TITLE I SCOPE AND DEFINITIONS

Article 1 Scope

This Regulation establishes:

Article 2 Amendment of Annex I

In order to ensure legal certainty, the [^F12 appropriate authority may make regulations^F12] amending the list of support schemes set out in Annex I to the extent necessary to take account of any new legislative acts on support schemes which may be adopted after the adoption of this Regulation.

^F13Article 3 Application to the outermost regions and the smaller Aegean islands

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 4 Definitions and related provisions _E1

1.For the purposes of this Regulation, the following definitions shall apply:

(a) "farmer" means a natural or legal person, or a group of natural or legal persons, regardless of the legal status granted to such group and its members ^F14 ..., whose holding is situated within [^F15 Northern Ireland ^F15] , and who exercises an agricultural activity;

(b) "holding" means all the units used for agricultural activities and managed by a farmer situated within [^F16 Northern Ireland ^F16] ;

(c) "agricultural activity" means:

(d) "agricultural products" means the products, with the exception of fishery products, listed in Annex I to the Treaties ^F21 ...;

(e) "agricultural area" means any area taken up by arable land, permanent grassland and permanent pasture, or permanent crops;

(f) "arable land" means land cultivated for crop production or areas available for crop production but lying fallow, including areas set aside in accordance with Articles 22, 23 and 24 of Regulation (EC) No 1257/1999 , with Article 39 of Regulation (EC) No 1698/2005 and with Article 28 of Regulation (EU) No 1305/2013 , irrespective of whether or not that land is under greenhouses or under fixed or mobile cover;

(g) "permanent crops" means non-rotational crops other than permanent grassland and permanent pasture that occupy the land for five years or more and yield repeated harvests, including nurseries and short rotation coppice;

[^F22 (h) "permanent grassland and permanent pasture" (together referred to as "permanent grassland") means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or more, [^F23 and, where the relevant authority so decides ^F23] , that has not been ploughed up for five years or more; it may include other species such as shrubs and/or trees which can be grazed and, where [^F24 the relevant authority so decides ^F24] , other species such as shrubs and/or trees which produce animal feed, provided that the grasses and other herbaceous forage remain predominant. [^F25 The relevant authority ^F25] may also decide to consider as permanent grassland:

(i) "grasses or other herbaceous forage" means all herbaceous plants traditionally found in natural pastures or normally included in mixtures of seeds for pastures or meadows in the [^F26 United Kingdom ^F26] , whether or not used for grazing animals;

(j) "nurseries" means the following areas of young ligneous (woody) plants grown in the open air for subsequent transplantation:

• (j) vine and root-stock nurseries,

• fruit tree and berries nurseries,

• ornamental nurseries,

• commercial nurseries of forest trees excluding those for the holding's own requirements grown within woodland,

• nurseries of trees and bushes for planting in gardens, parks, at the roadside and on embankments (e.g. hedgerow plants, rose trees and other ornamental bushes, ornamental conifers), including in all cases their stocks and young seedlings;

(k) "short rotation coppice" means areas planted with tree species ^F27 ... ^F28 ... defined by [^F29 the relevant authority ^F29] 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 ^F28 ... determined by the [^F30 relevant authority ^F30] ;

(l) "sale" means the sale or any other definitive transfer of ownership of land or payment entitlements; it does not include the sale of land where land is transferred to public authorities or for use in the public interest and where the transfer is carried out for non-agricultural purposes;

(m) "lease" means a rental agreement or similar temporary transaction;

(n) "transfer" means the lease or sale or actual inheritance or anticipated inheritance of land or payment entitlements or any other definitive transfer thereof; it does not cover the reversion of entitlements upon expiry of a lease;

[^F31 (o) “constituent nation” means England, Wales, Scotland or Northern Ireland, as the case may be;

(p) “national reserve” means a reserve established by the relevant authority at the level of the constituent nation;

(q) “regional reserves” means reserves established by the relevant authority at regional level;

(r) “relevant authority” means—

(i)in relation to England, the Secretary of State;

(ii)in relation to Wales, the Welsh Ministers;

(iii)in relation to Scotland, the Scottish Ministers;

(iv)in relation to Northern Ireland, the Department of Agriculture, Environment and Rural Affairs;

(s) “appropriate authority” means—

(i)the relevant authority for the constituent nation in which the regulations apply, or

(ii)the Secretary of State:

(aa)in relation to regulations applying in Scotland, if consent is given by the Scottish Ministers;

(bb)in relation to regulations applying in Northern Ireland, if consent is given by the Department of Agriculture, Environment and Rural Affairs;^F31]

[^F32 (t) ‘total ceiling’ means the amount determined in accordance with Article 5A. ^F32]

[^F33 Notwithstanding points (f) and (h) of the first subparagraph, [^F34 a relevant authority^F34] which, prior to 1 January 2018, [^F35 has^F35] accepted parcels of land lying fallow as arable land may continue to accept them as such after that date. From 1 January 2018 parcels of land lying fallow which have been accepted as arable land under this subparagraph in 2018 shall become permanent grassland in 2023, or thereafter, if the conditions set out in point (h) are met.^F33]

2.[^F36 For the purposes of point (c) of paragraph 1:

(a)the criteria to be met by farmers in order to fulfil the obligation to maintain an agricultural area in a state suitable for grazing or cultivation, as referred to in point (c)(ii) are the criteria set by the relevant authority prior to exit day;

^F37(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .^F36]

[^F38 The relevant authority^F38] may decide that land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas is to be considered to be permanent grassland, as referred to in point (h) of paragraph 1.

[[^F33,F38 The relevant authority^F38] may decide that:

(a)land that has not been ploughed up for five years or more shall be considered permanent grassland as referred to in point (h) of the first subparagraph of paragraph 1, provided that the land is used to grow grasses or other herbaceous forages naturally (self-seeded) or through cultivation (sown) and that it has not been included in the crop rotation of the holding for five years or more;

(b)permanent grassland may include other species such as shrubs and/or trees which produce animal feed, in areas where grasses and other herbaceous forage are predominant; and/or

(c)land which can be grazed where grasses and other herbaceous forage are not predominant or are absent in grazing areas be considered permanent grassland as referred to in point (h) of the first subparagraph of paragraph 1.

[^F38 The relevant authority^F38] may decide, on the basis of objective and non-discriminatory criteria, to apply their decision in accordance with points (b) and/or (c) of the third subparagraph of this paragraph to the whole or a part of [^F39 the constituent nation^F39] .

[^F40 This paragraph only applies where the decisions to which it refers were made and notified to the Commission by:

(a)31st January 2015, in the case of a decision taken under the second subparagraph;

(b)31st March 2018, in the case of a decision taken under the third or fourth subparagraph.^F40,F33]]

^F413.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 4 Definitions and related provisions _E14

1.For the purposes of this Regulation, the following definitions shall apply:

(a) ^F385 "farmer" means a natural or legal person, or a group of natural or legal persons, regardless of the legal status granted to such group and its members ..., whose holding is situated within [^F386 Wales ^F386] , and who exercises an agricultural activity;

(b) "holding" means all the units used for agricultural activities and managed by a farmer situated within [^F387 Wales ^F387] ;

(c) "agricultural activity" means:

(d) ^F390 "agricultural products" means the products, with the exception of fishery products, listed in Annex I to the Treaties ...;

(e) ^F391 "agricultural area" means any area taken up by arable land, permanent grassland ..., or permanent crops;

(f) "arable land" means land cultivated for crop production or areas available for crop production but lying fallow, including areas set aside in accordance with Articles 22, 23 and 24 of Regulation (EC) No 1257/1999 , with Article 39 of Regulation (EC) No 1698/2005 and with Article 28 of Regulation (EU) No 1305/2013 , irrespective of whether or not that land is under greenhouses or under fixed or mobile cover;

(g) ^F392 "permanent crops" means non-rotational crops other than permanent grassland ... that [^F393 occupies ^F393] the land for five years or more and yield repeated harvests, including nurseries and short rotation coppice;

[^F394 (h) [^F395 “permanent grassland” ^F395] means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or more, [^F396 and, where the relevant authority so decides ^F396] , that has not been ploughed up for five years or more; it may include other species such as shrubs and/or trees which can be grazed and, where [^F397 the relevant authority so decides ^F397] , other species such as shrubs and/or trees which produce animal feed, provided that the grasses and other herbaceous forage remain predominant. [^F398 The relevant authority ^F398] may also decide to consider as permanent grassland:

(i) "grasses or other herbaceous forage" means all herbaceous plants traditionally found in natural pastures or normally included in mixtures of seeds for pastures or meadows in [^F399 Wales ^F399] , whether or not used for grazing animals;

(j) "nurseries" means the following areas of young ligneous (woody) plants grown in the open air for subsequent transplantation:

• (j) vine and root-stock nurseries,

• fruit tree and berries nurseries,

• ornamental nurseries,

• commercial nurseries of forest trees excluding those for the holding's own requirements grown within woodland,

• nurseries of trees and bushes for planting in gardens, parks, at the roadside and on embankments (e.g. hedgerow plants, rose trees and other ornamental bushes, ornamental conifers), including in all cases their stocks and young seedlings;

(k) ^{F400,F401,F401} "short rotation coppice" means areas planted with tree species ... ... defined by [^F402 the relevant authority ^F402] 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 ... determined by the [^F403 relevant authority ^F403] ;

(l) "sale" means the sale or any other definitive transfer of ownership of land or payment entitlements; it does not include the sale of land where land is transferred to public authorities or for use in the public interest and where the transfer is carried out for non-agricultural purposes;

(m) "lease" means a rental agreement or similar temporary transaction;

(n) "transfer" means the lease or sale or actual inheritance or anticipated inheritance of land or payment entitlements or any other definitive transfer thereof; it does not cover the reversion of entitlements upon expiry of a lease;

[^F404 (o) “constituent nation” means England, Wales, Scotland or Northern Ireland, as the case may be;

(p) “national reserve” means a reserve established by the relevant authority at the level of the constituent nation;

(q) “regional reserves” means reserves established by the relevant authority at regional level;

(r) “relevant authority” means—

(i)in relation to England, the Secretary of State;

(ii)in relation to Wales, the Welsh Ministers;

(iii)in relation to Scotland, the Scottish Ministers;

(iv)in relation to Northern Ireland, the Department of Agriculture, Environment and Rural Affairs;

[^F405 (s) “appropriate authority” means the relevant authority for the constituent nation in which the regulations apply; ^F405,F404]]

[^F406 (t) “total ceiling” means the amount determined in accordance with Article 5A. ^F406]

[^F407 Notwithstanding points (f) and (h) of the first subparagraph, [^F408 a relevant authority^F408] which, prior to 1 January 2018, [^F409 has^F409] accepted parcels of land lying fallow as arable land may continue to accept them as such after that date. From 1 January 2018 parcels of land lying fallow which have been accepted as arable land under this subparagraph in 2018 shall become permanent grassland in 2023, or thereafter, if the conditions set out in point (h) are met.^F407]

2.[^F410 For the purposes of point (c) of paragraph 1:

(a)the criteria to be met by farmers in order to fulfil the obligation to maintain an agricultural area in a state suitable for grazing or cultivation, as referred to in point (c)(ii) are the criteria set by the relevant authority prior to exit day;

(b)where applicable in a constituent nation, the minimum activity to be carried out on agricultural areas naturally kept in a state suitable for grazing or cultivation, as referred to in point (c)(iii) is as defined by the relevant authority prior to exit day.^F410]

[^F411 The relevant authority^F411] may decide that land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas is to be considered to be permanent grassland, as referred to in point (h) of paragraph 1.

[[^F407,F411 The relevant authority^F411] may decide that:

(a)land that has not been ploughed up for five years or more shall be considered permanent grassland as referred to in point (h) of the first subparagraph of paragraph 1, provided that the land is used to grow grasses or other herbaceous forages naturally (self-seeded) or through cultivation (sown) and that it has not been included in the crop rotation of the holding for five years or more;

(b)permanent grassland may include other species such as shrubs and/or trees which produce animal feed, in areas where grasses and other herbaceous forage are predominant; and/or

(c)land which can be grazed where grasses and other herbaceous forage are not predominant or are absent in grazing areas be considered permanent grassland as referred to in point (h) of the first subparagraph of paragraph 1.

