
      deducted from the eligible expenditure of the operation in the final payment
      claim submitted by the beneficiary. This rule shall not apply to financial
      instruments and prizes.
   7. In the case of amendment of a programme, expenditure becoming eligible
      because of the amendment to the programme shall only be eligible from the date
      of submission to the Commission of the request for amendment.
   8. An operation may receive support from one or more CSF Funds and from other
      Union instruments, provided that the expenditure item included in a request for
      payment for reimbursement by one of the CSF Funds does not receive support
      from another Fund or Union instrument, or support from the same Fund under
      another programme.
EN                                            60                                         EN
 ---pagebreak---                                                Article 56
                                          Forms of support
   The CSF Funds shall be used to provide support in the form of grants, prizes, repayable
   assistance and financial instruments, or a combination thereof.
   In the case of repayable assistance, the support repaid to the body that provided it, or to
   another competent authority of the Member State, shall be kept in a separate account and
   reused for the same purpose or in accordance with the objectives of the programme.
                                               Article 57
                                           Forms of grants
   1.       Grants may take any of the following forms:
            (a)   reimbursement of eligible costs actually incurred and paid, together with,
                  where applicable, in-kind contributions and depreciation;
            (b)   standard scales of unit costs;
            (c)   lump sums not exceeding EUR 100 000 of public contribution;
            (d)   flat-rate financing, determined by the application of a percentage to one or
                  several defined categories of costs.
   2.       The options referred to in paragraph 1 may be combined only where each covers
            different categories of costs or where they are used for different projects
            forming a part of an operation or for successive phases of an operation.
   3.       Where an operation or a project forming a part of an operation is implemented
            exclusively through the procurement of works, goods or services, only
            paragraph 1(a) shall apply. Where the procurement within an operation or
            project forming part of an operation is limited to certain categories of costs, all
            the options referred to in paragraph 1 may be applied.
   4.       The amounts referred to in paragraph 1(b), (c) and (d) shall be established on the
            basis of:
            (a)   a fair, equitable and verifiable calculation method based on:
                  (i)    statistical data or other objective information; or
                  (ii)   the verified historical data of individual beneficiaries or the
                         application of their usual cost accounting practices;
            (b)   methods and corresponding scales of unit costs, lump sums and flat rates
                  applicable in Union policies for a similar type of operation and
                  beneficiary;
EN                                                   61                                         EN
 ---pagebreak---             (c)    methods and corresponding scales of unit costs, lump sums and flat rates
                   applied under schemes for grants funded entirely by the Member State for
                   a similar type of operation and beneficiary;
            (d)    rates established by this Regulation or the Fund-specific rules.
   5.       The document setting out the conditions for support for each operation shall set
            out the method to be applied for determining the costs of the operation and the
            conditions for payment of the grant.
                                                    Article 58
                              Flat rate financing for indirect costs for grants
   Where the implementation of an operation gives rise to indirect costs, they may be
   calculated as a flat rate in one of the following ways:
   (a)      a flat rate of up to 20 % of eligible direct costs, where the rate is calculated on
            the basis of a fair, equitable and verifiable calculation method or a method
            applied under schemes for grants funded entirely by the Member State for a
            similar type of operation and beneficiary;
   (b)      a flat rate of up to 15 % of eligible direct staff costs;
   (c)      a flat rate applied to eligible direct costs based on existing methods and
            corresponding rates, applicable in Union policies for a similar type of operation
            and beneficiary.
   The Commission shall be empowered to adopt delegated acts in accordance with Article
   142 concerning the definition of the flat rate and the related methods referred to in point
   (c) above.
                                               Article 59
                                 Specific eligibility rules for grants
   1.       Contributions in kind in the form of provision of works, goods, services, land
            and real estate for which no cash payment supported by invoices or documents
            of equivalent probative value has been made, may be eligible provided that the
            eligibility rules of the CSF Funds and the programme allow for it and that all the
            following conditions are fulfilled:
            (a)    the public support paid to the operation which includes contributions in
                   kind shall not exceed the total eligible expenditure, excluding
                   contributions in kind, at the end of the operation;
            (b)    the value attributed to contributions in kind does not exceed the costs
                   generally accepted on the market in question;
            (c)    the value and the delivery of the contribution can be independently
                   assessed and verified;
EN                                                   62                                         EN
 ---pagebreak---       (d)     in the case of provision of land or real estate, the value is certified by an
             independent qualified expert or duly authorised official body and does not
             exceed the limit laid down in paragraph 3(b);
      (e)    in the case of contributions in kind in the form of unpaid work, the value
             of that work is determined taking into account the verified time spent and
             the rate of remuneration for equivalent work.
   2. Depreciation costs may be considered as eligible under the following conditions:
      (a)    the eligibility rules of the programme allow for it;
      (b)    the amount of the expenditure is duly justified by supporting documents
             having equivalent probative value to invoices where reimbursed in the
             form referred to in Article 57(1)(a);
      (c)    the costs relate exclusively to the period of support for the operation;
      (d)    public grants have not contributed towards the acquisition of the
             depreciated assets.
   3. The following costs shall not be eligible for a contribution from the CSF Funds:
      (a)    interest on debt;
      (b)    the purchase of land not built on and land built on in the amount exceeding
             10% of the total eligible expenditure for the operation concerned. In
             exceptional and duly justified cases, a higher percentage may be permitted
             for operations concerning environmental conservation;
      (c)    value added tax. However, VAT amounts shall be eligible where they are
             not recoverable under national VAT legislation and are paid by a
             beneficiary other than non-taxable person as defined in the first
             subparagraph of Article 13(1) of Directive 2006/112/EC, provided that
             such VAT amounts are not incurred in relation to the provision of
             infrastructure.
                                         Article 60
                   Eligibility of operations depending on location
   1. Operations supported by the CSF Funds, subject to the derogations referred to in
      paragraphs 2 and 3, and the Fund-specific rules, shall be located in the area
      covered by the programme under which they are supported (the 'programme
      area').
   2. The managing authority may accept that an operation is implemented outside the
      programme area but within the Union, provided that all the following conditions
      are satisfied:
      (a)    the operation is for the benefit of the programme area;
EN                                             63                                           EN
 ---pagebreak---       (b)    the total amount allocated under the programme to operations located
             outside the programme area does not exceed 10 % of the support from the
             ERDF, Cohesion Fund and EMFF at the level of the priority, or 3% of the
             support from the EAFRD at the level of the programme;
      (c)    the monitoring committee has given its agreement to the operation or
             types of operations concerned;
      (d)    the obligations of the authorities for the programme in relation to
             management, control and audit concerning the operation are fulfilled by
             the authorities responsible for the programme under which that operation
             is supported or they enter into agreements with authorities in the area in
             which the operation is implemented.
   3. For operations concerning promotional activities, expenditure may be incurred
      outside the Union provided that the conditions set out in paragraph 2 (a) and the
      obligations in relation to management, control and audit concerning the
      operation are fulfilled.
   4. Paragraphs 1 to 3 shall not apply to programmes under the European territorial
      cooperation goal and paragraphs 2 and 3 shall not apply to operations supported
      by the ESF.
                                       Article 61
                               Durability of operations
   1. An operation comprising investment in infrastructure or productive investment
      shall repay the contribution from the CSF Funds if within five years from the
      final payment to the beneficiary or within the period of time set out in the State
      aid rules, where applicable, it is subject to:
      (a)    a cessation or relocation of a productive activity;
      (b)    a change in ownership of an item of infrastructure which gives to a firm or
             a public body an undue advantage; or
      (c)    a substantial change affecting its nature, objectives or implementation
             conditions which would result in undermining its original objectives.
      Sums unduly paid in respect of the operation shall be recovered by the Member
      State.
   2. Operations supported by the ESF and operations supported by the other CSF
      Funds that are not investment in infrastructure or productive investments shall
      repay the contribution from the Fund only where they are subject to an
      obligation for maintenance of investment under the applicable State aid rules
      and where they undergo a cessation or relocation of a productive activity within
      the period laid down in those rules.
EN                                            64                                         EN
 ---pagebreak---    3.     Paragraphs 1 and 2 shall not apply to contributions to or by financial instruments
          or to any operation which undergoes cessation of a productive activity due to a
          non-fraudulent bankruptcy.
   4.     Paragraphs 1 and 2 shall not apply to natural persons who are beneficiary of
          investment support and, after the completion of the investment operation,
          become eligible for and receive support under the EGF (Regulation [/2012]
          setting a European Globalisation Fund) where the investment concerned is
          directly linked to the type of activity identified as eligible for EGF support.
                                       TITLE VIII
                      MANAGEMENT AND CONTROL
                                      CHAPTER I
                       Management and control systems
                                           Article 62
                 General principles of management and control systems
   Management and control systems shall provide for:
   (a)    a description of the functions of each body concerned in management and
          control, and the allocation of functions within each body;
   (b)    compliance with the principle of separation of functions between and within
          such bodies;
   (c)    procedures for ensuring the correctness and regularity of expenditure declared;
   (d)    computerised systems for accounting, for the storage and transmission of
          financial data and data on indicators, for monitoring and for reporting;
   (e)    systems for reporting and monitoring where the responsible body entrusts
          execution of tasks to another body;
   (f)    arrangements for auditing the functioning of the management and control
          systems;
   (g)    systems and procedures to ensure an adequate audit trail;
   (h)    the prevention, detection and correction of irregularities, including fraud, and
          the recovery of amounts unduly paid, together with any interest.
EN                                                65                                         EN
 ---pagebreak---                                        Article 63
                         Responsibilities of Member States
   1. Member States shall fulfil the management, control and audit obligations and
      assume the resulting responsibilities laid down in the rules on shared
      management set out in the Financial Regulation and the Fund-specific rules. In
      accordance with the principle of shared management, Member States shall be
      responsible for the management and control of programmes.
   2. Member States shall ensure that their management and control systems for
      programmes are set up in accordance with the provisions of the Fund-specific
      rules and that the systems function effectively.
   3. Member States shall establish and implement a procedure for the independent
      examination and resolution of complaints concerning the selection or
      implementation of operations co-financed by the CSF Funds. Member States
      shall report the results of such examinations to the Commission upon request.
   4. All official exchanges of information between the Member State and the
      Commission shall be carried out using an electronic data exchange system
      established in compliance with the terms and conditions laid down by the
      Commission by means of implementing acts. Those implementing acts shall be
      adopted in accordance with the examination procedure referred to in Article
      143(3).
                                   CHAPTER II
        Accreditation of management and control bodies
                                       Article 64
                             Accreditation and coordination
   1. In accordance with [Article 56(3)] of the Financial Regulation, each body
      responsible for the management and control of expenditure under the CSF Funds
      shall be accredited by formal decision of an accrediting authority at ministerial
      level.
   2. The accreditation shall be granted subject to the body complying with the
      accreditation criteria on internal environment, control activities, information and
      communication, and monitoring laid down in the Fund-specific rules.
   3. The accreditation shall be based on an opinion of an independent audit body that
      assesses the body’s compliance with the accreditation criteria. The independent
      audit body shall carry out its work in accordance with internationally accepted
      audit standards.
EN                                           66                                           EN
 ---pagebreak---    4. The accrediting authority shall supervise the accredited body and withdraw its
      accreditation by formal decision if one or more of the accreditation criteria are
      no longer met, unless the body takes the necessary remedial actions within a
      period of probation to be determined by the accrediting authority according to
      the severity of the problem. The accrediting authority shall notify the
      Commission immediately of the setting of any probation period for an
      accredited body and of any withdrawal decision.
   5. The Member State may designate a coordinating body whose responsibility is to
      liaise with and provide information to the Commission, promote the harmonised
      application of Union rules, establish a synthesis report providing an overview at
      national level of all management declarations and the audit opinions and
      coordinate the implementation of remedial actions as regards any deficiencies of
      a common nature.
   6. Without prejudice to the rules laid down in the Fund-specific rules, the bodies to
      be accredited under paragraph 1 shall be:
      (a)    for the ERDF, ESF and the Cohesion Fund, the managing authorities and,
             where appropriate, the certifying authorities;
      (b)    for the EAFRD and the EMFF, the paying agencies.
                                CHAPTER III
               Commission powers and responsibilities
                                      Article 65
                      Commission powers and responsibilities
   1. The Commission shall satisfy itself on the basis of available information,
      including the accreditation procedure, annual management declaration, annual
      control reports, annual audit opinion, annual implementation report and audits
      carried out by national and Union bodies, that the Member States have set up
      management and control systems that comply with this Regulation and the
      Fund-specific rules and that these systems function effectively during the
      implementation of programmes.
   2. Without prejudice to audits carried out by Member States, Commission officials
      or authorised Commission representatives may carry out on-the-spot audits or
      checks upon giving adequate prior notice. The scope of such audits or checks
      may include, in particular, verification of the effective functioning of
      management and control systems in a programme or a part thereof, operations
      and assessment of the sound financial management of operations or
      programmes. Officials or authorised representatives of the Member State may
      take part in such audits.
EN                                           67                                          EN
 ---pagebreak---             Commission officials or authorised Commission representatives, duly
            empowered to carry out on-the-spot audits, shall have access to all records,
            documents and metadata, irrespective of the medium in which they are stored,
            relating to operations supported by the CSF Funds or to management and
            control systems. Member States shall provide copies of such records, documents
            and metadata to the Commission upon request.
            The powers set out in this paragraph shall not affect the application of national
            provisions which reserve certain acts for agents specifically designated by
            national legislation. Commission officials and authorised representatives shall
            not take part, inter alia, in home visits or the formal questioning of persons
            within the framework of national legislation. However, they shall have access to
            the information thus obtained.
   3.       The Commission may require a Member State to take the actions necessary to
            ensure the effective functioning of their management and control systems or the
            correctness of expenditure in accordance with the Fund-specific rules.
   4.       The Commission may require a Member State to examine a complaint submitted
            to the Commission concerning the selection or implementation of operations co-
            financed by the CSF Funds or the functioning of the management and control
            system.
                                         TITLE IX
           FINANCIAL MANAGEMENT, CLEARANCE OF
           ACCOUNTS AND FINANCIAL CORRECTIONS,
                                  DECOMMITMENT
                                        CHAPTER I
                                Financial management
                                           Article 66
                                     Budget commitments
   The budget commitments of the Union in respect of each programme shall be made in
   annual instalments for each Fund during the period between 1 January 2014 and 31
   December 2020. The decision of the Commission adopting a programme shall constitute
   the financing decision within the meaning of Article 75(2) of the Financial Regulation
   and once notified to the Member State concerned, a legal commitment within the
   meaning of that Regulation.
   For each programme, the budget commitment for the first instalment shall follow the
   adoption of the programme by the Commission.
EN                                                68                                          EN
 ---pagebreak---    The budget commitments for subsequent instalments shall be made by the Commission
   before 1 May of each year, on the basis of the decision referred to in the second
   subparagraph, except where Article 13 of the Financial Regulation applies.
   As regards the performance reserve, budget commitments shall follow the Commission
   decision approving the amendment of the programme.
                                            Article 67
                                   Common rules for payments
   1.        Payments by the Commission of the contribution from the CSF Funds to each
             programme shall be made in accordance with budget appropriations and subject
             to available funding. Each payment shall be posted to the earliest open budget
             commitment of the Fund concerned.
   2.        Payments shall take the form of pre-financing, interim payments and payment of
             the annual balance, where applicable, and of the final balance.
   3.        For forms of support under Article 57(1)(b), (c) and (d), the amounts paid to the
             beneficiary shall be regarded as eligible expenditure.
                                            Article 68
      Common rules for calculating interim payments, payment of the annual balance,
                         where applicable, and payment of final balance
   The Fund-specific rules shall lay down rules for the calculation of the amount reimbursed
   as interim payments, payment of the annual balance, where applicable, and of the final
   balance. This amount shall be a function of the specific co-financing rate applicable to
   the eligible expenditure.
                                            Article 69
                                      Requests for payment
   1.        The specific procedure and information to be submitted for requests for payment
             shall be laid down in the Fund-specific rules.
   2.        The request for payment to be submitted to the Commission shall provide all the
             information necessary for the Commission to produce accounts in accordance
             with Article 61(2) of the Financial Regulation.
EN                                                 69                                          EN
 ---pagebreak---                                            Article 70
                    Accumulation of pre-financing and interim payments
   1.      The cumulative total of pre-financing and interim payments and, where
           applicable, the annual balance by the Commission shall not exceed 95 % of the
           contribution from the CSF Funds to the programme.
   2.      When the ceiling of 95 % is reached, the Member States shall continue
           transmitting requests for payment to the Commission.
                                           Article 71
                                        Use of the euro
   Amounts set out in programmes submitted by Member States, forecasts of expenditure,
   statements of expenditure, requests for payment, annual accounts and expenditure
   mentioned in the annual and final implementation reports shall be denominated in euro.
                                           Article 72
                                Payment of initial pre-financing
   1.      Following the Commission decision adopting the programme, an initial pre-
           financing amount for the whole programming period shall be paid by the
           Commission. The initial pre-financing amount shall be paid in instalments
           according to budgetary needs. The instalments shall be defined in the Fund-
           specific rules.
   2.      Pre-financing shall be used only for making payments to beneficiaries in the
           implementation of the programme. It shall be made available without delay to
           the responsible body for this purpose.
                                           Article 73
                               Clearance of initial pre-financing
   The amount paid as initial pre-financing shall be totally cleared from the Commission
   accounts at the latest when the programme is closed.
                                           Article 74
                             Interruption of the payment deadline
   1.      The payment deadline for an interim payment claim may be interrupted by the
           authorising officer by delegation within the meaning of the Financial Regulation
           for a maximum period of nine months if:
EN                                               70                                         EN
 ---pagebreak---       (a)   following information provided by a national or Union audit body, there is
            evidence to suggest a significant deficiency in the functioning of the
            management and control system;
      (b)   the authorising officer by delegation has to carry out additional
            verifications following information coming to his attention alerting him
            that expenditure in a request for payment is linked to an irregularity
            having serious financial consequences;
      (c)   there is a failure to submit one of the documents required under Article
            75(1).
   2. The authorising officer by delegation may limit the interruption to the part of the
      expenditure covered by the payment claim affected by the elements referred to
      in paragraph 1. The authorising officer by delegation shall inform the Member
      State and the managing authority immediately of the reason for interruption and
      shall ask them to remedy the situation. The interruption shall be ended by the
      authorising officer by delegation as soon as the necessary measures have been
      taken.
                                 CHAPTER II
        Clearance of accounts and financial corrections
                                      Article 75
                             Submission of information
   1. By 1 February of the year following the end of the accounting period, the
      Member State shall submit to the Commission the following documents and
      information in accordance with [Article 56] of the Financial Regulation:
      (a)   the certified annual accounts of the relevant bodies accredited pursuant to
            Article 64;
      (b)   the management declaration of assurance as to the completeness, accuracy
            and veracity of the annual 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;
      (c)   a summary report of all available audits and controls carried out, including
            an analysis of systemic or recurrent weaknesses, as well as corrective
            actions taken or planned;
      (d)   an audit opinion by the designated independent audit body on the
            management declaration of assurance covering the completeness, accuracy
            and veracity of the annual accounts, the proper functioning of the internal
            control systems, as well as on the legality and regularity of the underlying
EN                                          71                                            EN
 ---pagebreak---              transactions and the respect of the principle of sound financial
             management, accompanied by a control report setting out the findings of
             the audits carried out relating to the accounting year covered by the
             opinion.
   2. Upon request by the Commission, the Member State shall provide further
      information to the Commission. If a Member State does not provide the
      requested information by the deadline for its submission set by the Commission,
      the Commission may take its decision on the clearance of the accounts on the
      basis of the information in its possession.
   3. By [15 February] of the year following the end of the accounting period, the
      Member State shall submit to the Commission a synthesis report in accordance
      with the last subparagraph of [Article 56(5)] of the Financial Regulation.
                                       Article 76
                                Clearance of accounts
   1. By 30 April of the year following the end of the accounting period, the
      Commission shall decide, in accordance with the Fund-specific rules, on the
      clearance of the accounts of the relevant bodies accredited pursuant to Article 64
      for each programme. The clearance decision shall cover the completeness,
      accuracy and veracity of the annual accounts submitted and shall be without
      prejudice to any subsequent financial corrections.
   2. The procedures for annual clearance shall be laid down in the Fund-specific
      rules.
                                       Article 77
                      Financial corrections by the Commission
   1. The Commission shall make financial corrections by cancelling all or part of the
      Union contribution to a programme and effecting recovery from the Member
      State in order to exclude from Union financing expenditure which is in breach of
      applicable Union and national law, including in relation to deficiencies in the
      management and control systems of Member States which have been detected
      by the Commission or the European Court of Auditors.
   2. A breach of applicable Union or national law shall lead to a financial correction
      only where one of the following conditions is met:
      (a)    the breach has or could have affected the selection of an operation by the
             responsible body for support by the CSF Funds;
      (b)    there is a risk that the breach has or could have affected the amount of
             expenditure declared for reimbursement by the Union budget.
   3. When deciding on the amount of a financial correction under paragraph 1, the
      Commission shall take account of the nature and gravity of the breach of
EN                                           72                                          EN
 ---pagebreak---       applicable Union or national law and its financial implications for the Union
      budget.
   4. The criteria and the procedures for applying financial corrections shall be laid
      down in the Fund-specific rules.
                                    CHAPTER III
                                 DECOMMITMENT
                                       Article 78
                                      Principles
   1. All programmes shall be submitted to a decommitment procedure established on
      the basis that amounts linked to a commitment which are not covered by pre-
      financing or a request for payment within a defined period shall be
      decommitted.
   2. The commitment related to the last year of the period will be decommitted
      according to the rules to be followed for the closure of the programmes.
   3. The Fund-specific rules shall specify the precise application of the
      decommitment rule for each CSF Fund.
   4. That part of commitments still open shall be decommitted if any of the
      documents required for the closure has not been submitted to the Commission
      by the deadlines established in the Fund-specific rules.
                                       Article 79
                         Exception to the decommitment
   1. The amount concerned by decommitment shall be reduced by the amounts that
      the responsible body has not been able to declare to the Commission because of:
      (a)   operations suspended by a legal proceeding or by an administrative appeal
            having suspensory effect; or
      (b)   reasons of force majeure seriously affecting implementation of all or part
            of the programme. The national authorities claiming force majeure shall
            demonstrate the direct consequences of the force majeure on the
            implementation of all or part of the programme
      The reduction may be requested once if the suspension or force majeure lasted
      up to one year, or several times corresponding to the duration of the force
      majeure or the number of years between the date of the legal or administrative
EN                                           73                                        EN
 ---pagebreak---       decision suspending the implementation of the operation and the date of the
      final legal or administrative decision.
   2. By 31 January, the Member State shall send to the Commission information on
      the exceptions referred to in paragraph 1 for the amount to be declared by the
      end of preceding year.
                                      Article 80
                                      Procedure
   1. The Commission shall inform the Member State and the managing authority in
      good time whenever there is a risk of application of decommitment under
      Article 78.
   2. On the basis of the information it has on 31 January, the Commission shall
      inform the Member State and the managing authority of the amount of the
      decommitment resulting from the information in its possession.
   3. The Member State shall have two months to agree to the amount to be
      decommitted or to submit its observations.
   4. By 30 June, the Member State shall submit to the Commission a revised
      financing plan reflecting for the financial year concerned the reduced amount of
      support over one or several priorities of the programme. Failing such
      submission, the Commission shall revise the financing plan by reducing the
      contribution from the CSF Funds for the financial year concerned. This
      reduction shall be allocated to each priority proportionately.
   5. The Commission shall amend the decision adopting the programme, by means
      of implementing acts, not later than 30 September.
EN                                           74                                        EN
 ---pagebreak---                                       PART THREE
      GENERAL PROVISIONS APPLICABLE TO THE ERDF,
                              THE ESF AND THE CF
                                          TITLE I
       OBJECTIVES AND THE FINANCIAL FRAMEWORK
                                       CHAPTER I
        Mission, goals and geographical coverage of support
                                            Article 81
                                       Mission and goals
   1.    The Funds shall contribute to developing and pursuing the actions of the Union
         leading to strengthening of its economic, social and territorial cohesion in
         accordance with Article 174 of the Treaty.
         The actions supported by the Funds shall contribute to the Union strategy for
         smart, sustainable and inclusive growth.
   2.    To this end, the following goals shall be pursued:
         (a)    'Investment for growth and jobs' in Member States and regions, to be
                supported by all the Funds; and
         (b)    'European territorial cooperation', to be supported by the ERDF.
                                            Article 82
                               Investment for growth and jobs
   1.    The Structural Funds shall support the Investment for growth and jobs goal in all
         regions corresponding to level 2 of the common classification of territorial units
         for statistics (hereinafter referred to as 'NUTS level 2') established by Regulation
         (EC) No 1059/2003.
   2.    Resources for the Investment for growth and jobs goal shall be allocated among
         the following three categories of NUTS level 2 regions:
EN                                                75                                          EN
 ---pagebreak---       (a)    less developed regions, whose GDP per capita is less than 75 % of the
             average GDP of the EU-27;
      (b)    transition regions, whose GDP per capita is between 75% and 90% of the
             average GDP of the EU-27;
      (c)    more developed regions, whose GDP per capita is above 90 % of the
             average GDP of the EU-27.
      The three categories of regions are determined on the basis of how their GDP
      per capita, measured in purchasing power parities and calculated on the basis of
      Union figures for the period 2006 to 2008, relates to the average GDP of the
      EU-27 for the same reference period.
   3. The Cohesion Fund shall support those Member States whose gross national
      income (GNI) per capita, measured in purchasing power parities and calculated
      on the basis of Union figures for the period 2007 to 2009, is less than 90 % of
      the average GNI per capita of the EU-27 for the same reference period.
      The Member States eligible for funding from the Cohesion Fund in 2013, but
      whose nominal GNI per capita exceeds 90% of the average GNI per capita of
      the EU-27 as calculated under the first sub-paragraph shall receive support from
      the Cohesion Fund on a transitional and specific basis.
   4. Immediately following the entry into force of this Regulation, the Commission
      shall adopt a decision by implementing act setting out the list of regions
      fulfilling the criteria of the three categories of regions referred to in paragraph 2
      and of Member States fulfilling the criteria of paragraph 3. This list shall be
      valid from 1 January 2014 to 31 December 2020.
   5. In 2017, the Commission shall review the eligibility of Member States for the
      Cohesion Fund on the basis of Union GNI figures for the period 2013 to 2015
      for the EU-27. Those Member States whose nominal GNI per capita exceeds
      90% of the average GNI per capita of the EU-27, shall receive support from the
      Cohesion Fund on a transitional and specific basis.
                                   CHAPTER II
                              Financial framework
                                         Article 83
                                    Global resources
   1. The global resources available for budgetary commitment from the Funds for
      the period 2014 to 2020 shall be EUR 338 993 760 032336 020 492 848 at 2011
      prices, in accordance with the annual breakdown shown in Annex III. For the
EN                                             76                                           EN
 ---pagebreak---          purposes of programming and subsequent inclusion in the general budget of the
         Union, the amount of global resources shall be indexed at 2 % per year.
