Commission Regulation (EU) No 702/2014 of 25 June 2014 declaring certain categories of aid in the agricultural and forestry sectors and in rural areas compatible with the internal market in application of Articles 107 and 108 of the Treaty on the Functioning of the European Union

For the purpose of this Regulation the following definitions shall apply:

1. ‘aid’ means any measure fulfilling all the criteria laid down in Article 107(1) of the Treaty;

2. ‘SME’ or ‘micro, small and medium-sized enterprises’ means undertakings fulfilling the criteria laid down in Annex I;

3. ‘agricultural sector’ means all undertakings active in primary agricultural production, processing and marketing of agricultural products;

4. ‘agricultural product’ means the products listed in Annex I to the Treaty, except the fishery and aquaculture products listed in Annex I to Regulation (EU) No 1379/2013 of the European Parliament and of the Council⁽¹⁾;

5. ‘primary agricultural production’ means the production of products of the soil and of stock farming, listed in Annex I to the Treaty, without performing any further operation changing the nature of such products;

6. ‘processing of agricultural products’ means any operation on an agricultural product resulting in a product which is also an agricultural product, except on-farm activities necessary for preparing an animal or plant product for first sale;

7. ‘marketing of agricultural products’ means holding or display with a view to sale, offering for sale, delivery or any other manner of placing on the market, except the first sale by a primary producer to resellers or processors and any activity preparing a product for such first sale; a sale by a primary producer to final consumers is considered as marketing of agricultural products if it takes place in separate premises reserved for that purpose;

8. ‘agricultural holding’ means a unit comprising of land, premises and facilities used for primary agricultural production;

9. ‘natural disasters’ means earthquakes, avalanches, landslides and floods, tornadoes, hurricanes, volcanic eruptions and wild fires of natural origin;

10. ‘aid scheme’ means any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be granted to one or several undertakings for an indefinite period of time and for an indefinite amount;

11. ‘evaluation plan’ means a document containing at least the following minimum elements: the objectives of the aid scheme to be evaluated; the evaluation questions; the result indicators; the envisaged methodology to conduct the evaluation; the data collection requirements; the proposed timing of the evaluation, including the date of submission of the final evaluation report; the description of the independent body conducting the evaluation or the criteria that will be used for its selection and the modalities for ensuring the publicity of the evaluation;

12. ‘individual aid’ means:

    1. ad hoc aid; and

    2. awards of aid to individual beneficiaries on the basis of an aid scheme;

13. ‘ad hoc aid’ means aid not granted on the basis of an aid scheme;

14. ‘undertaking in difficulty’ means an undertaking in respect of which at least one of the following circumstances occurs:

    1. in the case of a limited liability company (other than an SME that has been in existence for less than three years), where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital. For the purposes of this provision, ‘limited liability company’ refers in particular to the types of company mentioned in Annex I of Directive 2013/34/EU of the European Parliament and of the Council⁽²⁾ and ‘share capital’ includes, where relevant, any share premium;

    2. in the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has been in existence for less than three), where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses. For the purposes of this provision, ‘a company where at least some members have unlimited liability for the debt of the company’ refers in particular to the types of company mentioned in Annex II to Directive 2013/34/EU;

    3. where the undertaking is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors;

    4. where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan;

    5. in the case of an undertaking that is not an SME, where, for the past two years:

       1. the undertaking's book debt to equity ratio has been greater than 7,5 and

       2. the undertaking's EBITDA interest coverage ratio has been below 1,0;

15. ‘fallen stock’ means animals which have been killed by euthanasia with or without a definite diagnosis or which have died, including stillborn and unborn animals, on a farm or on any premises or during transport, but which have not been slaughtered for human consumption;

16. ‘adverse climatic event which can be assimilated to a natural disaster’ means unfavourable weather conditions such as frost, storms and hail, ice, heavy or persistent rain or severe drought which destroy more than 30 % of the average of the production calculated on the basis of:

    1. the preceding three-year period; or

    2. a three-year average based on the preceding five-year period, excluding the highest and the lowest entry;

17. ‘other adverse climatic events’ means unfavourable weather conditions which do not meet the conditions of Article 2(16) of this Regulation;

18. ‘plant pest’ means harmful organisms as defined in Article 2(1)(e) of Council Directive 2000/29/EC⁽³⁾;