[^F411 The relevant authority^F411] may decide, on the basis of objective and non-discriminatory criteria, to apply their decision in accordance with points (b) and/or (c) of the third subparagraph of this paragraph to the whole or a part of [^F412 the constituent nation^F412] .

^F413... ^F407]

^F4143.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 4 Definitions and related provisions _E15

1.For the purposes of this Regulation, the following definitions shall apply:

(a) ^F415 "farmer" means a natural or legal person, or a group of natural or legal persons, regardless of the legal status granted to such group and its members ..., whose holding is situated within [^F416 Scotland ^F416] , and who exercises an agricultural activity;

(b) "holding" means all the units used for agricultural activities and managed by a farmer situated within [^F417 Scotland ^F417] ;

(c) "agricultural activity" means:

(d) ^F420 "agricultural products" means the products, with the exception of fishery products, listed in Annex I to the Treaties ...;

(e) "agricultural area" means any area taken up by arable land, permanent grassland and permanent pasture, or permanent crops;

(f) "arable land" means land cultivated for crop production or areas available for crop production but lying fallow, including areas set aside in accordance with Articles 22, 23 and 24 of Regulation (EC) No 1257/1999 , with Article 39 of Regulation (EC) No 1698/2005 and with Article 28 of Regulation (EU) No 1305/2013 , irrespective of whether or not that land is under greenhouses or under fixed or mobile cover;

(g) "permanent crops" means non-rotational crops other than permanent grassland and permanent pasture that occupy the land for five years or more and yield repeated harvests, including nurseries and short rotation coppice;

[^F421 (h) "permanent grassland and permanent pasture" (together referred to as "permanent grassland") means land used to grow grasses or other herbaceous forage naturally (self-seeded) or through cultivation (sown) and that has not been included in the crop rotation of the holding for five years or more, [^F422 and, where the relevant authority so decides ^F422] , that has not been ploughed up for five years or more; it may include other species such as shrubs and/or trees which can be grazed and, where [^F423 the relevant authority so decides ^F423] , other species such as shrubs and/or trees which produce animal feed, provided that the grasses and other herbaceous forage remain predominant. [^F424 The relevant authority ^F424] may also decide to consider as permanent grassland:

(i) "grasses or other herbaceous forage" means all herbaceous plants traditionally found in natural pastures or normally included in mixtures of seeds for pastures or meadows in the [^F425 United Kingdom ^F425] , whether or not used for grazing animals;

(j) "nurseries" means the following areas of young ligneous (woody) plants grown in the open air for subsequent transplantation:

• (j) vine and root-stock nurseries,

• fruit tree and berries nurseries,

• ornamental nurseries,

• commercial nurseries of forest trees excluding those for the holding's own requirements grown within woodland,

• nurseries of trees and bushes for planting in gardens, parks, at the roadside and on embankments (e.g. hedgerow plants, rose trees and other ornamental bushes, ornamental conifers), including in all cases their stocks and young seedlings;

(k) ^{F426,F427,F427} "short rotation coppice" means areas planted with tree species ... ... defined by [^F428 the relevant authority ^F428] 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 ... determined by the [^F429 relevant authority ^F429] ;

(l) "sale" means the sale or any other definitive transfer of ownership of land or payment entitlements; it does not include the sale of land where land is transferred to public authorities or for use in the public interest and where the transfer is carried out for non-agricultural purposes;

(m) "lease" means a rental agreement or similar temporary transaction;

(n) "transfer" means the lease or sale or actual inheritance or anticipated inheritance of land or payment entitlements or any other definitive transfer thereof; it does not cover the reversion of entitlements upon expiry of a lease;

[^F430 (o) “constituent nation” means England, Wales, Scotland or Northern Ireland, as the case may be;

(p) “national reserve” means a reserve established by the relevant authority at the level of the constituent nation;

(q) “regional reserves” means reserves established by the relevant authority at regional level;

(r) “relevant authority” means—

(i)in relation to England, the Secretary of State;

(ii)in relation to Wales, the Welsh Ministers;

(iii)in relation to Scotland, the Scottish Ministers;

(iv)in relation to Northern Ireland, the Department of Agriculture, Environment and Rural Affairs;

(s) “appropriate authority” means—

(i)the relevant authority for the constituent nation in which the regulations apply, or

(ii)the Secretary of State:

(aa)in relation to regulations applying in Scotland, if consent is given by the Scottish Ministers;

(bb)in relation to regulations applying in Northern Ireland, if consent is given by the Department of Agriculture, Environment and Rural Affairs;^F430]

[^F431 (t) “total ceiling” means the amount determined in accordance with Article 5A. ^F431]

[^F432 Notwithstanding points (f) and (h) of the first subparagraph, [^F433 a relevant authority^F433] which, prior to 1 January 2018, [^F434 has^F434] accepted parcels of land lying fallow as arable land may continue to accept them as such after that date. From 1 January 2018 parcels of land lying fallow which have been accepted as arable land under this subparagraph in 2018 shall become permanent grassland in 2023, or thereafter, if the conditions set out in point (h) are met.^F432]

2.[^F435 For the purposes of point (c) of paragraph 1:

(a)the criteria to be met by farmers in order to fulfil the obligation to maintain an agricultural area in a state suitable for grazing or cultivation, as referred to in point (c)(ii) are the criteria set by the relevant authority prior to exit day;

(b)where applicable in a constituent nation, the minimum activity to be carried out on agricultural areas naturally kept in a state suitable for grazing or cultivation, as referred to in point (c)(iii) is as defined by the relevant authority prior to exit day.^F435]

[^F436 The relevant authority^F436] may decide that land which can be grazed and which forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas is to be considered to be permanent grassland, as referred to in point (h) of paragraph 1.

[[^F432,F436 The relevant authority^F436] may decide that:

(a)land that has not been ploughed up for five years or more shall be considered permanent grassland as referred to in point (h) of the first subparagraph of paragraph 1, provided that the land is used to grow grasses or other herbaceous forages naturally (self-seeded) or through cultivation (sown) and that it has not been included in the crop rotation of the holding for five years or more;

(b)permanent grassland may include other species such as shrubs and/or trees which produce animal feed, in areas where grasses and other herbaceous forage are predominant; and/or

(c)land which can be grazed where grasses and other herbaceous forage are not predominant or are absent in grazing areas be considered permanent grassland as referred to in point (h) of the first subparagraph of paragraph 1.

[^F436 The relevant authority^F436] may decide, on the basis of objective and non-discriminatory criteria, to apply their decision in accordance with points (b) and/or (c) of the third subparagraph of this paragraph to the whole or a part of [^F437 the constituent nation^F437] .

[^F438 This paragraph only applies where the decisions to which it refers were made and notified to the Commission by:

(a)31st January 2015, in the case of a decision taken under the second subparagraph;

(b)31st March 2018, in the case of a decision taken under the third or fourth subparagraph.^F438,F432]]

^F4393.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TITLE II GENERAL PROVISIONS ON DIRECT PAYMENTS

CHAPTER 1 Common rules on direct payments

Article 5 General common agricultural policy provisions

Regulation (EU) No 1306/2013 and the provisions adopted pursuant thereto shall apply to the schemes provided for in this Regulation.

Article 5A The total ceiling for England _E2

^F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F440Article 5A The total ceiling for Wales _E16

1.The Welsh Ministers must determine the total ceiling for Wales.

2.The Welsh Ministers must determine the total ceiling before the start of the relevant year.

3.The Welsh Ministers must publish the total ceiling as soon as practicable after they have determined it under paragraph 1.

4.The total ceiling, for any relevant year, must be distributed among all claimed payment entitlements, including the national reserve or the regional reserves, and ceilings set in accordance with Articles 42 and 51 and the amount allocated under Article 53.

5. In this Article, “relevant year” has the same meaning as in paragraph 3(4) of Schedule 5 to the Agriculture Act 2020 . ^F440]

[^F441Article 5A The total ceiling for Scotland _E17

1.In determining the total ceiling for Scotland, the Scottish Ministers must determine an amount equivalent to Scotland’s share of the 2020 national ceiling set out in Annex II.

2.The Scottish Ministers must determine the total ceiling before the start of the relevant financial year.

3.When the total ceiling has been determined, the Scottish Ministers must publish that amount as soon as practicable after that determination has been made.

4.The total ceiling, for any claim year, is to be distributed among all allocated payment entitlements, the national reserve or the regional reserves, and ceilings fixed in accordance with Articles 47, 51 and 53, as they apply in Scotland.

5.Where the Scottish Ministers make a decision under Article 22(2) to increase the basic payment scheme ceiling, the total ceiling for that claim year may be exceeded by the increase decided pursuant to that Article.

6.In this Article—

(a) “claim year” means a period of 12 months beginning with 1 January,

(b) “financial year” means a period of 12 months beginning with 1 April. ^F441]

[^F442Article 5A The total ceiling for Northern Ireland _E18

[^F443 The Department of Agriculture, Environment and Rural Affairs shall determine the total ceiling for Northern Ireland for each year prior to the commencement of payments^F443]

^F4443.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.The total ceiling, for any year, is to be distributed among all allocated payment entitlements, the national reserve or the regional reserves, and ceilings fixed in accordance with [^F445 Article 51^F445] and where applicable, Articles 42 and 53.

5.Where the Department of Agriculture, Environment and Rural Affairs makes a decision under Article 22(2) to increase the [^F446 basic payment scheme^F446] [^F446 farm sustainability transition payment scheme^F446] ceiling, the total ceiling, for any year, may be exceeded by the increase decided pursuant to that Article.^F442]

^F42Article 6 National ceilings

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F43Article 7 Net ceilings

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F44Article 7A Increase in national and net ceilings

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F45Article 8 Financial discipline

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F46Article 9 Active farmer _E3

1.No direct payments shall be granted to natural or legal persons, or to groups of natural or legal persons, whose agricultural areas are mainly areas naturally kept in a state suitable for grazing or cultivation and who do not carry out on those areas the minimum activity defined by [^F47 the relevant authority^F47] in accordance with point (b) of Article 4(2).

2.No direct payments shall be granted to natural or legal persons, or to groups of natural or legal persons, who operate airports, railway services, waterworks, real estate services, permanent sport and recreational grounds.

[^F48 Nothing in this Regulation prevents the relevant authority from adding to the list in the first subparagraph any other similar non-agricultural businesses or activities or from removing any such additions, provided that any such additions and removals are appropriate and made on the basis of objective and non-discriminatory criteria.^F48]

A person or group of persons falling within the scope of the first or second subparagraph shall, however, be regarded as an active farmer if it provides verifiable evidence, in the form that is required by [^F49 the relevant authority^F49] , which demonstrates any of the following:

(a)that the annual amount of direct payments is at least 5 % of the total receipts that it obtained from non-agricultural activities in the most recent fiscal year for which such evidence is available;

(b)that its agricultural activities are not insignificant;

(c)that its principal business or company objects consist of exercising an agricultural activity.

3.[^F50 Nothing in this Regulation prevents the relevant authority from deciding^F50] , on the basis of objective and non-discriminatory criteria, that no direct payments are to be granted to natural or legal persons, or to groups of natural or legal persons:

(a)whose agricultural activities form only an insignificant part of their overall economic activities; and/or

(b)whose principal activity or company objects do not consist of exercising an agricultural activity.

[^F33 3a.[^F51 Nothing in this Regulation prevents the relevant authority from deciding^F51] that no direct payments are to be granted to farmers who are not registered, for their agricultural activities, in a national fiscal or social security register.^F33]

[^F52 4.Paragraphs 2, 3 and 3a do not apply to farmers who received direct payments for the previous year, if the amount of those direct payments was no more than the amount set by the relevant authority in accordance with this Regulation prior to exit day.^F52]

5.In order to guarantee the protection of the rights of farmers, the [^F53 appropriate authority may make regulations^F53] laying down:

(a)criteria for determining the cases where a farmer's agricultural area is to be considered to be mainly an area naturally kept in a state suitable for grazing or cultivation;

(b)criteria for establishing the distinction between receipts resulting from agricultural and non-agricultural activities;

(c)criteria for establishing the amounts of direct payments referred to in paragraphs 2 and 4, especially concerning ^F54... direct payments for new farmers;

(d)criteria that farmers are to meet in order to prove for the purposes of paragraphs 2 and 3 that their agricultural activities are not insignificant and that their principal business or company objects consist of exercising an agricultural activity.