   2.    The Commission shall adopt a decision, by means of implementing acts, setting
         out the annual breakdown of the global resources by Member State, without
         prejudice to paragraph 3 of this Article and Article 84(7).
   3.    0,35 % of the global resources shall be allocated to technical assistance at the
         initiative of the Commission.
                                          Article 84
      Resources for Investment for growth and jobs and for European territorial
                                         cooperation
   1.    Resources for the Investment for growth and jobs goal shall amount to
         96,5096,52       %     of    the    global    resources     (i.e., a     total   of
         EUR 327 115 655 850324 320 492 844) and shall be allocated as follows:
         (a)    50,13 48,25 % (i.e., a total of EUR 163 560 715 122162 589 839 384) for
                less developed regions;
         (b)    12,0110,76 % (i.e., a total of EUR 36 471 144 19038 951 564 661) for
                transition regions;
         (c)    16,39 16,35 % (i.e., a total of EUR 55 419 403 116 53 142 922 017) for
                more developed regions;
         (d)    21,19 20,87 % (i.e., a total of EUR 70 739 863 59968 710 486 782) for
                Member States supported by the Cohesion Fund;
         (e)    0,29 0,27% (i.e., a total of EUR 924 529 823925 680 000) as additional
                funding for the outermost regions identified in Article 349 of the Treaty
                and the NUTS level 2 regions fulfilling the criteria laid down in Article 2
                of Protocol No 6 to the Treaty of Accession of Austria, Finland and
                Sweden.
         All regions whose GDP per capita for the 2007-2013 period was less than 75%
         of the average of the EU-25 for the reference period but whose GDP per capita
         is above 75% of the GDP average of the EU-27 shall receive an allocation under
         the Structural Funds equal to at least two thirds of their 2007-2013 allocation.
   2.    The following criteria shall be used for the breakdown by Member State:
         (a)    eligible population, regional prosperity, national prosperity and
                unemployment rate for less developed regions and transition regions;
         (b)    eligible population, regional prosperity, unemployment rate, employment
                rate, educational level and population density for more developed regions;
         (c)    population, national prosperity and surface area for the Cohesion Fund.
EN                                              77                                           EN
 ---pagebreak---    3.  At least 25 % of the Structural Funds resources for less developed regions, 40%
       for transition regions and 52% for more developed regions in each Member
       State shall be allocated to the ESF. For the purposes of this provision, the
       support to a Member State through the [Food for deprived people instrument]
       shall be considered as part of the share of Structural Funds allocated to the ESF.
   4.  The support from the Cohesion Fund for transport infrastructure under the
       Connecting Europe Facility shall be EUR 10 000 000 000.
       The Commission shall adopt a decision by implementing act setting out the
       amount to be transferred from each Member State's Cohesion Fund allocation
       for the whole period. The Cohesion Fund allocation of each Member State shall
       be reduced accordingly.
       The annual appropriations corresponding to the support from the Cohesion Fund
       mentioned in the first subparagraph shall be entered in the relevant budget lines
       of the Connecting Europe Facility as from the 2014 budgetary exercise.
       Support from the Cohesion Fund under the Connecting Europe Facility shall be
       implemented in accordance with Article [13] of Regulation (EU) […]/2012 on
       establishing the Connecting Europe Facility29 in respect of projects listed in
       Annex 1 to that Regulation, giving greatest possible priority to projects
       respecting the national allocations under the Cohesion Fund.
   5.  The support from the Structural Funds for [food for deprived people] under the
       Investment for Growth and Jobs shall be EUR 2 500 000 000.
       The Commission shall adopt a decision by implementing act setting out the
       amount to be transferred from each Member State's Structural Funds allocation
       for the whole period in each Member State. The Structural Funds allocation of
       each Member State shall be reduced accordingly.
       The annual appropriations corresponding to the support from the Structural
       Funds mentioned in the first subparagraph shall be entered in the relevant
       budget lines of the [food for deprived people instrument] with the 2014
       budgetary exercise.
   6.  5% of the resources for the Investment for growth and jobs goal shall constitute
       the performance reserve to be allocated in accordance with Article 20.
   7.  0,2% of the ERDF resources for the Investment for growth and jobs goal shall
       be allocated to innovative actions at the initiative of the Commission in the area
       of sustainable urban development.
   8.  Resources for the European territorial cooperation goal shall amount to 3,50
       3,48 % of the global resources available for budgetary commitment from the
       Funds for the period 2014 to 2020 (i.e., a total of EUR 11 878 104 18211 700
       000 004).
   29
      OJ…
EN                                           78                                           EN
 ---pagebreak---                                                       Article 85
                                    Non-transferability of resources
   1.   The total appropriations allocated to each Member State in respect of less
        developed regions, transition regions and more developed regions shall not be
        transferable between each of those categories of regions.
   2.   By way of derogation from paragraph 1, the Commission may accept, in duly
        justified circumstances which are linked to the implementation of one or more
        thematic objectives, a proposal by a Member State in its first submission of the
        Partnership Contract to transfer up to 2% of the total appropriation for a
        category of regions to other categories of regions.
                                                      Article 86
                                                   Additionality
   1.   For the purposes of this Article the following definitions apply:
        (1)      'public or equivalent structural expenditure' means the Gross Fixed Capital
                 Formation of the General Government reported in the Stability and
                 Convergence Programmes prepared by Member States according to
                 Council Regulation (EC) No 1466/9730 to present their medium term
                 budgetary strategy;
        (2)      'fixed assets' means all tangible or intangible assets produced as outputs
                 from processes of production that are themselves used repeatedly, or
                 continuously, in processes of production for more than one year;
        (3)       gross fixed capital formation'31 means all the resident producers'
                 acquisitions, less disposals, of fixed assets during a given period and
                 certain additions to the value of non-produced assets realised by the
                 productive activity of producer or institutional units;
        (4)       'general government' means the totality of institutional units which, in
                 addition to fulfilling their political responsibilities and their role of
                 economic regulation, produce principally non-market services (possibly
                 goods) for individual or collective consumption and redistribute income
                 and wealth32.
   2.   Support from the Funds for the Investment for growth and jobs goal shall not
        replace public or equivalent structural expenditure by a Member State.
   30
      OJ L 209, 2.8.1997, p.1.
   31
      As defined by the European System of Accounts (ESA) and transmitted by all 27 Member States in their Stability and
      Convergence Programmes.
   32
      Explanation: The general government sector consists mainly of central, state and local government units together with
      social security funds imposed and controlled by those units. In addition, it includes non-profit institutions engaged in non-
      market production that are controlled and mainly financed by government units or social security funds.
EN                                                             79                                                                   EN
 ---pagebreak---    3. Member States shall maintain for the period 2014-2020 a level of public or
      equivalent structural expenditure at least equal to the reference level set in the
      Partnership Contract.
      The reference level on average per year of public or equivalent structural
      expenditure for the years 2014-2020 shall be set in the Partnership Contract, on
      the basis of an ex ante verification by the Commission of the information
      submitted in the Partnership Contract, having regard to the average level of
      public or equivalent structural expenditure per year in the period 2007-2013.
      The Commission and the Member States shall take into account the general
      macroeconomic conditions and specific or exceptional circumstances, such as
      privatisations or an exceptional level of public or equivalent structural
      expenditure by a Member State in the period 2007-2013. They shall also take
      into account changes in the national allocations from the Structural Funds as
      compared to the years 2007-2013.
   4. Verification of whether the level of public or equivalent structural expenditure
      under the Investment for growth and jobs goal has been maintained for the period
      shall only take place in those Member States in which less developed and
      transition regions cover at least 15 % of the total population.
      In those Member States in which less developed and transition regions cover at
      least 70 % of the population, the verification shall take place at national level.
      In those Member States in which less developed and transition regions cover
      more than 15 % and less than 70 % of the population, the verification shall take
      place at national and regional level. For that purpose, those Member States shall
      provide to the Commission information about the expenditure in the less
      developed and transition regions at each stage of the verification process.
   5. The verification of whether the level of public or equivalent structural
      expenditure under the Investment for growth and jobs goal has been maintained
      shall take place at the time of submission of the Partnership Contract (ex ante
      verification), in 2018 (mid-term verification), and in 2022 (ex post verification).
      The detailed rules relating to the verification of additionality are set out in point
      2 of Annex IVII.
   6. If it is established by the Commission in the ex post verification that a Member
      State has not maintained the reference level of public or equivalent structural
      expenditure under the Investment for growth and jobs goal set out in the
      Partnership Contract as set out in Annex IVII, the Commission may carry out a
      financial correction. In deciding whether or not to carry out a financial
      correction, the Commission will take into account whether the economic
      situation of the Member State has significantly changed since the mid-term
      verification and whether the change was taken into account at that time. The
      detailed rules relating to financial correction rates are set out in point 3 of Annex
      IVII.
   7. Paragraphs 1 to 6 shall not apply to operational programmes under the European
      territorial cooperation goal.
EN                                            80                                            EN
 ---pagebreak---                                           TITLE II
                                  PROGRAMMING
                                       CHAPTER I
                       General provisions on the Funds
                                           Article 87
   Content and adoption of operational programmes under the Investment for growth
                                         and jobs goal
   1.     An operational programme shall consist of priority axes. A priority axis shall
          concern one Fund for a category of region and shall correspond, without
          prejudice to Article 52, to a thematic objective and comprise one or more
          investment priorities of that thematic objective, in accordance with the Fund-
          specific rules. For the ESF, a priority axis may combine investment priorities
          from different thematic objectives set out in Article 9(8), (9), (10) and (11) in
          order to facilitate their contribution to other priority axes, in duly justified
          circumstances.
   2.     An operational programme shall set out:
          (a)   a strategy for the operational programme's contribution to the Union
                strategy for smart, sustainable and inclusive growth, including:
                (i)   an identification of needs addressing the challenges identified in the
                      country-specific recommendations under Article 121(2) and the
                      Council recommendations adopted under Article 148(4) of the
                      Treaty, and taking into account the Integrated Guidelines and
                      national and regional specificities;
                (ii)  a justification of the choice of thematic objectives and corresponding
                      investment priorities, having regard to the Partnership Contract and
                      the results of the ex ante evaluation;
          (b)   for each priority axis:
                (i)   the investment priorities and corresponding specific objectives;
                (ii)  the common and specific output and result indicators, with where
                      appropriate a baseline value and a quantified target value, in
                      accordance with the Fund-specific rules;
                (iii) a description of actions to be supported including the identification
                      of the main target groups, specific territories targeted and types of
EN                                               81                                          EN
 ---pagebreak---              beneficiaries where appropriate and the planned use of financial
             instruments;
       (iv) the corresponding categories of intervention based on a
             nomenclature adopted by the Commission by means of
             implementing acts in accordance with the examination procedure
             referred to Article 143(3) and an indicative breakdown of the
             programmed resources;
   (c) the contribution to the integrated approach for territorial development set
       out in the Partnership Contract, including:
       (i)   the mechanisms that ensure coordination between the Funds, the
             EAFRD, the EMFF and other Union and national funding
             instruments, and with the EIB;
       (ii)  where appropriate, a planned integrated approach to the territorial
             development of urban, rural, coastal and fisheries areas and areas
             with particular territorial features, in particular the implementation
             arrangements for Articles 28 and 29;
       (iii) the list of cities where integrated actions for sustainable urban
             development will be implemented, the indicative annual allocation
             of the ERDF support for these actions, including the resources
             delegated to cities for management under Article 7(2) of Regulation
             (EU) No […] [ERDF] and the indicative annual allocation of ESF
             support for integrated actions;
       (iv) the identification of the areas in which community-led local
             development will be implemented;
       (v)   the arrangements for interregional and transnational actions with
             beneficiaries located in at least one other Member State;
       (vi) where appropriate, the contribution of the planned interventions
             towards macro regional strategies and sea basin strategies;
   (d) the contribution to the integrated approach set out in the Partnership
       Contract to address the specific needs of geographical areas most affected
       by poverty or target groups at highest risk of discrimination or exclusion,
       with special regard to marginalised communities, and the indicative
       financial allocation;
   (e) arrangements to ensure the effective implementation of the Funds,
       including:
       (i)   a performance framework in accordance with Article 19(1);
       (ii)  for each ex ante conditionality, established in accordance with
             Annex IV, that is not fulfilled at the date of submission of the
             Partnership Contract and operational programme, a description of
EN                                      82                                          EN
 ---pagebreak---                  the actions to fulfil the ex ante conditionality and a timetable for
                 such actions;
           (iii) the actions taken to involve the partners in the preparation of the
                 operational programme, and the role of the partners in the
                 implementation, monitoring and evaluation of the operational
                 programme;
      (f)  arrangements to ensure the efficient implementation of the Funds,
           including:
           (i)   the planned use of technical assistance including actions to reinforce
                 the administrative capacity of authorities and beneficiaries with the
                 relevant information referred to in paragraph 2 (b) for the priority
                 axis concerned;
           (ii)  an assessment of the administrative burden for beneficiaries and the
                 actions planned to achieve a reduction accompanied by targets;
           (iii) a list of major projects for which the estimated start date for the
                 execution of the main works is before 1 January 2018;
      (g)  a financing plan containing two tables:
           (i)   a table specifying for each year, in accordance with Articles 53, 110
                 and 111, the amount of the total financial appropriation envisaged for
                 the support from each of the Funds;
           (ii)  a table specifying, for the whole programming period, for the
                 operational programme and for each priority axis, the amount of the
                 total financial appropriation of the support from the Funds and the
                 national co-financing. Where the national co-financing is made up of
                 public and private co-financing, the table shall give the indicative
                 breakdown between the public and the private components. It shall
                 show, for information purposes, the envisaged participation from the
                 EIB;
      (h)  the implementing provisions for the operational programme containing:
           (i)   identification of the accrediting body, the managing authority, the
                 certifying authority, where applicable, and the audit authority;
           (ii)  identification of the body to which payments will be made by the
                 Commission.
   3. Each operational programme, except those where technical assistance is
      undertaken under a specific operational programme, shall include:
      (i)  a description of specific actions to take into account environmental
           protection requirements, resource efficiency, climate change mitigation
           and adaptation, disaster resilience and risk prevention and management, in
           the selection of operations;
EN                                          83                                          EN
 ---pagebreak---       (ii)  a description of the specific actions to promote equal opportunities and
            prevent any discrimination based on sex, racial or ethnic origin, religion or
            belief, disability, age or sexual orientation during the preparation, design
            and implementation of the operational programme and in particular in
            relation to access to funding, taking account of the needs of the various
            target groups at risk of such discrimination and in particular the
            requirements of ensuring accessibility for disabled persons;
      (iii) a description of its contribution to the promotion of equality between men
            and women and, where appropriate, the arrangements to ensure the
            integration of gender perspective at operational programme and operation
            level.
      Member States shall submit an opinion of the national equality bodies on the
      measures set out in points (ii) and (iii) with the proposal for an operational
      programme under the Investment for growth and jobs goal.
   4. Member States shall draft the operational programme according to the model
      adopted by the Commission.
      The Commission shall adopt that model by means of implementing acts. Those
      implementing acts shall be adopted in accordance with the advisory procedure
      referred to in Article 143(2).
   5. The Commission shall adopt a decision approving the operational programme
      by means of implementing acts.
                                       Article 88
                            Joint support from the Funds
   1. The Funds may jointly provide support for operational programmes under the
      Investment for growth and jobs goal.
   2. The ERDF and the ESF may finance, in a complementary manner and subject to
      a limit of 5 % of Union funding for each priority axis of an operational programme,
      a part of an operation for which the costs are eligible for support from the other
      Fund on the basis of eligibility rules applied to that Fund, provided that they are
      necessary for the satisfactory implementation of the operation and are directly
      linked to it.
   3. Paragraphs 1 and 2 shall not apply to programmes under the European territorial
      cooperation goal.
EN                                           84                                           EN
 ---pagebreak---                                                Article 89
                  Geographical scope of operational programmes under the
                               Investment for growth and jobs goal
   Unless otherwise agreed between the Commission and the Member State, operational
   programmes for the ERDF and the ESF shall be drawn up at the appropriate geographical
   level and at least at NUTS level 2, in accordance with the institutional system specific to
   the Member State.
   Operational programmes with support from the Cohesion Fund shall be drawn up at
   national level.
                                           CHAPTER II
                                        MAJOR PROJECTS
                                              Article 90
                                               Content
   As part of an operational programme or operational programmes, the ERDF and the
   Cohesion Fund may support an operation comprising a series of works, activities or
   services intended in itself to accomplish an indivisible task of a precise economic or
   technical nature which has clearly identified goals and whose total cost exceeds
   EUR 50 000 000 (a 'major project'). Financial instruments shall not be considered major
   projects.
                                              Article 91
                        Information to be submitted to the Commission
   1.        The Member State or the managing authority shall submit the following
             information on major projects to the Commission as soon as preparatory work
             has been completed:
             (a)   information on the body to be responsible for implementation of the major
                   project, and its capacity
             (b)   a description of and information on the investment and its location;
             (c)   total cost and total eligible cost, taking account of the requirements set out
                   in Article 54;
EN                                                   85                                           EN
 ---pagebreak---       (d)   information on the feasibility studies carried out, including the options
            analysis, the results, and independent quality review;
      (e)   a cost-benefit analysis, including an economic and a financial analysis,
            and a risk assessment;
      (f)   an analysis of the environmental impact, taking into account climate
            change adaptation and mitigation needs, and disaster resilience;
      (g)   the consistency with the relevant priority axes of the operational
            programme or programmes concerned, and its expected contribution to
            achieving the specific objectives of those priority axes;
      (h)   the financing plan showing the total planned financial resources and the
            planned support from the Funds, the EIB, and all other sources of
            financing, together with physical and financial indicators for monitoring
            progress, taking account of the identified risks;
      (i)   the timetable for implementing the major project and, where the
            implementation period is expected to be longer than the programming
            period, the phases for which support from the Funds is requested during
            the 2014 to 2020 programming period.
      The Commission shall provide indicative guidance on the methodology to be
      used in carrying out the cost-benefit analysis referred to in point (e) above in
      accordance with the advisory procedure referred to in Article 143(2).
      The format for the information on major projects to be submitted shall be set up
      in accordance with the model adopted by the Commission, by means of
      implementing acts. Those implementing acts shall be adopted in accordance
      with the advisory procedure referred to in Article 143(2).
   2. Major projects submitted to the Commission for approval shall be contained in
      the list of major projects in an operational programme. The list shall be
      reviewed by the Member State or the managing authority two years following
      the adoption of an operational programme and may at the request of the Member
      State be adjusted in accordance with the procedure set out in Article 26(2), in
      particular to include major projects with an expected completion date by the end
      of 2022.
                                       Article 92
                            Decision on a major project
   1. The Commission shall appraise the major project on the basis of the information
      referred to in Article 91 in order to determine whether the proposed support
      from the Funds is justified.
   2. The Commission shall adopt a decision, by means of implementing act, no later
      than three months after the date of submission of the information approving a
      major project in accordance with Article 91. That decision shall define the
EN                                           86                                        EN
 ---pagebreak---       physical object, the amount to which the co-financing rate for the priority axis
      applies, physical and financial indicators for monitoring progress, and the
      expected contribution of the major project to the objectives of the relevant
      priority axis or axes. An approval decision shall be conditional on the first
      works contract being concluded within two years of the date of the decision.
   3. Where the Commission refuses to allow support from the Funds to be given to a
      major project, it shall notify the Member State of its reasons within the period
      laid down in paragraph 2.
   4. Expenditure relating to major projects shall not be included in payment
      applications before adoption of an approval decision by the Commission.
                                 CHAPTER III
                               Joint action plan
                                       Article 93
                                         Scope
   1. A joint action plan is an operation defined and managed in relation to the
      outputs and results which it will achieve. It comprises a group of projects, not
      consisting in the provision of infrastructure, carried out under the responsibility
      of the beneficiary, as part of an operational programme or programmes. The
      outputs and results of a joint action plan shall be agreed between the Member
      State and the Commission and shall contribute to specific objectives of the
      operational programmes and form the basis of support from the Funds. Results
      shall refer to direct effects of the joint action plan. The beneficiary shall be a
      public law body. Joint action plans shall not be considered as major projects.
   2. The public support allocated to a joint action plan shall be a minimum of
      EUR 10 000 000 or 20 % of the public support of the operational programme or
      programmes, whichever is lower.
                                       Article 94
                          Preparation of joint action plans
   1. The Member State, the managing authority or any designated public law body
      may submit a proposal for a joint action plan at the same time as or subsequent
      to the submission of the operational programmes concerned. It shall contain all
      the elements referred to in Article 95.
   2. A joint action plan shall cover part of the period between 1 January 2014 and 31
      December 2022. The outputs and results of a joint action plan shall give rise to
EN                                           87                                           EN
 ---pagebreak---             reimbursement only if attained after the date of the decision of approval of the
            joint action plan and before the end of the implementation period defined.
                                             Article 95
                                   Content of joint action plans
   The joint action plan shall contain:
   (1)      an analysis of the development needs and objectives justifying the joint action
            plan, taking into account the objectives of the operational programmes and,
            where applicable, the country-specific recommendations and the broad
            guidelines of the economic policies of the Member States and of the Union
            under Article 121(2) and the Council recommendations which the Member
            States shall take into account in their employment policies under Article 148(4)
            of the Treaty;
   (2)      the framework describing the relationship between the general and specific
            objectives of the joint action plan, the milestones and the targets for outputs and
            results, and the projects or types of projects envisaged;
   (3)      the common and specific indicators used to monitor outputs and results, where
            relevant, by priority axis;
   (4)      information on the geographic coverage and target groups of the joint action
            plan;
   (5)      the expected implementation period of the joint action plan;
   (6)      an analysis of the effects of the joint action plan on the promotion of equality
            between men and women and the prevention of discrimination;
   (7)      an analysis of the effects of the joint action plan on the promotion of sustainable
            development, where appropriate;
   (8)      the implementing provisions for the joint action plan, including the following:
            (a)    the designation of the beneficiary responsible for the implementation of
                   the joint action plan, providing guarantees of its competence in the domain
                   concerned as well as its administrative and financial management
                   capacity;
            (b)    the arrangements for steering the joint action plan, in accordance with
                   Article 97;
            (c)    the arrangements for monitoring and evaluating the joint action plan
                   including arrangements ensuring the quality, collection and storage of data
                   on the achievement of milestones, outputs and results;
            (d)    the arrangements ensuring the dissemination of information and
                   communication on the joint action plan and on the Funds;
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 ---pagebreak---    (9)     the financial arrangements of the joint action plan, including the following:
           (a)    the costs of achieving milestones, outputs and result targets with reference
                  to point (2), based on the methods set out in Article 57(4) and in Article 14
                  of the ESF Regulation;
           (b)    an indicative schedule of payments to the beneficiary linked to the
                  milestones and targets;
           (c)    the financing plan by operational programme and priority axis, including
                  the total eligible amount and the public support.
   The format for the joint action plan shall be set up in accordance with the model adopted
   by the Commission, by means of implementing acts. Those implementing acts shall be
   adopted in accordance with the advisory procedure referred to in Article 143(2).
                                             Article 96
                                 Decision on the joint action plan
   1.      The Commission shall appraise the joint action plan on the basis of the
           information referred to in Article 95 in order to determine whether support from
           the Funds is justified.
           Where the Commission, within three months following the submission of a joint
           action plan proposal, considers that it does not meet the appraisal requirements,
           it shall make observations to the Member State. The Member State shall provide
           to the Commission all necessary additional information requested and, where
           appropriate, revise the joint action plan accordingly.
   2.      Provided that any observations have been satisfactorily taken into account, the
           Commission shall adopt a decision approving the joint action plan no later than
           6 months after its submission by the Member State but not before the adoption
           of the operational programmes concerned.
   3.      The decision referred to in paragraph 2 shall indicate the beneficiary and the
           objectives of the joint action plan, the milestones and targets for outputs and
           results, the costs of achieving these milestones, outputs and result targets, and
           the financing plan by operational programme and priority axis, including the
           total eligible amount and the public contribution, the implementation period of
           the joint action plan and, where relevant, the geographical coverage and target
           groups of the joint action plan.
   4.      Where the Commission refuses to allow support from the Funds to be given to a
           joint action plan, it shall notify the Member State of its reasons within the period
           laid down in paragraph 2.
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 ---pagebreak---                                        Article 97
          Steering Committee and amendment of the joint action plan
   1. The Member State or the managing authority shall set up a steering committee
      for the joint action plan, distinct from the monitoring committee of the
      operational programmes. The steering committee shall meet at least twice a
      year.
      Its composition shall be decided by the Member State in agreement with the
      managing authority, respecting the principle of partnership.
      The Commission may participate in the work of the steering committee in an
      advisory capacity.
   2. The steering committee shall carry out the following activities:
      (a)    review progress towards achieving the milestones, outputs and results of
             the joint action plan;
      (b)    consider and approve any proposal to amend the joint action plan in order
             to take account of any issues affecting its performance.
   3. Requests for amendment of joint action plans submitted by a Member State shall
      be duly substantiated. The Commission shall assess whether the request for
      amendment is justified, taking account of the information provided by the
      Member State. The Commission may make observations and the Member State
      shall provide to the Commission all necessary additional information. The
      Commission shall adopt a decision on a request for amendment no later than
      three months after its formal submission by the Member State, provided that any
      observations made by the Commission have been satisfactorily taken into
      account. The amendment shall enter into force from the date of the decision,
      unless otherwise set out in the decision.
                                       Article 98
            Financial management and control of the joint action plan
   1. Payments to the beneficiary of a joint action plan shall be treated as lump sums
      or standard scales of unit costs. The ceiling for lump sums set out in Article
      57(1)(c) shall not apply.
   2. The financial management, control and audit of the joint action plan shall aim
      exclusively at verifying that the conditions for payments defined in the decision
      approving the joint action plan have been fulfilled.
   3. The beneficiary and bodies acting under its responsibility may apply their
      accounting practices for the costs of implementing operations. These accounting
      practices and the costs actually incurred by the beneficiary shall not be subject
      to audit by the audit authority or the Commission.
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 ---pagebreak---                                   CHAPTER IV
                           Territorial development
                                          Article 99
                           Integrated territorial investment
   1.  Where an urban development strategy or other territorial strategy or pact as
       defined in Article 12(1) of Regulation…[ESF] requires an integrated approach
       involving investments under more than one priority axis of one or more
       operational programmes, the action shall be carried out as an integrated
       territorial investment (an 'ITI').
   2.  The relevant operational programmes shall identify the ITIs planned and shall
       set out the indicative financial allocation from each priority axis to each ITI.
   3.  The Member State or the managing authority may designate one or more
       intermediate bodies, including local authorities, regional development bodies or
       non-governmental organisations, to carry out the management and
       implementation of an ITI.