19. ‘catastrophic event’ means an unforeseen event of biotic or abiotic nature caused by human action that leads to important disturbances of forest structures, eventually causing important economic damage to the forest sectors;

20. ‘gross grant equivalent’ means the amount of the aid if it had been provided in the form of a grant to the beneficiary, before any deduction of tax or other charges;

21. ‘tangible assets’ means assets consisting of land, buildings and plant, machinery and equipment;

22. ‘intangible assets’ means assets that do not have a physical or financial embodiment such as patents, licences, know-how or other intellectual property;

23. ‘agroforestry systems’ means land use systems where trees are grown in combination with agriculture on the same land;

24. ‘repayable advance’ means a loan for a project which is paid in one or more instalments and the conditions for the reimbursement of which depend on the outcome of the project;

25. ‘start of works on the project or activity’ means the earlier of either the start of the activities or the construction works relating to the investment, or the first legally binding commitment to order equipment or employ services or any other commitment that makes the project or activity irreversible; buying land and preparatory works such as obtaining permits and conducting feasibility studies are not considered start of works or activity;

26. ‘large enterprises’ means undertakings not fulfilling the criteria laid down in Annex I;

27. ‘fiscal successor scheme’ means a scheme in the form of tax advantages which constitutes an amended version of a previously existing scheme in the form of tax advantages and which replaces it;

28. ‘aid intensity’ means the gross aid amount expressed as a percentage of the eligible costs, before any deduction of tax or other charge;

29. ‘date of granting the aid’ means the date when the legal right to receive the aid is conferred on the beneficiary under the applicable national legal regime;

30. ‘Union standard’ means mandatory standard laid down in Union legislation setting the level which individual undertakings must achieve, in particular as regards the environment, hygiene and animal welfare; however, standards or targets set at Union level which are binding for Member States but not for individual undertakings are not deemed to be Union standards;

31. ‘rural development programme’ means rural development programme as provided for in Article 6(1) of Regulation (EU) No 1305/2013;

32. ‘non-productive investment’ means investment which does not lead to a significant increase in the value or profitability of the holding;

33. ‘investments to comply with an Union standard’ means investments made to comply with an Union standard after the expiry of the transitional period provided for in Union legislation;

34. ‘young farmer’ means a person who is no more than 40 years of age on the date of submitting the aid application, possesses adequate occupational skills and competences and is setting up for the first time in an agricultural holding as a head of that holding;

35. ‘outermost regions’ means the regions referred to in the first paragraph of Article 349 of the Treaty;

36. ‘smaller Aegean islands’ means the smaller islands referred to in Article 1(2) of Regulation (EU) No 229/2013 of the European Parliament and of the Council^(4);

37. ‘less developed regions’ means regions where the gross domestic product (GDP) per capita is less than 75 % of average GDP of the EU-27;

38. ‘EU-25’ means the 25 Member States of the Union who were Member States of the Union in May 2005;

39. ‘EU-27’ means the 27 Member States of the Union who were Member States of the Union in January 2007;

40. ‘capital works’ means works, undertaken by the farmer personally or by the farmer's workers, that create an asset;

41. ‘food based biofuel’ means a biofuel produced from cereal and other starch rich crops, sugars and oil crops as defined in the Commission's Proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources⁽⁵⁾;

42. ‘active farmer’ means an active farmer within the meaning of Article 9 of Regulation (EU) No 1307/2013⁽⁶⁾ of the European Parliament and of the Council;

43. ‘producer group and organisation’ means a group or organisation set up for the purpose of:

    1. adapting the production and output of producers who are members of such producer groups or organisations to market requirements; or

    2. jointly placing goods on the market, including the preparation for sale, centralisation of sales and supply to bulk buyers; or

    3. establishing common rules on production information, with particular regard to harvesting and availability; or

    4. other activities that may be carried out by producer groups or organisations, such as the development of business and marketing skills and the organisation and facilitation of innovation processes;

44. ‘fixed costs arising from participation in quality scheme’ means the costs incurred for entering a supported quality scheme and the annual contribution for participating in that quality scheme, including, where necessary, expenditure on checks required to verify compliance with the specifications of the quality scheme;

45. ‘advice’ means complete advice given in the framework of one and the same contract;

46. ‘member of a farm household’ means a natural or legal person or a group of natural or legal persons, whatever legal status is granted to the group and its members by national law, with the exception of farm workers;

