Section I — General provisions
On-the-spot checks by the Commission
1. Without prejudice to the checks carried out by Member States under national law, regulations and administrative provisions or Article 287 TFEU or to any check organised under Article 322 TFEU or based on Council Regulation (Euratom, EC) No 2185/96 ( 30 ) , the Commission may organise on-the-spot checks in Member States with a view to verifying in particular:
(a)
compliance of administrative practices with Union rules;
(b)
the existence of the requisite supporting documents and their correlation with the operations financed by the EAGF or the EAFRD;
(c)
the terms on which the operations financed by the EAGF or the EAFRD were undertaken and checked.
(d)
whether a paying agency complies with the accreditation criteria laid down in Article 7(2) and whether the Member State correctly applies the provisions of Article 7(5).
Persons authorised by the Commission to carry out on-the-spot checks on its behalf, or Commission agents acting within the scope of the powers conferred on them, shall have access to the books and all other documents, including documents and metadata drawn up or received and recorded on an electronic medium, relating to expenditure financed by the EAGF or the EAFRD.
The powers to carry out on-the-spot checks shall not affect the application of national provisions which reserve certain acts for agents specifically designated by national law. Without prejudice to the specific provisions of Regulation (EU, Euratom) No 883/2013 ( 31 ) of the European Parliament and of the Council and Regulation (Euratom, EC) No 2185/96, persons authorised by the Commission to act on its behalf shall not take part, inter alia, in home visits or the formal questioning of persons on the basis of law of the Member State concerned. However, they shall have access to information thus obtained.
2. The Commission shall give sufficient prior notice of an on-the-spot check to the Member State concerned or to the Member State within whose territory the check is to take place, taking into account the administrative impact on paying agencies when organising checks. Agents from the Member State concerned may take part in such checks.
At the request of the Commission and with the agreement of the Member State, additional checks or inquiries into the operations covered by this Regulation shall be undertaken by the competent bodies of that Member State. Commission agents or persons authorised by the Commission to act on its behalf may take part in such checks.
In order to improve checks, the Commission may, with the agreement of the Member States concerned, request the assistance of the authorities of those Member States for certain checks or inquiries.
Access to information
1. Member States shall make available to the Commission all information necessary for the smooth operation of the Funds and shall take all appropriate measures to facilitate the checks which the Commission deems appropriate in connection with the management of Union financing, including on-the-spot checks.
2. Member States shall communicate to the Commission at its request the laws, regulations and administrative provisions which they have adopted in order to implement the Union legal acts relating to the CAP, where those acts have a financial impact on the EAGF or the EAFRD.
3. Member States shall make available to the Commission information about irregularities and suspected fraud cases detected, as well as information about the steps taken pursuant to Section III of this Chapter to recover undue payments in connection with those irregularities and frauds.
Access to documents
The accredited paying agencies shall keep supporting documents relating to payments made and documents relating to the performance of the administrative and physical checks required by Union law, and shall make the documents and information available to the Commission. Those supporting documents may be kept in electronic form under the conditions laid down by the Commission on the basis of Article 50(2).
Where those documents are kept by an authority acting under delegation from a paying agency and responsible for authorising expenditure, that authority shall send reports to the accredited paying agency on the number of checks made, their content and the measures taken in the light of their results.
Commission powers
1. In order to ensure the correct and efficient application of the provisions relating to on-the-spot checks and access to documents and information set out in this Chapter, the Commission shall be empowered to adopt delegated acts in accordance with Article 115 supplementing specific obligations to be complied with by the Member States under this Chapter.
2. The Commission may adopt implementing acts laying down rules on:
(a)
the procedures relating to the specific obligations which the Member States have to comply with in relation to the checks provided for in this Chapter;
(b)
the procedures relating to the cooperation obligations to be complied with by the Member States for the implementation of Articles 47 and 48;
(c)
the procedures and other practical arrangements relating to the reporting obligation referred to in Article 48(3);
(d)
the conditions under which the supporting documents referred to in Article 49 are to be kept, including their form and the time period of their storage.
Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 116(3).
Clearance of accounts
Prior to 31 May of the year following the budget year in question and on the basis of the information transmitted in accordance with point (c) of Article 102(1), the Commission shall adopt implementing acts, containing its decision on the clearance of the accounts of the accredited paying agencies. Those implementing acts shall cover the completeness, accuracy and veracity of the annual accounts submitted and shall be without prejudice to the content of decisions subsequently adopted pursuant to Article 52.