^F556.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F56 7.Nothing in this Regulation prevents the relevant authority from deciding that only one or two of the criteria listed in the third subparagraph of paragraph 2 applies.^F56]

[^F57 8.The relevant authority may decide to stop applying paragraph 2.^F57,F46]]

Article 9 Active farmer _E19

1.No direct payments shall be granted to natural or legal persons, or to groups of natural or legal persons, whose agricultural areas are mainly areas naturally kept in a state suitable for grazing or cultivation and who do not carry out on those areas the minimum activity defined by [^F447the relevant authority^F447] in accordance with point (b) of Article 4(2).

^F4482.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4483.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4483a.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4484.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.In order to guarantee the protection of the rights of farmers, the [^F449appropriate authority may make regulations^F449] laying down:

(a)criteria for determining the cases where a farmer's agricultural area is to be considered to be mainly an area naturally kept in a state suitable for grazing or cultivation;

^F450(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F451(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F452(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4536.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4537.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4538.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F58Article 10 Minimum requirements for receiving direct payments

1.[^F59 Subject to paragraph 2, the^F59] [^F59 The^F59] relevant authority shall not grant direct payments to a farmer where the eligible holding for which direct payments are claimed or due to be granted before the application of Article 63 of Regulation (EU) No 1306/2013 is smaller than the area set in legislation applying to the constituent nation.

2.[^F60 In the case of farmers receiving the animal-related coupled support referred to in Title IV, the area threshold determined in accordance with paragraph 1 does not apply, but the relevant authority shall not grant direct payments where the total amount of direct payments claimed or due to be granted before the application of Article 63 of Regulation (EU) No 1306/2013 in a given calendar year is less than [^F61 EUR 100^F61] [^F61 £100^F61] .^F60,F58]]

Article 11A Progressive reductions of direct payments

^F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 11 Reduction of payments _E4

1.[^F62 The relevant authority^F62] shall reduce the amount of direct payments to be granted to a farmer pursuant to Chapter 1 of Title III for a given calendar year by at least 5 % for the part of the amount exceeding [^F63 £190 000^F63] .

2.Before applying paragraph 1, [^F64 the relevant authority^F64] may subtract the salaries linked to an agricultural activity actually paid and declared by the farmer in the previous calendar year, including taxes and social contributions related to employment, from the amount of direct payments to be granted to a farmer pursuant to Chapter 1 of Title III in a given calendar year. Where no data is available on the salaries actually paid and declared by the farmer in the previous calendar year, the most recent data available shall be used.

3.Where [^F65 the relevant authority^F65] decides to grant a redistributive payment to farmers pursuant to Chapter 2 of Title III and to use more than 5 % [^F66 of its share^F66] of the annual national ceiling ^F67... for that purpose, it may decide not to apply this Article.

Where [^F65 the relevant authority^F65] decides to grant a redistributive payment to farmers pursuant to Chapter 2 of Title III and the application of the maximum limits set out in Article 41(4) prevents it from using more than 5 % [^F66 of its share^F66] of the annual national ceiling ^F67... for that purpose, [^F68 the relevant authority^F68] may decide not to apply this Article.

4.No advantage by means of avoiding reductions of the payment shall be granted in favour of farmers in respect of whom it is established that they artificially created, after 18 October 2011, the conditions to avoid the effects of this Article.

^F695.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F696.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 11 Reduction of payments _E20

1.[^F454 The relevant authority^F454] shall reduce the amount of direct payments to be granted to a farmer pursuant to Chapter 1 of Title III for a given calendar year by at least 5 % for the part of the amount exceeding [^F455£150,000^F455] .

2.Before applying paragraph 1, [^F456the relevant authority^F456] may subtract the salaries linked to an agricultural activity actually paid and declared by the farmer in the previous calendar year, including taxes and social contributions related to employment, from the amount of direct payments to be granted to a farmer pursuant to Chapter 1 of Title III in a given calendar year. Where no data is available on the salaries actually paid and declared by the farmer in the previous calendar year, the most recent data available shall be used.

3.^F458,F460Where [^F457the relevant authority^F457] decides to grant a redistributive payment to farmers pursuant to Chapter 2 of Title III and to use more than 5 % ... of the [^F459total^F459] ceiling ... for that purpose, it may decide not to apply this Article.

^F458,F460Where [^F457the relevant authority^F457] decides to grant a redistributive payment to farmers pursuant to Chapter 2 of Title III and the application of the maximum limits set out in Article 41(4) prevents it from using more than 5 % ... of the [^F459total^F459] ceiling ... for that purpose, [^F461the relevant authority^F461] may decide not to apply this Article.

4.No advantage by means of avoiding reductions of the payment shall be granted in favour of farmers in respect of whom it is established that they artificially created, after 18 October 2011, the conditions to avoid the effects of this Article.

^F4625.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4626.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 11 Reduction of payments _E21

1.[^F463 The relevant authority^F463] shall reduce the amount of direct payments to be granted to a farmer pursuant to Chapter 1 of Title III for a given calendar year by at least 5 % for the part of the amount exceeding EUR 150 000.

2.Before applying paragraph 1, [^F464the relevant authority^F464] may subtract the salaries linked to an agricultural activity actually paid and declared by the farmer in the previous calendar year, including taxes and social contributions related to employment, from the amount of direct payments to be granted to a farmer pursuant to Chapter 1 of Title III in a given calendar year. Where no data is available on the salaries actually paid and declared by the farmer in the previous calendar year, the most recent data available shall be used.

^F4653.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.No advantage by means of avoiding reductions of the payment shall be granted in favour of farmers in respect of whom it is established that they artificially created, after 18 October 2011, the conditions to avoid the effects of this Article.

[^F466 4A.For each calendar year, the estimated product of the reductions made in accordance with this Article must be made available as support for measures under rural development.

4B. References to “rural development” in this Article and Article 14 include measures which are conducive to—

(a)the conservation or enhancement of the natural beauty or amenity of the countryside (including its flora and fauna and geological and physiographical features) or of any features of archaeological interest there,

(b)the promotion of the enjoyment of the countryside by the public,

(c)starting, or improving the productivity of, an agricultural, horticultural or forestry activity or rural business, or

(d)starting, promoting or improving rural services.^F466]

^F4675.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F4676.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 12 Multiple claims

The area corresponding to the number of eligible hectares in respect of which an application for a basic payment has been submitted by a farmer pursuant to Chapter 1 of Title III may be the subject of an application for any other direct payment, as well as for any other aid not covered by this Regulation, save as explicitly provided otherwise in this Regulation.

^F70Article 13 State aid

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^F71Article 14 Flexibility between pillars _E5

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[^F468Article 14 Flexibility between pillars _E22

The relevant authority may make available, as additional support for measures under rural development, up to 15% of ^F469... the [^F470 total ceiling^F470] for [^F471 a given calendar year^F471] . The amount made available for rural development under this paragraph shall no longer be available for granting direct payments.^F468]

^F72Article 15 Review

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CHAPTER 2 Provisions applying to Bulgaria, Croatia and Romania

Article 16 Gradual introduction of direct payments in Bulgaria and Romania

For Bulgaria and Romania, the ceilings fixed in accordance with Articles 42, 47, 49, 51, 53 and 65 shall, for 2015, be established on the basis of the amount set out in point A of Annex V.

^F73Article 17 Gradual introduction of direct payments in Croatia

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Article 18 Complementary national direct payments and direct payments in Bulgaria and Romania

1.In 2015, Bulgaria and Romania may use national direct payments in order to complement payments granted under the basic payment scheme referred to in Sections 1, 2 and 3 of Chapter 1 of Title III. The total amount of those payments shall not exceed the relevant amount set out in point B of Annex V.

2.In 2015, Bulgaria may use national direct payments in order to complement payments granted under the crop-specific payment for cotton referred to in Chapter 2 of Title IV. The total amount of those payments shall not exceed the amount set out in point C of Annex V.

3.Complementary national direct payments shall be granted in accordance with objective criteria and in such a way as to ensure the equal treatment of farmers and to avoid distortions of the market and of competition.

^F74Article 19 Complementary national direct payments for Croatia

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^F75Article 20 Special national de-mining reserve for Croatia

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TITLE III [^F76BASIC PAYMENT SCHEME^F76] [^F76FARM SUSTAINABILITY TRANSITION PAYMENT SCHEME^F76] , SINGLE AREA PAYMENT SCHEME AND RELATED PAYMENTS

CHAPTER 1 [^F77Basic payment scheme^F77] [^F77farm sustainability transition payment scheme^F77] and single area payment scheme

Section 1 Setting up of the [^F78basic payment scheme^F78] [^F78farm sustainability transition payment scheme^F78]

[^F79Article 21 Payment entitlements

Support under the [^F80 basic payment scheme^F80] [^F80 farm sustainability transition payment scheme^F80] shall be available to farmers who:

(a)obtain payment entitlements under this Regulation through first allocation pursuant to Article 24 as it had effect immediately before exit day, through allocation from the national reserve or regional reserves pursuant to Article 30 or through transfer pursuant to Article 34, or

(b)[^F81 comply with Article 9 and^F81] hold unexpired owned or leased-in payment entitlements established under the single payment scheme in accordance with Regulation (EC) No 1782/2003 and with Regulation (EC) No 73/2009.^F79]

[^F83Article 22 [^F82Basic payment scheme^F82] [^F82Farm sustainability transition payment scheme^F82] ceiling _E6

^F841.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F85 2.The [^F86 basic payment scheme^F86] [^F86 farm sustainability transition payment scheme^F86] ceiling for the given year is the amount which remains for the basic payment scheme after deducting, from the total ceiling, the ceilings set under Article ^F87... 51 (and, where applicable, Articles 42 and 53) for that year. The relevant authority may increase the amount of the basic payment scheme ceiling. ^F88...^F85]

3.The relevant authority may review the decision under paragraph 2 on an annual basis.

4.The total value of all payment entitlements and the national reserve or regional reserves in the constituent nation must equal ^F89... the [^F90 basic payment scheme^F90] [^F90 farm sustainability transition payment scheme^F90] ceiling. ^F91...^F83]

[^F92 5.If the ceiling [^F93 calculated^F93] pursuant to [^F94 paragraph 2^F94] of this Article is different from that of the previous year as a result of [^F95 the removal of the payment for agricultural practices beneficial for the climate and the environment or^F95] any decision taken by [^F96 the relevant authority^F96] in accordance with paragraph 3 of this Article, [^F97 or^F97] Article 42(1), ^F98... the second subparagraph of Article 51(1), or Article 53, [^F96 the relevant authority^F96] shall linearly reduce or increase the value of all payment entitlements in order to ensure compliance with paragraph 4 of this Article.^F92]

[^F472Article 22 Basic payment scheme ceiling _E23

^F4731.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F474 2.The basic payment scheme ceiling in Wales for any given year is the amount which remains for the basic payment scheme after deducting, from the total ceiling, the ceilings set in accordance with Articles 42 and 51 for that year, and the amount allocated under Article 53.^F474]

^F4753.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F476 4.The total value of all claimed payment entitlements in the constituent nation must equal the basic payment scheme ceiling in Wales.^F476,F472]]

[^F477 5.If the ceiling calculated pursuant to paragraph 2 of this Article is different from the relevant authority’s share of the basic payment scheme ceiling in claim year 2020 as a result of any decision taken by the relevant authority, or the total value of all claimed payment entitlements (including those allocated and claimed from the national reserve or regional reserve) is different from the total value of claimed payment entitlements in claim year 2020, the relevant authority shall linearly reduce or increase the value of all claimed payment entitlements in order to ensure compliance with paragraph 4 of this Article.^F477]

[^F478Article 22 Basic payment scheme ceiling _E24

^F4791.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F480 2.The basic payment scheme ceiling for any given year is the amount which remains for the basic payment scheme after deducting, from the total ceiling, the ceilings set under Articles 47, 51 and 53 for that year. The relevant authority may decide to increase the amount of the basic payment scheme ceiling. That increase may not exceed 3% of the total ceiling after deduction of the amount resulting from the application of Article 47(1) for the relevant year.^F480]

3.The relevant authority may review the decision under paragraph 2 on an annual basis.