47. ‘Transmissible Spongiform Encephalopathy (TSE) and Bovine Spongiform Encephalopathy (BSE) test costs’ means all costs, including those for test kits and for the taking, transporting, testing, storing and destruction of samples necessary for sampling and laboratory testing in accordance with Chapter C of Annex X to Regulation (EC) No 999/2001 of the European Parliament and of the Council⁽⁷⁾;

48. ‘herd book’ means any book, register, file or data medium:

    1. which is maintained by a breeders' organisation or association officially recognised by a Member State in which the breeders' organisation or association was constituted; and

    2. in which pure-bred breeding animals of a given breed are entered or registered with mention of their ancestors;

49. ‘protected animal’ means any animal protected either by Union or by national legislation;

50. ‘research and knowledge-dissemination organisation’ means an entity (such as universities or research institutes, technology transfer agencies, innovation intermediaries, research-oriented physical or virtual collaborative entities), irrespective of its legal status (organised under public or private law) or way of financing, whose primary goal is to independently conduct fundamental research, industrial research or experimental development, or to widely disseminate the results of such activities by way of teaching, publication or knowledge transfer. Where such entity also pursues economic activities the financing, the costs and the revenues of those economic activities must be accounted for separately. Undertakings that can exert influence upon such an entity, in the quality of, for example, shareholders or members, may not enjoy a preferential access to its research capacities or to the results generated by it;

51. ‘arm's length’ means that the conditions of the transaction between the contracting parties do not differ from those which would be stipulated between independent undertakings and contain no element of collusion. Any transaction that results from an open, transparent and unconditional procedure is considered as meeting the arm's length principle;

52. ‘fast growing trees’ means a short rotation forest, where the minimum time before felling is set to be not less than 8 years and the maximum time before felling is set not to exceed 20 years;

53. ‘trees for short rotation coppicing’ means tree species of CN code 06 02 9041 to be defined by Member States that consist of woody, perennial crops, the rootstock or stools of which remain in the ground after harvesting, with new shoots emerging in the following season and with a maximum harvest cycle to be determined by the Member States;

54. ‘transaction cost’ means an additional cost linked to fulfilling a commitment, but not directly attributable to its implementation or not included in the costs or income foregone that are compensated directly; and which can be calculated on a standard cost basis;

55. ‘other land manager’ means an undertaking which manages land other than undertaking active in the agricultural sector;

56. ‘processing of agricultural products into non-agricultural products’ means any operation on an agricultural product resulting in a product which is not covered by Annex I to the Treaty;

57. ‘“a” areas’ means those areas designated in an approved regional aid map for the period from 1 July 2014 to 31 December 2020 in application of the provisions of Article 107(3)(a) of the Treaty;

58. ‘“c” areas’ means those areas designated in an approved regional aid map for the period 1 July 2014 to 31 December 2020 in application of the provisions of Article 107(3)(c) of the Treaty;

59. ‘sparsely populated areas’ means areas accepted by the Commission as such in the individual decisions on regional aid maps for the period from 1 July 2014 to 31 December 2020;

60. ‘NUTS 3 area’ means a region specified at level 3 of a common classification of territorial units for statistics in accordance with Regulation (EC) No 1059/2003 of the European Parliament and of the Council⁽⁸⁾;

61. ‘non-predefined “c” areas’ means areas that a Member State at its own discretion designates as ‘c’ areas provided that the Member State demonstrates that such areas fulfil certain socioeconomic criteria and that those areas are designated in an approved regional aid map for the period 1 July 2014 to 31 December 2020 in application of the provisions of Article 107(3)(c) of the Treaty;

62. ‘former “a” areas’ means those areas designated as ‘a’ areas in an approved regional map for the period from 1 January 2011 to 30 June 2014;

63. ‘foodstuffs’ means foodstuffs which are not agricultural products and which are listed in Annex I to Regulation (EU) No 1151/2012 of the European Parliament and of the Council⁽⁹⁾.

Aid schemes, individual aid granted under aid schemes and ad hoc aid shall be compatible with the internal market within the meaning of Article 107(2) or (3) of the Treaty and shall be exempted from the notification requirement of Article 108(3) of the Treaty provided that such aid fulfils all the conditions laid down in Chapter I of this Regulation, as well as the specific conditions for the relevant category of aid laid down in Chapter III of this Regulation.