1.For the purposes of Article 74(1) of Regulation (EC) No 1698/2005 Member States shall ensure that all the rural development measures they intend to implement are verifiable and controllable. To this end, Member States shall define control arrangements that give them reasonable assurance that eligibility criteria and other commitments are respected.
2.In order to substantiate and confirm the adequacy and accuracy of the calculations of payments under Articles 31, 38, 39, 40 and 43 to 47 of Regulation (EC) No 1698/2005, Member States shall ensure that appropriate expertise is provided by bodies or services functionally independent from those responsible for those calculations. Provision of such expertise shall be evidenced in the rural development programme.
Interest rate subsidies for loans may be co-financed by the EAFRD pursuant to Article 71(5) of Regulation (EC) No 1698/2005. When proposing interest rate subsidies, Member States shall indicate in their programmes the method of calculation of the interest rate subsidy to be used.
Member States may establish a system of capitalisation of the remaining annual instalments of the interest rate subsidy at any time during the period of the loan. Any remaining annual instalment after the final date for payments shall be capitalised and paid out by 31 December 2015 at the latest. For the purposes of claims for payment made to the Commission, the amounts paid out to the intermediary financial institution undertaking the payment of the discounted value of the subsidy shall be considered as expenditure actually incurred.
For the purposes of the second paragraph, an agreement is needed between the Member States’ paying agency and the intermediary financial institution undertaking the payment of the discounted value of the subsidy. Member States shall indicate in the programme the calculation method and future value hypotheses to be used in calculating the capitalised value of outstanding interest rate subsidy as well as the arrangements for continuing transmitting the aid to the beneficiaries.
Member States shall remain responsible for the management of the payment of the discounted value of the subsidy for the entire loan period to the financial intermediary and for any recovery of amounts unduly paid in accordance with Article 33 of Council Regulation (EC) No 1290/2005(1).
Pursuant to Article 71(5) of Regulation (EC) No 1698/2005, as part of a rural development programme, the EAFRD may co-finance expenditure in respect of an operation comprising contributions to support venture capital funds, guarantee funds and loan funds (hereinafter ‘the funds’), in accordance with Articles 51 and 52 of this Regulation.
1.Those part-financing the funds or their sponsors shall submit a business plan to the managing authority specifying, inter alia, the targeted market or guarantee portfolio, the criteria, terms and conditions of financing, the operational budget of the fund, the ownership and part-financing partners, the requirements as to the professionalism, competence and independence of the management, the fund’s by-laws, the justification and intended utilisation of the EAFRD contribution, the investment exit policy, and the winding-up provisions of the fund, including the re-utilisation of returns attributable to the EAFRD contribution. The business plan shall be appraised and its implementation monitored by or under the responsibility of the managing authority.
2.The funds shall be set up as independent legal entities governed by agreements between the shareholders or as separate block of finance within an existing financial institution. In the latter case, the fund shall be subject to specific implementing rules, providing in particular for the keeping of separate accounts distinguishing the new resources invested in the fund, including those contributed by the EAFRD, from those initially available in the financial institution. The Commission shall not become a partner or shareholder in the fund.
3.The funds shall invest in or provide guarantees to enterprises on their establishment, during their early stages or expansion and only in activities that the fund managers consider potentially viable. The assessment of the economic viability shall take into account all sources of income of the enterprises in question. Funds shall not invest in or provide guarantees for firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty(2).
4.Precautions shall be taken by managing authorities and funds to minimise distortion of competition in the venture capital or lending market. In particular, returns from equity investments and loans, less a pro rata share of the management costs, may be preferentially allocated to the private sector shareholders up to the level of remuneration laid down in the shareholder agreement, and after that, they shall be allocated proportionally between all shareholders and the EAFRD.
5.Management costs of funds shall not exceed 3 % of the paid-up capital, or 2 % in the case of guarantee funds, on a yearly average for the duration of the programme unless, after a competitive tender, a higher percentage proves necessary.
6.The terms and conditions for contributions to funds from rural development programmes, including deliverables, investment strategy and planning, monitoring implementation, investment exit policy and winding up provisions, shall be established in a funding agreement to be concluded between the fund on the one hand, and the Member State or the managing authority, on the other.
7.Contributions to funds from the EAFRD and other public sources and investments made by the funds in or guarantees provided to individual undertakings shall be subject to the rules in Regulation (EC) No 1698/2005 or to the Community rules on State aid.
1. As regards financial engineering actions referred to in Article 51 of this Regulation, the expenditure declared to the Commission in accordance with Article 26(3)(a) of Regulation (EC) No 1290/2005 shall be the total expenditure paid in establishing or contributing to such funds.