Those implementing acts shall be adopted in accordance with the advisory procedure referred to in Article 116(2).
Conformity clearance
1. Where it finds that expenditure falling within the scope of Article 4(1) and Article 5 has not been effected in conformity with Union law and, in respect of the EAFRD, has not been effected in conformity with the applicable Union and national law referred to in Article 85 of Regulation (EU) No 1303/2013, the Commission shall adopt implementing acts determining the amounts to be excluded from Union financing. Those implementing acts shall be adopted in accordance with the advisory procedure referred to in Article 116(2).
2. The Commission shall assess the amounts to be excluded on the basis of the gravity of the non-conformity recorded. It shall take due account of the nature of the infringement and of the financial damage caused to the Union. It shall base the exclusion on the identification of amounts unduly spent and, where these cannot be identified with proportionate effort, may apply extrapolated or flat-rate corrections. Flat-rate corrections shall only be applied where, due to the nature of the case or because the Member State has not provided the Commission with the necessary information, it is not possible with proportionate effort to identify more precisely the financial damage caused to the Union.
3. Before the adoption of any decision to refuse financing, the findings from the Commission's inspection and the Member State's replies shall be notified in writing, following which the two parties shall attempt to reach agreement on the action to be taken. At that point in the procedure the Member States shall be given the opportunity to demonstrate that the actual extent of the non-compliance is less than in the Commission's assessment.
If agreement is not reached, the Member State may request the opening of a procedure aimed at reconciling, within a period of four months, each party's position. A report of the outcome of the procedure shall be submitted to the Commission. The Commission shall take into account the recommendations in the report before deciding on any refusal of financing and shall give reasons if it decides not to follow those recommendations.
4. Financing may not be refused for:
(a)
expenditure as indicated in Article 4(1) which is effected more than 24 months before the Commission notifies the Member State in writing of its inspection findings;
(b)
expenditure on multiannual measures falling within the scope of Article 4(1) or within the scope of the programmes as indicated in Article 5, where the final obligation on the recipient occurs more than 24 months before the Commission notifies the Member State in writing of its inspection findings;
(c)
expenditure on measures in programmes, as indicated in Article 5, other than those referred to in point (b) of this paragraph, for which the payment or, as the case may be, the final payment, by the paying agency, is made more than 24 months before the Commission notifies the Member State in writing of its inspection findings.
5. Paragraph 4 shall not apply in the case of:
(a)
irregularities covered by Section III of this Chapter;
(b)
national aids for which the Commission has initiated the procedure laid down in Article 108(2) TFEU or infringements which the Commission has notified to the Member State concerned by a letter of formal notice in accordance with Article 258 TFEU;
(c)
infringements by Member States of their obligations under Chapter III of Title V of this Regulation, provided that the Commission notifies the Member State in writing of its inspection findings within 12 months following receipt of the Member State's report on the results of its checks on the expenditure concerned.
Commission powers
1. The Commission shall adopt implementing acts laying down rules on:
(a)
the clearance of accounts provided for in Article 51 with regard to the measures to be taken in connection with the adoption of the decision and its implementation, including the information exchange between the Commission and the Member States and the deadlines to be respected;
(b)
the conformity clearance provided for in Article 52 with regard to the measures to be taken in connection with the adoption of the decision and its implementation, including the information exchange between the Commission and the Member States and the deadlines to be respected as well as the conciliation procedure provided for in that Article, including the establishment, tasks, composition and working arrangements of the conciliation body.
2. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 116(3).
3. In order to enable the Commission to protect the financial interest of the Union and to ensure the provisions relating to the conformity clearance provided for in Article 52 are applied efficiently, the Commission shall be empowered to adopt delegated acts in accordance with Article 115, concerning the criteria and methodology for applying corrections.
Section III — Irregularities
Common Provisions
1. For any undue payment following the occurrence of irregularity or negligence, Member States shall request recovery from the beneficiary within 18 months after the approval and, where applicable, reception, by the paying agency or body responsible for the recovery, of a control report or similar document, stating that an irregularity has taken place. The corresponding amounts shall be recorded at the time of the recovery request in the debtors' ledger of the paying agency.