   4.  The Member State or the relevant managing authorities shall ensure that the
       monitoring system for the operational programme provides for the identification
       of operations and outputs of a priority axis contributing to an ITI.
                                     TITLE III
      MONITORING,EVALUATION, INFORMATION AND
                             COMMUNICATION
                                    CHAPTER I
                         Monitoring and evaluation
                                        Article 100
                        Functions of the monitoring committee
   1.  The monitoring committee shall examine in particular:
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 ---pagebreak---       (a)   any issues that affect the performance of the operational programme;
      (b)   progress in implementation of the evaluation plan and the follow-up given
            to findings of evaluations;
      (c)   implementation of the communication strategy;
      (d)   implementation of major projects;
      (e)   implementation of joint action plans;
      (f)   actions to promote equality between men and women, equal opportunities,
            and non-discrimination, including accessibility for disabled persons;
      (g)   actions to promote sustainable development;
      (h)   actions in the operational programme relating to the fulfilment of ex ante
            conditionalities;
      (i)   financial instruments.
   2. The monitoring committee shall examine and approve:
      (a)   the methodology and criteria for selection of operations;
      (b)   the annual and final implementation reports;
      (c)   the evaluation plan for the operational programme and any amendment of
            the plan;
      (d)   the communication strategy for the operational programme and any
            amendment of the strategy;
      (e)   any proposal by the managing authority for any amendment to the
            operational programme.
                                      Article 101
      Implementation reports for the Investment for growth and jobs goal
   1. By 30 April 2016 and by 30 April of each subsequent year until and including
      2022 the Member State shall submit to the Commission an annual report in
      accordance with Article 44(1). The report submitted in 2016 shall cover the
      financial years 2014 and 2015, as well as the period between the starting date for
      eligibility of expenditure and 31 December 2013.
   2. Annual implementation reports shall set out information on:
      (a)   implementation of the operational programme in accordance with Article
            44(2);
      (b)   progress in preparation and implementation of major projects and joint
            action plans.
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 ---pagebreak---    3. The annual implementation reports submitted in 2017 and 2019 shall set out and
      assess the information required under Articles 44(3) and (4) respectively, the
      information set out in paragraph 2, together with:
      (a)   progress in implementation of the integrated approach to territorial
            development, including sustainable urban development, and community-
            led local development under the operational programme;
      (b)   progress in implementation of actions to reinforce the capacity of Member
            State authorities and beneficiaries to administer and use the Funds;
      (c)   progress in implementation of any interregional and transnational actions;
      (d)   progress in implementation of the evaluation plan and the follow-up given
            to the findings of evaluations;
      (e)   the specific actions taken to promote equality between men and women
            and to prevent discrimination, including accessibility for disabled persons,
            and the arrangements implemented to ensure the integration of the gender
            perspective in the operational programme and operations;
      (f)   actions taken to promote sustainable development in accordance with
            Article 8;
      (g)   the results of the information and publicity measures of the Funds carried
            out under the communication strategy;
      (h)   progress in the implementation of actions in the field of social innovation,
            where appropriate;
      (i)   progress in the implementation of measures to address the specific needs
            of geographical areas most affected by poverty or of target groups at
            highest risk of discrimination or exclusion, with special regard to
            marginalised communities including, where appropriate, the financial
            resources used;
      (j)   the involvement of the partners in the implementation, monitoring and
            evaluation of the operational programme.
   4. The annual and final implementation reports shall be drawn up following
      models adopted by the Commission by means of implementing acts. These
      implementing acts shall be adopted in accordance with the advisory procedure
      referred to in Article 143(2).
                                     Article 102
                           Transmission of financial data
   1. By 31 January, 30 April, 31 July and 31 October, the managing authority shall
      transmit electronically to the Commission for monitoring purposes, for each
      operational programme and by priority axis:
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 ---pagebreak---            (a)    the total and public eligible cost of the operations and the number of
                  operations selected for support;
           (b)    the total and public eligible cost of contracts or other legal commitments
                  entered into by beneficiaries in implementation of operations selected for
                  support;
           (c)    the total eligible expenditure declared by beneficiaries to the managing
                  authority.
   2.      In addition, the transmission on 31 January shall contain the above data broken
           down by category of intervention. This transmission shall be considered to fulfil
           the requirement for the submission of financial data referred to in Article 44(2).
   3.      A forecast of the amount for which Member States expect to submit payment
           applications for the current financial year and the subsequent financial year shall
           accompany the transmissions to be made by 31 January and 31 July.
   4.      The cut-off date for the data submitted under this Article shall be the end of the
           month preceding the month of submission.
                                           Article 103
                                        Cohesion Report
   The report of the Commission referred to in Article 175 of the Treaty shall include:
   (a)     a record of progress made on economic, social and territorial cohesion,
           including the socio-economic situation and development of the regions, as well
           as the integration of the Union's priorities;
   (b)     a record of the role of the Funds, the EIB and the other instruments, as well as
           the effect of other Union and national policies, in the progress made.
                                           Article 104
                                           Evaluation
   1.      An evaluation plan shall be drawn up by the managing authority for each
           operational programme. The evaluation plan shall be submitted to the first
           meeting of the monitoring committee. Where a single monitoring committee
           covers more than one operational programme, an evaluation plan may cover all
           the operational programmes concerned.
   2.      By 31 December 2020, managing authorities shall submit to the Commission,
           for each programme, a report summarising the findings of evaluations carried
           out during the programming period, including an assessment of the main outputs
           and results of the programme.
   3.      The Commission shall carry out ex post evaluations in close cooperation with
           the Member States and managing authorities.
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 ---pagebreak---                                  CHAPTER II
                   Information and Communication
                                      Article 105
                             Information and publicity
   1. Member States and managing authorities shall be responsible for:
      (a)   ensuring the establishment of a single website or a single website portal
            providing information on, and access to, all operational programmes in
            that Member State;
      (b)   informing potential beneficiaries about funding opportunities under
            operational programmes;
      (c)   publicising to Union citizens the role and achievements of cohesion policy
            and of the Funds through information and communication actions on the
            results and impact of Partnership Contracts, operational programmes and
            operations.
   2. Member States shall in order to ensure transparency in the support of the Funds
      maintain a list of operations by operational programme and by Fund in CSV or
      XML format which shall be accessible through the single website or the single
      website portal providing a list and summary of all operational programmes in
      that Member State.
      The list of operations shall be updated at least every three months.
      The minimum information to be set out in the list of operations is laid down in
      Annex VI.
   3. Detailed rules concerning the information and publicity measures for the public
      and information measures for applicants and for beneficiaries are laid down in
      Annex VI.
   4. Technical characteristics of information and publicity measures for the operation
      and instructions for creating the emblem and a definition of the standard colours
      shall be adopted by the Commission by means of implementing acts in
      accordance with the examination procedure referred to Article 143(3).
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 ---pagebreak---                                      Article 106
                              Communication strategy
   1. The managing authority shall draw up a communication strategy for each
      operational programme. A common communication strategy may be drawn up
      for several operational programmes.
      The communication strategy shall include the elements set out in Annex VI and
      annual updates with details of the planned information and publicity activities to
      be carried out.
   2. The communication strategy shall be discussed and approved by the first
      monitoring committee following the adoption of the operational programme.
      Any revision of the communication strategy shall be discussed in, and approved
      by, the monitoring committee.
   3. The managing authority shall inform the monitoring committee for each
      operational programme at least once a year of progress in the implementation of
      the communication strategy and its assessment of the results.
                                     Article 107
           Information and communication officers and their networks
   1. Each Member State shall designate an information and communication officer to
      coordinate information and communication actions in relation to one or several
      Funds and shall inform the Commission accordingly.
   2. The information and communication officer shall coordinate and chair meetings
      of a national network of Funds' communicators, including relevant European
      territorial cooperation programmes, the creation and maintenance of the website
      or website portal referred to in Annex VI and the obligation to provide an
      overview about communication measures undertaken at national level.
   3. Each managing authority shall designate one person to be responsible for
      information and communication at operational programme level and shall
      inform the Commission of those designated.
   4. Union networks comprising the members designated by the Member States and
      the managing authorities shall be set up by the Commission to ensure exchange
      on the results of the implementation of the communication strategies, the
      exchange of experience in implementing the information and communication
      measures, and the exchange of good practices.
EN                                          96                                           EN
 ---pagebreak---                                            TITLE IV
                            TECHNICAL ASSISTANCE
                                             Article 108
                    Technical assistance at the initiative of the Commission
   The Funds may support technical assistance up to a ceiling of 0,35 % of their respective
   annual allocation.
                                             Article 109
                           Technical assistance of the Member States
   1.       Each of the Funds may finance technical assistance operations eligible under
            any of the other Funds. The amount of the Funds allocated to technical
            assistance shall be limited to 4% of the total amount of the Funds allocated to
            operational programmes under each category of region of the Investment for
            growth and jobs goal.
   2.       Technical assistance shall take the form of a mono-fund priority axis within an
            operational programme or of a specific operational programme.
   3.       The allocation for technical assistance from a Fund shall not exceed 10% of the
            total allocation of that Fund to operational programmes in a Member State under
            each category of region of the Investment for growth and jobs goal.
                                           TITLE V
               FINANCIAL SUPPORT FROM THE FUNDS
                                             Article 110
                              Determination of co-financing rates
   1.       The Commission decision adopting an operational programme shall fix the co-
            financing rate and the maximum amount of support from Funds for each priority
            axis.
   2        For each priority axis, the Commission decision shall set out whether the co-
            financing rate for the priority axis will be applied to:
EN                                                  97                                      EN
 ---pagebreak---       (a)   total eligible expenditure, including public and private expenditure; or
      (b)   public eligible expenditure.
   3. The co-financing rate at the level of each priority axis of operational
      programmes under the Investment for growth and jobs goal shall be no higher
      than:
      (a)   85 % for the Cohesion Fund;
      (b)   85 % for the less developed regions of Member States whose average
            GDP per capita for the period 2007 to 2009 was below 85 % of the EU-27
            average during the same period and for the outermost regions;
      (c)   80% for the less developed regions of Member States other than those
            referred to in point (b) eligible for the transitional regime of the Cohesion
            Fund on 1 January 2014;
      (d)   75% for the less developed regions of Member States other than those
            referred to in points (b) and (c), and for all regions whose GDP per capita
            for the 2007-2013 period was less than 75% of the average of the EU-25
            for the reference period but whose GDP per capita is above 75% of the
            GDP average of the EU-27;
      (e)   60 % for the transition regions other than those referred to in point (d);
      (f)   50 % for the more developed regions other than those referred to in point
            (d).
      The co-financing rate at the level of each priority axis of operational
      programmes under the European territorial cooperation goal shall be no higher
      than 75%.
   4. The co-financing rate of the additional allocation in accordance with Article
      84(1)(e) shall be no higher than 50%.
      The same co-financing rate shall apply to the additional allocation under
      Article 4(2) of Regulation (EU) No […]/2012 [ETC Regulation].
   5. The maximum co-financing rate under paragraph 3 at the level of a priority axis
      shall be increased by ten percentage points, where the whole of a priority axis is
      delivered through financial instruments, or through community-led local
      development.
   6. The contribution from the Funds for each priority axis shall not be less than 20
      % of the eligible public expenditure.
   7. A separate priority axis with a co-financing rate of up to 100% may be
      established within an operational programme to support operations implemented
      through financial instruments set up at Union level and managed directly or
      indirectly by the Commission. Where a separate priority is established for this
      purpose, the support under this axis may not be implemented by any other
      means.
EN                                           98                                           EN
 ---pagebreak---                                            Article 111
                            Modulation of the co-financing rates
   The co-financing rate from the Funds to a priority axis may be modulated to take account
   of:
   (1)     the importance of the priority axis for the delivery of the Union strategy for
           smart, sustainable and inclusive growth, having regard to the specific gaps to be
           addressed;
   (2)     protection and improvement of the environment, principally through the
           application of the precautionary principle, the principle of preventive action and
           the polluter pays principle;
   (3)     the rate of mobilisation of private financing;
   (4)     the coverage of areas with severe and permanent natural or demographic
           handicaps defined as follows:
           (a)   island Member States eligible under the Cohesion Fund, and other islands
                 except those on which the capital of a Member State is situated or which
                 have a fixed link to the mainland;
           (b)   mountainous areas as defined by the national legislation of the Member
                 State;
           (c)   sparsely (less than 50 inhabitants per square kilometre) and very sparsely
                 (less than 8 inhabitants per square kilometre) populated areas.
                                         TITLE VI
                       MANAGEMENT AND CONTROL
                                       CHAPTER I
                        Management and control systems
                                           Article 112
                              Responsibilities of Member States
   1.      Member States shall ensure that management and control systems for
           operational programmes are set up in accordance with Articles 62 and 63.
   2.      Member States shall prevent, detect and correct irregularities and shall recover
           amounts unduly paid, together with any interest on late payments. They shall
EN                                                99                                          EN
 ---pagebreak---       notify these irregularities to the Commission and shall keep the Commission
      informed of the progress of related administrative and legal proceedings.
      When amounts unduly paid to a beneficiary cannot be recovered and this is as a
      result of fault or negligence on the part of a Member State, the Member State
      shall be responsible for reimbursing the amounts concerned to the general
      budget of the Union.
      The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 laying down detailed rules concerning the obligations of the
      Member States specified in this paragraph.
   3. Member States shall ensure that no later than 31 December 2014, all exchanges
      of information between beneficiaries and managing authorities, certifying
      authorities, audit authorities and intermediate bodies can be carried out solely by
      means of electronic data exchange systems.
      The systems shall facilitate interoperability with national and Union frameworks
      and allow for the beneficiaries to submit all information referred to in the first
      sub-paragraph only once.
      The Commission shall adopt, by means of implementing acts, detailed rules
      concerning the exchanges of information under this paragraph. Those
      implementing acts shall be adopted in accordance with the examination
      procedure referred to in Article 143(3).
                                  CHAPTER II
                 Management and control authorities
                                       Article 113
                             Designation of authorities
   1. The Member State shall designate, for each operational programme, a national,
      regional or local public authority or body as managing authority. The same public
      authority or body may be designated as a managing authority for more than one
      operational programme.
   2. The Member State shall designate, for each operational programme, a national,
      regional or local public authority or body as a certifying authority, without
      prejudice to paragraph 3. The same certifying authority may be designated for
      more than one operational programme.
   3. The Member State may designate for an operational programme a managing
      authority which carries out in addition the functions of the certifying authority.
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 ---pagebreak---    4. The Member State shall designate, for each operational programme, a national,
      regional or local public authority or body, functionally independent from the
      managing authority and the certifying authority, as audit authority. The same
      audit authority may be designated for more than one operational programme.
   5. For the Investment for growth and jobs goal, provided that the principle of
      separation of functions is respected, the managing authority, the certifying
      authority, where applicable, and the audit authority may be part of the same public
      authority or body. However, for those operational programmes for which the total
      amount of support from the Funds exceeds EUR 250 000 000, the audit authority
      may not be part of the same public authority or body as the managing authority.
   6. The Member State may designate one or more intermediate bodies to carry out
      certain tasks of the managing or the certifying authority under the responsibility
      of that authority. The relevant arrangements between the managing authority or
      certifying authority and the intermediate bodies shall be formally recorded in
      writing.
   7. The Member State or the managing authority may entrust the management of
      part of an operational programme to an intermediate body by way of an
      agreement in writing between the intermediate body and the Member State or
      managing authority (a 'global grant'). The intermediate body shall provide
      guarantees of its solvency and competence in the domain concerned, as well as
      its administrative and financial management.
   8. The Member State shall lay down in writing rules governing its relations with the
      managing authorities, certifying authorities and audit authorities, the relations
      between such authorities, and the relations of such authorities with the Commission.
                                       Article 114
                        Functions of the managing authority
   1. The managing authority shall be responsible for managing the operational
      programme in accordance with the principle of sound financial management.
   2. As regards the programme management of the operational programme, the
      managing authority shall:
      (a)    support the work of the monitoring committee and provide it with the
             information it requires to carry out its tasks, in particular data relating to
             the progress of the operational programme in achieving its objectives,
             financial data and data relating to indicators and milestones;
      (b)    draw up and, after approval by the monitoring committee, submit to the
             Commission annual and final implementation reports;
      (c)    make available to intermediate bodies and beneficiaries information that is
             relevant to the execution of their tasks and the implementation of
             operations respectively;
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 ---pagebreak---       (d)  establish a system to record and store in computerised form data on each
           operation necessary for monitoring, evaluation, financial management,
           verification and audit, including data on individual participants in
           operations, where applicable;
      (e)  ensure that the data referred to in point (d) is collected, entered and stored
           in the system, and that data on indicators is broken down by gender where
           required by Annex I of the ESF Regulation.
   3. As regards the selection of operations, the managing authority shall:
      (a)  draw up and, once approved, apply appropriate selection procedures and
           criteria that:
           (i)    are non-discriminatory and transparent;
           (ii)   take into account the general principles set out in Articles 7 and 8;
      (b)  ensure that a selected operation falls within the scope of the Fund or Funds
           concerned and within a category of intervention identified in the priority
           axis or axes of the operational programme;
      (c)  provide to the beneficiary a document setting out the conditions for support
           for each operation including the specific requirements concerning the
           products or services to be delivered under the operation, the financing
           plan, and the time-limit for execution;
      (d)  satisfy itself that the beneficiary has the administrative, financial and
           operational capacity to fulfil the conditions defined in point (c) before
           approval of the operation;
      (e)  satisfy itself that, where the operation has started before the submission of
           an application for funding to the managing authority, Union and national
           rules relevant for the operation have been complied with;
      (f)  ensure that an applicant does not receive support from the Funds where it
           has been, or should have been, subject to a procedure of recovery in
           accordance with Article 61 following the relocation of a productive
           activity within the Union;
      (g)  determine the categories of intervention to which the expenditure of an
           operation shall be attributed.
   4. As regards the financial management and control of the operational programme,
      the managing authority shall:
      (a)  verify that the co-financed products and services have been delivered and
           that expenditure declared by the beneficiaries has been paid by them and
           that it complies with applicable Union and national law, the operational
           programme and the conditions for support of the operation;
      (b)  ensure that beneficiaries involved in the implementation of operations
           reimbursed on the basis of eligible costs actually incurred maintain either
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 ---pagebreak---              a separate accounting system or an adequate accounting code for all
             transactions relating to an operation;
       (c)   put in place effective and proportionate anti-fraud measures taking into
             account the risks identified;
       (d)   set up procedures to ensure that all documents regarding expenditure and
             audits required to ensure an adequate audit trail are held in accordance with
             the requirements of Article 62(g);
       (e)   draw up the management declaration of assurance on the functioning of
             the management and control system, the legality and regularity of
             underlying transactions and the respect of the principle of sound financial
             management, together with a report setting out the results of management
             controls carried out, any weaknesses identified in the management and
             control system and any corrective action taken.
   5.  Verifications pursuant to paragraph 4(a) shall include the following procedures:
       (a)   administrative verifications in        respect  of   each    application  for
             reimbursement by beneficiaries;
       (b)   on-the-spot verifications of operations.
       The frequency and coverage of the on-the-spot verifications shall be
       proportionate to the amount of public support to an operation and the level of
       risk identified by these verifications and audits by the audit authority for the
       management and control system as a whole.
   6.  On-the-spot verifications of individual operations pursuant to paragraph (5)(b)
       may be carried out on a sample basis.
   7.  Where the managing authority is also a beneficiary under the operational
       programme, arrangements for the verifications referred to in paragraph 4(a) shall
       ensure adequate separation of functions.
   8.  The Commission shall adopt delegated acts, in accordance with Article 142,
       laying down the modalities of the exchange of information in paragraph 2(d).
   9.  The Commission shall adopt delegated acts, in accordance with Article 142,
       laying down rules concerning arrangements for the audit trail referred to in
       paragraph 4(d).
   10. The Commission shall adopt, by means of implementing acts, the model for the
       management declaration referred to in paragraph 4(e). Those implementing acts
       shall be adopted in accordance with the advisory procedure referred to in Article
       143(2).
EN                                            103                                          EN
 ---pagebreak---                                           Article 115
                            Functions of the certifying authority
   The certifying authority of an operational programme shall be responsible in particular
   for:
   (a)     drawing up and submitting to the Commission payment applications and
           certifying that these result from reliable accounting systems, are based on
           verifiable supporting documents and have been subject to verifications by the
           managing authority;
   (b)     drawing up the annual accounts;
   (c)     certifying the completeness, accuracy and veracity of the annual accounts and
           that the expenditure entered in the accounts complies with applicable Union and
           national rules and has been incurred in respect of operations selected for funding
           in accordance with the criteria applicable to the operational programme and
           complying with Union and national rules;
   (d)     ensuring that there is a system which records and stores, in computerised form,
           accounting records for each operation, and which supports all the data required
           for drawing up payment applications and annual accounts, including records of
           amounts recoverable, amounts recovered and amounts withdrawn following
           cancellation of all or part of the contribution for an operation or operational
           programme;
   (e)     ensuring for the purposes of drawing up and submission of payment applications
           that it has received adequate information from the managing authority on the
           procedures and verifications carried out in relation to expenditure;
   (f)     taking account when drawing up and submitting payment applications the
           results of all audits carried out by or under the responsibility of the audit
           authority;
   (g)     maintaining accounting records in a computerised form of expenditure declared
           to the Commission and the corresponding public contribution paid to
           beneficiaries;
   (h)     keeping an account of amounts recoverable and of amounts withdrawn
           following cancellation of all or part of the contribution for an operation.
           Amounts recovered shall be repaid to the general budget of the Union prior to
           the closure of the operational programme by deducting them from the next
           statement of expenditure.
EN                                              104                                           EN
 ---pagebreak---                                       Article 116
                          Functions of the audit authority
   1. The audit authority shall ensure that audits are carried out on the management
      and control systems, on an appropriate sample of operations and on the annual
      accounts.
      The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 to set out the conditions which those audits shall fulfil.
   2. Where audits are carried out by a body other than the audit authority, the audit
      authority shall ensure that any such body has the necessary functional
      independence.
   3. The audit authority shall ensure that audit work takes account of internationally
      accepted audit standards.
   4. The audit authority shall, within six months of adoption of an operational
      programme, prepare an audit strategy for performance of audits. The audit
      strategy shall set out the audit methodology, the sampling method for audits on
      operations and the planning of audits in relation to the current accounting year
      and the two subsequent accounting years. The audit strategy shall be updated
      annually from 2016 until and including 2022. Where a common management
      and control system applies to more than one operational programme, a single
      audit strategy may be prepared for the operational programmes concerned. The
      audit authority shall submit the audit strategy to the Commission upon request.
   5. The audit authority shall draw up:
      (i)    an audit opinion on the annual accounts for the preceding accounting year,
             whose scope shall cover the completeness, accuracy and veracity of the
             annual accounts, the functioning of the management and control system
             and the legality and regularity of the underlying transactions;
      (ii)   an annual control report setting out the findings of the audits carried out
             during the preceding accounting year.
      The report under point (ii) shall set out any deficiencies found in the
      management and control system and any corrective measures taken or proposed
      to be taken.
      Where a common management and control system applies to more than one
      operational programme, the information required under point (ii) may be
      grouped in a single report.
   6. The Commission shall adopt, by means of implementing acts, models for the
      audit strategy, the audit opinion and the annual control report, as well as the
      methodology for the sampling method referred to in paragraph 4. These
      implementing acts shall be adopted in accordance with the examination
      procedure referred to in Article 143(3).
EN                                           105                                         EN
 ---pagebreak---    7.     Implementing rules concerning the use of data collected during audits carried out
          by Commission officials or authorised Commission representatives shall be adopted
          by the Commission in accordance with the examination procedure referred to in
          Article 143(3).
                                    CHAPTER III
                                     Accreditation
                                         Article 117
      Accreditation and withdrawal of accreditation of the managing authority and the
                                    certifying authority
   1.     The accrediting body shall adopt a formal decision to accredit those managing
          authorities and certifying authorities that comply with the accreditation criteria
          that have been established by the Commission by means of delegated acts in
          accordance with Article 142.
   2.     The formal decision referred to in paragraph 1 shall be based on a report and an
          opinion of an independent audit body that assesses the management and control
          system, including the role of intermediate bodies therein, and its compliance
          with Articles 62, 63, 114 and 115. The accrediting body shall take into account
          whether the management and control systems for the operational programme are
          similar to those in place for the previous programming period, as well as any
          evidence of their effective functioning.
   3.     The Member State shall submit the formal decision referred to in paragraph 1 to
          the Commission within six months of the adoption of the decision adopting the
          operational programme.
   4.     Where the total amount of support from the Funds to an operational programme
          exceeds EUR 250 000 000 the Commission may request, within two months of
          receipt of the formal decision referred to in paragraph 1, the report and the
          opinion of the independent audit body and the description of the management
          and control system.
          The Commission may make observations within two months of receipt of these
          documents.
          In deciding whether to request those documents, the Commission shall take into
          account whether the management and control systems for the operational
          programme are similar to those in place for the previous programming period,
          whether the managing authority also carries out the functions of the certifying
          authority, and any evidence of their effective functioning.
EN                                              106                                          EN
 ---pagebreak---                                               Article 118
                                Cooperation with audit authorities
   1.       The Commission shall cooperate with audit authorities to coordinate their audit
            plans and methods and shall immediately exchange the results of audits carried
            out on management and control systems.
   2.       To facilitate this cooperation in cases where a Member State designates more than
            one audit authority, the Member State may designate a coordination body.
   3.       The Commission, the audit authorities and any coordination body shall meet on
            a regular basis and at least once a year, unless otherwise agreed, to examine the
            annual control report, the opinion and the audit strategy, and to exchange views
            on issues relating to improvement of the management and control systems.
                                          TITLE VII
           FINANCIAL MANAGEMENT, CLEARANCE OF
            ACCOUNTS AND FINANCIAL CORRECTIONS
                                         CHAPTER I
                                  Financial management
                                             Article 119
                                   Common rules for payments
   The Member State shall ensure that at the latest by the closure of the operational
   programme, the amount of public support paid to beneficiaries is at least equal to the
   contribution from the Funds paid by the Commission to the Member State.
                                              Article 120
      Common rules for calculating interim payments and payment of the annual and
                                            final balance
   1.       The Commission shall reimburse as interim payments 90% of the amount
            resulting from applying the co-financing rate for each priority axis laid down in
            the decision adopting the operational programme to the eligible expenditure for
            the priority axis included in the payment application. It shall determine the
            annual balance in accordance with Article 130(1).
   2.       The contribution from the Funds to a priority axis through the interim payments
            and payment of the annual and the final balance shall not be higher than:
EN                                                  107                                       EN
 ---pagebreak---             (a)   the public support indicated in the payment application for the priority
                  axis; and
            (b)   the contribution from the Funds for the priority axis laid down in the
                  decision of the Commission approving the operational programme.