However, when paying the balance and closing the rural development programme in accordance with Article 28 of Regulation (EC) No 1290/2005, the eligible expenditure shall be the total of:
(a) any payment for investment in enterprises out of each of the funds concerned, or any guarantees provided including amounts committed as guarantees by guarantee funds;
(b) eligible management costs.
The co-financing rate to be applied shall correspond to the co-financing rate of the measure to which the fund contributes. If the fund contributes to several measures with different co-financing rates, these rates shall apply at the ratio of the respective eligible expenditure.
The difference between the EAFRD contribution actually paid pursuant to the first subparagraph and the eligible expenditure under points (a) or (b) of the second subparagraph shall be cleared in the context of the annual accounts of the last year of implementation of the programme. These accounts shall include the detailed financial information needed.
2. Where EAFRD co-finances operations comprising guarantee funds for repayable investments pursuant to Article 50 of this Regulation, an appropriate ex ante assessment of expected losses shall be carried out, taking into account current market practices for similar operations for the type of investments and market concerned. The assessment of the expected losses may be reviewed, if justified by subsequent market conditions. The resources committed to honour guarantees shall reflect such an assessment.
3. Resources returned to the operation during the programming period from investments undertaken by funds or left over after a guarantee has been honoured shall be reused by the fund according to the funding agreement referred to in Article 51(6) of this Regulation or cleared in the context of the annual accounts. After the final date of eligibility of the rural development programme, resources returned to the operation from investments undertaken by funds or left over after all guarantees have been honoured shall be used by the Member States concerned for the benefit of individual undertakings.
Interest generated by payments from rural development programmes to funds shall be used according to the first subparagraph.]
Textual Amendments
F1 Substituted by Commission Implementing Regulation (EU) No 679/2011 of 14 July 2011 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
[F21. [F1Where appropriate, Member States may fix the level of support provided for in Articles 27, 31, 37 to 41 and 43 to 49 of Regulation (EC) No 1698/2005 on the basis of standard costs and standard assumptions of income foregone.]
Without prejudice to the applicable material and procedural State aid rules the first subparagraph also applies to investments associated with maintenance, restoration and upgrading of the natural heritage and with the development of high natural value sites as referred to in Article 57(a) of Regulation (EC) No 1698/2005.]
2.Member States shall ensure that the calculations and the corresponding support referred to in paragraph 1:
(a)contain only elements that are verifiable;
(b)are based on figures established by appropriate expertise;
(c)indicate clearly the source of the figures;
(d)are differentiated to take into account regional or local site conditions and actual land use as appropriate;
(e)in the case of measures pursuant to Articles 31, 37 to 40 and 43 to 47 of Regulation (EC) No 1698/2005, do not contain elements linked to fixed investment costs.
Textual Amendments
F1 Substituted by Commission Implementing Regulation (EU) No 679/2011 of 14 July 2011 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
F2 Substituted by Commission Regulation (EC) No 482/2009 of 8 June 2009 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and Regulation (EC) No 883/2006 laying down detailed rules for the application of Council Regulation (EC) No 1290/2005 as regards the keeping of accounts by the paying agencies, declarations of expenditure and revenue and the conditions for reimbursing expenditure under the EAGF and the EAFRD.
1.[F1Contributions in kind from a public or private beneficiary, namely the provision of goods or services for which no cash payment supported by invoices or documents of equivalent probative value is made, may be eligible expenditure provided that the following conditions are fulfilled:]
(a)the contributions consist in the provision of land or real estate, equipment or raw materials, research or professional work or unpaid voluntary work;
(b)the contributions are not made in respect of financial engineering actions referred to in Article 50;
(c)the value of the contributions can be independently assessed and verified.
In the case of provision of land or real estate, the value shall be certified by an independent qualified expert or duly authorised official body.
In the case of unpaid voluntary work, the value of that work shall be determined taking into account the time spent and the hourly and daily rate of remuneration for equivalent work, where relevant on the basis of ex-ante established system of standard costing, provided that the control system provides reasonable assurance that the work has been carried out.
2.Public expenditure co-financed by the EARDF, contributing to an operation which includes contributions in kind shall not exceed the total eligible expenditure, excluding contributions in kind, at the end of the operation.
Textual Amendments
F1 Substituted by Commission Implementing Regulation (EU) No 679/2011 of 14 July 2011 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
1.In the case of investments, eligible expenditure shall be limited to:
(a)the construction, acquisition, including leasing, or improvement of immovable property;
(b)the purchase or lease-purchase of new machinery and equipment, including computer software up to the market value of the asset. Other costs connected with the leasing contract, such as lessor’s margin, interest refinancing costs, overheads and insurance charges, shall not be eligible expenditure;
(c)general costs linked to expenditure referred to in points (a) and (b), such as fees of architects and engineers and consultation fees, feasibility studies, the acquisition of patent rights and licences.