4.The total value of all payment entitlements and the national reserve or regional reserves in [^F481 Scotland^F481] must equal ^F482... the basic payment scheme ceiling [^F483 in Scotland^F483] . ^F484...^F478]

[^F485 5.If the ceiling [^F486 calculated^F486] pursuant to [^F487 paragraph 2^F487] of this Article is different from that of the previous year as a result of any decision taken by [^F488 the relevant authority^F488] in accordance with paragraph 3 of this Article, ^F489...[^F490 Article 14^F490] , ^F491...^F492... the second subparagraph of Article 51(1), or Article 53, [^F488 the relevant authority^F488] shall linearly reduce or increase the value of all payment entitlements in order to ensure compliance with paragraph 4 of this Article.^F485]

Article 23 Regional allocation of the [^F99basic payment scheme ceiling^F99] _E7

1.[^F100 The relevant authority may apply the [^F101 basic payment scheme^F101] [^F101 farm sustainability transition payment scheme^F101] at regional level, provided that it took a decision to do so by 1 August 2014.^F100] In such cases, [^F102 the relevant authority^F102] shall define the regions in accordance with objective and non-discriminatory criteria such as their agronomic and socio-economic characteristics, their regional agricultural potential, or their institutional or administrative structure.

^F103...

2.[^F104 The relevant authority^F104] shall divide [^F105 the [^F101 basic payment scheme^F101] [^F101 farm sustainability transition payment scheme^F101] ceiling referred to in Article 22(2)^F105] between the regions in accordance with objective and non-discriminatory criteria.

^F106...

3.[^F107 The relevant authority^F107] may decide that the regional ceilings shall be subject to annual progressive modifications in accordance with pre-established annual steps and objective and non-discriminatory criteria such as agricultural potential or environmental criteria.

4.To the extent necessary to respect the applicable regional ceilings determined in accordance with paragraph 2 or 3, [^F108 the relevant authority^F108] shall make a linear reduction or increase in the value of the payment entitlements in each of the relevant regions.

5.[^F109 The relevant authority^F109] may decide to cease the application of the [^F110 basic payment scheme^F110] [^F110 farm sustainability transition payment scheme^F110] at regional level from a date to be set by [^F111 the relevant authority^F111] .

^F1126.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 23 Regional allocation of the [^F493basic payment scheme ceiling^F493] _E25

1.[^F494 The relevant authority may apply the basic payment scheme at regional level, provided that it took a decision to do so by 1 August 2014.^F494] In such cases, [^F495the relevant authority^F495] shall define the regions in accordance with objective and non-discriminatory criteria such as their agronomic and socio-economic characteristics, their regional agricultural potential, or their institutional or administrative structure.

^F496...

2.[^F497 The relevant authority^F497] shall divide [^F498the basic payment scheme ceiling in Scotland referred to in Article 22(2)^F498] between the regions in accordance with objective and non-discriminatory criteria.

^F499...

3.[^F500 The relevant authority^F500] may decide that the regional ceilings [^F501in Scotland^F501] shall be subject to annual progressive modifications in accordance with pre-established annual steps and objective and non-discriminatory criteria such as agricultural potential or environmental criteria.

4.To the extent necessary to respect the applicable regional ceilings [^F502in Scotland^F502] determined in accordance with paragraph 2 or 3, [^F503the relevant authority^F503] shall make a linear reduction or increase in the value of the payment entitlements in each of the relevant regions.

5.[^F504 The relevant authority^F504] may decide to cease the application of the basic payment scheme at regional level from a date to be set by [^F505the relevant authority^F505] .

^F5066.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F507Article 23 Regional allocation of the national ceilings _E26

1.[^F508 The relevant authority may apply the basic payment scheme at regional level, provided that it took a decision to do so by 1 August 2014.^F508] In such cases, [^F509 the relevant authority^F509] shall define the regions in accordance with objective and non-discriminatory criteria such as their agronomic and socio-economic characteristics, their regional agricultural potential, or their institutional or administrative structure.

^F510...

2.[^F511 The relevant authority^F511] shall divide [^F512 its share of^F512] the annual national ceiling for the basic payment scheme referred to in Article 22(1) between the regions in accordance with objective and non-discriminatory criteria.

^F513...

3.[^F514 The relevant authority^F514] may decide that the regional ceilings shall be subject to annual progressive modifications in accordance with pre-established annual steps and objective and non-discriminatory criteria such as agricultural potential or environmental criteria.

4.To the extent necessary to respect the applicable regional ceilings determined in accordance with paragraph 2 or 3, [^F515 the relevant authority^F515] shall make a linear reduction or increase in the value of the payment entitlements in each of the relevant regions.

5.[^F516 The relevant authority^F516] may decide to cease the application of the basic payment scheme at regional level from a date to be set by [^F517 the relevant authority^F517] .

^F5186.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .^F507]

Article 24 First allocation of payment entitlements

1.Payment entitlements shall be allocated to farmers who are entitled to be granted direct payments in accordance with Article 9 of this Regulation provided that:

(a)they apply for allocation of payment entitlements under the basic payment scheme by the final date for submission of applications in 2015 to be set in accordance with point (b) of the first subparagraph of Article 78 of Regulation (EU) No 1306/2013, except in case of force majeure or exceptional circumstances; and

(b)they were entitled to receive payments, before any reduction or exclusion provided for in Chapter 4 of Title II of Regulation (EC) No 73/2009, in respect of an aid application for direct payments, for transitional national aid or for complementary national direct payments in accordance with Regulation (EC) No 73/2009 for 2013.

The first subparagraph shall not apply in Member States applying Article 21(3) of this Regulation.

Member States may allocate payment entitlements to farmers who are entitled to be granted direct payments in accordance with Article 9 of this Regulation, who fulfil the condition provided for in point (a) of the first subparagraph and who:

(a)did not receive payments for 2013 in respect of an aid application as referred to in the first subparagraph of this paragraph and who, on the date fixed by the Member State concerned in accordance with Article 11(2) of Commission Regulation (EC) No 1122/2009(21) for the claim year 2013:

(b)in 2014, are allocated payment entitlements from the national reserve under the single payment scheme pursuant to Article 41 or 57 of Regulation (EC) No 73/2009; or

(c)never held owned or leased-in payment entitlements established under Regulation (EC) No 73/2009 or Regulation (EC) No 1782/2003 and who submit verifiable evidence that, on the date fixed by the Member State in accordance with Article 11(2) of Regulation (EC) No 1122/2009 for the claim year 2013, they produced, reared or grew agricultural products, including through harvesting, milking, breeding animals and keeping animals for farming purposes. Member States may establish their own additional objective and non-discriminatory eligibility criteria for this category of farmers as regards appropriate skills, experience or education.

2.Except in the case of force majeure or exceptional circumstances, the number of payment entitlements allocated per farmer in 2015 shall be equal to the number of eligible hectares, which the farmer declares in his aid application in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 for 2015 and which are at his disposal on a date fixed by the Member State. That date shall be no later than the date fixed in that Member State for amending such an aid application.

3.Member States may apply one or more of the limitations, as set out in paragraphs 4 to 7, on the number of payment entitlements to be allocated under paragraph 2.

4.Member States may decide that the number of payment entitlements to be allocated shall be equal to either the number of eligible hectares which the farmer declared in accordance with Article 34(2) of Regulation (EC) No 73/2009 in 2013, or the number of eligible hectares referred to in paragraph 2 of this Article, whichever is the lowest. For Croatia, the use of this option shall be without prejudice to the allocation of payment entitlements for de–mined hectares in accordance with Article 20(4) of this Regulation.

5.Where the total number of eligible hectares referred to in paragraph 2 of this Article declared in a Member State would result in an increase of more than 35 % of the total number of eligible hectares declared in accordance with Article 35 of Regulation (EC) No 73/2009 in 2009, or in the case of Croatia in 2013, Member States may limit the number of payment entitlements to be allocated in 2015 to a minimum of either 135 % or 145 % of the total number of eligible hectares declared in 2009, or, in the case of Croatia, of the total number of eligible hectares declared in 2013, in accordance with Article 35 of Regulation (EC) No 73/2009.

When using this option, Member States shall allocate a reduced number of payment entitlements to farmers. That number shall be calculated by applying a proportional reduction to the additional number of eligible hectares declared by each farmer in 2015 compared to the number of eligible hectares within the meaning of Article 34(2) of Regulation (EC) No 73/2009 that that farmer declared in his aid application in 2011 or, in the case of Croatia, in 2013, without prejudice to the de-mined hectares for which payment entitlements are to be allocated in accordance with Article 20(4) of this Regulation.

6.Member States may decide to apply, for the purposes of establishing the number of payment entitlements to be allocated to a farmer, a reduction coefficient to those eligible hectares referred to in paragraph 2 which consist of permanent grassland located in areas with difficult climate conditions, especially due to their altitude and other natural constraints such as poor soil quality, steepness and water supply.

7.Member States may decide that the number of payment entitlements to be allocated to a farmer shall be equal to the number of eligible hectares referred to in paragraph 2 of this Article which were not hectares of vineyards on the date fixed by the Member State in accordance with Article 11(2) of Regulation (EC) No 1122/2009 for the claim year 2013 or hectares of arable land under permanent greenhouses.

8.In the case of the sale or lease of their holding or part of it, natural or legal persons complying with paragraph 1 of this Article may, by contract signed before the final date for submitting applications in 2015 to be set in accordance with point (b) of the first subparagraph of Article 78 of Regulation (EU) No 1306/2013, transfer the right to receive payment entitlements in accordance with paragraph 1 of this Article to one or more farmers provided that the latter comply with the conditions laid down in Article 9 of this Regulation.

9.A Member State may decide to fix a minimum size per holding, expressed in eligible hectares, in respect of which the farmer may apply for an allocation of payment entitlements. That minimum size shall not exceed the threshold set out in point (b) of Article 10(1) in conjunction with paragraph 2 of that Article.

10.Member States shall, where relevant, notify the Commission of the decisions referred to in this Article by 1 August 2014.

11.The Commission shall adopt implementing acts laying down rules on applications for the allocation of payment entitlements submitted in the year of allocation of payment entitlements where those payment entitlements may not yet be definitively established and where that allocation is affected by specific circumstances. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 71(2).

Article 25 Value of payment entitlements and convergence _E8

[^F113 1.Subject to paragraphs 2 and 3, for the purposes of this Article the unit value of payment entitlements is calculated by dividing a fixed percentage of the [^F114 total ceiling^F114] for each relevant year by the number of payment entitlements in 2015 in the constituent nation or, where applicable, at regional level, excluding those allocated from the national reserve or regional reserves in 2015.

The fixed percentage referred to in the first subparagraph is calculated by dividing ^F115... the [^F116 basic payment scheme^F116] [^F116 farm sustainability transition payment scheme^F116] ceiling or, where applicable, the regional ceiling for the [^F116 basic payment scheme^F116] [^F116 farm sustainability transition payment scheme^F116] set in accordance with Article 23(2), as it had effect immediately before exit day for 2015, after applying the linear reduction provided for in paragraph 1 or, where applicable, paragraph 2 of Article 30 [^F117 , as it had effect immediately before exit day,^F117] by the relevant authority’s share of the national ceiling for 2015.

2.The value of payment entitlements, other than those allocated from the national reserve or regional reserves in 2015, may be differentiated for each relevant year on the basis of their initial unit value calculated in accordance with Article 26 as it had effect immediately before exit day, provided that the decision to differentiate was taken and notified to the Commission by 1 August 2014.

3.All payment entitlements in a constituent nation or, where Article 23 is applied, in a region shall have a uniform unit value unless the relevant authority has applied the derogation in paragraph 4 of this Article, as it had effect immediately before exit day. Where a relevant authority has applied this derogation, the unit value will be calculated in accordance with paragraphs 4 to 7 of this Article as it had effect immediately before exit day.^F113]

8.When applying paragraph 2 of this Article, the transition from the initial unit value of payment entitlements as calculated in accordance with Article 26 [^F118 as it had effect immediately before exit day^F118] to their final unit value in 2019 as established in accordance with paragraph 3 or paragraphs 4 to 7 of this Article shall be made in equal steps starting from 2015.

In order to ensure compliance with the fixed percentage referred to in paragraph 1 of this Article for each year, the value of the payment entitlements with an initial unit value that is higher than the national or regional unit value in 2019 shall be adjusted.

^F1199.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.In 2015, Member States shall inform farmers of the value of their payment entitlements as calculated in accordance with this Article and Articles 26 and 27 for each year of the period covered by this Regulation.

Article 25 Value of payment entitlements and convergence _E27

^F5191.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5192.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F520 3.All payment entitlements in a constituent nation or, where Article 23 is applied, in a region shall have a uniform unit value unless the relevant authority has applied the derogation in paragraph 4 of this Article, as it had effect immediately before exit day. Where a relevant authority has applied this derogation, the unit value will be calculated in accordance with paragraphs 4 to 7 of this Article as it had effect immediately before exit day.^F520]

^F5218.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5229.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.In 2015, Member States shall inform farmers of the value of their payment entitlements as calculated in accordance with this Article and Articles 26 and 27 for each year of the period covered by this Regulation.

Article 25 Value of payment entitlements and convergence _E28

[^F523 1.[^F524 For^F524] the purposes of this Article the unit value of payment entitlements is calculated by dividing a fixed percentage of the [^F525 total ceiling^F525] for each relevant year by the number of payment entitlements in 2015 in the constituent nation or, where applicable, at regional level, excluding those allocated from the national reserve or regional reserves in 2015.

The fixed percentage referred to in the first subparagraph is calculated by dividing the [^F526 basic payment scheme ceiling in Scotland^F526] or, where applicable, the regional ceiling for the basic payment scheme set in accordance with Article 23(2), as it had effect immediately before exit day for 2015, after applying the linear reduction provided for in paragraph 1 or, where applicable, paragraph 2 of Article 30 [^F527 , as it had effect immediately before exit day^F527] by the relevant authority’s share of the national ceiling for 2015.^F523]

^F5282.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5293.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5308.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5319.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.In 2015, Member States shall inform farmers of the value of their payment entitlements as calculated in accordance with this Article and Articles 26 and 27 for each year of the period covered by this Regulation.

^F120Article 26 Calculation of the initial unit value

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^F120Article 27 Inclusion of the special national de-mining reserve

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^F120Article 28 Windfall profit

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Article 29 Notifications concerning the value of payment entitlements and convergence

Member States shall notify the Commission of any decision referred to in Articles 25, 26 and 28 by 1 August 2014.

Section 2 National reserve and regional reserves

Article 30 Establishment and use of the national reserve or regional reserves _E9

[^F121 1.The relevant authority shall maintain the national reserve or regional reserves established prior to exit day.^F121]

^F1222.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F1223.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.[^F123 The relevant authority^F123] shall allocate payment entitlements from their national or regional reserves in accordance with objective criteria and in such a way as to ensure the equal treatment of farmers and to avoid distortions of the market and of competition.

^F1245.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.[^F125 The relevant authority^F125] shall use their national or regional reserves to allocate payment entitlements, as a matter of priority, to young farmers and to farmers commencing their agricultural activity.

7.[^F126 The relevant authority^F126] may use their national or regional reserves to:

(a)allocate payment entitlements to farmers in order to prevent land from being abandoned, including in areas subject to restructuring or development programmes relating to a form of public intervention;

(b)allocate payment entitlements to farmers in order to compensate them for specific disadvantages;

(c)allocate payment entitlements to farmers who were prevented from being allocated payment entitlements under this Chapter as a result of force majeure or exceptional circumstances;

(d)allocate, in cases where they apply Article 21(3) of this Regulation, payment entitlements to farmers whose number of eligible hectares that they declared in 2015 in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 and that are at their disposal on a date fixed by the Member State, which shall be no later than the date fixed in that Member State for amending such an aid application, is higher than the number of owned or leased-in payment entitlements established in accordance with Regulation (EC) No 1782/2003 and with Regulation (EC) No 73/2009 that they hold on the final date for submission of applications to be set in accordance with point (b) of the first subparagraph of Article 78 of Regulation (EU) No 1306/2013;

(e)linearly increase, on a permanent basis, the value of all payment entitlements under the [^F127 basic payment scheme^F127] [^F127 farm sustainability transition payment scheme^F127] at national or regional level if the relevant national or regional reserve exceeds 0,5 % of the [[[^{F128,F129,F127} basic payment scheme^F127] [^F127 farm sustainability transition payment scheme^F127] ceiling in Northern Ireland^F129] or, where applicable, the^F128] regional ceiling [^F130 in Northern Ireland^F130] for the [^F127 basic payment scheme^F127] [^F127 farm sustainability transition payment scheme^F127] , provided that sufficient amounts remain available for allocations under paragraph 6, under points (a) and (b) of this paragraph and under paragraph 9 of this Article;

(f)cover the yearly needs for payments to be granted in accordance with Article 51(2) ^F131... of this Regulation.

For the purpose of this paragraph, [^F132 the relevant authority^F132] shall decide on the priorities between the different uses referred to herein.

8.When applying paragraph 6 and points [^F133 (a) and (b)^F133] of paragraph 7, [^F134 the relevant authority^F134] shall fix the value of payment entitlements allocated to farmers at the national or regional average value of payment entitlements in the year of allocation.

[^F135 The national or regional average value shall be calculated by dividing the [[^F129,F136 basic payment scheme^F136] [^F136 farm sustainability transition payment scheme^F136] ceiling in Northern Ireland^F129] or, where applicable, the regional ceiling [^F130 in Northern Ireland^F130] for the [^F136 basic payment scheme^F136] [^F136 farm sustainability transition payment scheme^F136] set in accordance with Article 23(2), for the year of allocation, excluding the amount of the national reserve or regional reserves, by the number of allocated payment entitlements.^F135]

[^F137 The relevant authority^F137] shall fix the steps for annual progressive modifications of the value of payment entitlements allocated from the national reserve or regional reserves, taking account of the modifications of the [^F138 relevant authority’s share of the basic payment ceiling or, where applicable, the regional ceiling [^F130 in Northern Ireland^F130] for the [^F136 basic payment scheme^F136] [^F136 farm sustainability transition payment scheme^F136] set in accordance with^F138] Article 23(2) that result from the variations in the level of the national ceilings set out in Annex II.

9.Where a farmer is entitled to receive payment entitlements or to increase the value of the existing ones by virtue of a definitive court ruling or by virtue of a definitive administrative act of the competent authority of a [^F139 relevant authority^F139] , the farmer shall receive the number and value of payment entitlements established in that ruling or act at a date to be fixed by the [^F139 relevant authority^F139] . However, that date shall not be later than the latest date for lodging an application under the [^F136 basic payment scheme^F136] [^F136 farm sustainability transition payment scheme^F136] following the date of the court ruling or the administrative act, taking into account the application of Articles 32 and 33.

10.When applying paragraph 6, points (a) and (b) of paragraph 7 and paragraph 9, [^F140 the relevant authority^F140] may either allocate new entitlements or increase the unit value of all of the existing entitlements of a farmer up to the national or regional average value.

[^F141 10a.When applying paragraph 6, points (a) and (b) of paragraph 7, and paragraph 10, the sum of the number of payment entitlements allocated to a farmer and the number of existing entitlements held by that farmer where their unit value is increased to the national or regional average value shall not exceed 90.^F141]

[^F142 10b.After the application of paragraph (10a), the number of payment entitlements to be allocated to a farmer shall be reduced by the number of entitlements temporarily transferred out by that farmer and by the number of entitlements permanently transferred out by that farmer in the scheme year of application and the previous 2 scheme years, provided those scheme years relate to 2022 or later.^F142]

11.For the purposes of this Article, the following definitions shall apply:

(a)'young farmers' means farmers fulfilling the conditions laid down in Article 50(2) and, where relevant, the conditions referred to in Article 50(3) and (11);

(b)'farmers commencing their agricultural activity' means natural or legal persons who, in the five years preceding the start of the agricultural activity, did not have any agricultural activity in their own name and at their own risk or did not have the control of a legal person exercising an agricultural activity. In the case of a legal person, the natural person or persons in control of the legal person must not have had any agricultural activity in their own name and at their own risk or must not have had the control of a legal person exercising an agricultural activity in the five years preceding the start of the agricultural activity by the legal person; [^F143 this category of farmers must also meet any additional objective and non-discriminatory eligibility criteria established by the relevant authority prior to exit day as regards appropriate skills, experience or education^F143] .

[^F144 12.A farmer as defined in Article 4(1)(a) who has submitted an application and been unsuccessful in obtaining entitlements from the national or regional reserve under paragraph 6, 7a or 7b in three or more scheme years shall no longer be eligible to be allocated entitlements from the national or regional reserve under paragraph 6, 7a or 7b.

A young farmer as defined in Article 50(2) who has submitted an application and has been unsuccessful in obtaining entitlements from the national or regional reserve under paragraph 6, 7a or 7b in three or more scheme years shall no longer be eligible to be allocated entitlements from the national or regional reserve under paragraph 6, 7a or 7b.^F144]

[^F145 13.A young farmer or a farmer commencing their agricultural activity is not eligible to apply for an allocation of payment entitlements in a year after 2025.^F145]

Article 30 Establishment and use of the national reserve or regional reserves _E29

[^F532 1.The relevant authority shall maintain the national reserve or regional reserves established prior to exit day.^F532]

^F5332.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5333.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.[^F534 The relevant authority^F534] shall allocate payment entitlements from their national or regional reserves in accordance with objective criteria and in such a way as to ensure the equal treatment of farmers and to avoid distortions of the market and of competition.

5.Payment entitlements referred to in paragraph 4 shall only be allocated to farmers entitled to be granted direct payments in accordance with Article 9.

6.[^F535 The relevant authority^F535] shall use their national or regional reserves to allocate payment entitlements, as a matter of priority, to young farmers and to farmers commencing their agricultural activity.

7.[^F536 The relevant authority^F536] may use their national or regional reserves to:

^F537(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F537(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)allocate payment entitlements to farmers who were prevented from being allocated payment entitlements under this Chapter as a result of force majeure or exceptional circumstances;

(d)allocate, in cases where they apply Article 21(3) of this Regulation, payment entitlements to farmers whose number of eligible hectares that they declared in 2015 in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 and that are at their disposal on a date fixed by the Member State, which shall be no later than the date fixed in that Member State for amending such an aid application, is higher than the number of owned or leased-in payment entitlements established in accordance with Regulation (EC) No 1782/2003 and with Regulation (EC) No 73/2009 that they hold on the final date for submission of applications to be set in accordance with point (b) of the first subparagraph of Article 78 of Regulation (EU) No 1306/2013;

(e)linearly increase, on a permanent basis, the value of all payment entitlements under the basic payment scheme at national or regional level if the relevant national or regional reserve exceeds 0,5 % of the [[^F538,F539 basic payment scheme ceiling in Wales^F539] or, where applicable, the^F538] regional ceiling for the basic payment scheme, provided that sufficient amounts remain available for allocations under paragraph 6, under points (a) and (b) of this paragraph and under paragraph 9 of this Article;

(f)^F540cover the yearly needs for payments to be granted in accordance with Article 51(2) ... of this Regulation.

For the purpose of this paragraph, [^F541the relevant authority^F541] shall decide on the priorities between the different uses referred to herein.

8.When applying paragraph 6 and points [^F542(a) and (b)^F542] of paragraph 7, [^F543the relevant authority^F543] shall fix the value of payment entitlements allocated to farmers at the national or regional average value of payment entitlements in the year of allocation.

[^F544 The national or regional average value shall be calculated by dividing the [^F545 basic payment scheme ceiling in Wales^F545] or, where applicable, the regional ceiling for the basic payment scheme set in accordance with Article 23(2), for the year of allocation, excluding the amount of the national reserve or regional reserves, by the number of allocated payment entitlements.^F544]

^F546...

9.Where a farmer is entitled to receive payment entitlements or to increase the value of the existing ones by virtue of a definitive court ruling or by virtue of a definitive administrative act of the competent authority of a [^F547relevant authority^F547] , the farmer shall receive the number and value of payment entitlements established in that ruling or act at a date to be fixed by the [^F547relevant authority^F547] . However, that date shall not be later than the latest date for lodging an application under the basic payment scheme following the date of the court ruling or the administrative act, taking into account the application of Articles 32 and 33.