   3.       Notwithstanding Article 22, the Union support through the interim payments
            and payments of the final balance shall not be higher than the public support and
            the maximum amount of support from the Funds for each priority axis as laid
            down in the decision of the Commission approving the operational programme.
                                            Article 121
                                     Payment applications
   1.       Payment applications shall include, for each priority axis:
            (a)   the total amount of eligible expenditure paid by beneficiaries in
                  implementing operations, as entered into the accounts of the certifying
                  authority;
            (b)   the total amount of public support incurred in implementing operations, as
                  entered into the accounts of the certifying authority;
            (c)   the corresponding eligible public support which has been paid to the
                  beneficiary, as entered into the accounts of the certifying authority.
   2.       Expenditure included in a payment application shall be supported by receipted
            invoices or accounting documents of equivalent probative value, except for
            forms of support under Articles 57 (1) (b) (c) and (d), 58, 59 (1) and 93 and
            under Article 14 of the Regulation (EU) No […]/2012 of the European
            Parliament and of the Council of the European Social Funds and repealing
            Regulation (EC) No 1081/2006 [ESF]. For such forms of support, the amounts
            included in a payment application shall be the costs reimbursed to the
            beneficiary by the managing authority.
   3.       The Commission shall adopt, by means of implementing acts, the model for
            payment applications. These implementing acts shall be adopted in accordance
            with the advisory procedure referred to in Article 143(2).
                                            Article 122
                                    Payment to beneficiaries
   Managing authorities shall ensure that the beneficiaries receive the total amount of the
   public support as quickly as possible and in full and in any event before the inclusion of
   the corresponding expenditure in the payment application. No amount shall be deducted
   or withheld and no specific charge or other charge with equivalent effect shall be levied
   that would reduce these amounts for the beneficiaries.
EN                                                108                                         EN
 ---pagebreak---                                             Article 123
                                          Use of the euro
   1.       Member States which have not adopted the euro as their currency on the date of
            an application for payment shall convert the amounts of expenditure incurred in
            national currency into euro. This amount shall be converted into euro using the
            monthly accounting exchange rate of the Commission in the month during
            which the expenditure was registered in the accounts of the managing authority
            of the operational programme concerned. This rate shall be published
            electronically by the Commission each month.
   2.       When the euro becomes the currency of a Member State, the conversion
            procedure set out in paragraph 1 shall continue to apply to all expenditure
            recorded in the accounts by the managing authority before the date of entry into
            force of the fixed conversion rate between the national currency and the euro.
                                            Article 124
                                   Payment of pre-financing
   1.       The initial pre-financing amount shall be paid in instalments as follows:
            (a)   in 2014: 2 % of the amount of support from the Funds for the entire
                  programming period to the operational programme;
            (b)   in 2015: 1 % of the amount of support from the Funds for the entire
                  programming period to the operational programme;
            (c)   in 2016: 1 % of the amount of support from the Funds for the entire
                  programming period to the operational programme.
            If an operational programme is adopted in 2015 or later, the earlier instalments
            shall be paid in the year of adoption.
   2.       An annual pre-financing amount shall be paid before 1 July in the years 2016 to
            2022. In 2016, it shall be 2 % of the amount of the support from the Funds for
            the whole programming period to the operational programme. In the years 2017
            to 2022, it shall be 2,5% of the amount of the support from the Funds for the
            whole programming period to the operational programme.
                                            Article 125
                                   Clearance of pre-financing
   The amount paid as annual pre-financing shall be cleared from the Commission accounts
   in accordance with Article 130.
EN                                                 109                                       EN
 ---pagebreak---                                            Article 126
    Deadlines for presentation of interim payment applications and for their payment
   1.     The certifying authority shall submit on a regular basis an application for
          interim payment covering amounts entered in its accounts as public support paid
          to beneficiaries in the accounting year ending 30 June.
   2.     The certifying authority shall submit the final application for interim payment
          by 31 July following the end of the previous accounting year and, in any event,
          before the first application for interim payment for the next accounting year.
   3.     The first application for interim payment shall not be made before the formal act
          accrediting the managing authority has been received by the Commission.
   4.     Interim payments shall not be made for an operational programme where the
          annual implementation report has not been sent to the Commission in
          accordance with Article 101.
   5.     Subject to available funding, the Commission shall make the interim payment
          no later than 60 days after the date on which a payment application is registered
          with the Commission.
                                                Article 127
                                             Decommitment
   1.     The Commission shall decommit any part of the amount calculated in
          accordance with the second subparagraph in an operational programme that has
          not been used for payment of the initial and annual pre-financing, interim
          payments and annual balance by 31 December of the second financial year
          following the year of budget commitment under the operational programme or
          for which a payment application drawn up in accordance with Article 121 has
          not been submitted in accordance with Article 126.
          For the purposes of the decommitment, the Commission shall calculate the
          amount by adding one sixth of the annual budget commitment related to the
          2014 total annual contribution to each of the 2015 to 2020 budget commitments.
   2.     By way of derogation from the first subparagraph of paragraph 1, the deadlines
          for decommitment shall not apply to the annual budget commitment related to
          the 2014 total annual contribution.
   3.     If the first annual budget commitment is related to the 2015 total annual
          contribution, by way of derogation from paragraph 1, the deadlines for
          decommitment shall not apply to the annual budget commitment related to the
          total annual contribution of 2015. In such cases, the Commission shall calculate
          the amount under the first sub-paragraph of paragraph 1 by adding one fifth of
          the annual budget commitment related to the 2015 total amount contribution to
          each of the 2016 to 2020 budget commitments.
EN                                               110                                        EN
 ---pagebreak---    4. That part of commitments still open on 31 December 2022 shall be decommitted
      if any of the documents required under Article 130(1) has not been submitted to
      the Commission by 30 September 2023.
                                 CHAPTER II
                  Clearance of accounts and closure
                                     SECTION I
                          CLEARANCE OF ACCOUNTS
                                     Article 128
                          Content of the annual accounts
   1. The certified annual accounts for each operational programme shall cover the
      accounting year and shall include at the level of each priority axis:
      (a)   the total amount of eligible expenditure entered into the accounts of the
            certifying authority as having been paid by beneficiaries in implementing
            operations and the corresponding eligible public support which has been
            paid and the total amount of public support incurred in implementing
            operations;
      (b)   the amounts withdrawn and recovered during the accounting year, the
            amounts to be recovered as at the end of the accounting year, the
            recoveries effected pursuant to Article 61, and the irrecoverable amounts;
      (c)   for each priority axis, the list of operations completed during the
            accounting year that were supported by ERDF and Cohesion Fund;
      (d)   for each priority axis, a reconciliation between the expenditure stated
            pursuant to point (a) and the expenditure declared in respect of the same
            accounting year in payment applications, accompanied by an explanation
            of any differences.
   2. The certifying authority may specify by priority axis in the accounts a provision,
      which shall not exceed 5 % of the total expenditure in payment applications
      presented for a given accounting year, where the assessment of the legality and
      regularity of the expenditure is subject to an ongoing procedure with the audit
      authority. The amount covered shall be excluded from the total amount of
      eligible expenditure referred to in paragraph 1(a). These amounts shall be
      definitively included in, or excluded from, the annual accounts of the following
      year.
EN                                         111                                           EN
 ---pagebreak---                                            Article 129
                                  Submission of information
   For each year from 2016 until and including 2022, the Member State shall submit the
   documents referred to in Article 75(1).
                                           Article 130
                                Annual clearance of accounts
   1.      For the purposes of calculating the amount chargeable to the Funds for an
           accounting year, the Commission shall take into account:
           (a)   the total amount of expenditure entered into the accounts referred to in
                 Article 128(1)(a), to which shall be applied the co-financing rate for each
                 priority axis;
           (b)   the total amount of payments made by the Commission during that
                 accounting year, consisting of:
                 (i)   the amount of interim payments paid by the Commission in
                       accordance with Article 120(1) and Article 22; and
                 (ii)  the amount of the annual pre-financing paid under Article 124(2).
   2.      The annual balance which, as a result of the clearance of accounts, is
           recoverable from the Member State shall be subject to a recovery order of the
           Commission. The annual balance payable to the Member State shall be added to
           the next interim payment made by the Commission following the clearance of
           accounts.
   3.      If, for reasons attributable to a Member State, the Commission is not in a
           position to clear the accounts by 30 April of the year following the end of an
           accounting year, the Commission shall notify the Member State of the actions
           that must be undertaken by the managing authority or audit authority, or of the
           additional enquiries the Commission proposes to undertake pursuant to Article
           65(2) and (3).
   4.      Payment of the annual balance by the Commission shall be based on the
           expenditure declared in the accounts, net of any provision made in respect of
           expenditure declared to the Commission which is subject to a contradictory
           procedure with the audit authority.
                                           Article 131
                                       Rolling Closure
   1.      For the ERDF and the Cohesion Fund, the annual accounts for each operational
           programme shall include at the level of each priority axis the list of operations
           completed during the accounting year. The expenditure relating to these
EN                                               112                                         EN
 ---pagebreak---       operations included in the accounts subject to the clearance decision shall be
      considered as closed.
   2. For the ESF, the expenditure included in the accounts that are subject to a
      clearance decision shall be considered as closed.
                                      Article 132
                             Availability of documents
   1. Without prejudice to the rules governing State aid, the managing authority shall
      ensure that all supporting documents on operations are made available to the
      Commission and the European Court of Auditors upon request for a period of
      three years. This three year period shall run from 31 December of the year of the
      clearance of accounts decision pursuant to Article 130 or, at the latest, from the
      date of payment of the final balance.
      This three year period shall be interrupted either in the case of legal or
      administrative proceedings or by a duly justified request of the Commission.
   2. The documents shall be kept either in the form of the originals, or certified true
      copies of the originals, or on commonly accepted data carriers including
      electronic versions of original documents or documents existing in electronic
      version only.
   3. The documents shall be kept in a form which permits identification of data
      subjects for no longer than is necessary for the purposes for which the data were
      collected or for which they are further processed.
   4. The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 to set out which data carriers can be considered as commonly
      accepted.
   5. The procedure for certification of conformity of documents held on commonly
      accepted data carriers with the original document shall be laid down by the
      national authorities and shall ensure that the versions held comply with national
      legal requirements and can be relied on for audit purposes.
   6. Where documents exist in electronic version only, the computer systems used
      must meet accepted security standards that ensure that the documents held
      comply with national legal requirements and can be relied on for audit purposes.
EN                                          113                                          EN
 ---pagebreak---                                      SECTION II
                 CLOSURE OF OPERATIONAL PROGRAMMES
                                      Article 133
       Submission of closure documents and payment of the final balance
   1. Member States shall submit the following documents by 30 September 2023:
      (a)   an application for payment of the final balance;
      (b)   a final implementation report for the operational programme; and
      (c)   the documents referred to in Article 75(1) for the final accounting year,
            from 1 July 2022 to 30 June 2023.
   2. The final balance shall be paid no later than three months after the date of
      clearance of accounts of the final accounting year or one month after the date of
      acceptance of the final implementation report, whichever date is later.
                                     SECTION III
                            SUSPENSION OF PAYMENTS
                                      Article 134
                               Suspension of payments
   1. All or part of the interim payments at the level of priority axes or operational
      programmes may be suspended by the Commission where:
      (a)   there is a serious deficiency in the management and control system of the
            operational programme for which corrective measures have not been
            taken;
      (b)   expenditure in a statement of expenditure is linked to an irregularity
            having serious financial consequences which has not been corrected;
      (c)   the Member State has failed to take the necessary action to remedy the
            situation giving rise to an interruption under Article 74;
      (d)   there is a serious deficiency in the quality and reliability of the monitoring
            system or of the data on common and specific indicators;
      (e)   the Member State has failed to undertake actions set out in the operational
            programme relating to fulfilment of an ex ante conditionalities;
EN                                           114                                           EN
 ---pagebreak---       (f)    there is evidence resulting from a performance review that a priority axis
             has failed to achieve the milestones set out in the performance framework;
      (g)    the Member State fails to respond or does not reply satisfactorily under
             Article 20(3).
   2. The Commission may decide, by means of implementing acts, to suspend all or
      part of interim payments, after having given the Member State the opportunity
      to present its observations.
   3. The Commission shall end suspension of all or part of interim payments where
      the Member State has taken the necessary measures to enable the suspension to
      be lifted.
                                  CHAPTER III
                             Financial corrections
                                      SECTION I
               FINANCIAL CORRECTIONS BY MEMBER STATES
                                       Article 135
                       Financial corrections by Member States
   1. The Member States shall in the first instance be responsible for investigating
      irregularities and for making the financial corrections required and pursuing
      recoveries. In the case of a systemic irregularity, the Member State shall extend its
      investigation to cover all operations potentially affected.
   2. The Member State shall make the financial corrections required in connection with
      individual or systemic irregularities detected in operations or operational
      programmes. Financial corrections shall consist of cancelling all or part of the
      public contribution to an operation or operational programme. The Member
      State shall take into account the nature and gravity of the irregularities and the
      financial loss to the Funds and shall apply a proportionate correction. Financial
      corrections shall be recorded in the annual accounts by the managing authority
      for the accounting year in which the cancellation is decided.
   3. The contribution from the Funds cancelled in accordance with paragraph 2 may
      be reused by the Member State within the operational programme concerned,
      subject to paragraph 4.
   4. The contribution cancelled in accordance with paragraph 2 may not be reused
      for any operation that was the subject of the correction or, where a financial
EN                                           115                                            EN
 ---pagebreak---       correction is made for a systemic irregularity, for any operation affected by the
      systemic irregularity.
                                     SECTION II
              FINANCIAL CORRECTIONS BY THE COMMISSION
                                       Article 136
                           Criteria for financial corrections
   1. The Commission shall make financial corrections by means of implementing
      acts by cancelling all or part of the Union contribution to an operational
      programme in accordance with Article 77 where, after carrying out the
      necessary examination, it concludes that:
      (a)   there is a serious deficiency in the management and control system of the
            operational programme which has put at risk the Union contribution
            already paid to the operational programme;
      (b)   the Member State has not complied with its obligations under Article 135
            prior to the opening of the correction procedure under this paragraph;
      (c)   expenditure contained in a payment application is irregular and has not
            been corrected by the Member State prior to the opening of the correction
            procedure under this paragraph.
      The Commission shall base its financial corrections on individual cases of
      irregularity identified and shall take account of whether an irregularity is
      systemic. When it is not possible to quantify precisely the amount of irregular
      expenditure charged to the Funds, the Commission shall apply a flat rate or
      extrapolated financial correction.
   2. The Commission shall, when deciding the amount of a correction under
      paragraph 1, take account of the nature and gravity of the irregularity and the
      extent and financial implications of the deficiencies in management and control
      systems found in the operational programme.
   3. Where the Commission bases its position on reports of auditors other than those
      of its own services, it shall draw its own conclusions regarding the financial
      consequences after examining the measures taken by the Member State
      concerned under Article 135(2), the notifications sent under Article 112(3), and
      any replies from the Member State.
   4. Where the Commission, based on the examination of the final implementation
      report of the operational programme, establishes a serious failure to achieve the
      targets set out in the performance framework, it may apply financial corrections
      in respect of the priority axes concerned by means of implementing acts.
EN                                           116                                        EN
 ---pagebreak---    5. When a Member State does not comply with its obligations as referred to in
      Article 86, the Commission may, in relation to the degree of non-compliance
      with these obligations, make a financial correction by cancelling all or part of
      the Structural Funds contribution to the Member State concerned.
   6. The Commission shall be empowered to adopt delegated acts in accordance with
      Article 142 establishing the criteria for establishing the level of financial
      correction to be applied.
                                        Article 137
                                         Procedure
   1. Before taking a decision on a financial correction, the Commission shall launch
      the procedure by informing the Member State of the provisional conclusions of its
      examination and requesting the Member State to submit its comments within two
      months.
   2. Where the Commission proposes a financial correction on the basis of
      extrapolation or a flat rate, the Member State shall be given the opportunity to
      demonstrate, through an examination of the documentation concerned, that the
      actual extent of irregularity is less than the Commission's assessment. In agreement
      with the Commission, the Member State may limit the scope of this examination
      to an appropriate proportion or sample of the documentation concerned. Except in
      duly justified cases, the time allowed for this examination shall not exceed a
      further period of two months after the two-month period referred to in paragraph
      1.
   3. The Commission shall take account of any evidence supplied by the Member
      State within the time limits set out in paragraphs 1 and 2.
   4. Where the Member State does not accept the provisional conclusions of the
      Commission, the Member State shall be invited to a hearing by the Commission,
      in order to ensure that all relevant information and observations are available as a
      basis for conclusions by the Commission on the application of the financial
      correction.
   5. In order to apply financial corrections the Commission shall take a decision, by
      means of implementing acts, within six months of the date of the hearing, or of
      the date of receipt of additional information where the Member State agrees to
      submit such additional information following the hearing. The Commission shall
      take account of all information and observations submitted during the course of
      the procedure. If no hearing takes place, the six month period shall begin to run
      two months after the date of the letter of invitation to the hearing sent by the
      Commission.
   6. Where irregularities affecting annual accounts sent to the Commission are
      detected by the Commission or by the European Court of Auditors, the resulting
      financial correction shall reduce support from the Funds to the operational
      programme.
EN                                             117                                         EN
 ---pagebreak---                                                Article 138
                                     Obligations of Member States
   A financial correction by the Commission shall not prejudice the Member State's
   obligation to pursue recoveries under Article 135(2) of this Regulation and to recover
   State aid in the meaning of Article 107(1) of the Treaty and under Article 14 of Council
   Regulation (EC) No 659/199933.
                                              Article 139
                                              Repayment
   1.       Any repayment due to be made to the general budget of the Union shall be
            effected before the due date indicated in the order for recovery drawn up in
            accordance with Article 73 of the Financial Regulation. The due date shall be
            the last day of the second month following the issuing of the order.
   2.       Any delay in effecting repayment shall give rise to interest on account of late
            payment, starting on the due date and ending on the date of actual payment. The
            rate of such interest shall be one-and-a-half percentage points above the rate
            applied by the European Central Bank in its main refinancing operations on the
            first working day of the month in which the due date falls.
                                           TITLE VIII
               Proportional control of operational programmes
                                                   Article 140
                           Proportional control of operational programmes
   1.       Operations for which the total eligible expenditure does not exceed
            EUR 100 000 shall not be subject to more than one audit by either the audit
            authority or the Commission prior to the closure of all the expenditure
            concerned under Article 131. Other operations shall not be subject to more than
            one audit per accounting year by the audit authority and the Commission prior to
            the closure of all the expenditure concerned under Article 131. These provisions
            are without prejudice to paragraph 4.
   2.       For operational programmes for which the most recent audit opinion indicates
            that there are no significant deficiencies, the Commission may agree with the
            audit authority in the subsequent meeting referred to in Article 118(3) that the
            level of audit work required may be reduced so that it is proportionate to the risk
            established. In such cases, the Commission will not carry out its own on-the-spot
   33
           OJ L 83, 27.3.1999, p. 1.
EN                                                   118                                        EN
 ---pagebreak---             audits unless there is evidence suggesting deficiencies in the management and
            control system affecting expenditure declared to the Commission in an
            accounting year for which the accounts have been the subject of a clearance
            decision.
   3.       For operational programmes for which the Commission concludes that it can
            rely on the opinion of the audit authority, it may agree with the audit authority to
            limit its own on the spot audits to audit the work of the audit authority unless
            there is evidence of deficiencies in the work of the audit authority work for an
            accounting year for which the accounts have been subject to a clearance
            decision.
   4.       Without prejudice to paragraph 1, the audit authority and the Commission may
            carry out audits of operations in case a risk assessment establishes a specific risk
            of irregularity or fraud, in case of evidence of serious deficiencies in the
            management and control system of the operational programme concerned, and,
            during the 3 years following closure of all the expenditure of an operation under
            Article 131, as part of an audit sample. The Commission may at any time carry
            out audits of operations for the purpose of assessing the work of an audit
            authority by re-performance of its audit activity.
                                       PART FOUR
           DELEGATIONS OF POWER, IMPLEMENTING,
               TRANSITIONAL AND FINAL PROVISIONS
                                        CHAPTER I
            Delegations of power and implementing provisions
                                            Article 141
                                  Amendment of the Annexes
   The Commission may adopt, by means of delegated acts in accordance with Article 142,
   amendments to the Annexes I and VI to this Regulation within the scope of the relevant
   provisions of this Regulation.
                                            Article 142
                                   Exercise of the delegation
   1.       The powers to adopt delegated acts are conferred on the Commission subject to
            the conditions laid down in this Article.
EN                                                119                                            EN
 ---pagebreak---    2. The delegations of power referred to in this Regulation shall be conferred for an
      indeterminate period of time from the date of entry into force of this Regulation.
   3. The delegations of power referred to in Articles 5(3), 12, 20(4), 29(6), 32(1),
      33(3), 33(4), 33(7), 34(3), 35(5), 36(4), 54(1), 58, 112(2), 114(8), 114(9),
      116(1), 117(1), 132(4), 136(6) and 141 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.
   4. As soon as it adopts a delegated act, the Commission shall notify it
      simultaneously to the European Parliament and to the Council.
   5. The delegated acts shall enter into force only if no objection has been expressed
      either by the European Parliament or the Council within a period of 2 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 2 months at the initiative of the European Parliament or the
      Council.
      If, on expiry of that period, neither the European Parliament nor the Council has
      objected to the delegated act, it shall be published in the Official Journal of the
      European Union and shall enter into force at the date stated therein.
      The delegated act may be published in the Official Journal of the European
      Union and enter into force before the expiry of that period if the European
      Parliament and the Council have both informed the Commission of their
      intention not to raise objections.
      If the European Parliament or the Council objects to a delegated act, the act shall
      not enter into force. The institution that objects to the delegated act shall state
      the reasons for its objections.
                                       Article 143
                                Committee Procedure
   1. The Commission shall be assisted by a Coordination Committee of the Funds.
      That committee shall be a committee within the meaning of Regulation (EU) No
      182/2011.
   2. Where reference is made to this paragraph, Article 4 of Regulation (EU) No
      182/2011 shall apply.
   3. Where reference is made to this paragraph, Article 5 of Regulation (EU) No
      182/2011 shall apply.
EN                                            120                                           EN
 ---pagebreak---              Where the opinion of the committee under paragraphs 2 and 3 is to be obtained
             by written procedure, that procedure shall be terminated without result when,
             within the time-limit for delivery of the opinion, the chair of the committee so
             decides or (…) [number of members] (a … majority of) [majority to be
             specified: simple, two-thirds, etc.] committee members so request.
             Where the committee delivers no opinion, the Commission shall not adopt the
             draft implementing act and the third subparagraph of Article 5(4) of Regulation
             (EU) No 182/2011 shall apply.
                                         CHAPTER II
                           Transitional and final provisions
                                             Article 144
                                               Review
   The European Parliament and the Council shall review this Regulation by 31 December
   20XX in accordance with Article 177 of the Treaty.
                                             Article 145
                                      Transitional provisions
   1.        This Regulation shall not affect the continuation or modification, including the
             total or partial cancellation, of the projects concerned, until their closure, or of
             assistance approved by the Commission on the basis of Regulation (EC) No
             1083/2006 or any other legislation applying to that assistance on 31 December
             2013.
   2.        Applications made under Council Regulation (EC) No 1083/2006 shall remain
             valid.
                                             Article 146
                                                Repeal
   1.        Council Regulation (EC) No 1083/2006 is hereby repealed with effect from 1
             January 2014.
   2.        References to the repealed Regulation shall be construed as references to this
             Regulation.
                                             Article 147
                                          Entry into force
   This Regulation shall enter into force on the day following that of its publication in the
   Official Journal of the European Union.
   This Regulation shall be binding in its entirety and directly applicable in all Member
   States.
EN                                                  121                                           EN
 ---pagebreak---    Done at Brussels,
   For the European Parliament For the Council
   The President               The President
EN                              122            EN
 ---pagebreak---                                               ANNEX I
     Common Strategic Framework elements related to the coherence and consistency with the
   economic policies of Member States and the Union, coordination mechanisms among the CSF
      Funds and with other relevant Union policies and instruments, horizontal principles and
         cross-cutting policy objectives and arrangements to address territorial challenges
   1.     Introduction
   In order to maximise the contribution of the CSF Funds to smart, sustainable and inclusive
   growth, thereby reducing disparities, it is necessary to ensure that policy commitments made
   in the context of the Europe 2020 strategy are underpinned by investment through the CSF
   Funds and other Union instruments. Member States shall thus identify how their
   programmes can contribute to the policy objectives and headline targets of the Europe 2020
   strategy and the flagship initiatives.
   2.     Coherence and Consistency with the Union's Economic Governance
   1.       Member States shall give particular attention to prioritising growth-friendly
            expenditure, including spending on education, research, innovation and energy
            efficiency and expenditure to facilitate the access of SMEs to finance and to ensure
            environmental sustainability, the management of natural resources and climate
            action, and to ensuring the effectiveness of such spending. They shall also take
            account of maintaining or reinforcing the coverage and effectiveness of employment
            services and active labour market policies, with a focus on youth unemployment.
   2.       In preparing their Partnership Contracts, Member States shall programme the CSF
            Funds taking into account the most recent relevant country-specific
            recommendations issued by the Council on the basis of Article 121(2) and Article
            148(4) of the Treaty on the Functioning of the European Union in accordance with
            their respective roles and obligations. Member States shall also take into account
            relevant Council recommendations based on the Stability and Growth Pact and the
            economic adjustment programmes. Each Member State shall set out in the
            Partnership Contract, in accordance with Article 14(a)(i) of this Regulation, how
            different Union and national funding streams contribute to addressing the challenges
            identified by the relevant country-specific recommendations concerned and the
            objectives set out in their National Reform Programmes in close consultation with
            the responsible regional and local authorities.
   3.     Coordination Mechanisms Among the CSF Funds
   3.1    Introduction
   1.       Member States shall ensure that the interventions supported through the CSF Funds
            are complementary and are implemented in a coordinated manner that leads to a
            reduction of administrative cost and burden on the ground.
EN                                             123                                           EN
 ---pagebreak---    3.2 Coordination and complementarity
   1.   Member States and managing authorities responsible for the implementation of the
        CSF Funds shall work closely together in the preparation, implementation,
        monitoring and evaluation of the Partnership Contract and programmes. In
        particular, they shall ensure that the following actions are carried out:
        (a)   identify areas of intervention where the CSF Funds can be combined in a
              complementary manner to achieve the thematic objectives set out in this
              Regulation;
        (b)   promote the involvement of managing authorities responsible for other CSF
              Funds or other managing authorities and relevant ministries in the
              development of support schemes to ensure coordination and avoid overlaps;
        (c)   establish, where appropriate, joint monitoring committees for programmes
              implementing the CSF Funds, and the development of other joint management
              and control arrangements to facilitate coordination between authorities
              responsible for the implementation of the CSF Funds;
        (d)   make use of joint eGovernance solutions aimed at applicants and beneficiaries,
              and "one-stop shops" for advice on the opportunities of support available
              through each of the CSF Funds;
        (e)   establish mechanisms to coordinate cooperation activities financed by the
              ERDF and the ESF with investments supported by the 'Investment for Growth
              and Jobs goal' programmes.
   3.3 Encouraging integrated approaches
   1.   Member States shall, where appropriate, combine the CSF Funds into integrated
        packages at local, regional or national level, which are tailor-made to address specific
        needs in order to support the achievement of the national Europe 2020 targets, and
        make use of Integrated Territorial Investments, Integrated Operations and Joint
        Action Plans.
   2.   Member States shall promote the development of local and sub-regional approaches,
        in particular via community-led local development by delegating decision-making
        and implementation to a local partnership of public, private and civil society actors.
        Community-led local development shall be implemented in the context of a strategic
        approach to ensure that the ‘bottom-up’ definition of local needs takes account of
        priorities set at a higher level. Member States shall therefore define the approach to
        community-led local development across the CSF Funds and shall indicate in the
        Partnership Contracts the main challenges to be tackled in this way, the main
        objectives and priorities for community-led local development, the types of
        territories to be covered, which specific role will be attributed to local action groups
        in the delivery of strategies and the role envisaged for the different CSF Funds in
        implementing local development strategies in different types of territories such as
        rural, urban and coastal areas and the corresponding co-ordination mechanisms.
EN                                          124                                              EN
 ---pagebreak---    4.    Coordination of CSF Funds with Other Union Policies and Instruments
   The Union programmes set out in this section do not constitute an exhaustive list.
   4.1   Introduction
   1.     Member States shall undertake an analysis of the impact of Union policies at
          national and regional level, and on social, economic and territorial cohesion with a
          view to fostering effective coordination and to identifying and promoting the most
          suitable means of using European funds to support local, regional and national
          investment.
   2.     Member States shall ensure consistency at programming and implementation stages
          between interventions supported by the CSF Funds and the objectives of other Union
          policies. To this end, they shall seek to take into account the following aspects:
          (a)   identify and exploit complementarities between different Union instruments at
                national and regional level, both in the planning phase and during
                implementation;
          (b)   optimise existing structures and where necessary, establish new ones that
                facilitate the strategic identification of priorities for the different instruments
                and structures for coordination at national level, avoid duplication of effort and
                identify areas where additional financial support is needed;
          (c)   make full use of the potential to combine support from different instruments to
                support individual operations and work closely with those responsible for
                implementing other national instruments to deliver coherent and streamlined
                funding opportunities for beneficiaries.
   4.2   Coordination with the Common Agricultural Policy and the Common Fisheries Policy
   1.     The EAFRD is an integral part of the Common Agricultural Policy and complements
          the measures under the European Agricultural Guarantee Fund which provide
          direct support to farmers and support market measures. Member States shall
          therefore manage these interventions together to maximise synergies and the added
          value of EU support.
   2.     The EMFF aims at achieving the objectives of the reformed Common Fisheries
          Policy and of the Integrated Maritime Policy. Member States shall therefore make
          use of the EMFF to support efforts to improve data collection and strengthen
          control, and ensure that synergies are also sought in support of the priorities of
          Integrated Maritime Policy, such as marine knowledge, maritime spatial planning,
          integrated coastal zone management, integrated maritime surveillance, the
          protection of the marine environment and of biodiversity, and the adaptation to the
          adverse effects of climate change on coastal areas.
EN                                             125                                              EN
 ---pagebreak---    4.3    Horizon 202034 and other centrally managed EU programmes in the areas of research
   and innovation
   1.      Member States and the Commission shall pay attention to strengthening
           coordination and complementarities between the CSF Funds and Horizon 2020, the
           Programme for the Competitiveness of Enterprises and small and medium-sized
           enterprises (COSME)35, and other relevant centrally managed Union funding
           programmes while also establishing a clear division of areas of intervention between
           them.
   2.      In particular, Member States shall develop national and/or regional research and
           innovation (R&I) strategies for ‘smart specialisation’ in line with the National
           Reform Programme. These strategies shall be developed through involving national
           or regional managing authorities and stakeholders such as universities and other
           higher education institutions, industry and social partners in an entrepreneurial
           discovery process. The authorities directly concerned by Horizon 2020 shall be
           closely associated to this process. Under these strategies (inter alia):
           (a)   "Upstream actions" to prepare regional R&I players to participate in Horizon
                 2020 ("staircase to excellence") shall be developed through capacity building.
                 Communication and cooperation between Horizon 2020 national contact points
                 and managing authorities of the CSF Funds shall be strengthened.
           (b)   "Downstream actions" shall provide the means to exploit and diffuse R&I
                 results, stemming from Horizon 2020 and preceding programmes, into the
                 market with particular attention on creating an innovation-friendly business
                 environment for SMEs and in line with the priorities identified for the
                 territories in the relevant smart specialisation strategy.
   3.      Member States shall make full use of the provisions in this regulation allowing for
           combining the CSF Funds with those under Horizon 2020 in the relevant
           programmes used to implement parts of the strategies. Joint support shall be
           provided to national and regional authorities for the design and implementation of
           such strategies, to identify opportunities for joint financing of R&I infrastructures of
           European interest, the promotion of international collaboration, methodological
           support through peer reviews, exchange of good practice, and training across
           regions.
   4.      Member States shall consider the following additional measures aimed at unlocking
           their potential for excellence in research and innovation, in a manner that is
           complementary to and creates synergies with Horizon 2020, in particular through
           joint funding:
           (a)   linking emerging centres of excellence and innovative regions in less developed
                 Member States to leading counterparts elsewhere in Europe;
   34
          COM(2011) 809 final
   35
          COM(2011) 834 final
EN                                              126                                            EN
 ---pagebreak---             (b)    building links with innovative clusters and recognising excellence in less
                   developed regions;
            (c)    establishing "ERA Chairs" to attract outstanding academics, in particular to
                   less developed regions;
            (d)    supporting access to international networks for researchers and innovators
                   who are less involved in the ERA or from less developed regions;
            (e)    contributing as appropriate to the European Innovation Partnerships;
            (f)    preparing national institutions and/or clusters of excellence for participation in
                   the Knowledge and Innovation Communities (KICs) of the European Institute
                   of Innovation and Technology (EIT); and
            (g)    hosting high-quality international researcher mobility programmes with co-
                   funding from the "Marie Sklodowska-Curie Actions".
   4.4    New Entrants Reserve (NER) 300 demonstration funding36
   Member States shall ensure, where appropriate, that financing from the CSF Funds is
   coordinated with support from the NER 300 Programme, which uses the revenues from
   auctioning 300 million allowances reserved under the new entrants reserve of the European
   Emissions Trading Scheme to co-finance a wide range of large-scale demonstration projects
   of carbon capture and storage (CCS) as well as of innovative renewables technologies across
   the EU.
   4.5    LIFE37 and the environmental acquis
   1.       Member States shall, where possible, seek to exploit synergies with Union policy
            instruments (both funding and non-funding instruments) serving climate change
            mitigation and adaptation, environmental protection and resource efficiency.
   2.       Member States shall, where appropriate, ensure complementarity and coordination
            with LIFE, in particular with Integrated Projects in the areas of nature, water,
            waste, air, climate change mitigation and climate change adaptation. This
            coordination shall be achieved in particular by promoting the funding of activities
            through the CSF Funds that complement Integrated Projects under the LIFE
            Programme as well as by promoting the use of solutions, methods and approaches
            validated under the LIFE Programme.
   3.       The relevant sectoral plans, programmes or strategies (including the Prioritised
            Action Framework, the River Basin Management Plan, the Waste Management
   36
          OJ L 290, 6.11.2010, p. 39–48 2010/670/EU: Commission Decision of 3 November 2010 laying down
          criteria and measures for the financing of commercial demonstration projects that aim at the
          environmentally safe capture and geological storage of CO2 as well as demonstration projects of
          innovative renewable energy technologies under the scheme for greenhouse gas emission allowance
          trading within the Community established by Directive 2003/87/EC of the European Parliament and of
          the Council (2010/670/EU) OJ L 275, 25.10.2003, p. 32–46.
   37
          COM(2011) 874 final
EN                                                 127                                                  EN
 ---pagebreak---         Plan, the national mitigation plan or adaptation strategy), as referred to in the LIFE
        Regulation, shall serve as the coordination framework for support from the different
        Funds.
   4.6 ERASMUS for All38
   1.   Member States shall seek to use CSF Funds to mainstream tools and methods
        developed and tested successfully under "Erasmus for All".
   2.   Member States shall ensure effective coordination between CSF Funds and ‘Erasmus
        for All’ at national level through a clear distinction in the types of investment and
        target groups supported. Member States shall seek complementarity with regards to
        the funding of mobility actions, while exploring possible synergies.
   3.   Coordination shall be achieved by putting in place appropriate cooperation
        mechanisms between managing authorities and the national agencies established
        under the ‘Erasmus for All’ programme.
   4.7 Programme for Social Change and Innovation (PSCI)39
   1.   Member States shall, where appropriate, seek effective coordination between the
        Programme for Social Change and Innovation and the support provided by the CSF
        Funds under the employment and social inclusion thematic objectives.
   2.   Member States shall, where appropriate, seek to scale-up the most successful
        measures developed under the progress axis of the PSCI, notably on social
        innovation and social policy experimentation with the support of the ESF.
   3.   In order to promote workers' geographical mobility and boost employment
        opportunities, Member States shall ensure complementarity of actions to enhance
        transnational labour mobility supported by the ESF, including cross-border
        partnerships, with support provided under the EURES axis of the PSCI.
   4.   Member States shall seek complementarity and coordination between CSF Funds'
        support for self-employment, entrepreneurship, business creation and social
        enterprises and the PSCI support under the microfinance and social
        entrepreneurship axis aimed at increasing the access to microfinance for people
        furthest away from the labour market and for micro-enterprises as well as
        supporting the development of social enterprises.
   4.8 Connecting Europe facility (CEF)40
   1.   The CEF is the dedicated Union fund for the implementation of the Union policies
        for Trans-European Transport Networks of infrastructure (TENs) in the field of
        transport, telecommunications and energy. To maximise European added value in
        these areas, Member States and the Commission shall ensure that ERDF and
        Cohesion Fund interventions are planned in close cooperation with the support
   38
       COM(2011) 788 final
   39
       COM(2011)609 final
   40
       COM(2011) 665 final
EN                                         128                                              EN
 ---pagebreak---          provided from the CEF, so as to avoid duplication of efforts and ensure that optimal
         links of different types of infrastructure at local, regional and national levels, and
         across the Union are provided for. Maximum leverage of the different funding
         instruments shall be ensured for projects with a European and Single Market
         dimension, and in particular those projects implementing the priority transport,
         energy and digital infrastructure networks as identified in the respective TEN policy
         frameworks.
   2.    In the field of transport, plans shall be based on real and projected transport
         demand and identify missing links and bottlenecks, taking into account the
         development of Union cross border links, and developing links across regions within
         a Member State. Investment in regional connectivity to the comprehensive trans-
         European transport network (TEN-T) and to the core TEN-T network shall ensure
         that urban and rural areas benefit from the opportunities created by major
         networks.
   3.    Prioritisation of investments which have an impact beyond a certain Member State,
         particularly along the core TEN-T network corridors, shall be coordinated with
         TEN-T planning and core network corridors implementation plans, so that
         investments by the ERDF and the Cohesion Fund in transport infrastructure are
         fully in line with the TEN-T Guidelines.
   4.    Member States shall take into account the Commission’s White Paper on
         Transport41 which sets out a vision for a competitive and resource-efficient transport
         system, highlighting that a significant reduction in greenhouse gases is required in
         the transport sector. For the CSF Funds, this means focusing on sustainable forms of
         transport and sustainable urban mobility as well as investing in areas that offer the
         greatest European added value. Once identified, investments shall be prioritised
         according to their contribution to mobility, sustainability, to reducing greenhouse
         gas emissions, and to the Single European Transport Area.
   5.    The CSF Funds shall deliver the local and regional infrastructures and their linkages
         to the priority Union networks in the energy and telecommunication areas.
   6.    Member States and the Commission shall put in place appropriate coordination and
         technical support mechanisms to ensure the complementarity and effective planning
         of ICT measures to make full use of the different Union instruments (CSF Funds
         CEF, Trans-European networks, Horizon 2020) for the financing of broadband
         networks and the digital service infrastructures. The selection of the most
         appropriate financing instrument shall take into account the revenue generating
         potential of the operation and its level of risk in order to make the most effective use
         of public funds. If an operation has been submitted for CEF funding but has not
         been selected, its evaluation under the CEF shall be taken into account by the
         Member State in the context of selection for support by the CSF Funds.
   4.9 IPA, ENI and EDF42
   41
       Roadmap to a Single European Transport Area – Towards a competitive and resource efficient
       transport system” COM 2011) 144 final.
   42
       COM(2011) 838 final; COM(2011) 839 final; COM(2011) 837 final.
EN                                            129                                             EN
 ---pagebreak---    1.      Member States and the Commission shall seek to increase coordination between
           external instruments and the CSF Funds to improve effectiveness in achieving
           multiple Union policy objectives. Coordination and complementarities with the
           European Development Fund, the Pre Accession Instrument and the European
           Neighbourhood Instrument is particularly important.
   2.      To support deeper territorial integration, Member States shall seek to capitalise on
           synergies between territorial cooperation activities under cohesion policy and the
           European Neighbourhood Instruments, in particular with regard to cross border
           cooperation activities. Member States shall also, where appropriate, ensure that
           existing activities are associated with newly created European Groupings of
           Territorial Cooperation, having special regard to coordination and exchange of best
           practices.
   5.    Coordination with Cooperation Activities
   1.      Member States shall seek complementarity between cooperation activities and other
           actions supported by the CSF Funds.
   2.      Member States shall ensure that cooperation activities make an effective
           contribution to the objectives of the Europe 2020 strategy and that cooperation is
           organised in support of wider policy goals. To achieve this Member States shall
           ensure complementarity and coordination with other Union-funded programmes or
           instruments.
   3.      To reinforce the effectiveness of cohesion policy Member States shall seek
           coordination and complementarity between the European Territorial Cooperation
           and the "Investment for Growth and Jobs goal" programmes, in particular to ensure
           coherent planning and facilitate the implementation of large-scale investment.
   4.      Member States shall, where appropriate, ensure that the objectives of macro-
           regional and sea-basin strategies form part of the overall strategic planning in
           cohesion policy programmes in the regions and Member States concerned. Member
           States shall also ensure that where macro-regional and sea basin strategies have been
           put in place, all the CSF Funds, where appropriate, support their implementation.
           To ensure efficient implementation there shall also be coordination with other
           Union-funded instruments as well as other relevant instruments.
   5.      Member States shall, where appropriate, make use of the possibility to carry out
           interregional and transnational actions with beneficiaries located in at least one
           other Member State within the framework of the operational programmes under the
           "Investment for Growth and Jobs goal", including the implementation of relevant
           research and innovation measures emanating from their smart specialisation
           strategies.
   6.    Horizontal Principles and Cross-cutting Policy Objectives
   A. Horizontal principles
   6.1   Partnership and multi-level governance
EN                                            130                                            EN
 ---pagebreak---    In accordance with Article 5, the principle of partnership and multi-level governance shall be
   respected by Member States in order to facilitate achieving social, economic and territorial
   cohesion and delivery of the Union's priorities of smart, sustainable and inclusive growth.
   This requires coordinated action carried out in accordance with the principles of subsidiarity
   and proportionality, and in partnership. It also shall take the form of operational and
   institutionalised cooperation, in particular with regard to the drawing-up and
   implementation of the Union's policies. Member States shall therefore make full use of the
   partnerships established in the framework of the CSF Funds.
   6.2     Sustainable development
   1.       To ensure the full mainstreaming of sustainable development into the CSF Funds,
            and respecting the principle of sustainable development as laid down in Article 3 of
            the Treaty on European Union, the obligation to integrate environmental protection
            requirements according to Article 11 and the polluter pays principle as set out in
            Article 192 of the Treaty on the Functioning of the European Union, managing
            authorities shall undertake actions throughout the programme lifecycle, to avoid or
            reduce environmentally harmful effects of interventions and ensure results in net
            social, environmental and climate benefits by the following actions:
            (a)   directing investments towards the most resource-efficient and sustainable
                  options,
            (b)   avoiding investments that may have a significant negative environmental or
                  climate impact, and supporting actions to mitigate any remaining impacts,
            (c)   taking a long-term perspective when ‘life-cycle’ costs of alternative options for
                  investment are compared,
            (d)   increasing the use of green public procurement.
   2.       Member States shall ensure that investments made with the support of the CSF
            Funds consider climate change mitigation potential, as well as be resilient to the
            impact of climate change and natural disasters such as increased risks of flooding,
            heat waves and extreme weather events.
   3.       Member States shall track biodiversity related expenditure using the methodology
            based on the categories of intervention or measures adopted by the Commission.
   4.       Investments also need to be consistent with the water hierarchy, with a focus on
            demand management options with alternative supply options only to be considered
            when the potential for water savings and efficiency has been exhausted. Public
            intervention in the waste management sector shall complement efforts by the private
            sector, in particular producer responsibility. Actions should support innovative
            approaches that promote a closed-loop economy and need to be consistent with the waste
            hierarchy.
   6.3     Promotion of equality between men and women and non-discrimination
EN                                             131                                              EN
 ---pagebreak---    1.      In accordance with Article 7, Member States shall pursue the objective of equality
           between men and women and must take appropriate steps to prevent any
           discrimination and to ensure accessibility during the preparation, implementation,
           monitoring and evaluation of operations in the programmes co-financed by the CSF
           Funds. When pursuing the objectives of Article 7, Member States shall describe in
           detail actions to be taken, in particular with regard to selection of operations, setting
           of objectives for interventions, and arrangements for monitoring and reporting.
           Member States shall also carry out gender analyses where appropriate.
   2.      Member States shall ensure the participation of the relevant bodies responsible for
           promoting gender equality, non-discrimination and accessibility in the partnership,
           and ensure adequate structures in accordance with national practices to advise on
           gender equality, non-discrimination and accessibility in order to provide the
           necessary expertise in the preparation, monitoring and evaluation of the CSF Funds.
           The composition of the monitoring committees shall be gender balanced and include
           a gender expertise/responsibility function.
   3.      Managing authorities shall regularly undertake specific evaluations or self-
           assessment exercises, in coordination with the monitoring committees, focusing on
           the application of the gender mainstreaming principle.
   4.      Member States shall address, in an appropriate manner, the needs of disadvantaged
           groups in order to allow them to better integrate into the labour market, and to fully
           participate in society.
   B. Cross-cutting policy objectives
   6.4   Accessibility
   1.      Managing authorities shall ensure that all products, goods, services and
           infrastructures that are open or provided to the public and are co-financed by the
           CSF Funds are accessible to all citizens including those with disabilities. In
           particular, accessibility to the physical environment, transport, information and
           communication technologies in order to achieve inclusion for disadvantaged groups,
           including persons with disabilities has to be ensured. Managing authorities shall
           undertake actions throughout the programme lifecycle to identify and remove
           existing accessibility barriers or prevent new ones.
   6.5   Addressing demographic change
   1.      The challenges resulting from demographic change shall be taken into account at all
           levels. Member States shall therefore make use of the CSF Funds to develop tailor-
           made strategies, where appropriate, to tackle demographic problems and to create
           growth linked to an ageing society.
   2.      Member States shall use the CSF Funds to take action to facilitate inclusion of all age
           groups. They shall in particular enhance job opportunities for the elderly and young
           people. Investments in health infrastructures shall serve the goal of a long and
           healthy working life for all of the Union’s citizens.
EN                                             132                                               EN
 ---pagebreak---    3.      In the regions most affected by demographic change, Member States shall identify
           measures to:
           (a)    support demographic renewal through better conditions for families and an
                  improved balance between working and family life;
           (b)    boost employment, raise productivity and economic performance through
                  investing in education, ICT and research;
           (c)    focus on the adequacy and quality of education and social support structures;
                  and
           (d)    ensure cost-effective provision of health care and long-term care including
                  investment in e-health, e-care and infrastructure.
   6.6    Climate change mitigation and adaptation
   Climate change mitigation and adaptation and risk prevention shall be integrated in the
   preparation, programming, implementation, monitoring and evaluation of all funds.
   The visibility of contributions towards the goal of a spending of at least 20% of the Union
   budget on climate change mitigation shall be ensured.
   7. Arrangements to Address Territorial Challenges
   7.1.   Member States and regions shall undertake the following steps for the purpose of
   preparation of their Partnership Contracts and programmes:
           (a)    An analysis of the Member State’s or region’s development potential and
                  capacity, particularly in relation to the key challenges identified in Europe
                  2020, the National Reform Programmes and the relevant country-specific
                  recommendations. The responsible authorities shall undertake a detailed
                  analysis of national, regional and local characteristics;
           (b)    An assessment of the major challenges to be addressed by the region or
                  Member State, the identification of the bottlenecks and missing links,
                  innovation gaps, including the lack of planning and implementation capacity
                  that inhibit the long-term potential for growth and jobs. This shall form the
                  basis for the identification of the possible fields and activities for policy
                  prioritisation, intervention and concentration;
           (c)    An assessment of the cross-sectoral, cross-jurisdictional or cross-border
                  coordination challenges, particularly in the context of macro-regional and sea-
                  basin strategies;
           (d)    Identification of steps to achieve improved coordination across different
                  territorial levels and sources of funding to deliver an integrated approach
                  linking Europe 2020 with regional and local actors.
EN                                              133                                           EN
 ---pagebreak---    7.2.   In order to take into account the objective of territorial cohesion, the Member States
   and regions shall ensure that the overall approach to promoting smart, sustainable and
   inclusive growth:
            (a)  reflects the role of cities, rural areas fisheries and coastal areas, areas facing
                 specific geographical or demographic problems;
            (b)  takes account of the specific challenges of the outermost regions, the
                 northernmost regions with a very low population density and of island, cross-
                 border or mountain regions;
            (c)  addresses urban-rural linkages, in terms of access to affordable, quality
                 infrastructures and services, and problems in regions with a high concentration
                 of socially marginalised communities.
EN                                              134                                             EN
 ---pagebreak---                                                   ANNEX II
                          Method for establishing the performance framework
   1.       The performance framework shall consist of milestones established for each priority for
            the years 2016 and 2018 and targets established for 2022. The milestones and targets shall
            be presented in accordance with the format set out in table 1.
   Table 1: Standard format for the performance framework
   Priority          Indicator       and Milestone        for Milestone      for Target for 2022
                     measurement unit, 2016                    2018
                     where appropriate
   2.       Milestones are intermediate targets for the achievement of the specific objective of a
            priority, expressing the intended progress towards the targets set for the end of the period.
            Milestones established for 2016 shall include financial indicators and output indicators.
            Milestones established for 2018 shall include financial indicators, output indicators and
            where appropriate, result indicators. Milestones may also be established for key
            implementation steps.
   3.       Milestones shall be:
            –      relevant, capturing essential information on the progress of a priority;
            –      transparent, with objectively verifiable targets and the source data identified and
                   publicly available;
            –      verifiable, without imposing a disproportionate administrative burden;
            –      consistent across operational programmes, where appropriate.
EN                                                 135                                                EN
 ---pagebreak---                                ANNEX III
       Annual breakdown of commitment appropriations for 2014 to 2020
   […]
EN                              136                                   EN
 ---pagebreak---                                                            ANNEX IVII
                                                           Additionality
   1.         PUBLIC OR EQUIVALENT STRUCTURAL EXPENDITURE
   The figure on Gross Fixed Capital Formation in column X-1, expressed as a share of GDP,
   according to Table 2 of Annex 2 of the "Guidelines on the format and content of Stability and
   Convergence Programmes"43, will be used to determine public or equivalent structural expenditure.
   2.         VERIFICATION
   Verifications of additionality in accordance with Article 86(3) are subject to the following rules:
   2.1      Ex-ante verification
   (a)        When a Member State submits a Partnership Contract, it shall provide information on the
              planned profile of expenditure in the format of Table 1 below. In those Member States in
              which less developed and intermediate regions cover more than 15% and less than 70% of
              the population, information about the expenditure in [less developed and intermediate
              regions] shall be provided in the same format.
            Table 1
   Expenditure      2014 2015 2016                 2017      2018 2019 2020
       of the
      General
   Government
   as a share of
       GDP
       P51            X          X       X           X         X    X    X
   (b)        Member State shall provide to the Commission information on the main macroeconomic
              indicators and forecasts underlying the level of public or equivalent structural expenditure.
   (c)        Once there is agreement by the Commission and the Member State, Table 1 above will be
              included in the Partnership Contract of the Member State concerned as the reference level
              of the public or equivalent structural expenditure to be maintained in the years 2014-2020.
   2.2      Mid-term verification
   (a)        At the time of the mid-term verification, a Member State shall be deemed to have
              maintained the level of public or equivalent structural expenditure if the annual average of
              expenditure in the years 2014-2017 is equal to or higher than the reference level of
              expenditure set in the Partnership Contract.
   (b)        Following the mid-term verification, the Commission may revise, in consultation with a
              Member State, the reference level of public or equivalent structural expenditure in the
   43
            As endorsed by the ECOFIN Council on 7 September 2010.
EN                                                             137                                      EN
 ---pagebreak---              Partnership Contract if the economic situation of the Member State has significantly
             changed since adoption of the Partnership Contract and the change was not taken into
             account when setting the reference level in the Partnership Contract.
   2.3     Ex post verification
   At the time of the ex post verification, a Member State shall be deemed to have maintained the
   level of public or equivalent structural expenditure if the annual average of expenditure in the years
   2014-2020 is equal to or higher than the reference level of expenditure set in the Partnership
   Contract.
   3.        FINANCIAL CORRECTION RATES FOLLOWING EX POST VERIFICATION
   Where the Commission decides to carry out a financial correction in accordance with Article 86(4),
   the rate of financial correction shall be obtained by subtracting 3% from the difference between the
   reference level in the Partnership Contract and the level achieved, expressed as a percentage of the
   reference level, and then dividing the result by 10. The financial correction shall be determined by
   applying that rate of financial correction to the Funds' contribution to the Member State concerned
   for the less developed and transition regions for the full programming period.
   If the difference between the reference level in the Partnership Contract and the level achieved,
   expressed as a percentage of the reference level in the Partnership Contract, is 3 % or less, no
   financial correction shall be made.
   The financial correction shall not exceed 5 % of the Funds' allocation to the Member State
   concerned for the less developed and transition regions for the full programming period.
EN                                                 138                                                EN
 ---pagebreak---                                                                                                     ANNEX IV
                                                                                           Ex ante conditionalities
                                                                                    Thematic ex ante conditionalities
       Thematic                       Ex ante conditionality                                                                      Criteria for fulfilment
       objectives
  1. Strengthening         1.1. Research and innovation: The
  research,                existence of a national or regional
                                                                               –            A national or regional research and innovation strategy for smart specialisation is in
  technological            research and innovation strategy for                             place that:
  development and          smart specialisation in line with the
  innovation (R&D          National Reform Program, to leverage                             –        is based on a SWOT analysis to concentrate resources on a limited set of research
  target)                  private      research       and      innovation                           and innovation priorities;
  (referred to        in   expenditure, which complies with the
  Article 9(1) )           features of well-performing national or                          –        outlines measures to stimulate private RTD investment;
                           regional research and innovation
                           systems44.
                                                                                            –        contains a monitoring and review system.
                                                                               –            A Member State has adopted a framework outlining available budgetary resources for
                                                                                            research and innovation;
                                                                               –            A Member State has adopted a multi-annual plan for budgeting and prioritization of
                                                                                            investments linked to EU priorities (European Strategy Forum on Research
                                                                                            Infrastructures -ESFRI).
  2.        Enhancing      2.1. Digital growth: The existence within
  access to and use        the national or regional innovation                 –            A chapter for digital growth within the national or regional innovation strategy for
  and quality of           strategy for smart specialisation of an
  44
            Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Europe 2020 Flagship Initiative Innovation Union
            (COM(2010) 546 final of 6.10.2010). Commitments 24/25 and Annex I "Self assessment tool: Features of well performing national and regional research and innovations systems". Conclusions of the
            Competitiveness Council: Conclusions on Innovation Union for Europe (doc. 17165/10 of 26.11.2010).
EN                                                                                                        139                                                                                                     EN
 ---pagebreak---   information       and     explicit chapter for digital growth to                          smart specialisation is in place that contains:
  communication             stimulate demand for affordable, good
  technologies              quality and interoperable ICT-enabled                           –      budgeting and prioritisation of actions through a SWOT analysis carried out in
  (Broadband                private and public services and increase
  target)                   uptake by citizens, including vulnerable                               alignment with the Scoreboard of the Digital Agenda for Europe45;
  (referred to         in   groups,      businesses        and       public
                            administrations including cross border                          –      an analyses of balancing support for demand and supply of information and
  Article 9(2) )
                            initiatives.                                                           communication technologies (ICT) should have been conducted;
                                                                                            –      measurable targets for outcomes of interventions in the field of digital literacy,
                                                                                                   skills, e-inclusion, e-accessibility, and e-health which are aligned with existing
                                                                                                   relevant sectoral national or regional strategies.
                                                                                            –      assessment of needs to reinforce ICT capacity-building.
                            2.2. Next Generation Access (NGA)
                                                                               –            A national NGA Plan is in place that contains:
                            Infrastructure: The existence of national
                            NGA Plans which take account of
                            regional actions in order to reach the EU                       –      a plan of infrastructure investments through demand aggregation and a mapping
                            high-speed Internet access targets46,                                  of infrastructure and services, regularly updated;
                            focusing on areas where the market fails
                            to provide an open infrastructure at an                         –      sustainable investment models that enhance competition and provide access to
                            affordable cost and to an adequate                                     open, affordable, quality and future proof infrastructure and services;
                            quality in line with the EU competition
                            and state aid rules, and provide
                            accessible services to vulnerable groups.                       –      measures to stimulate private investment.
  3. Enhancing the          3.1. Specific actions have been carried
  competitiveness of        out for the effective implementation of
                                                                               –            The specific actions include:
  45
           Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A Digital Agenda for Europe (COM(2010) 245
           final/2 of 26.8.2010); Commission Staff Working Paper: Digital Agenda Scoreboard (SEC(2011) 708 of 31.5.2011). Conclusions of the Transport, Telecommunications and Energy Council on the Digital Agenda for
           Europe (doc. 10130/10 of 26 May 2010)
  46
           Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A Digital Agenda for Europe (COM(2010) 245
           final/2 of 26.8.2010); Commission Staff Working Paper: Digital Agenda Scoreboard (SEC(2011) 708 of 31.5.2011).
EN                                                                                                      140                                                                                                          EN
 ---pagebreak---   small and medium-         the Small Business Act (SBA) and its
  sized enterprises         Review of 23 February 201147 including                           –       a monitoring mechanism to ensure the implementation of the SBA including a
  (SMEs)                    the "Think Small First" principle.                                       body in charge of coordinating SME issues across different administrative levels
                                                                                                     (“SME Envoy”);
  (referred to        in
  Article 9(3))
                                                                                             –       measures to reduce the time to set-up business to 3 working days and the cost to
                                                                                                     €100;
                                                                                             –       measures to reduce the time needed to get licenses and permits to take up and
                                                                                                     perform the specific activity of an enterprise to 3 months;
                                                                                             –       a mechanism for systematic assessment of the impact of legislation on SMEs
                                                                                                     using an "SME test" while taking into account differences in the size of
                                                                                                     enterprises, where relevant.
                            3.2. Transposition into national law of
                                                                                –            Transposition of that Directive in accordance with Article 12 of the Directive (by 16
                            Directive (2011/7/EU) of the European
                            Parliament and of the Council of                                 March 2013).
                            16 February 2011 on combating late
                            payment in commercial transactions48.
  4. Supporting the         4.1. Energy efficiency: Transposition into
                                                                                –            Implementation of minimum requirements related to the energy performance of
  shift towards a           national law of Directive (2010/31/EU)
  low-carbon                of the European Parliament and of the                            buildings required in line with Article 3, Article 4 and Article 5 of Directive
  economy in all            Council of 19 May 2010 on the energy                             2010/31/EU
  sectors                   performance of buildings in accordance
                            with Article 28 of the Directive 49.                –            Adoption of measures necessary to establish a system of certification of the energy
  (referred     to    in    Compliance       with     Article     6(1)    of                 performance of buildings in accordance with Article 11 of Directive 2010/31/EU;
  47
            Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Think Small First - A Small Business Act for Europe
            (COM(2008) 394 of 23.6.2008); Conclusions of the Competitiveness Council: Think Small First – A Small Business Act for Europe (doc. 16788/08, 1.12.2008); Communication from the Commission to the European
            Parliament, the Council, the Economic and Social Committee and the Committee of the Regions: Review of the "Small Business Act" for Europe (COM(2008) 78 final, 23.2.2011); Conclusions of the
            Competitiveness Council: Conclusions on the Review of the "Small Business Act" for Europe (doc. 10975/11 of 30.5.2011).
  48
            OJ L 48, 23.2.2011, p. 1.
  49
            OJ L 153, 18.6.2010, p. 13
  50
            OJ L 140, 5.6.2009, p. 136.
  51
            OJ L 114, 27.4.2006, p. 64.
EN                                                                                                         141                                                                                                       EN
 ---pagebreak---   Article 9(4))            Decision No 406/2009/EC of the
                           European Parliament and of the Council   – Realisation of the required rate of renovation of public buildings;
                           of 23 April 2009 on the effort of
                           Member States to reduce their            – Final customers are provided with individual meters;
                           greenhouse gas emissions to meet the
                           Community’s greenhouse gas emission      – Efficiency in heating and cooling is promoted according to Directive 2004/8/EC.
                           reduction commitments up to 202050.
                           Transposition into national law of
                           Directive 2006/32/EC of the European
                           Parliament and of the Council of 5 April
                           2006 on energy end-use efficiency and
                           energy services51.
                           Transposition into national law of
                           Directive 2004/8/EC of the European
                           Parliament and of the Council of 11
                           February 2004 on the promotion of
                           cogeneration based on a useful demand
                           in the internal energy market and
                           amending Directive 92/42/EEC52.
                           4.2. Renewable energy: Transposition
                           into national law of Directive
                                                                    – A Member State has put in place transparent support schemes, priority in grid access
                           2009/28/EC of the European Parliament      and in dispatching, standard rules relating to the bearing and sharing of costs of
                           and of the Council of 23 April 2009 on     technical adaptations which have been made public;
                           the promotion of the use of energy from
                           renewable sources and amending and       – A Member State has adopted a national renewable energy action plan in accordance
                           subsequently      repealing   Directives   with Article 4 of Directive 2009/28/EC.
                           (2001/77/EC) and (2003/30/EC)53.
  52
           OJ L 52, 21.2.2004, p.50.
  53
           OJ L 140, 5.6.2009, p. 16.
EN                                                                              142                                                                      EN
 ---pagebreak---   5.       Promoting       5.1.      Risk    prevention         and     risk
                                                                                –            A national or regional risk assessment shall be in place that includes:
  climate      change      management: The existence of national
  adaptation and risk      or regional risk assessments for disaster
  prevention               management. taking into account climate                           –        A description of the process, methodology, methods and non-sensitive data used
  (Climate     change      change adaptation54                                                        for national risk assessment;
  target)
                                                                                             –        A description of single-risk and multi-risk scenarios;
  (referred to       in
  Article 9(5)
                                                                                             –        Taking into account, where appropriate, national climate change adaptation
                                                                                                      strategies.
  6. Protecting the        6.1. Water sector: The existence of a) a
                                                                                  –          A Member State has ensured contribution of the different water uses to the recovery of
  environment and          water pricing policy which provides
  promoting        the     adequate incentives for users to use                               the costs of water services by sector in accordance with Article 9 of Directive
  sustainable use of       water resources efficiently and b) an                              2000/60/EC.
  resources                adequate contribution of the different
  (referred to       in    water uses to the recovery of the costs of             –          The adoption of a river basin management plan for the river basin district where
  Article 9(6) )           water services, in accordance with                                 investments will take place in accordance with Article 13 of Directive 2000/60/EC of
                           Article 9 of Directive 2000/60/EC of the
                           European Parliament and of the Council
                                                                                              the European Parliament and of the Council of 23 October 2000 establishing a
                           of 23 October 2000 establishing a                                  framework for Community action in the field of water policy56.
                           framework for Community action in the
                           field of water policy55.                                          –
                           6.2. Waste sector: Implementation of
                                                                                –            A Member State has reported to the Commission on progress towards targets of Article
                           Directive 2008/98/EC of the European
                           Parliament and of the Council of 19                               11 of Directive 2008/98/EC, reasons for failure, and intended actions to meet the
                           November 2008 on waste and repealing                              targets;
                           certain Directives57, in particular the
                           development of waste management plans                –            A Member State has ensured that its competent authorities establish, in accordance
                           in accordance with the Directive and                              with Articles 1, 4, 13 and 16 of Directive 2008/98/EC, one or more waste management
                           with the waste hierarchy..
                                                                                             plans as required by Article 28 of the Directive;
  54
           Conclusions of the Justice and Home Affairs Council; 11-12 April 2011, Conclusion on further developing risk assessments for disaster management in the European Union.
  55
           OJ L 327, 22.12.2000, p. 1.
  56
           OJ L 327, 22.12.2000, p. 1.
  57
           OJ L 312, 22.11.2008, p. 3.
EN                                                                                                         143                                                                     EN
 ---pagebreak---                                                                  – No later by 12 December 2013, a Member State has established, in accordance with
                                                                   Articles 1 and 4 of Directive 2008/98/EC, waste prevention programmes, as required
                                                                   by Article 29 of the Directive;
                                                                 – A Member State has taken necessary measures to achieve 2020 target on re-use and
                                                                   recycling in accordance with Article 11 of Directive 2008/98/EC.
  7.        Promoting 7.1. Road: The existence of a
                                                                 – A comprehensive transport plan is in place that contains:
  sustainable         comprehensive national transport plan
  transport       and which       contains    an     appropriate
  removing            prioritisation of investments in the core    –     prioritisation of investments in the core TEN-T network, the comprehensive
  bottlenecks in key  Trans European Network of Transport                network and secondary connectivity. The prioritisation should take into account
  network             Infrastructure (TEN-T) network, in the             the contribution of investments to mobility, sustainability, the reduction of
  infrastructures     comprehensive network (investments                 greenhouse gas emissions and contribution to the Single European transport area;
  (referred to     in other than the core TEN-T) and in
                      secondary connectivity (including public
  Article 9(7) )
                      transport at regional and local level).
                                                                   –     a realistic and mature project pipeline (including timetable, budgetary
                                                                         framework);
                                                                   –     a strategic environmental assessment fulfilling the legal requirements for the
                                                                         transport plan;
                                                                   –     measures to strengthen capacity of intermediary bodies and beneficiaries to
                                                                         deliver the project pipeline.
                      7.2. Railway: The existence within the
                      comprehensive national transport plan of
                                                                 – A chapter on railway development within the comprehensive transport plan is in place
                      an explicit chapter on railway               that contains:
                      development       which     contains    an
                      appropriate prioritisation of investments    –     a realistic and mature project pipeline (including a timetable, budgetary
                      in the core Trans European Network of              framework);
                      Transport      Infrastructure     (TEN-T)
                      network, in the comprehensive network        –     a strategic environmental assessment fulfilling the legal requirements for the
                      (investments other than the core TEN-T)
                      and in secondary connectivity of the
                                                                         transport plan;
                      railway system according to their
                      contributions to mobility, sustainability,   –     measures to strengthen capacity of intermediary bodies and beneficiaries to
EN                                                                           144                                                                        EN
 ---pagebreak---                            national and European wide network                                       deliver the project pipeline.
                           effects. The investments cover mobile
                           assets and interoperability and capacity
                           building.
  8.       Promoting       8.1. Access to employment for job-
                                                                               –            Employment services have the capacity to and do deliver:
  employment and           seekers and inactive people, including
  supporting labour        local employment initiatives and support
  mobility                 for labour mobility: Active labour                               –       personalised services and active and preventive labour market measures at an
  (Employment              market policies are designed and                                         early stage, which are open for all jobseekers;
  target)                  delivered in coherence with the
                           Employment guidelines58;                                         –       anticipating and counselling on long-term employment opportunities created by
  (referred to       in
  Article 9(8) )
                                                                                                    structural shifts in the labour market such as the shift to a low carbon economy;
                                                                                            –       transparent and systematic information on new job vacancies.
                                                                               –            Employment services have set up networks with employers and education institutes.
                           8.2.                    Self-employment, –                       A comprehensive strategy in place which includes:
                           entrepreneurship and business
                           creation: the existence of a                                     –       measures to reduce the time to set up businesses to three working days and the
                           comprehensive              strategy         for                          cost to EUR 100;
                           inclusive start-up support in
                           accordance with the Small                                        –       measures to reduce the time needed to get licenses and permits to take up and
                           Business Act59 and in coherence with                                     perform the specific activity of an enterprise business to three months;
                           the Employment guidelines and the
                           Broad Guidelines for the economic                                –       actions linking suitable business development services and financial services
                           policies of the Member States and of the                                 (access to capital), including the outreach to disadvantaged groups and areas.
                           Union60,      regarding       the      enabling
                           conditions for job creation.
  58
           Council decision (2010/707/EU) of 21 October 2010, OJ L 308, 24.11.2010, p.46.
  59
           Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Think Small First - A Small Business Act for Europe
           (COM(2008) 394 of 23.6.2008); Conclusions of the Competitiveness Council: Think Small First – A Small Business Act for Europe (doc. 16788/08, 1.12.2008); Communication from the Commission to the European
           Parliament, the Council, the Economic and Social Committee and the Committee of the Regions: Review of the "Small Business Act" for Europe (COM(2008) 78 final, 23.2.2011); Conclusions of the
           Competitiveness Council: Conclusions on the Review of the "Small Business Act" for Europe (doc. 10975/11 of 30.5.2011).
  60
           Council Recommendation (2010/410/EU) of 13 July 2010, OJ L 191, 23.07.2010, p. 28.
EN                                                                                                        145                                                                                                       EN
 ---pagebreak---                       8.3. Modernisation and strengthening of
                      labour market institutions , including
                                                                             –             Actions to reform employment services, aiming at providing them the capacity to
                      actions to enhance transnational labour                              deliver62:
                      mobility61:
                      - Labour         market institutions are                             –        personalised services and active and preventive labour market measures at an
                      modernised         and       strengthened          in                         early stage, which are open for all jobseekers;
                      accordance        with the Employment
                      Guidelines;                                                          –        counselling on long-term employment opportunities created by structural shifts in
                      - Reforms of labour market institutions
                                                                                                    the labour market such as the shift to the low carbon economy;
                      will be preceded by a clear strategy and
                      ex ante assessment including the gender                              –        transparent and systematic information on new job opening accessible at Union
                      dimension                                                                     level.
                                                                             –             Reform of employment services will include the creation of networks with employers
                                                                                           and education institutes.
                      8.4. Active and healthy ageing: Active
                                                                             –             Actions to deliver on active and healthy ageing challenges64:
                      ageing policies are designed and
                      delivered in accordance with the
                      Employment Guidelines63                                              –        relevant stakeholders are involved in the design and implementation of active
                                                                                                    ageing policies;
                                                                                           –        a Member State has measures in place to promote active ageing and to reduce
                                                                                                    early retirement.
                      8.5. Adaptation of workers, enterprises
                      and entrepreneurs to change: The
                                                                             –             Effective instruments are in place to support social partners and public authorities to
                      existence of policies aimed at favouring                             develop proactive approaches towards change and restructuring.
                      anticipation and good management of
                      change and restructuring at all relevant
  61
     If a country specific Council Recommendation is in place, directly linked to this conditionality provision, then the assessment of its fulfilment will take account of the assessment of progress made on the country
     specific Council Recommendation.
  62
     Deadlines for delivery on all elements here contained in this section may expire during the programme implementation period.
  63
     If a Country Specific Council Recommendation is in place, directly linked to this conditionality provision, then the assessment of its fulfilment will take account of the assessment of progress made on the country
     specific Council Recommendation.
  64
     Deadlines for the achievement of delivery on all the elements contained in this section may expire during the programme implementation period.
EN                                                                                                       146                                                                                                            EN
 ---pagebreak---                            levels (national, regional, local and
                           sectoral) 65.
  9. Investing in          9.1. Early school leaving: The existence       –            A system for collecting and analysing data and information on ESL at national,
  skills,   education      of a comprehensive strategy to reduce
  and         lifelong                                                                 regional and local level is in place that:
                           early school leaving (ESL) in accordance
  learning                 with Council Recommendation of 28
  (Education target)       June 2011 on policies to reduce early                       –       provides a sufficient evidence-base to develop targeted policies;
  (referred to       in    school leaving66.
  Article 9(10)                                                                        –       is used systematically to monitor developments at the respective level.
                                                                          –            A strategy on ESL is in place that:
                                                                                       –       is based on evidence;
                                                                                       –       is comprehensive (e.g. covering all educational sectors including early childhood
                                                                                               development) and adequately addresses prevention, intervention and
                                                                                               compensation measures;
                                                                                       –       sets out objectives that are consistent with the Council Recommendation on
                                                                                               policies to reduce early school leaving;
                                                                                       –       cuts across-sectors, and involves and coordinates all policy sectors and
                                                                                               stakeholders that are relevant to address ESL.
                           9.2. Higher education: The existence of
                                                                          –            A national or regional strategy for tertiary education is in place that includes:
                           national or regional strategies for
                           increasing tertiary education attainment,
                           quality and efficiency in accordance with                   –       measures to increase participation and attainment that:
                           the Communication of the Commission
                           of 20 September 2011 on the                                         –      improve guidance provided to prospective students;
  65
           Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committtee of the Regions – A shared commitment for employment –
           COM(2009)257 Final.
  66
           OJ C 191, 1.7.2011, p. 1.
EN                                                                                                  147                                                                                                EN
 ---pagebreak---                      modernisation of            Europe's     higher
                     education systems67.                                                      –        increase higher education participation among low income groups and
                                                                                                        other under-represented groups.
                                                                                               –        increase participation by adult learners;
                                                                                               –        (where necessary) reduce drop-out rates/improve completion rates;
                                                                                      –        measures to increase quality that:
                                                                                               –        encourage innovative content and programme design;
                                                                                               –        promotes high standards of quality in teaching;
                                                                                      –        measures to increase employability and entrepreneurship that:
                                                                                               –        encourage the development of "transversal                       skills",   including
                                                                                                        entrepreneurship in all higher education programmes;
                                                                                               –        reduce gender differences in terms of academic and vocational choices and
                                                                                                        encouraging students to choose careers in sectors were they are under
                                                                                                        represented in order to reduce the gender segregation of the labour market.
                                                                                               –        ensure informed teaching using                     knowledge from     research   and
                                                                                                        developments in business practices.
                     9.3. Lifelong learning: The existence of
                                                                         –            A national or regional policy framework for lifelong learning is in place that contains:
                     a national and/or regional policy
                     framework for lifelong learning in line
                     with Union level policy guidance68.                              –        measures to support lifelong learning (LLL) implementation and skills upgrading
                                                                                               and providing for the involvement of, and partnership with stakeholders,
                                                                                               including social partners and civil society associations;
  67
     COM (2011)567 final.
  68
     Council conclusions of 12 May 2009 on a strategic framework for European cooperation in education and training ("ET 2020") (OJ C 119, 28.5.2009, p.2)
EN                                                                                                   148                                                                                   EN
 ---pagebreak---    – measures for the effective provision of skills development for young people in
     vocational training, adults, women returning in the labour market, low skilled
     and older workers, and other disadvantaged groups;
   – measures to widen access to LLL including through the effective implementation
     of transparency tools (European Qualifications Framework, National
     Qualifications Framework, European Credit system for Vocational Education and
     Training, European Quality Assurance in Vocational Education and Training)
     and the development and integration of lifelong learning services (education and
     training, guidance, validation);
   – measures to improve the relevance of education and training and to adapt it to the
     needs of identified target groups.
EN       149                                                                          EN
 ---pagebreak---   10.      Promoting        10.1. Active inclusion
                            Integration of marginalised communities          –             A national strategy for poverty reduction is in place that:
  social     inclusion
  and      combating        such as the Roma :
  poverty (poverty          - The existence and the implementation                         –       is based on evidence. This requires a system for collecting and analysing data
  target)                   of a national strategy for poverty                                     and information which provides sufficient evidence to develop policies for
                            reduction      in     accordance        with                           poverty reduction. This system is used to monitor developments;
  (referred to        in    Commission Recommendation of 3
  Article 9(9) )            October 2008 on the active inclusion of
                            the people excluded from the labour                            –       is in accordance with the national poverty and social exclusion target (as defined
                            market69      and     the     Employment                               in the National Reform Programme), which includes the extension of
                            guidelines.                                                            employment opportunities for disadvantaged groups;
                                                                                           –       contains a mapping of the territorial concentration beyond the regional/on NUTS
                                                                                                   3 level of marginalised and disadvantaged groups including the Roma;
                                                                                           –       demonstrates that social partners and relevant stakeholders are involved in the
                                                                                                   design of active inclusion;
                                                                                           –       includes measures for the shift from residential to community based care;
                                                                                           –       indicates clearly measures to prevent and combat segregation in all fields.
                            - A national Roma inclusion strategy is          –             A national Roma inclusion strategy is in place that:
                            in place in accordance with the EU
                            Framework        for     national     Roma                     –       sets achievable national goals for Roma integration to bridge the gap with the
                            integration strategies70                                               general population. These targets should address, as a minimum, the four EU
                                                                                                   Roma integration goals relating to access to education, employment, healthcare
                                                                                                   and housing;
  69
           Commission Recommendation of 3 October 2008 on the active inclusion of the people excluded from the labour market (OJ L 307, 18.11.2008, p. 11).
  70
           Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: An EU framework for National Roma Integration
           Strategies up to 2020. COM(2011) 173.
EN                                                                                                       150                                                                                                  EN
 ---pagebreak---                                                –     is coherent with the National Reform Programme;
                                               –     identifies where relevant those disadvantaged micro-regions or segregated
                                                     neighbourhoods, where communities are most deprived, using already available
                                                     socio-economic and territorial indicators (i.e. very low educational level, long-
                                                     term unemployment, etc).
                                               –     allocates a sufficient funding from national budgets, which will be
                                                     complemented, where appropriate, by international and EU funding.
                                               –     includes strong monitoring methods to evaluate the impact of Roma integration
                                                     actions and a review mechanism for the adaptation of the strategy.
                                               –     is designed, implemented and monitored in close cooperation and continuous
                                                     dialogue with Roma civil society, regional and local authorities.
   - The provision of support for relevant
   stakeholders in accessing the Funds.        –     contains a national contact point for the national Roma integration strategy with
                                                     the authority to coordinate the development and implementation of the strategy.
                                             – Relevant stakeholders are provided support for submitting project applications and for
                                               implementing and managing the selected projects
   10.2. Health: The existence of a national
   or regional strategy for health ensuring  – A national or regional strategy for health is in place that:
   access to quality health services and
   economic sustainability.                    –     Contains coordinated measures to improve access to quality health services;
                                               –     contains measures to stimulate efficiency in the health sector, including through
                                                     deployment of effective innovative technologies, service delivery models and
                                                     infrastructure;
                                               –     contains a monitoring and review system.
                                             – A Member State or region has adopted a framework outlining available budgetary
EN                                                       151                                                                         EN
 ---pagebreak---                                                                                                  resources for health care.
  11.       Enhancing        Member States administrative efficiency:
                                                                                     –           A strategy for reinforcing a Member State's administrative efficiency is in place and in
  institutional
  capacity           and
                             - The existence of a strategy for                                   the process of being implemented72. The strategy includes:
                             reinforcing       the       Member         States'
  efficient       public     administrative        efficiency       including
  administration             public administration reform71
                                                                                                 –        an analysis and strategic planning of legal, organisational and/or procedural
  (referred to         in                                                                                 reform actions;
  Article 9(11) )
                                                                                                 –        the development of quality management systems;
                                                                                                 –        integrated actions for simplification and rationalisation of administrative
                                                                                                          procedures;
                                                                                                 –        the development and implementation of human resources strategies and policies
                                                                                                          covering the recruitment plans and career paths of staff, competence building and
                                                                                                          resourcing;
                                                                                                 –        the development of skills at all levels;
                                                                                                 –        the development of procedures and tools for monitoring and evaluation.
  71
            If a country specific Council Recommendation is in place, directly linked to this conditionality provision, then the assessment of its fulfilment will take account of the assessment of progress made on the country
            specific Council Recommendation.
  72
            Deadlines for the achievement of all the elements contained in this section may expire during the programme implementation period.
EN                                                                                                              152                                                                                                            EN
 ---pagebreak---                                                                             General ex-ante conditionalities
         Area                           Ex-ante conditionality                                                Criteria for fulfilment
  1.             Anti-     The existence of a mechanism which ensures        –       Effective implementation and application of the EU Directive 2000/78/EC
  discrimination           effective implementation and application of               and Directive 2000/43/EC on non-discrimination is ensured through:
                           Directive 2000/78/EC of 27 November 2000
                           establishing a general framework for equal
                           treatment in employment and occupation73 and              –     institutional arrangements for the implementation, application and
                           Directive 2000/43/EC of 29 June 2000                            supervision of the EU directives on non-discrimination;
                           implementing the principle of equal treatment
                           between persons irrespective of racial or ethnic          –     a strategy for training and dissemination of information for staff
                           origin74                                                        involved in the implementation of the funds;
                                                                                     –     Measures to strengthen administrative capacity for implementation and
                                                                                           application of the EU directives on non-discrimination.