By way of derogation from point (b) of the first subparagraph, and only for micro, small and medium-sized enterprises within the meaning of Commission Recommendation 2003/361/EC(3), Member States may, in duly substantiated cases, establish the conditions under which the purchase of second-hand equipment may be regarded as eligible expenditure.
[F12. In the case of agricultural investments, the purchase of agricultural production rights, payment entitlements, animals, annual plants and their planting shall not be eligible for investment support.
Simple replacement investments shall not be eligible expenditure.
However, in cases of restoration of agricultural production potential damaged by natural disasters pursuant to Article 20(b)(vi) of Regulation (EC) No 1698/2005, expenditure for the purchase of animals and replacement investments may be eligible expenditure.]
Textual Amendments
F1 Substituted by Commission Implementing Regulation (EU) No 679/2011 of 14 July 2011 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
1. By way of derogation from Article 24(6) of Regulation (EU) No 65/2011, Member States may, upon request, pay an advance to the beneficiaries of investment support. As regards public beneficiaries, such an advance may be paid to municipalities and associations thereof, to regional authorities and to public law bodies.
2. The amount of the advances shall not exceed 50 % of the public aid related to the investment, and its payment shall be subject to the establishment of a bank guarantee or an equivalent guarantee corresponding to 110 % of the amount of the advance.
A facility provided as a guarantee by a public authority shall be considered equivalent to the guarantee referred to in the first subparagraph, provided that the authority undertakes to pay the amount covered by that guarantee should entitlement to the advance paid not be established.
3. The guarantee may be released when the competent paying agency establishes that the amount of actual expenditure corresponding to the public aid related to the investment exceeds the amount of the advance.]
Textual Amendments
F1 Substituted by Commission Implementing Regulation (EU) No 679/2011 of 14 July 2011 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
1.Rural development programmes may cover State aid intended to provide additional national funding in accordance with Article 89 of Regulation (EC) No 1698/2005 in favour of measures or operations falling within the scope of Article 36 of the Treaty only if the State aid is identified in accordance with point 9.A of Annex II to this Regulation.
[F32. Rural development programmes may cover payments made by Member States for rural development, falling outside the scope of Article 36 of the Treaty, in favour of measures pursuant to Articles 25, 43 to 49 and 52 of Regulation (EC) No 1698/2005 and of operations under measures pursuant to Articles 21, 24, 28, 29, 30 and 35a of that Regulation or additional national funding, falling outside the scope of Article 36 of the Treaty, in favour of the measures pursuant to Articles 25, 27, 43 to 49 and 52 of Regulation (EC) No 1698/2005 and of operations under measures pursuant to Articles 21, 24, 28, 29, 30 and 35a of that Regulation only if the State aid is identified in accordance with point 9.B of Annex II to this Regulation.]
3.Expenditure incurred for the measures and operations referred to in paragraph 2 of this Article shall be eligible only if the underlying aid does not constitute unlawful aid within the meaning of Article 1(f) of Council Regulation (EC) No 659/1999(4) at the time the aid is granted.
The managing authority or any other competent authority in the Member State shall ensure that where aid is to be granted to operations under the measures referred to in paragraph 2 of this Article on the basis of existing aid schemes within the meaning of Article 1(b) and (d) of Regulation (EC) No 659/1999, any applicable notification requirements for individual aid within the meaning of Article 1(e) of that Regulation are respected, and that such operations are selected only after notification of the underlying aid and approval by the Commission pursuant to Article 88(3) of the Treaty.
Textual Amendments
1.The rural development programme shall include a communication plan which shall set out:
(a)the aims and target groups;
(b)the content and strategy of the communication and information measures, stating the measures to be taken;
(c)its indicative budget;
(d)the administrative departments or bodies responsible for implementation;
(e)the criteria to be used to evaluate the impact of the information and publicity measures in terms of transparency, awareness of the rural development programmes and the role played by the Community.
2.The amount allocated for information and publicity may be part of the technical assistance component of the rural development programme.
3.Detailed rules on information and publicity are laid down in Annex VI.
At the meetings of the Monitoring Committee set up in accordance with Article 77 of Regulation (EC) No 1698/2005, the Chairman shall report on progress in implementing the information and publicity measures and provide the Committee members with examples of such measures.
For the purposes of Article 78, point (f) of Regulation (EC) No 1698/2005, ‘ substantial proposals for changes ’ shall include the changes for which a decision of the Commission is compulsory and changes referred to in Article 9(1) of this Regulation except the changes relating to the exception referred to in Article 5(6) of Regulation (EC) No 1698/2005 and the information on and description of existing measures in the programme.]