2. If recovery has not taken place within four years from the date of the recovery request, or within eight years where recovery is taken in the national courts, 50 % of the financial consequences of the non-recovery shall be borne by the Member State concerned and 50 % by the Union's budget, without prejudice to the requirement that the Member State concerned must pursue recovery procedures in compliance with Article 58.
Where, in the context of the recovery procedure, the absence of any irregularity is recorded by an administrative or legal instrument of a final nature, the Member State concerned shall declare as expenditure to the Funds the financial burden borne by it under the first subparagraph.
However, if for reasons not attributable to the Member State concerned, it is not possible for recovery to take place within the time limit specified in the first subparagraph, and the amount to be recovered exceeds EUR 1 million, the Commission may, at the request of the Member State, extend the time-limit by a period of up to half of the original period.
3. On duly justified grounds, Member States may decide not to pursue recovery. A decision to this effect may be taken only in the following cases:
(a)
where the costs already and likely to be effected total more than the amount to be recovered, which condition shall be considered to have been met if:
(i)
the amount to be recovered from the beneficiary in the context of an individual payment for an aid scheme or support measure, not including interest, does not exceed EUR 100; or
(ii)
the amount to be recovered from the beneficiary in the context of an individual payment for an aid scheme or support measure, not including interest, falls between EUR 100 and EUR 150 and the Member State concerned applies a threshold equal to or higher than the amount to be recovered under its national law for not pursuing national debts.
(b)
where recovery proves impossible owing to the insolvency, recorded and recognised under national law, of the debtor or the persons legally responsible for the irregularity.
Where the decision referred to in the first subparagraph of this paragraph is taken before the outstanding amount has been subject to the rules referred to in paragraph 2, the financial consequence of non-recovery shall be borne by the Union's budget.
4. Member States shall enter in the annual accounts to be sent to the Commission under point (c)(iv) of Article 102(1) the amounts to be borne by them under paragraph 2 of this Article. The Commission shall check that this has been done and make any adjustments needed in the implementing act referred to in Article 51.
5. The Commission may, provided that the procedure laid down in Article 52(3) has been followed, adopt, implementing acts, excluding from Union financing sums charged to the Union's budget in the following cases:
(a)
if the Member State has not respected the time limits referred to in paragraph 1;
(b)
if it considers that the decision not to pursue recovery taken by a Member State pursuant to paragraph 3 is not justified;
(c)
if it considers that an irregularity or lack of recovery is the outcome of irregularity or negligence attributable to the administrative authorities or another official body of the Member State.
Those implementing acts shall be adopted in accordance with the advisory procedure referred to in Article 116(2).
Provisions specific to the EAGF
Sums recovered following the occurrence of irregularity or negligence and the interest thereon shall be made over to the paying agency and booked by it as revenue assigned to the EAGF in the month in which the money is actually received.
When the Union's budget is credited as referred to in the first paragraph, the Member State may retain 20 % of the corresponding amounts as flat rate recovery costs, except in cases of irregularity or negligence attributable to its administrative authorities or other official bodies.
Provisions specific to the EAFRD
Where irregularities or negligence are detected in rural development operations or programmes, Member States shall make financial adjustments by totally or partially cancelling the Union financing concerned. Member States shall take into consideration the nature and gravity of the irregularities detected and the level of the financial loss to the EAFRD.
Amounts of the Union financing under the EAFRD which are cancelled and amounts recovered, as well as the interest thereon, shall be reallocated to the programme concerned. However, the cancelled or recovered Union funds may be reused by Member States only for an operation under the same rural development programme and provided the funds are not reallocated to operations which have been the subject of a financial adjustment. After the closure of a rural development programme, the Member State shall refund the sums recovered to the Union's budget.
Commission powers
1. In order to ensure correct and efficient application of the provisions relating to the conditions for the recovery of undue payments and interest thereon, the Commission shall be empowered to adopt delegated acts in accordance with Article 115 concerning specific obligations to be complied with by the Member States.
2. The Commission shall adopt implementing acts laying down rules on:
(a)
the procedures for the recovery of undue payments and interest as set out in this Section and for keeping the Commission apprised of pending recoveries;
(b)
the forms of notification and communication to be made by the Member States to the Commission in relation to the obligations set out in this Section.
Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 116(3).
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