10.When applying paragraph 6, points (a) and (b) of paragraph 7 and paragraph 9, [^F548the relevant authority^F548] may either allocate new entitlements or increase the unit value of all of the existing entitlements of a farmer up to the national or regional average value.

11.For the purposes of this Article, the following definitions shall apply:

(a)^F549'young farmers' means farmers fulfilling the conditions laid down in Article 50(2) and, where relevant, the conditions referred to in Article 50 ... (11);

(b)'farmers commencing their agricultural activity' means natural or legal persons who, in the five years preceding the start of the agricultural activity, did not have any agricultural activity in their own name and at their own risk or did not have the control of a legal person exercising an agricultural activity. In the case of a legal person, the natural person or persons in control of the legal person must not have had any agricultural activity in their own name and at their own risk or must not have had the control of a legal person exercising an agricultural activity in the five years preceding the start of the agricultural activity by the legal person; [^F550this category of farmers must also meet any additional objective and non-discriminatory eligibility criteria established by the relevant authority prior to exit day as regards appropriate skills, experience or education^F550] .

Article 30 Establishment and use of the national reserve or regional reserves _E30

[^F551 1.The relevant authority shall maintain the national reserve or regional reserves established prior to exit day.^F551]

^F5522.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F5523.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.[^F553 The relevant authority^F553] shall allocate payment entitlements from their national or regional reserves in accordance with objective criteria and in such a way as to ensure the equal treatment of farmers and to avoid distortions of the market and of competition.

5.Payment entitlements referred to in paragraph 4 shall only be allocated to farmers entitled to be granted direct payments in accordance with Article 9.

6.[^F554 The relevant authority^F554] shall use their national or regional reserves to allocate payment entitlements, as a matter of priority, to young farmers and to farmers commencing their agricultural activity.

7.[^F555 The relevant authority^F555] may use their national or regional reserves to:

(a)allocate payment entitlements to farmers in order to prevent land from being abandoned, including in areas subject to restructuring or development programmes relating to a form of public intervention;

(b)allocate payment entitlements to farmers in order to compensate them for specific disadvantages;

(c)allocate payment entitlements to farmers who were prevented from being allocated payment entitlements under this Chapter as a result of force majeure or exceptional circumstances;

(d)allocate, in cases where they apply Article 21(3) of this Regulation, payment entitlements to farmers whose number of eligible hectares that they declared in 2015 in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 and that are at their disposal on a date fixed by the Member State, which shall be no later than the date fixed in that Member State for amending such an aid application, is higher than the number of owned or leased-in payment entitlements established in accordance with Regulation (EC) No 1782/2003 and with Regulation (EC) No 73/2009 that they hold on the final date for submission of applications to be set in accordance with point (b) of the first subparagraph of Article 78 of Regulation (EU) No 1306/2013;

(e)linearly increase, on a permanent basis, the value of all payment entitlements under the basic payment scheme at national or regional level if the relevant national or regional reserve exceeds 0,5 % of the [[^F556,F557 basic payment scheme ceiling in Scotland^F557] or, where applicable, the^F556] regional ceiling [^F558in Scotland^F558] for the basic payment scheme, provided that sufficient amounts remain available for allocations under paragraph 6, under points (a) and (b) of this paragraph and under paragraph 9 of this Article;

(f)^F559cover the yearly needs for payments to be granted in accordance with Article 51(2) ... of this Regulation.

For the purpose of this paragraph, [^F560the relevant authority^F560] shall decide on the priorities between the different uses referred to herein.

8.When applying paragraph 6 and points [^F561(a) and (b)^F561] of paragraph 7, [^F562the relevant authority^F562] shall fix the value of payment entitlements allocated to farmers at the national or regional average value of payment entitlements in the year of allocation.

[^F563 The national or regional average value shall be calculated by dividing the [^F557 basic payment scheme ceiling in Scotland^F557] or, where applicable, the regional ceiling [^F558 in Scotland^F558] for the basic payment scheme set in accordance with Article 23(2), for the year of allocation, excluding the amount of the national reserve or regional reserves, by the number of allocated payment entitlements.^F563]

^F564...

9.Where a farmer is entitled to receive payment entitlements or to increase the value of the existing ones by virtue of a definitive court ruling or by virtue of a definitive administrative act of the competent authority of a [^F565relevant authority^F565] , the farmer shall receive the number and value of payment entitlements established in that ruling or act at a date to be fixed by the [^F565relevant authority^F565] . However, that date shall not be later than the latest date for lodging an application under the basic payment scheme following the date of the court ruling or the administrative act, taking into account the application of Articles 32 and 33.

10.When applying paragraph 6, points (a) and (b) of paragraph 7 and paragraph 9, [^F566the relevant authority^F566] may either allocate new entitlements or increase the unit value of all of the existing entitlements of a farmer up to the national or regional average value.

11.For the purposes of this Article, the following definitions shall apply:

(a)'young farmers' means farmers fulfilling the conditions laid down in Article 50(2) and, where relevant, the conditions referred to in Article 50(3) and (11);

(b)'farmers commencing their agricultural activity' means natural or legal persons who, in the five years preceding the start of the agricultural activity, did not have any agricultural activity in their own name and at their own risk or did not have the control of a legal person exercising an agricultural activity. In the case of a legal person, the natural person or persons in control of the legal person must not have had any agricultural activity in their own name and at their own risk or must not have had the control of a legal person exercising an agricultural activity in the five years preceding the start of the agricultural activity by the legal person; [^F567this category of farmers must also meet any additional objective and non-discriminatory eligibility criteria established by the relevant authority prior to exit day as regards appropriate skills, experience or education^F567] .

Article 31 Replenishment of the national reserve or regional reserves

1.The national reserve or regional reserves shall be replenished by amounts resulting from:

[^F146 (a)payment entitlements not giving right to payments during two consecutive years due to the application of:

[^F148 (b)a number of payment entitlements equivalent to the total number of payment entitlements which have not been activated by farmers in accordance with Article 32 of this Regulation for a period of two consecutive years, except where their activation has been prevented by force majeure or exceptional circumstances; when establishing the owned or leased-in payment entitlements held by a farmer that shall revert to the national reserve or regional reserves, priority shall be given to those entitlements which have the lowest value;^F148]

(c)payment entitlements voluntarily returned by farmers;

^F149(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(e)unduly allocated payment entitlements in accordance with Article 63 of Regulation (EU) No 1306/2013;

(f)a linear reduction of the value of payment entitlements under the [^F150 basic payment scheme^F150] [^F150 farm sustainability transition payment scheme^F150] at national or regional level where the national reserve or regional reserves are not sufficient to cover the cases referred to in Article 30(9) of this Regulation;

[^F22 (g)where [^F151 the relevant authority considers^F151] it necessary, a linear reduction of the value of payment entitlements under the [^F150 basic payment scheme^F150] [^F150 farm sustainability transition payment scheme^F150] at national or regional level to cover cases referred to in Article 30(6) of this Regulation. In addition, [^F152 a relevant authority^F152] already making use of that linear reduction may in the same year also apply a linear reduction of the value of payment entitlements under the basic payment scheme at national or regional level to cover cases referred to in points (a) and (b) of the first subparagraph of Article 30(7) of this Regulation;^F22]

[^F153 (h)the application of Article 34(4) of this Regulation.^F153]

2.The [^F154 appropriate authority may make regulations^F154] laying down necessary measures regarding the reversion of non-activated payment entitlements to the national reserve or regional reserves. ^F155...

Section 3 Implementation of the [^F156basic payment scheme^F156] [^F156farm sustainability transition payment scheme^F156]

Article 32 Activation of payment entitlements

1.Support under the [^F157 basic payment scheme^F157] [^F157 farm sustainability transition payment scheme^F157] shall be granted to farmers, by means of declaration in accordance with Article 33(1), upon activation of a payment entitlement per eligible hectare in the [^F158 constituent nation^F158] where it has been allocated. Activated payment entitlements shall give a right to the annual payment of the amounts fixed therein, without prejudice to the application ^F159... of reduction of payments in accordance with Article 11 and of linear reductions in accordance with ^F160... Article 51(2) ^F161... of this Regulation, and to the application of Article 63 of Regulation (EU) No 1306/2013.

[^F162 1A.The relevant authority may make additional payments based on the amount paid under—

(i)the Basic Payment Scheme;

(ii)the Farm Sustainability Transition Scheme; or

(iii)the Farm Sustainability Scheme^F162] .

2.For the purposes of this Title, 'eligible hectare' means:

(a)any agricultural area of the holding ^F163... that is used for an agricultural activity or, where the area is also used for non-agricultural activities, is predominantly used for agricultural activities; or

(b)[^F164 any area which gave a right to payments in 2008 under the single payment scheme laid down in Title III^F164] of Regulation (EC) No 1782/2003, and which:

3.For the purposes of point (a) of paragraph 2:

(a)where an agricultural area of a holding is also used for non-agricultural activities, that area shall be considered to be used predominantly for agricultural activities provided that those agricultural activities can be exercised without being significantly hampered by the intensity, nature, duration and timing of the non-agricultural activities;

(b)[^F165 the relevant authority^F165] may draw up a list of areas which are predominantly used for non-agricultural activities.

[^F166 The relevant authority must apply the criteria it has established for the implementation of this paragraph in the constituent nation.^F166]

4.Areas shall be considered to be eligible hectares only if they comply with the definition of eligible hectare throughout the calendar year, except in the case of force majeure or exceptional circumstances.

[^F167 5.For the purposes of determining 'eligible hectare', [^F168 the relevant authority^F168] having taken the decision referred to in the second subparagraph of Article 4(2) may apply a reduction coefficient to convert the hectares concerned into 'eligible hectares'.^F167]

6.Areas used for the production of hemp shall only be eligible hectares if the varieties used have a tetrahydrocannabinol content not exceeding 0,2 %.

[^F169Article 32A

1.Farmers shall not convert or plough permanent grassland situated in areas which, prior to exit day, have been designated by the relevant authority as permanent grasslands which are environmentally sensitive.

2.Without prejudice to Directive 2004/35/CE of the European Parliament and of the Council where a farmer has converted or ploughed permanent grassland that is subject to the obligation referred to in paragraph 1 the relevant authority shall provide for the obligation to reconvert the area into permanent grassland and may, on a case by case basis, issue precise instructions to be respected by the farmer concerned on how to reverse the environmental damage caused in order to restore the environmentally sensitive status.

3.The farmer shall be informed without delay after the non-compliance has been established of the obligation to reconvert and of the date before which that obligation is to be complied with. That date shall not be later than the date for the submission of the single application for the following year.

4.By way of derogation from Article 4(1)(h) of Regulation (EU) No 1307/2013, the land reconverted shall be considered as permanent grassland as of the first day of reconversion and be subject to the obligation referred to in paragraph 1.^F169]

Article 33 Declaration of eligible hectares

1.For the purposes of the activation of payment entitlements provided for in Article 32(1), the farmer shall declare the parcels corresponding to the eligible hectares accompanying any payment entitlement. Except in the case of force majeure or exceptional circumstances, the parcels declared shall be at the farmer's disposal on a date fixed by the [^F170 relevant authority^F170] , which shall be no later than the date fixed in that [^F171 constituent nation^F171] for amending the aid application as referred to in Article 72(1) of Regulation (EU) No 1306/2013.

2.[^F172 The relevant authority^F172] may, in duly justified circumstances, authorise the farmer to modify his declaration provided that he maintains at least the number of hectares corresponding to his payment entitlements and respects the conditions for granting the payment under the [^F173 basic payment scheme^F173] [^F173 farm sustainability transition payment scheme^F173] for the area concerned.

Article 34 Transfer of payment entitlements

1.Payment entitlements may be transferred only to a farmer [^F174 entitled to be granted direct payments in accordance with Article 9^F174] established in the same [^F175 constituent nation^F175] , except in the case of transfer by actual or anticipated inheritance.

Payment entitlements, including in the case of actual or anticipated inheritance, may be activated only in the [^F175 constituent nation^F175] where they were allocated.

2.Where [^F176 the relevant authority exercises^F176] the option in Article 23(1), payment entitlements may be transferred or activated only within the same region, except in the case of actual or anticipated inheritance.

Payment entitlements, including in the case of actual or anticipated inheritance, may be activated only in the region where they were allocated.

3.[^F177 A relevant authority^F177] not exercising the option in Article 23(1) may decide that payment entitlements may be transferred or activated only within the same region, except in the case of actual or anticipated inheritance.

Such regions shall be defined at the appropriate territorial level in accordance with objective criteria and in a way that ensures the equal treatment of farmers and avoids distortions of the market and of competition.

[^F178 4.Where payment entitlements are transferred without land, [^F179 the relevant authority^F179] may, acting in compliance with [[^F180,F181 assimilated^F181] law relating to the common agricultural policy and the objectives of the common agricultural policy set out in Article 39 of the Treaty on the Functioning of the European Union^F180] , decide that a part of the payment entitlements transferred are to revert to the national reserve or regional reserves or that their unit value is to be reduced in favour of the national reserve or regional reserves. Such reduction may be applied to one or more types of transfer.^F178]

5.The [^F182 appropriate authority may make regulations^F182] laying down detailed rules governing the notification by farmers of transfer of payment entitlements to the [^F183 relevant authority^F183] and the deadlines within which such notification is to take place. ^F184...

Article 35 Delegated powers

1.In order to ensure legal certainty and to clarify the specific situations that may arise in the application of the [^F185 basic payment scheme^F185] [^F185 farm sustainability transition payment scheme^F185] , the [^F186 appropriate authority may make regulations^F186] concerning:

(a)rules on eligibility and access in respect of the basic payment scheme of farmers in the case of inheritance and anticipated inheritance, inheritance under a lease, change of legal status or denomination, transfer of payment entitlements, [^F187 and^F187] merger or scission of the holding ^F188...;

(b)rules on the calculation of the value and number or on the increase or reduction in the value of payment entitlements in relation to the allocation of payment entitlements under any provision of this Title, including rules:

(c)rules on the establishment and calculation of the value and number of payment entitlements received from the national reserve or regional reserves;

(d)rules on the modification of the unit value of payment entitlements in the case of fractions of payment entitlements and in the case of transfer of payment entitlements referred to in Article 34(4);

^F189(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F189(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)criteria for the allocation of payment entitlements pursuant to Article 30(6) [^F190 and (7)^F190] ;

[^F191 (h)criteria for setting the reduction coefficient referred to in Article 32(5).^F191]

2.In order to ensure the proper management of payment entitlements, the [^F192 appropriate authority may make regulations^F192] laying down rules on the content of the declaration and the requirements for the activation of payment entitlements.

3.In order to preserve public health, the [^F193 appropriate authority may make regulations^F193] laying down rules making the granting of payments conditional upon the use of certified seeds of certain hemp varieties and the procedure for the determination of hemp varieties and the verification of their tetrahydrocannabinol content referred to in Article 32(6).

Section 4 Single area payment scheme

^F194Article 36 Single area payment scheme

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F194Article 37 Transitional national aid

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 5 Implementation of the basic payment scheme in the member states having applied the single area payment scheme

^F194Article 38 Introduction of the basic payment scheme in the Member States having applied the single area payment scheme

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F194Article 39 First allocation of payment entitlements

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F194Article 40 Value of payment entitlements

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 2 Redistributive payment

[^F195Article 41 General rules _E10

[^F196 1. The relevant authority may grant an annual payment to farmers who are entitled to a payment under the [^F197 basic payment scheme ^F197] [^F197 farm sustainability transition payment scheme ^F197] referred to in Sections 1, 2, 3 and 5 of Chapter 1 (“the redistributive payment”), provided that such a decision was taken and notified to the Commission by 1 August 2019.

2.If the relevant authority applies the [^F197 basic payment scheme^F197] [^F197 farm sustainability transition payment scheme^F197] at regional level in accordance with Article 23, it may apply the redistributive payment at regional level.^F196]

3.Without prejudice to the application of financial discipline, of reduction of payments in accordance with Article 11, of linear reductions as referred in Article 7 of this Regulation, and to the application of Article 63 of Regulation (EU) No 1306/2013, the redistributive payment shall be granted annually upon activation of payment entitlements by the farmer ^F198....

4.The redistributive payment shall be calculated each year by [^F199 the relevant authority^F199] by multiplying a figure to be set by the [^F200 relevant authority^F200] , which shall not be higher than 65 % of the ^F201... average payment per hectare [^F202 made by the relevant authority (at regional level where applicable)^F202] , by the number of payment entitlements activated by the farmer in accordance with Article 33(1) ^F203.... The number of such payment entitlements or hectares shall not exceed a maximum to be set by [^F199 the relevant authority^F199] which shall not be higher than 30 hectares [^F204 , or 54 hectares if the^F204] average size exceeds 30 hectares in the [^F205 constituent nation^F205] concerned.

^F2065.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.The national average payment per hectare referred to in paragraph 4 of this Article shall be established by the [^F207 relevant authority^F207] on the basis [^F208 of its share^F208] of the national ceiling ^F209... for calendar year 2019 and the number of eligible hectares declared in accordance with Article 33(1) ^F210... in 2015.

^F211...

7.[^F212 The relevant authority^F212] shall ensure that no advantage provided for under this Chapter is granted to farmers in respect of whom it is established that, after 18 October 2011, they divided their holding with the sole purpose of benefiting from the redistributive payment. This shall also apply to farmers whose holdings result from that division.

^F2138.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .^F195]

Article 41 General rules _E31

[^F568 1. The relevant authority may grant an annual payment to farmers who are entitled to a payment under the basic payment scheme referred to in Sections 1, 2, 3 and 5 of Chapter 1 (“the redistributive payment”) ^F569 ....

2.If the relevant authority applies the basic payment scheme at regional level in accordance with Article 23, it may apply the redistributive payment at regional level.^F568]

3.^{F570,F571,F572}Without prejudice to the application ... of reduction of payments in accordance with Article 11 ... of this Regulation, and to the application of Article 63 of Regulation (EU) No 1306/2013, the redistributive payment shall be granted annually upon activation of payment entitlements by the farmer ....

4.^F575,F577The redistributive payment shall be calculated each year by [^F573the relevant authority^F573] by multiplying a figure to be set by the [^F574relevant authority^F574] , which shall not be higher than 65 % of the ... average payment per hectare [^F576made by the relevant authority (at regional level where applicable)^F576] , by the number of payment entitlements activated by the farmer in accordance with Article 33(1) .... [^F578The number of such payment entitlements or hectares shall not exceed a maximum level to be set by the relevant authority which shall not be higher than 54 hectares.^F578]

^F5795.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6.^F582,F583The national average payment per hectare referred to in paragraph 4 of this Article shall be established by the [^F580relevant authority^F580] on the basis [^F581of its share^F581] of the national ceiling ... for calendar year 2019 and the number of eligible hectares declared in accordance with Article 33(1) ... in 2015.

^F584...

7.[^F585 The relevant authority^F585] shall ensure that no advantage provided for under this Chapter is granted to farmers in respect of whom it is established that, after 18 October 2011, they divided their holding with the sole purpose of benefiting from the redistributive payment. This shall also apply to farmers whose holdings result from that division.

^F5868.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[[^F214,F215Article 42 Financial provisions

In order to finance the redistributive payment, the relevant authority may decide [^F216 , by the date referred to in Article 41(1)^F216] to use up to 30% of [^F217 its share of the annual national^F217] [^F217 the total^F217] ceiling.^F215,F214]]

[^F218CHAPTER 3 Payment for agricultural practices beneficial for the climate and the environment

Article 43 General rules _cross-notes

1.Farmers entitled to a payment under the basic payment scheme or the single area payment scheme shall observe, on all their eligible hectares within the meaning of Article 32(2) to (5), the agricultural practices beneficial for the climate and the environment referred to in paragraph 2 of this Article or the equivalent practices referred to in paragraph 3 of this Article.

2.The agricultural practices beneficial for the climate and the environment shall be the following:

[^F219 (a)crop diversification;^F219]

(b)maintaining existing permanent grassland; and

(c)having ecological focus area on the agricultural area.

3.The equivalent practices shall be those which include similar practices that yield an equivalent or higher level of benefit for the climate and the environment compared to one or several of the practices referred to in paragraph 2. Those equivalent practices and the practice or practices referred to in paragraph 2 to which they are equivalent are listed in Annex IX and shall be covered by any of the following:

(a)commitments undertaken in accordance with either Article 39(2) of Regulation (EC) No 1698/2005 or Article 28(2) of Regulation (EU) No 1305/2013;

(b)national or regional environmental certification schemes, including those for the certification of compliance with national environmental legislation, going beyond the relevant mandatory standards established pursuant to Chapter I of Title VI of Regulation (EU) No 1306/2013, which aim to meet objectives relating to soil and water quality, biodiversity, landscape preservation, and climate change mitigation and adaptation. Those certification schemes may include the practices listed in Annex IX to this Regulation, the practices referred to in paragraph 2 of this Article, or a combination of those practices.

4.The equivalent practices referred to in paragraph 3 shall not be the subject of double funding.

5.[^F220 Nothing in this Regulation prevents the relevant authority from deciding^F220] , including, where appropriate, at regional level, to restrict the choice of the farmers to use the options referred to in points (a) and (b) of paragraph 3.

6.[^F221 Nothing in this Regulation prevents the relevant authority from deciding^F221] , including, where appropriate, at regional level, that farmers shall carry out all of their relevant obligations under paragraph 1 in accordance with national or regional environmental certification schemes referred to in point (b) of paragraph 3.

7.Subject to the decisions of [^F222 the relevant authority^F222] referred to in paragraphs 5 and 6, a farmer may observe one or more of the practices referred to in point (a) of paragraph 3 only if these fully replace the related practice or practices referred to in paragraph 2. A farmer may use certification schemes referred to in point (b) of paragraph 3 only if these cover the entire obligation referred to in paragraph 1.

^F2238.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.Without prejudice to paragraphs 10 and 11 of this Article, to the application ^F224... [^F225 of linear reductions in accordance with Article 7 of this Regulation and to the application^F225] of Article 63 of Regulation (EU) No 1306/2013, [^F226 the relevant authority^F226] shall grant the payment referred to in this Chapter to farmers who observe the practices referred to in paragraph 1 of this Article that are relevant for them, and to the extent that those farmers comply with Articles [^F227 44,^F227] 45 and 46 of this Regulation.

This payment shall take the form of an annual payment per eligible hectare declared in accordance with Article 33(1) ^F228..., the amount of which shall be calculated annually by dividing the amount resulting from the application of Article 47 by the total number of eligible hectares declared in accordance with Article 33(1) ^F228... in the [^F229 constituent nation^F229] or the region concerned.

By way of derogation from the second subparagraph, [^F230 and provided that the decision to derogate was taken and notified to the Commission prior to 15 December 2014, the relevant authority^F230] may decide to grant the payment referred to in this paragraph as a percentage of the total value of the payment entitlements that the farmer has activated in accordance with Article 33(1) for each relevant year.

For each year and each [^F229 constituent nation^F229] or region, that percentage shall be calculated by dividing the amount resulting from the application of Article 47 by the total value of all payment entitlements activated in accordance with Article 33(1) in that [^F229 constituent nation^F229] or region.

10.Farmers whose holdings are fully or partly situated in areas covered by Directives 92/43/EEC, 2000/60/EC, or 2009/147/EC shall be entitled to the payment referred to in this Chapter provided that they observe the practices referred to in this Chapter to the extent that those practices are compatible in the holding concerned with the objectives of those Directives.

11.Farmers complying with the requirements laid down in Article 29(1) of Regulation (EC) No 834/2007 as regards organic farming shall be entitled ipso facto to the payment referred to in this Chapter.

The first subparagraph shall apply only to the units of a holding that are used for organic production in accordance with Article 11 of Regulation (EC) No 834/2007.

12.The [^F231 appropriate authority may make regulations^F231] :

(a)adding equivalent practices to the list set out in Annex IX;

(b)establishing appropriate requirements applicable to the national or regional certification schemes referred to in point (b) of paragraph 3 of this Article, including the level of assurance to be provided by those schemes;

(c)establishing detailed rules for the calculation of the amount referred to in Article 28(6) of Regulation (EU) No 1305/2013 for the practices referred to in points 3 and 4 of Section I and point 7 of Section III of Annex IX to this Regulation, and any further equivalent practices added to that Annex pursuant to point (a) of this paragraph for which a specific calculation is needed in order to avoid double funding.

^F23213.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[^F233Article 43a Plans for, and reports in respect of, a holding

1.A farmer entitled to a payment under the basic payment scheme must prepare in respect of the claim year to which the payment relates any two or more of the plans or reports specified in paragraph 2.

2.The plans and reports referred to in paragraph 1 are—

(a)an animal health and welfare plan;

(b)a carbon plan;

(c)a habitats report;

(d)an integrated pest management plan;

(e)a soil report.

3.A plan or report referred to in this Article must be as described in Annex IXa in respect of the plan or report.

4. In this Article, “ claim year ” has the same meaning as in Article 5A(6). ^F233]

[^F234Article 44 Crop diversification _cross-notes

1.Where the arable land of the farmer covers between 10 and 30 hectares and is not entirely cultivated with crops under water for a significant part of the year or for a significant part of the crop cycle, there shall be at least two different crops on that arable land. The main crop shall not cover more than 75 % of that arable land.

Where the arable land of the farmer covers more than 30 hectares and is not entirely cultivated with crops under water for a significant part of the year or for a significant part of the crop cycle, there shall be at least three different crops on that arable land. The main crop shall not cover more than 75 % of that arable land and the two main crops together shall not cover more than 95 % of that arable land.

[^F22 2.Without prejudice to the number of crops required pursuant to paragraph 1, the maximum thresholds set out therein shall not apply to holdings where grasses or other herbaceous forage or land lying fallow or cultivated with crops under water for a significant part of the year or for a significant part of the crop cycle cover more than 75 % of the arable land. In such cases, the main crop on the remaining arable area shall not cover more than 75 % of that remaining arable land, except where this remaining area is covered by grasses or other herbaceous forage or land lying fallow.^F22]

3.Paragraphs 1 and 2 shall not apply to holdings:

[^F22 (a)where more than 75 % of the arable land is used for the production of grasses or other herbaceous forage, is used for cultivation of leguminous crops, is land lying fallow or is subject to a combination of those uses;

(b)where more than 75 % of the eligible agricultural area is permanent grassland, is used for the production of grasses or other herbaceous forage or for the cultivation of crops under water for a significant part of the year or for a significant part of the crop cycle, or is subject to a combination of those uses;^F22]

(c)where more than 50 % of the areas of arable land declared were not declared by the farmer in his aid application of the previous year and, where based on a comparison of the geo-spatial aid applications, all arable land is being cultivated with a different crop compared to that of the previous calendar year;

^F235(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. For the purposes of this Article, a "crop" means any of the following:

(a)a culture of any of the different genera defined in the botanical classification of crops;

(b)a culture of any of the species in the case of Brassicaceae, Solanaceae, and Cucurbitaceae;

(c)land lying fallow;

(d)grasses or other herbaceous forage.

[^F22 Winter crop and spring crop shall be considered to be distinct crops even if they belong to the same genus. Triticum spelta shall be considered to be a distinct crop from crops belonging to the same genus.^F22]

5.The [^F236 appropriate authority may make regulations^F236] :

(a)recognising other types of genera and species than those referred to in paragraph 4 of this Article; and

(b)laying down the rules concerning the application of the precise calculation of shares of different crops.^F234]

Article 45 Permanent grassland

[^F237 1.Farmers shall not convert or plough permanent grassland situated in areas which, prior to exit day, have been designated by the relevant authority as permanent grasslands which are environmentally sensitive.^F237]

2.[^F238 The relevant authority^F238] shall ensure that the ratio of areas of permanent grassland to the total agricultural area declared by the farmers in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 does not decrease by more than 5 % compared to [^F239 the reference ratio^F239] established by [^F240 the relevant authority^F240] in 2015 by dividing areas of permanent grassland referred to in point (a) of the second subparagraph of this paragraph by the total agricultural area referred to in point (b) of that subparagraph.

For the purposes of establishing the reference ratio referred to in the first subparagraph:

(a) "areas of permanent grassland" means the land under permanent pasture declared in 2012, ^F241 ... in accordance with Regulation (EC) No 73/2009 by the farmers subject to the obligations under this Chapter, as well as the areas of permanent grassland declared in 2015 in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 by the farmers subject to the obligations under this Chapter that have not been declared as land under permanent pasture in 2012 ^F242 ...;

(b) "total agricultural area" means the agricultural area declared in 2015 in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 by farmers subject to the obligations under this Chapter.

The reference ratio of permanent grassland shall be recalculated in cases where farmers subject to the obligations under this Chapter have an obligation to reconvert an area into permanent grassland in 2015 or in 2016 in accordance with Article 93 of Regulation (EU) No 1306/2013. In such cases, these areas shall be added to the areas of permanent grassland referred to in point (a) of the second subparagraph of this paragraph.

The ratio of permanent grassland shall be established each year on the basis of the areas declared by the farmers subject to the obligations under this Chapter for that year in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013.

[^F243 The obligation under this paragraph shall apply across the constituent nation.^F243]

^F244...

3.Where it is established that the ratio referred to in paragraph 2 has decreased by more than 5 % [^F245 in the constituent nation, the relevant authority^F245] shall impose obligations at holding level to reconvert land into permanent grassland for those farmers who have land at their disposal which was converted from land under permanent pasture or from permanent grassland into land for other uses during a period in the past.

However, where the amount of areas of permanent grassland in absolute terms established in accordance with point (a) of the second subparagraph of paragraph 2 is maintained within certain limits, the obligation set out in the first subparagraph of paragraph 2 shall be considered to have been complied with.

4.Paragraph 3 shall not apply where the decrease below the threshold is the result of afforestation that is compatible with the environment and does not include plantations of short rotation coppice, Christmas trees or fast growing trees for energy production.

5.In order to ensure that the ratio of permanent grassland is maintained, the [^F246 appropriate authority may make regulations^F246] laying down detailed rules on maintenance of permanent grassland, including rules on reconversion in the case of non-respect of the obligation in paragraph 1 of this Article, ^F247... and any adjustment of the reference ratio referred to in paragraph 2 that may become necessary.

6.The [^F248 appropriate authority may make regulations^F248] :

(a)laying down the framework for the designation of further sensitive areas referred to in the second subparagraph of paragraph 1 of this Article;

(b)establishing detailed methods for the determination of the ratio of permanent grassland and of the total agricultural area that has to be maintained pursuant to paragraph 2 of this Article;

(c)defining the period in the past referred to in the first subparagraph of paragraph 3 of this Article.

7.The [^F249 appropriate authority may make regulations^F249] fixing the limits referred to in the second subparagraph of paragraph 3 of this Article. ^F250...

Article 46 Ecological focus area

[^F22 1.Where the arable land of a holding covers more than 15 hectares, the farmer shall ensure that, from 1 January 2015, an area corresponding to at least 5 % of the arable land of the holding that the farmer declared in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013 and, if they are considered to be ecological focus area by the [^F251 relevant authority^F251] in accordance with paragraph 2 of this Article, including the areas mentioned in points (c), (d), (g), (h), (k) and (l) of that paragraph is ecological focus area.^F22]

The percentage referred to in the first subparagraph of this paragraph shall be increased from 5 % to 7 % subject to a legislative act of the European Parliament and of the Council in accordance with Article 43(2) TFEU.

By 31 March 2017, the Commission shall present an evaluation report on the implementation of the first subparagraph of this paragraph accompanied, where appropriate, by a proposal for a legislative act as referred to in the second subparagraph.

2.[^F252 An ecological focus area may include one or more of the following:^F252]

(a)land lying fallow;

(b)terraces;

(c)landscape features, including such features adjacent to the arable land of the holding which, by way of derogation from Article 43(1) of this Regulation, may include landscape features that are not included in the eligible area in accordance with point (c) of Article 76(2) of Regulation (EU) No 1306/2013;

(d)buffer strips, including buffer strips covered by permanent grassland, provided that these are distinct from adjacent eligible agricultural area;

(e)hectares of agro-forestry that receive, or have received, support under Article 44 of Regulation (EC) No 1698/2005 and/or Article 23 of Regulation (EU) No 1305/2013;

(f)strips of eligible hectares along forest edges;

(g)areas with short rotation coppice with no use of mineral fertiliser and/or plant protection products;

(h)[^F253 afforested areas referred to in point (b)(ii) of Article 32(2) of this Regulation;^F253]

[^F253 afforested areas that receive, or have received, support under Article 22 of Regulation (EU) No 1305/2013 through a forestry grant scheme agreement for small or farm woodland creation.^F253]

(i)areas with catch crops, or green cover established by the planting and germination of seeds, subject to the application of weighting factors referred to in paragraph 3 of this Article;

(j)areas with nitrogen-fixing crops[^F22 ;^F22]

[^F33 (k)areas with Miscanthus ;

(l)areas with Silphium perfoliatum ;

(m)land lying fallow for melliferous plants (pollen and nectar rich species).^F33]

[^F22 With the exception of the areas of the holding referred to in points (g), [^F254 (h),^F254] (k) and (l) of the first subparagraph of this paragraph, the ecological focus area shall be located on the arable land of the holding. In the case of areas referred to in points (c) and (d) of the first subparagraph of this paragraph, the ecological focus area may also be adjacent to the arable land of the holding the farmer declared in accordance with point (a) of the first subparagraph of Article 72(1) of Regulation (EU) No 1306/2013.^F22]

3.In order to simplify administration and to take account of the characteristics of the types of ecological focus area listed in the first subparagraph of paragraph 2, as well as to facilitate their measurement, [^F255 the relevant authority^F255] may, when calculating the total hectares represented by the ecological focus area of the holding, make use of the conversion and/or weighting factors set out in Annex X. If [^F256 the relevant authority^F256] decides to consider to be ecological focus area the area under point (i) of the first subparagraph of paragraph 2 or any other area that is subject to a weighting of less than 1, the use of the weighting factors set out in Annex X shall be mandatory.

4.Paragraph 1 shall not apply to holdings:

[^F22 (a)where more than 75 % of the arable land is used for the production of grasses or other herbaceous forage, is land lying fallow, is used for cultivation of leguminous crops, or is subject to a combination of those uses;

(b)where more than 75 % of the eligible agricultural area is permanent grassland, is used for the production of grasses or other herbaceous forage or for the cultivation of crops under water either for a significant part of the year or for a significant part of the crop cycle, or is subject to a combination of those uses.^F22]

5.[^F257 The relevant authority^F257] may decide to implement up to half of the percentage points of the ecological focus area referred to in paragraph 1 at regional level in order to obtain adjacent ecological focus areas. [^F257 The relevant authority^F257] shall designate the areas and the obligations of participating farmers or groups of farmers. ^F258...

6. [^F259 The relevant authority ^F259] may decide to allow farmers whose holdings are in close proximity to fulfil the obligation referred to in paragraph 1 collectively ("collective implementation"), provided that the ecological focus areas concerned are contiguous. ^F260 ... [^F259 The relevant authority ^F259] may designate the areas on which collective implementation is possible and may impose further obligations upon farmers or groups of farmers participating in such collective implementation.

Each farmer participating in collective implementation shall ensure that at least 50 % of the area subject to the obligation in paragraph 1 is located on the land of his holding and is in accordance with the second subparagraph of paragraph 2. The number of farmers participating in such collective implementation shall not exceed ten.

^F2617.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F2618.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.The [^F262 appropriate authority may make regulations^F262] :

(a)laying down further criteria for the types of areas referred to in paragraph 2 of this Article to qualify as ecological focus area;

(b)adding other types of areas than those referred to in paragraph 2 that can be taken into account for the purpose of respecting the percentage referred to in paragraph 1;

(c)adapting Annex X in order to establish the conversion and weighting factors referred to in paragraph 3 and in order to take into account the criteria and/or types of areas to be defined by the [^F263 appropriate authority^F263] under points (a) and (b) of this paragraph;

(d)setting rules for the implementation referred to in paragraphs 5 and 6, including the minimum requirements on such implementation;

^F264(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F264(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Article 47 Financial provisions

1.In order to finance the payment referred to in this Chapter, [^F265 the relevant authority^F265] shall use 30 % [^F266 of its share^F266] of the annual national ceiling ^F267....

2.[^F268 The relevant authority^F268] shall apply the payment referred to in this Chapter at [^F269 the same level across the constituent nation^F269] .