  2. Gender equality       The existence of a strategy for the promotion of  –       Effective implementation and application of an explicit strategy for the
                           gender equality and a mechanism which                     promotion of gender equality is ensured through:
                           ensures its effective implementation.
                                                                                     –     a system for collecting and analyzing data and indicators broken down
                                                                                           by sex and to develop evidences-based gender policies;
                                                                                     –     a plan and ex-ante criteria for the integration of gender equality
                                                                                           objectives through gender standards and guidelines;
                                                                                     –     implementation mechanisms including involvement of a gender body
                                                                                           and the relevant expertise to draft monitor and evaluate the
                                                                                           interventions.
  3. Disability            The existence of a mechanism which ensures        –       Effective implementation and application of the UN Convention on the rights
                           effective implementation and application of the
  73
           OJ L 303, 2.12.2000, p.16
  74
           OJ L 180, 19.07.2000, p. 22
EN                                                                                       153                                                                     EN
 ---pagebreak---                           UN Convention on the rights of persons with                           of persons with disabilities is ensured through:
                          disabilities. 75
                                                                                                –        Implementation of measures in line with Article 9 of the UN
                                                                                                         Convention to prevent, identify and eliminate obstacles and barriers to
                                                                                                         accessibility of persons with disabilities;
                                                                                                –        institutional arrangements for the implementation and supervision of
                                                                                                         the UN Convention in line with Article 33 of the Convention;
                                                                                                –        a plan for training and dissemination of information for staff involved
                                                                                                         in the implementation of the funds;
                                                                                                –        measures to strengthen administrative capacity for implementation and
                                                                                                         application of the UN Convention including appropriate arrangements
                                                                                                         for monitoring compliance with accessibility requirements.
  4..          Public     The existence of a mechanism which ensures                 –          Effective implementation and application of Directives 2004/18/EC and
  procurement             effective implementation and application of                           2004/17/EC is ensured through:
                          Directives 2004/18/EC and 2004/17/EC and
                          their adequate supervision and surveillance.
                                                                                                –        complete transposition of Directives 2004/18/EC and 2004/17/EC;
                                                                                                –        institutional arrangements for the implementation, application and
                                                                                                         supervision of EU public procurement law;
                                                                                                –        measures which ensure adequate supervision and surveillance of
                                                                                                         transparent contract award procedures and adequate information
                                                                                                         thereon;
                                                                                                –        a strategy for training and dissemination of information for staff
                                                                                                         involved in the implementation of the funds;
  75
          OJ, L 23, 27.01.2010, p. 35 publication of the Council Decision of 26 November 2009 concerning the conclusion, by the European Community, of the United Nations Convention on the Rights of Persons with
          Disabilities.
EN                                                                                                    154                                                                                                       EN
 ---pagebreak---                                                                               –      Measures to strengthen administrative capacity for implementation and
                                                                                     application of EU public procurement law.
  5. State aid              The existence of a mechanism which ensures      – Effective implementation and application of EU State aid law is ensured
                            effective implementation and application of EU    through:
                            State aid law
                                                                              –      institutional arrangements for the implementation, application and
                                                                                     supervision of EU State aid law;
                                                                              –      a strategy for training and dissemination of information for staff
                                                                                     involved in the implementation of the funds;
                                                                              –      measures to strengthen administrative capacity for implementation and
                                                                                     application of EU State aid rules.
  6. Environmental          The existence of a mechanism which ensures      – Effective implementation and application of Union environmental legislation
  legislation relating      the effective implementation and application of   is ensured through:
  to Environmental          Union environmental legislation related to EIA
  Impact Assessment         and SEA in accordance with Directive
  (EIA)and, Strategic       (85/337/EEC) of 27 June 1985 on the               –      complete and correct transposition of EIA and SEA directives;
  Environmental             assessment of the effects of certain public and
  Assessment (SEA)          private projects on the environment76 and with    –      institutional arrangements for the implementation, application and
                            Directive (2001/42/EC) of 27 June 2001 on the            supervision of EIA and SEA Directives;
                            assessment of the effects of certain plans and
                            programmes on the environment77.                  –      a strategy for training and dissemination of information for staff
                                                                                     involved in the implementation of EIA and SEA Directives;
                                                                              –      measures to ensure sufficient administrative capacity.
  76
            OJ L 175, 5.7.1985, p. 40.
  77
            OJ L 197, 21.7.2001, p. 30.
EN                                                                                 155                                                                     EN
 ---pagebreak---   7.        Statistical The existence of a statistical system necessary – A multi-annual plan for timely collection and aggregation of data is in place
  systems and result    to undertake evaluations to assess the            that includes:
  indicators            effectiveness and impact of the programmes.
                                                                          –      the identification of sources and mechanisms to ensure statistical
                                                                                 validation;
                                                                          –      arrangements for publication and public availability.
                        The existence of an effective system of result
                        indicators necessary to monitor progress          –      an effective system of results indicators including:
                        towards results and to undertake impact
                        evaluation.                                       –      the selection of result indicators for each programme providing
                                                                                 information on those aspects of the well-being and progress of people
                                                                                 that motivate policy actions financed by the programme;
                                                                          –      the establishment of targets for these indicators;
                                                                          –      the respect for each indicator of the following requisites: robustness
                                                                                 and statistical validation, clarity of normative interpretation,
                                                                                 responsiveness to policy, timely collection and public availability of
                                                                                 data;
                                                                          –      adequate procedures in place to ensure that all operations financed by
                                                                                 the programme adopt an effective system of indicators.
EN                                                                            156                                                                       EN
 ---pagebreak---                                                   ANNEX VI
                       Information and communication on support from the Funds
   1.       LIST OF OPERATIONS
   The list of operations referred to Article 105(2) shall contain, in at least one of the official languages
   of the Member State, the following data fields:
   –        Beneficiary name (only legal entities; no natural persons shall be named);
   –        Operation name;
   –        Operation summary;
   –        Operation start date;
   –        Operation end date (expected date for physical completion or full implementation of the
            operation);
   –        Total eligible expenditure allocated to the operation;
   –        EU co-financing rate (as per priority axis);
   –        Operation postcode;
   –        Country;
   –        Name of category of intervention for the operation;
   –        Date of last update of the list of operations.
   The headings of the data fields and the names of the operations shall be also provided in at least one
   other official language of the European Union.
   2.       INFORMATION AND PUBLICITY MEASURES FOR THE PUBLIC
   The Member State, the managing authority and the beneficiaries shall take the steps necessary to
   provide information and publicity to the public on operations supported by an operational
   programme in accordance with this Regulation.
   2.1.     Responsibilities of the Member State and the managing authority
   1.       The Member State and the managing authority shall ensure that the information and
            publicity measures are implemented in accordance with the communication strategy and
            that these measures aim at the widest possible media coverage using various forms and
            methods of communication at the appropriate level.
   2.       The Member State or the managing authority shall be responsible for organising at least the
            following information and publicity measures:
EN                                                 157                                                   EN
 ---pagebreak---         (a)   a major information activity publicising the launch of the operational programme;
        (b)   at least one major information activity a year which promotes the funding
              opportunities and the strategies pursued and presents the achievements of the
              operational programme, including, where relevant, major projects, joint action plans
              and other project examples;
        (c)   displaying the flag of the European Union in front of, or at a place visible to the
              public, at the premises of each managing authority;
        (d)   publishing electronically the list of operations in accordance with section 1;
        (e)   giving examples of operations, by operational programme, on the single website or on
              the operational programme's website that is accessible through the single website
              portal; the examples should be in a widely spoken official language of the European
              Union other than the official language or languages of the Member State concerned;
        (f)   updating information about the operational programme's implementation, including its
              main achievements, on the single website or on the operational programme's website
              that is accessible through the single website portal.
   3.   The managing authority shall involve in information and publicity measures, in accordance
        with national laws and practices, the following bodies:
        (a)   the partners referred to in Article 5;
        (b)   information centres on Europe, as well as Commission representation offices in the
              Member States;
        (c)   educational and research institutions.
        These bodies shall widely disseminate the information described in Article 105(1)(a) and
        (b).
   2.2. Responsibilities of the beneficiaries
   1.   All information and communication measures provided by the beneficiary shall
        acknowledge support from the Funds to the operation by displaying:
        (a)   the EU emblem in accordance with the technical characteristics laid down in the
              implementing act adopted by the Commission under Article 105(4), together with a
              reference to the European Union;
        (b)   a reference to the Fund or Funds supporting the operation.
   2.   During implementation of an operation, the beneficiary shall inform the public about the
        support obtained from the Funds by:
        (a)   providing on the beneficiary's website, where such a website exists, a short
              description of the operation, including its aims and results, and highlighting the
              financial support from the European Union;
EN                                            158                                              EN
 ---pagebreak---         (b)    placing at least one poster with information about the project (minimum size A3),
               including the financial support from the European Union, at a location readily visible
               to the public, such as the entrance area of a building.
   3.   For operations supported by the ESF, and in appropriate cases for operations supported by
        the ERDF or Cohesion Fund, the beneficiary shall ensure that those taking part in an
        operation have been informed of this funding.
        Any document, including any attendance or other certificate, concerning such an operation
        shall include a statement to the effect that the operational programme was supported by the
        Fund or Funds.
   4.   During implementation of an ERDF or Cohesion Fund operation, the beneficiary shall put
        up, at a location readily visible to the public, a temporary billboard of a significant size for
        each operation consisting in the financing of infrastructure or construction operations for
        which the total public support to the operation exceeds EUR 500 000.
   5.   No later than three months after completion of an operation, the beneficiary shall put up a
        permanent plaque or billboard of significant size at a location readily visible to the public
        for each operation that fulfils the following criteria:
        (a)    the total public support to the operation exceeds EUR 500 000;
        (b)    the operation consists in the purchase of a physical object or in the financing of
               infrastructure or of construction operations.
        The plaque or billboard shall state the type, name and purpose of the operation and shall be
        prepared in accordance with the technical characteristics adopted by the Commission in
        accordance with Article 105(4).
   3.   INFORMATION MEASURES FOR POTENTIAL BENEFICIARIES AND BENEFICIARIES
   3.1. Information measures for potential beneficiaries
   1.   The managing authority shall ensure, in accordance with the communication strategy, that
        the operational programme's strategy, objectives and funding opportunities offered by joint
        support from the European Union and the Member State, are disseminated widely to
        potential beneficiaries and all interested parties, with details of the financial support from
        the Funds concerned.
   2.   The managing authority shall ensure that potential beneficiaries are informed on at least the
        following:
        (a)    the conditions of eligibility of expenditure to be met in order to qualify for support
               under an operational programme;
        (b)    a description of the procedures for examining applications for funding and of the time
               periods involved;
        (c)    the criteria for selecting the operations to be supported;
EN                                              159                                                EN
 ---pagebreak---            (d)    the contacts at national, regional or local level that are able to provide information on
                  the operational programmes;
           (e)    that applications should propose communication activities, proportional to the size of
                  the operation, in order to inform the public about the operation's aims and the EU
                  support to the operation.
   3.2.    Information measures for beneficiaries
   1.      The managing authority shall inform beneficiaries that acceptance of funding constitutes an
           acceptance of their inclusion in the list of operations published in accordance with Article
           105(2).
   2.      The managing authority shall provide information and publicity kits, including templates in
           electronic format, to help beneficiaries to meet their obligations set out in section 2.2.
   4.      ELEMENTS OF THE COMMUNICATION STRATEGY
   The communication strategy drawn up by the managing authority shall include at least the following
   elements:
   (a)     a description of the approach taken, including the main information and publicity measures
           to be taken by the Member State or the managing authority aimed at potential beneficiaries,
           beneficiaries, multipliers and the wider public, having regard to the aims described in
           Article 105;
   (b)     a description of materials that will be made available in formats accessible for people with
           disabilities;
   (c)     a description of how beneficiaries will be supported in their communication activities;
   (d)     the indicative budget for implementation of the strategy;
   (e)     a description of the administrative bodies, including the staff resources, responsible for
           implementing the information and publicity measures;
   (f)     the arrangements for the information and publicity measures referred to in section 2,
           including the website or website portal at which such data may be found;
   (g)     an indication of how the information and publicity measures shall be assessed in terms of
           visibility and awareness of policy, operational programmes and operations, and of the role
           played by the Funds and the European Union;
   (h)     where appropriate, a description of the use of the main results of the previous operational
           programme;
   (i)     an annual update setting out the information and communication activities to be carried out.
EN                                                160                                                  EN
 ---pagebreak---                         LEGISLATIVE FINANCIAL STATEMENT
   1. FRAMEWORK OF THE PROPOSAL/INITIATIVE
      1.1. Title of the proposal/initiative
      1.2. Policy area(s) concerned in the ABM/ABB structure
      1.3. Nature of the proposal/initiative
      1.4. Objective(s)
      1.5. Grounds for the proposal/initiative
      1.6. Duration and financial impact
      1.7. Management method(s) envisaged
   2. MANAGEMENT MEASURES
      2.1. Monitoring and reporting rules
      2.2. Management and control system
      2.3. Measures to prevent fraud and irregularities
   3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE
      3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s)
      affected
      3.2. Estimated impact on expenditure
      3.2.1. Summary of estimated impact on expenditure
      3.2.2. Estimated impact on operational appropriations
      3.2.3. Estimated impact on appropriations of an administrative nature
      3.2.4. Compatibility with the current multiannual financial framework
      3.2.5. Third-party participation in financing
      3.3. Estimated impact on revenue
EN                                           161                                       EN
 ---pagebreak---                                        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 laying down
           certain common provisions on the European Regional Development Fund, the European
           Social Fund, the Cohesion Fund, the European Agricultural and Rural Development Fund
           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
   1.2.    Policy area(s) concerned in the ABM/ABB structure78
           13.Regional policy, ABB activities 13 03 (European Regional Development Fund and
           other regional operations); 13 04 Cohesion Fund
           4. Employment and social affairs, ABB activity 04 02 (European Social Fund)
   1.3.    Nature of the proposal/initiative
           ■ The proposal/initiative relates to a new action
                The proposal/initiative relates to a new action following a pilot project/preparatory action79
                The proposal/initiative relates to the extension of an existing action
                The proposal/initiative relates to an action redirected towards a new action
   1.4.    Objectives
   1.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative
           The objective of Cohesion Policy is to reduce disparities between the levels of
           development of the various regions, in particular for rural areas, areas affected by
           industrial transition, and regions which suffer from severe and permanent natural or
           demographic handicaps and to contribute to achieving the targets set out in the Europe
           2020 strategy of smart, sustainable and inclusive growth, and in particular towards the
           achievement of quantitative headline targets identified in that strategy.
   1.4.2.  Specific objective(s) and ABM/ABB activity(ies) concerned
           The ERDF aims to strengthen economic, social and territorial cohesion in the European
           Union by co-financing investments in Member States, while the ESF promotes
           employment, education and social inclusion.
           The Cohesion Fund helps Member States to make investments in transport networks and
           the environment.
   78
          ABM: Activity-Based Management – ABB: Activity-Based Budgeting.
   79
          As referred to in Article 49(6)(a) or (b) of the Financial Regulation.
EN                                                                   162                                   EN
 ---pagebreak---    The specific objectives of intervention by the Funds are as follows:
   -      strengthening research, technological development and innovation
   -      enhancing accessibility to and use and quality of information and communication
   technologies
   -      enhancing the competitiveness of small and medium-sized enterprises and the
   agricultural sector (for EAFRD) and fisheries and aquaculture sector (for the EMFF)
   -      supporting the shift towards a low-carbon economy in all sectors;
   -      promoting climate change adaptation and risk prevention and management;
   -      protecting the environment and promoting resource efficiency;
   -      promoting sustainable transport and removing bottlenecks in key network
   infrastructures
   -      promoting employment and supporting labour mobility
   -      promoting social inclusion and combating poverty
   -      investing in education, skills and lifelong learning
   -      enhancing institutional capacity and an efficient public administration
   ABM/ABB activities concerned:
   13 03: European Regional Development Fund and other regional interventions
   13 04: Cohesion Fund
   04 02: European Social Fund
EN                                        163                                          EN
 ---pagebreak---    1.4.3.  Expected result(s) and impact
           Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted.
           Cohesion Policy makes a significant contribution to spreading growth and prosperity
           across the Union delivering European policy objectives, while reducing economic, social
           and territorial disparities.
   1.4.4.  Indicators of results and impact
           Specify the indicators for monitoring implementation of the proposal/initiative.
           The Commission proposes a common set of output indicators which can be aggregated at
           the EU level. The common output indicators are contained in Annexes to the Fund-specific
           regulations. Result indicators will be compulsory for all programmes and all priorities. The
           impacts of the programmes will be evaluated against the objectives and targets of the
           Europe 2020 strategy, and GDP and unemployment indicators where appropriate.
   1.5.    Grounds for the proposal/initiative
   1.5.1.  Requirement(s) to be met in the short or long term
           The Union shall promote economic, social and territorial cohesion and solidarity among
           Member States. The proposal sets the frame for cohesion policy in the next funding period
           2014-2020.
   1.5.2.  Added value of EU involvement
           EU action is justified both on the grounds of the objectives laid out in Article 174 of the
           Treaty and on the subsidiarity principle. The right to act is constituted by Article 3 of the
           Treaty on European Union, which states that "[the Union] shall promote economic, social
           and territorial cohesion and solidarity among Member States", as well as by Article 175 of
           the TFEU which explicitly requests the Union to implement this policy by means of
           Structural Funds, and Article 177 which defines the role of the Cohesion Fund. The aims
           of European Social Fund (ESF), European Regional Development Fund (ERDF) and
           Cohesion Fund (CF) are defined in Articles 162, 176 and 177. More details on the added
           value of EU involvement can be found in the related Impact Assessment.
           As the EU Budget Review has highlighted, the "EU budget should be used to finance EU
           public goods, actions that Member States and regions cannot finance themselves, or where
           it can secure better results".80 The legal proposal will respect the principle of subsidiarity
           as the tasks of the Funds are set out in the Treaty and the policy is implemented in
           accordance with the principle of shared management and respecting the institutional
           competencies of Member States and regions.
   1.5.3.  Lessons learned from similar experiences in the past
           A summary can be found in the Impact Assessment accompanying the proposal.
   80
          COM(2010) 700, 19.10.2010.
EN                                                      164                                                    EN
 ---pagebreak---    1.5.4.   Coherence and possible synergy with other relevant instruments
            A Common Strategic Framework will be established. This will translate the objectives and
            priorities of Europe 2020 into investment priorities for the ERDF, CF, ESF, EAFRD and
            the 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.
   1.6.     Duration and financial impact
                 Proposal/initiative of limited duration
            –        Proposal/initiative in effect from 01/01/2014 to 31/12/2020
            –        Financial impact from 2014 to 2023
                 Proposal/initiative of unlimited duration
            • Implementation with a start-up period from YYYY to YYYY,
            • followed by full-scale operation.
   1.7.     Management mode(s) envisaged81
                 Centralised direct management by the Commission
                 Centralised indirect management with the delegation of implementation tasks to:
            •        executive agencies
            •        bodies set up by the Communities82
            •        national public-sector bodies/bodies with public-service mission
            –        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
            ■ Shared management with the Member States
                 Decentralised management with third countries
                 Joint management with international organisations (to be specified)
            If more than one management mode is indicated, please provide details in the "Comments" section.
   Comments
   .
   .
   81
          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
   82
          As referred to in Article 185 of the Financial Regulation.
EN                                                                  165                                      EN
 ---pagebreak---    2.     MANAGEMENT MEASURES
   2.1.   Monitoring and reporting rules
          Specify frequency and conditions.
          The monitoring system will be based on a system of shared management. Monitoring
          Committees set up for each operational programme and annual implementation reports for
          each operational programme will be at the heart of the approach. Monitoring Committees
          will meet at least once per year. Annual review meetings between the Commission and
          Member States complement the system.
          In addition to the implementation reports for each operational programme progress reports
          in 2017 and 2019 will focus on strategic issues at Member State level. Based on this, the
          Commission will prepare strategic reports in 2017 and 2019.
          The monitoring and reporting system will be based on output and result indicators. The
          proposals set out a set of common indicators that will be used for the aggregation of
          information at an EU level. At key points of the implementation period (2017 and 2019),
          additional analytical requirements on the progress of programmes are part of the annual
          implementation reports. The monitoring and reporting system fully uses the potential of
          electronic data transfers.
          Evaluation arrangements shall be put in place to evaluate the effectiveness, efficiency and
          the impact of the policy, especially with regard to the EU2020 headline targets and other
          relevant impact indicators.
   2.2.   Management and control system
   2.2.1. Risk(s) identified
          Since 2007 the European Court of Auditors ('the Court') has reported in its annual report an
          estimated error rate for Cohesion Policy as a whole for each budget year (2006-2009)
          based on an independent, annual, random sample of transactions.
          The Court's estimated level of error for Cohesion Policy has been high compared to other
          policy groups of the EU budget in these years, and has varied around 5%-10% of
          expenditure for the current programming period. However the error rate provided by the
          Court applies to interim payments submitted by Member States which are reimbursed by
          the Commission before all controls foreseen for 2007-2013 programmes have been carried
          out at national and Community level.
          Under current rules, interim payments are certified by the Certifying Authority to the
          Commission after management desk checks on all expenditure claimed by beneficiaries
          have been carried out, but frequently before on the spot in-depth management checks or
          subsequent audit activities. Therefore the multiannual financing arrangements mean that
          controls are carried out before but also after the audit work is done by the European Court
          of Auditors, and the residual error after all controls have been completed can be
          significantly lower that the error rate detected by the Court. On the basis of past
          experience, the residual error at the end of the programming once all controls have been
          completed is estimated to be in the range of 2-5%.
EN                                             166                                                EN
 ---pagebreak---    A number of measures have been foreseen in the proposals to reduce the error rate linked
   to the interim payments made by Commission (the error rate reported by the European
   Court of Auditors):
   1) Interim payments by the Commission will be capped at 90% of the amount due to
   Member States, as at this point only part of the national controls have been carried
   out. The remaining balance will be paid following the annual clearance of accounts once
   audit evidence and reasonable assurance has been provided by the managing authority and
   the audit authority. Any irregularities detected by the Commission or the European Court
   of Auditors after the transmission of annual certified accounts by the managing/certifying
   authority will lead to a net correction. This will provide greater incentives to Member
   States to ensure the regularity of expenditure certified to the Commission compared to the
   present approach which allows for more extensive recycling of recovered funds throughout
   the lifetime of programmes.
   2) Introduction of an annual clearance of accounts and of an annual closure of
   completed operations or expenditure, which will create additional incentives for national
   and regional authorities to undertake quality controls in a timely manner in view of the
   annual certification of accounts to the Commission. This constitutes a reinforcement of
   present financial management arrangements and offers better assurance that irregular
   expenditure is excluded from the accounts on annual basis rather than at the end of the
   programming period.
   It is expected that the measures outlined above (the new reimbursement system, annual
   clearance and closure and definitive net corrections by the Commission) will reduce the
   error rate below 5%, and that the final residual error rate at closure of programmes will be
   closer to the 2% materiality threshold applied by the European Court of Auditors.
   This estimation is nevertheless subject to the capacity of the Commission and Member
   States to address the principal risks outlined below.
   An analysis of errors reported by the Court and the Commission in the last five years
   shows that the principal errors found are concentrated in a limited number of
   programmes in some Member States. The error rates based on statistical samples
   reported by audit authorities also demonstrate substantial variation between different
   programmes and thus support this analysis. The proposal to focus audit activities and
   resources to high risk programmes, and to allow proportionate control measures for
   programmes with effective control systems, would address the principal risks in a more
   effective manner and lead to a more efficient use of existing audit resources both at
   national and Commission level. The possibility to benefit from proportionate arrangements
   in relation to the situation of each programme can in itself introduce incentives for more
   effective control measures.
   The analysis of errors that have remained undetected by the national management and
   control systems and thus have been identified by the Court in its 2006-2009 audits also
   shows a concentration of risks in the following categories:
   For ERDF and the Cohesion Fund, public procurement errors have contributed
   approximately to 41% of the cumulative quantifiable errors found. Errors related to
   eligibility accounted for 39% and included various types of errors such as errors in project
   selection, funding of ineligible categories of costs, costs falling outside the eligibility
   period or eligible area, miscalculation of co-financing rates, financing of ineligible VAT
   etc. Weaknesses in the audit trail accounted for 11% of quantifiable errors (with the
EN                                        167                                              EN
 ---pagebreak---           proportion decreasing over time due to reinforced management controls), and errors linked
          to the complex issue of revenue generating projects (revenues not deducted or calculated
          incorrectly and thus the co-financing rate was too high) accounted for 6% of quantifiable
          errors reported over the period.
          For the ESF, eligibility issues have contributed approximately to 58% of the cumulative
          quantifiable errors found and encompassed in particular non-eligible participants, non-
          eligible direct and indirect costs, payments after or before the eligibility period, ineligible
          expenditure declared on a flat-rate basis, ineligible costs of scholarship and public
          allowances, revenues not deducted when calculating eligible expenditure or calculated
          incorrectly, services paid but not delivered and ineligible VAT. Accuracy issues, that
          represented 7% of quantifiable errors reported, concerned incorrect allocation of direct and
          indirect costs, unduly justified overhead allocation method, mistakes in calculation of
          expenses, non-respect of the real cost principle, over-declaration of costs, incorrect
          calculation of co-financing rates and finally multiple declaration of staff costs. Audit trail
          issues contributed to 35% of errors and referred to the absence of essential supporting
          documents, in particular at the level of beneficiaries.
          Although the Commission is undertaking a number of actions with the Member States to
          reduce these errors, it is anticipated that, pending adoption of the current proposal and their
          proper implementation in the Member States, these errors could remain potential risk areas
          in the next programming period 2014-2020.
          Errors related to public procurement in particular are a major source of errors that may be
          estimated to an error rate of approximately 2%-4% each year on average for the current
          programming period. Proposals put forward under Cohesion Policy will ensure more
          effective controls, however to achieve a substantial reduction in the error rate under
          Cohesion Policy, it is important that these actions are complemented by a clarification and
          simplification of public procurement rules. In the absence of streamlined public
          procurement procedures, and if public administrations and beneficiaries in the Member
          States are unable to improve the implementation of these rules, Cohesion Policy would
          continue to be systematically affected by this part of the current error rate. The current
          revision of the Directive on public procurement should therefore provide an opportunity to
          contribute to a reduction of errors in Cohesion Policy along the lines indicated above.
   2.2.2. Control method(s) envisaged
          The proposed architecture of the management and control systems represents an evolution
          of the set-up in place in 2007-2013 and preserves most of the functions carried out in the
          current period including administrative and on-the spot verifications, audits of
          management and control systems and audits of operations. It also maintains the role of the
          Commission, along with the possibility for interruptions, suspensions and financial
          corrections by the Commission.