Textual Amendments
The structure and the elements of the annual progress reports provided for in Article 82 of Regulation (EC) No 1698/2005 are set out in Annex VII to this Regulation.
Mid-term and ex-post evaluations in accordance with Article 86(4) and (5) of Regulation (EC) No 1698/2005 shall be submitted to the Commission respectively by 31 December 2010 and 31 December 2015 at the latest.
If Member States fail to submit the mid-term and ex-post evaluation reports by the dates referred to in the first paragraph of this Article the Commission may apply the procedure of temporary suspension of intermediate payments referred to in Article 27(3) of Regulation (EC) No 1290/2005 until it receives those evaluation reports.
1.The common set of baseline, output, result, and impact indicators for the rural development programmes are listed in Annex VIII to this Regulation. That list of indicators shall form the Common Monitoring and Evaluation Framework (CMEF) referred to in Article 80 of Regulation (EC) No 1698/2005.
Where relevant, those indicators shall be broken down by age and gender of beneficiaries, as well as according to whether the measures are implemented in less-favoured areas or in areas covered by the Convergence Objective.
[F4For measures containing types of operations as specified under Article 16a of Regulation (EC) No 1698/2005 output indicators and indicative targets for output indicators shall be broken down by types of operations.]
2.Progress on the output and result indicators shall be part of the annual progress report. That report shall include both common and additional indicators.
To measure progress in meeting the objectives of the rural development programme, indicative targets for output, result and impact indicators shall be set for the period of implementation of the programme, including additional national financing referred to in Article 89 of Regulation (EC) No 1698/2005.
3.Guidance on the CMEF shall be drawn up by the Commission through a common approach with the Member States. That guidance shall cover at least the following:
(a)monitoring requirements;
(b)the organisation of the ex-ante, mid-term and ex-post evaluation and common evaluation questions for each rural development measure;
(c)guidance on the reporting system for assessing progress with respect to indicators;
(d)information sheets for each measure containing the intervention logic and the different indicators;
(e)information sheets describing baseline, output, result and impact indicators.
Textual Amendments
1.The Commission, in collaboration with the Member States, shall establish an information system (hereinafter ‘the System’) to permit the secure exchange of data of common interest between the Commission and each Member State. Those data shall cover both administrative/operational and financial aspects, the latter covered by Article 18 of Commission Regulation (EC) No 883/2006(5).
The System shall be set up and updated by the Commission through a common approach with the Member States.
2.As regards the administrative/operational management, the System shall contain the documentary aspects of common interest enabling monitoring to be carried out, and in particular: the national strategy plans and their updates, the summary reports, the programmes and their modifications, the Commission Decisions, the annual progress reports, including codification of measures in accordance with the table in Point 7 of Annex II, and the monitoring and evaluation indicators in Annex VIII.
3.The managing authority and the Commission shall input into the System and update the documents for which they are responsible in the format required.
4.The System shall be accessible to the Member States and the Commission either directly or via an interface for automatic synchronisation and inputting of data with national and regional computer management systems.
Member States shall submit requests for access rights to the System to the Commission in a centralised manner.
5.Exchanges of data shall be signed electronically in accordance with Article 5 of Directive 1999/93/EC of the European Parliament and of the Council(6). The Member States and the Commission shall recognise the legal effectiveness and admissibility as evidence in legal proceedings of the electronic signature used in the System.
6.The date to take into account for the forwarding of documents to the Commission shall be the date on which the Member State transmits the documents, after inputting them into the System.
A document shall be regarded as having been sent to the Commission once it is no longer possible for the Member State to amend it or remove it from the System.
7.The cost of developing and updating the common elements of the System shall be financed by the Community budget in accordance with Article 66(1) of Regulation (EC) No 1698/2005.
Any costs of an interface between national and local systems, on the one hand, and the System, on the other hand, and any costs of adapting national and local systems may be eligible under Article 66(2) of that Regulation.
[F58. [F3In cases of force majeure or exceptional circumstances, and in particular of malfunctioning of the system or a lack of a lasting connection, the Member State may submit the documents to the Commission in hard copy or by other appropriate electronic means. Such submission of hard copies or by other electronic means shall require prior notice to the Commission.]
Once the cause of force majeure or exceptional circumstance preventing use of the System ceases, the Member State shall input the documents concerned into the System. In this event, the date of sending shall be deemed to be the date of submission of the documents in hard copy or by other appropriate electronic means.]
Textual Amendments
F3 Substituted by Commission Regulation (EC) No 363/2009 of 4 May 2009 amending Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).
F5 Substituted by Commission Regulation (EC) No 1175/2008 of 27 November 2008 amending and correcting Regulation (EC) No 1974/2006 laying down detailed rules for the application of Council Regulation (EC) No 1698/2005 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD).