The reduction provided for in Article 42(1) of Regulation (EC) No 1782/2003 shall apply to all reference amounts after any possible reduction under Article 41(2) of that Regulation and, where applicable, after any possible reduction under Article 65(1) and the second subparagraph of Article 70(2) of that Regulation.

In case of application of the reduction referred to in Article 42 (7) of Regulation (EC) No 1782/2003, the unit value of all payment entitlements which have been established at the date of application of the linear reduction shall be reduced proportionately.

In the case where the amounts contained in the national reserve show to be higher than what is needed to cover the cases referred to in Article 42 of Regulation (EC) No 1782/2003, the Member States may increase proportionally the unit value of all payment entitlements. The total amount used for this increase shall not be higher than the total amount resulting from the linear reduction applied in accordance with Article 42(1) and (7) of that Regulation.

The percentage of reduction fixed by the Member States in accordance with Article 42(1) of Regulation (EC) No 1782/2003 shall apply in 2007 to the amounts resulting from dairy premiums and additional payments to be included in the single payment scheme.

Where a Member State makes use of the option, provided for in the first subparagraph of Article 62 of Regulation (EC) No 1782/2003, to include in full the amounts resulting from dairy premiums and additional payments in the single payment scheme, it shall apply the percentage of reduction referred to in paragraph 1 of this Article in the year in which it makes use of that option. In the following years, the Member State concerned shall apply the reduction within the limit of the increase of the amounts provided for in Articles 95 (2) and 96 (2) of Regulation (EC) No 1782/2003.

Where a Member State makes use of the option, provided for in the first subparagraph of Article 62 of Regulation (EC) No 1782/2003, to include in part the amounts resulting from dairy premiums and additional payments in the single payment scheme, it shall apply the percentage of reduction referred to in paragraph 1 of this Article to the corresponding amounts included in the single payment scheme in the year in which it makes use of that option, taking into account the increase of the amounts provided for in Article 95 (2) and 96 (2) of Regulation (EC) No 1782/2003.