          In order to reinforce accountability, programme authorities would be accredited by a
          national accrediting body in charge of their ongoing supervision. The proposal offers the
          flexibility to keep the current architecture of three key authorities by programme in cases
          where the current system has been proven to be effective. However it also offers the
          possibility to merge the managing and certifying authority and thus decrease the number of
          involved authorities in the Member States. A smaller number of bodies in place would
          reduce the administrative burden and enhance the possibility for building stronger
          administrative capacity, but also permit a clearer distribution of responsibilities.
EN                                               168                                                 EN
 ---pagebreak---         The costs of tasks related to control (at national and regional level, excluding the costs of
        the Commission) are estimated around 2% of the total funding administered in the period
        2007-201383. These costs are related to the following areas of control: 1% is derived from
        national coordination and programme preparation, 82% relate to programme management,
        4% to certification and 13% to audit.
        The following proposals will increase the costs of control:
        -the creation and functioning of an accrediting body (the costs of which may be offset by
        the merger of the managing and certifying authorities, if this option is selected by the
        Member State);
        - the submission of certified annual accounts and an annual management declaration,
        which implies having carried out all necessary controls within the accounting year (which
        may require additional administrative effort);
        - the need for additional audit activity by the audit authorities to audit the management
        declaration or the need to finish its audits and express an audit opinion in a shorter period
        of time compared to the current obligations.
        There are however also proposals which will reduce the costs of control:
        - the option to merge the managing and certifying authorities, which could allow the
        Member State to save a substantial part of the 4% of the current costs relating to
        certification due to better administrative efficiency, reduced need for coordination and
        reduction of the scope of audits;
        -the use of simplified costs and Joint Action Plans, which reduces administrative costs and
        burdens at all levels, for both administrations and beneficiaries;
        -proportionate control arrangements for management verifications and for audits;
        -annual closure, which will reduce the cost of retention of documents for control purposes
        for public administrations and beneficiaries.
        Therefore overall it is expected that proposals will lead to a redistribution of control
        costs (remaining around 2% of the total funding managed), rather than an increase
        or a reduction. It is however anticipated that this redistribution of costs (across functions
        and due to the proportionate control arrangements, also across Member States and
        programmes) will enable more effective mitigation of risks and thus will lead to an error
        rate below 5%.
        In addition to changes in the financial management and control arrangement which
        contribute to the effective detection and early exclusion of errors from the accounts,
        the proposal foresees simplification in several areas that contributes to the prevention
        of errors. As indicated above, measures proposed in these areas would address 55% of the
        error rates reported for the current period.
        These measures include:
   83
      Study "Regional governance in the context of globalisation: reviewing governance mechanisms & administrative costs. Administrative
      workload and costs for Member State public authorities of the implementation of ERDF and Cohesion Fund", 2010
EN                                                           169                                                                  EN
 ---pagebreak---         - A more extensive use of simplified costs which reduces errors related to financial
        management, eligibility rules and audit trail, and reorients both implementation and control
        towards the performance of operations.
        - A greater thematic concentration of funding, which can entail a reduction of errors
        stemming from the wide variety of interventions and thus a variety of eligibility rules
        applied.
        - Clarified rules for the selection of projects.
        - A simpler, flat rate based, approach to revenue-generating operations which will reduce
        the risk of errors in determining and deducting the revenue generated by operations.
        - Harmonisation, clarification and simplification of eligibility rules with other EU financial
        support instruments which will reduce mistakes made by beneficiaries who use assistance
        from different sources.
        - A mandatory setup of electronic data management and electronic data exchange between
        the administration and beneficiaries which has the potential to curtail the error rate arising
        from inadequate document retention and simplifying the administrative burden on
        beneficiaries.
        - Annual closure of operations or expenditure, which decreases audit trail errors by
        shortening the time period for document retention and avoids the substantial build-up of
        administrative workload linked to the one-off closure at the end of the programming
        period.
        Most of the simplifications listed above also contribute to the reduction of administrative
        burden for beneficiaries and thus represent a simultaneous reduction of risks of error
        and of administrative burden.
   2.3. Measures to prevent fraud and irregularities
        Specify existing or envisaged prevention and protection measures.
        The Structural Funds services together with OLAF have put in place a Joint Fraud
        Prevention Strategy which foresees a series of actions to be carried out by the Commission
        and the Member States to prevent fraud in structural actions under shared management.
        Both DGs are currently developing a fraud risk scoring model which will be used by the
        concerned managing authorities on 116 ESF and 60 ERDF programmes.
        The recent Commission Communication on an anti-fraud strategy (COM(2011)376 final of
        24.6.2011) welcomes the existing strategy as a best practice initiative and envisages
        complementary actions to it, the most important being that the Commission proposal for
        2014-2020 regulations request Member States to put in place fraud prevention measures
        which are effective and proportionate to the identified fraud risks.
        The current Commission proposal includes an explicit requirement to put in place such
        measures under Article 86(4)(c). This should reinforce fraud awareness in Member States
        among all bodies involved in the management and control of funds and thus reduce the risk
        of fraud.
EN                                                 170                                            EN
 ---pagebreak---      3.        ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE
     3.1.      Heading(s) of the multiannual financial framework and expenditure budget line(s)
               affected
               • Existing expenditure budget lines
               In order of multiannual financial framework headings and budget lines.
                                                                                Type of
  Heading of                          Budget line                             expenditure
                                                                                                                     Contribution
  multiannual
   financial                                                                                                                        within the meaning
                                                                                                  from         from
  framework    Number                                                                                                    from third of Article 18(1)(aa)
                                                                                Diff. (84)       EFTA85      candidate
                                                                                                                          countries   of the Financial
                                                                                                countries   countries86                 Regulation
               04021700 ESF Convergence
    1 Smart    04021900 ESF Compétitivité Régionale
       and
   Inclusive   13031600 FEDER Convergence
    Growth
      New
                                                                                  Diff             NO            NO         NO              NO
               13031800 FEDER Compétitivité Régionale
   Headings
   for 2014-
     2020
               13031900 FEDER Coopération territoriale
               européenne
               13040200 Fonds de cohésion
               • New budget lines requested : No
               In order of multiannual financial framework headings and budget lines.
                                                                                Type of
                                      Budget line                             expenditure
                                                                                                                     Contribution
  Heading of
  multiannual
                                                                                                  from         from                 within the meaning
   financial   Number                                                          Diff./non-                                from third of Article 18(1)(aa)
  framework                                                                                       EFTA       candidate
               [Heading……………………………………..]                                           diff.                                  countries   of the Financial
                                                                                                countries    countries                  Regulation
               [XX.YY.YY.YY]
      […]                                                                         […]          YES/NO        YES/NO      YES/NO         YES/NO
               […]
     84
              Diff. = Differentiated appropriations / Non-Diff. = Non-differentiated appropriations
     85
              EFTA: European Free Trade Association.
     86
              Candidate countries and, where applicable, potential candidate countries from the Western Balkans.
EN                                                                    171                                                                 EN
 ---pagebreak---     3.2.     Estimated impact on expenditure
    3.2.1.   Summary of estimated impact on expenditure
                                                                                                                                                            EUR million (to 3 decimal places)
                 Heading of multiannual financial                                     Number
                                                                                                    Smart and Inclusive growth
                                   framework:                                               1
                                                                                               Year     Year        Year      Year    Year    Year    Year
           DG: REGIO and EMPL                                                                    87
                                                                                                        N+1         N+2       N+3     N+4     N+5     N+6
                                                                                                                                                                 TOTAL
                                                                                                N
 y Operational appropriations (2011 prices)                                                   2014    2015        2016      2017    2018    2019    2020
                                                                                              37.00     37.56       38.02     38.37   38.72   39.02   39.30
                                                         Commitments                 (1)
                                                                                              4,476     4,774       3,079     9,867   2,325   1,277   3,920 268.019,718267
                                                                                              36.94     37.37       37.75     38.15   38.56   38.94   39.33          .075,828
                                                                                              2,785     5,939       8,354     3,836   2,407   8,791   3,716
 New ERDF and ESF budget lines
                                                                                              5.662     11.29       21.86     28.57   31.78   36.70   34.77
                                                         Payments                    (2)
                                                                                              ,0725     7,046       3,675    6,824.   9,232   2,873   4,287
                                                                                               .648,    11.25       21.77     448,4   31.61   36.50   34.60 170.666,010169
                                                                                                    1   4,375       8,321        69    2,19   2,392   2,638          .846,485
                                                                                              9.482    9.751,      9.968,     10.13   10.30   10.45   10.59
                                                         Commitments                (1a)
                                                                                              ,5819     2409.       9039.     8,977   8,621   6,512   5,853 70.702,68768.6
                                                                                               .572,    614,2       631,0    9.702,  9.883,   10.05   10.21            73,310
 New CF Budget line before transfer to new                                                       122        64         37       463     112   3,301   7,011
 Connecting Europe Facility budget line                                                       1.499    2.821,      5.410,    7.352,  8.652,  9.699,  8.801,
                                                         Payments                   (2a)
                                                                                              ,3971     0472.       6384.     2906.   8007.   9649.   7329.
                                                                                               .455,    825,6       862,2     017,6   248,3   845,3   299,1 44.237,86941.5
                                                                                                 451        65         38        86       9      52      37            53,920
 Transfer to the new Connecting Europe                   Commitments                   (1b)    1397,5  1401,8     1403,8    1414,8   1440,9  1451,3 1489,9            10 000,0
    87
            Year N is the year in which implementation of the proposal/initiative starts.
EN                                                                                                          172                                                                             EN
 ---pagebreak---  facility budget line
                                                                                                   4,8      903,8     1003,8      1103,2         1129,9       1177,6        1303,6                   6 626,7
                                                            Payments                    (2b)
 Appropriations of an administrative                             nature        financed
                                                                                              0           0           0           0            0             0              0             0
 from the envelope for specific programmes88
 13.01.04.01 – External Staff ERDF                                                    (3)     3,060       3,060       3,060       3,060        3,060         3,060          3060          21,420
 13.01.04.03 – External Staff CF                                                              1,340       1,340       1,340       1,340        1,340         1,340          1,340         9,380
 04.01.04.01 - External Staff ESF                                                               5,000     5,000       5,000       5,000        5,000         5,000          5,000         35,000
 Total external staff on former BA lines                                                        9,400     9,400       9,400       9,400        9,400         9,400          9,400                     65,800
 OTHER         ADMIN          APPROPRIATIONS                                                                                                                                                          93,555
                                                                                              13,365      13,365      13,365      13,365       13,365        13,365         13,365
 FROM REGIO
 OTHER         ADMIN          APPROPRIATIONS
                                                                                              16,000      16,000      16,000      16,000       16,000        16,000         16,000                   112,000
 FROM EMPL
                                                                                               46.52        47.35       48.03       48.55        49.06         49.51          49.93
                                                            Commitments
                                                                                    =1+1a      5,822        4,779       0,747       7,608        9,711         6,554          8,537
                                                                                      +3
                                                                                               46.55        47.02       47.42       47.89        48.48         49.04          49.58 338.993,760336
           TOTAL appropriations                                                                3,672        8,968       8,155       5,064        4,284         0,857          9,492                .020,493
    for DG REGIO, EMPL and MOVE                                                                7.200        14.15       27.31       35.96        40.48         46.44          43.61
                                                                                    =2+2a
                                                            Payments
                                                                                               ,2357        6,859       3,078       7,879        0,798         1,602          4,784
                                                                                      +3        .142,       14.11       26.67       34.50        38.89         46.38          43.94 215.175,234211
                                                                                                  316       8,805       9,324       4,920        9,345         6,509          0,540                .671,759
 y TOTAL operational appropriations
                                                            Commitments              (4)       46.48        47.31       47.99       48.51        49.03         49.47          49.89 338722,405335.
                                                                                               7,058        6,014       1,982       8,843        0,946         7,789          9,772                 749,138
                                                                                               46.51        46.99       47.38       47.85        48.44         49.00          49.55
     88
              Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions (former "BA" lines), indirect research, direct research.
EN                                                                                                              173                                                                                          EN
 ---pagebreak---                                                                      4,907  0,203    9,390  6,299  5,519  2,092  0,727
                                               Payments       (5)
 y TOTAL appropriations of an administrative nature           (6)   38,765 38,765   38,765 38,765 38,765 38,765 38,765          271,355
 financed from the envelope for specific programmes
                                                                     46.52  47.35    48.03  48.55  49.06  49.51  49.93
                                                                     5,822  4,779    0,747  7,608  9,711  6,554  8,537 338.993,760336
           TOTAL appropriations                Commitments   =4+ 6   46.55  47.02    47.42  47.89  48.48  49.04  49.58        .020,493
            under HEADING 1                                          3,672  8,968    8,155  5,064  4,284  0,857  9,492
   of the multiannual financial framework
                                               Payments      =5+ 6
    If more than one heading is affected by the proposal / initiative: N/A
                                               Commitments    (4)
 y TOTAL operational appropriations
                                               Payments       (5)
 y TOTAL appropriations of an administrative nature           (6)
 financed from the envelope for specific programmes
           TOTAL appropriations                Commitments   =4+ 6
          under HEADINGS 1 to 4
   of the multiannual financial framework      Payments      =5+ 6
             (Reference amount)
EN                                                                              174                                                     EN
 ---pagebreak---           Heading of multiannual financial
                                                      5 " Administrative expenditure "
                      framework:
                                                                                                                 EUR million (to 3 decimal places)
                                                         Year     Year       Year      Year  Year   Year   Year
                                                                                                                      TOTAL
                                                           N      N+1        N+2       N+3    N+4    N+5    N+6
               DG: REGIO
 y Human resources                                       80,187 80,187     80,187   80,187  80,187 80,187 80,187            561,309
 y Other administrative expenditure                       3,800 3,800      3,800    3,800   3,800  3,800  3,800               26,600
           TOTAL DG REGIO              Appropriations    83,987 83,987     83,987   83,987  83,987 83,987 83,987            587,909
                                                         Year     Year       Year      Year  Year   Year   Year
                  739109                                   N      N+1        N+2       N+3    N+4    N+5    N+6
                                                                                                                      TOTAL
               DG: EMPL
 y Human resources                                       25,400 25,400     25,400   25,400  25,400 25,400 25,400            177,800
 y Other administrative expenditure
           TOTAL DG EMPL               Appropriations    25,400 25,400     25,400   25,400  25,400 25,400 25,400            177,800
EN                                                                    175                                                                        EN
 ---pagebreak---          TOTAL appropriations
                                                       (Total         commitments
          under HEADING 5                              = Total payments)
                                                                                        109,387 109,387  109,387 109,387 109,387     109,387     109,387            765,709
 of the multiannual financial framework
                                                                                                                                                         EUR million (to 3 decimal places)
                                                                                                                            … enter as many years as
                                                                                         Year    Year     Year    Year
                                                                                                                          necessary to show the duration      TOTAL
                                                                                          N89    N+1      N+2     N+3      of the impact (see point 1.6)
                                                                                         46.63   47.46    48.14   48.66   49.17       49.62       50.04
         TOTAL appropriations                          Commitments
                                                                                         5,210   4,166    0,134   6,995   9,098       5,941       7,924
        under HEADINGS 1 to 5                                                            46.66   47.13    47.53   48.00   48.59       49.15       49.69 339.759,469336
 of the multiannual financial framework                                                  3,059   8,355    7,542   4,451   3,671       0,244       8,879           .786,202
                                                       Payments
  89
          Year N is the year in which implementation of the proposal/initiative starts.
EN                                                                                                   176                                                                                 EN
 ---pagebreak---  3.2.2.      Estimated impact on operational appropriations
             •       The proposal/initiative does not require the use of operational appropriations
             •       The proposal requires the use of operational appropriations, as explained below. Cohesion policy is run by shared management. While
                 strategic priorities are set at the EU level, actual day-to-day management is vested in managing authorities at national, regional and local
                 level. While common output indicators are proposed by the Commission, the actual output targets are proposed by these managing
                 authorities as part of their operational programmes, and agreed by the Commission. It is therefore difficult to indicate targets for outputs
                 until the programmes are drafted, negotiated and agreed in 2013/14.
                                                                                                                                                     Commitment appropriations in EUR million (to 3 decimal places)
                                                          Year                Year                Year                         Year             … enter as many years as necessary to show
                                                                                                                                                                                                             TOTAL
             Indicate                                      N                  N+1                 N+2                          N+3               the duration of the impact (see point 1.6)
          objectives and
             outputs                                                                                                    OUTPUTS
                                       Avera
                             Type                                                                                                                                                                         Total
                               of
                                         ge       Number              Number              Number                       Number                 Number              Number              Number             number    Total
                                        cost                  Cost                Cost                   Cost                         Cost                Cost                Cost                Cost
                             output                                                                                                                                                                        of      cost
                 Ø              90     of the    of outputs          of outputs          of outputs                   of outputs             of outputs          of outputs          of outputs          outputs
                                       output
          SPECIFIC OBJECTIVE No 191…
             - Output
             - Output
             - Output
          Sub-total for specific objective N°1
           SPECIFIC OBJECTIVE No 2…
             - Output
 90
           Outputs are products and services to be supplied (e.g.: number of student exchanges financed, number of km of roads built, etc.).
 91
           As described in Section 1.4.2. "Specific objective(s)…".
EN                                                                                                              177                                                                                                        EN
 ---pagebreak---    Sub-total for specific objective N°2
             TOTAL COST
                                            .
EN                                      178 EN
 ---pagebreak---           3.2.3.     Estimated impact on appropriations of an administrative nature
          3.2.3.1. Summary
                     •        The proposal/initiative does not require the use of administrative
                         appropriations
                     •        The proposal requires the use of administrative appropriations, as explained
                         below:
          DG REGIO
          EUR million (to 3 decimal places)
                                 Year             Year              Year           Year            Year          Year            Year
                                                                                                                                                TOTAL
                                  N 92             N+1               N+2           N+3              N+4           N+5            N+6
      HEADING 5
  of the multiannual
 financial framework
  Human        resources                                                                                                                          561,309
                                   80,187     80,187            80,187         80,187            80,187       80,187         80,187
  REGIO
 Other administrative
                             3,800                3,800             3,800          3,800           3,800         3,800          3,800              26,600
 expenditure
 Subtotal HEADING 5                                                                                                                             586,187
    of the multiannual             83,741     83,741            83,741         83,741            83,741       83,741         83,741
  financial framework
 Outside HEADING 593
    of the multiannual
 financial framework 94
  Human        resources
                                       4,4              4,4               4,4             4,4           4,4            4,4             4,4           30,8
  REGIO
  Other expenditure
  of an administrative             13,365           13,365           13,365          13,365          13,365        13,365         13,365           93,555
  nature
         Subtotal                                   17,765           17,765          17,765          17,765        17,765         17,765
  outside HEADING 5                17,765                                                                                                         124,355
    of the multiannual
  financial framework
                                 101,506          101,506           101,506        101,506         101,506       101,506         101,506          710,542
         TOTAL
          92
                   Year N is the year in which implementation of the proposal/initiative starts.
          93
                   Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions
                   (former "BA" lines), indirect research, direct research.
          94
                   External staff financed from former BA lines, based on the 2011 Final Allocation for Human Resources, including external staff
                   at Headquarters and in Delegations
EN                                                                           179                                                                   EN
 ---pagebreak---          DG EMPL
         EUR million (to 3 decimal places)
                                Year             Year              Year           Year            Year          Year          Year
                                                                                                                                            TOTAL
                                N 95              N+1               N+2           N+3             N+4            N+5          N+6
     HEADING 5
  of the multiannual
 financial framework
  Human resources                25,400            25,400           25,400          25,400         25,400        25,400        25,400         177,800
  Other administrative
  expenditure
 Subtotal HEADING 5
   of the multiannual            25,400            25,400           25,400          25,400         25,400         25,400       25,400         177,800
  financial framework
 Outside HEADING 596
   of the multiannual
  financial framework
  Human resources                 5,000             5,000             5,000          5,000          5,000          5,000        5,000          35,000
  Other expenditure
  of an administrative           16,000            16,000           16,000          16,000         16,000         16,000       16,000         112,000
  nature
        Subtotal
  outside HEADING 5
   of the multiannual
                                 21,000         21,000            21,000         21,000          21,000        21,000        21,000           147,000
  financial framework
        TOTAL                    46,400            46,400           46,400          46,400         46,400         46,400       46,400         324,800
        TOTAL                  148,933           148,933         148,933       148,933          148,933       148,933       148,933         1.042,531
         95
                  Year N is the year in which implementation of the proposal/initiative starts.
         96
                  Technical and/or administrative assistance and expenditure in support of the implementation of EU programmes and/or actions
                  (former "BA" lines), indirect research, direct research.
EN                                                                         180                                                                 EN
 ---pagebreak---   3.2.3.2. Estimated requirements of human resources
             •        The proposal/initiative does not require the use of human resources
             •        The proposal/initiative requires the use of human resources, as explained below: Figures used for the year n are the ones for 2011.
  DG REGIO:
                                                                                                                                Estimate to be expressed in full amounts (or at most to one decimal place)
                                                                              Year            Year                            Year N+2                             Year        Year   Year       Year
                                                                                N              N+1                                                                  N+3         N+4    N+5       N+6
  y Establishment plan posts (officials and temporary agents) REGIO
               13 01 01 01 (Headquarters and                                  606              606                               606                                606        606    606         606
               Commission’s Representation Offices)
               13 01 01 02 (Delegations)
               13 01 05 01 (Indirect research)
               10 01 05 01 (Direct research)
  y External personnel (in Full Time Equivalent unit: FTE)97 REGIO
               13 01 02 01 (CA, INT, SNE from the                              48               48                                48                                 48         48     48          48
               "global envelope")
               13 02 02 (CA, INT, JED, LA and SNE in
               the delegations)
               13 01 04 01              - at Headquarters99                    56            56          56                                                       56          56    56        56
               98
                                        - in delegations
  97
           CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert;
  98
           Under the ceiling for external personnel from operational appropriations (former "BA" lines).
  99
           Essentially for Structural Funds, European Agricultural Fund for Rural Development (EAFRD) and European Fisheries Fund (EFF).
EN                                                                                                          181                                                                                          EN
 ---pagebreak---                                         - at Headquarters101                   25            25          25                                25  25  25  25
               13 01 04 03
               100
                                        - in delegations
               XX 01 05 02 (CA, INT, SNE - Indirect
               research)
               10 01 05 02 (CA, INT, SNE - Direct
               research)
               Other
               TOTAL                                                          735            735         735                               735 735 735 735
             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 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                  To contribute to the analysis, negotiation, modification and/or preparation for approval
                                                  proposals for programmes and/or projects in Member State XXX. To contribute to
                                                  manage, monitor and evaluate the implementation of programmes/projects approved.
                                                  To ensure compliance with the rules governing programme XXX.
  External personnel                              Idem and /or administrative support
  100
           Under the ceiling for external personnel from operational appropriations (former "BA" lines).
  101
           Essentially for Structural Funds, European Agricultural Fund for Rural Development (EAFRD) and European Fisheries Fund (EFF).
EN                                                                                                          182                                                  EN
 ---pagebreak---   DG EMPL
  Estimate to be expressed in full time equivalent units without decimals
                                                             Year                       Year                    Year N+2                       Year N+3             Year            Year Year
                                                               N                        N+1                                                                         N+4             N+5  N+6
  y Establishment plan posts (officials and temporary agents)
               04 01 01 (Headquarters                         200                        200                       200                             200              200             200  200
               and Commission’s
               Representation Offices)
               (200 posts, unit cost
               127.000 €)
                (Delegations)
               (Indirect research)
                (Direct research)
  y External personnel (in Full Time Equivalent unit: FTE)102
                (CA, INT, SNE from
               the "global envelope")
                (CA, INT, JED, LA and
               SNE in the delegations)
               04                        - at                 93                         93                         93                              93               93              93   93
               01                        Hea
               04                        dqu
               01                        arter
               103
                                         s104
                                         - in
                                         dele
                                         gati
  102
           CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert;
  103
           Under the ceiling for external personnel from operational appropriations (former "BA" lines).
  104
           Essentially for Structural Funds, European Agricultural Fund for Rural Development (EAFRD) and European Fisheries Fund (EFF).
EN                                                                                                       183                                                                                  EN
 ---pagebreak---                          ons
     XX 01 05 02 (CA, INT,
     SNE - Indirect research)
     xx 01 05 02 (CA, INT,
     SNE - Direct research)
     Other xx 01 04 02)
     TOTAL                            293                293                   293                    293            293           293          293
   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 with any additional allocation which may be granted to the managing DG under the annual allocation procedure and in the
   light of budgetary constraints.
EN                                                                      184                                                                            EN
 ---pagebreak---       3.2.4.    Compatibility with the current multiannual financial framework
                •        Proposal/initiative is compatible the next multiannual financial framework.
                •        Proposal/initiative will entail reprogramming of the relevant heading in the
                    multiannual financial framework.
                Explain what reprogramming is required, specifying the budget lines concerned and the corresponding
                amounts.
                […]
                •        Proposal/initiative requires application of the flexibility instrument or revision
                    of the multiannual financial framework105.
                Explain what is required, specifying the headings and budget lines concerned and the corresponding
                amounts.
                […]
      3.2.5.    Third-party contributions
                • The proposal/initiative does not provide for co-financing by third parties
                •        The proposal provides that European funding needs to be co-financed. The
                    exact amount cannot be quantified. The regulation establishes maximum co-
                    financing rates differentiated in line with the level of regional development (cf.
                    Art. 73 of proposed regulation):
                                                                           Appropriations in EUR million (to 3 decimal places)
                                   Year            Year           Year      Year        Year      Year         Year
                                                                                                                            Total
                                     N              N+1           N+2       N+3         N+4       N+5           N+6
 Specify the co-financing                           MS             MS       MS                     MS           MS
                                    MS                                                  MS
 body
 TOTAL      appropriations
                                    tbd              tbd           tbd      tbd         tbd        tbd          Tbc
 cofinanced
      105
              See points 19 and 24 of the Interinstitutional Agreement.
EN                                                                     185                                                      EN
 ---pagebreak---          3.3.       Estimated impact on revenue
                    •       Proposal/initiative has no financial impact on revenue.
                    •       Proposal/initiative has the following financial impact:
                            –                     on own resources
                            –                     on miscellaneous revenue
                                                                                                    EUR million (to 3 decimal places)
                                                                                  Impact of the proposal/initiative106
                             Appropriations
                            available for the
 Budget revenue line:                                                                                       … insert as many columns as necessary
                             ongoing budget           Year            Year      Year          Year
                                   year                                                                      in order to reflect the duration of the
                                                       N               N+1      N+2            N+3
                                                                                                                     impact (see point 1.6)
 Article ………….
                    For miscellaneous assigned revenue, specify the budget expenditure line(s) affected.
                    […]
                    Specify the method for calculating the impact on revenue.
                    […]
         106
                  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                                                                       186                                                                   EN
 ---pagebreak--- EN 187 EN