Rights to aid (CAP) and their legal nature, the pledge, attachment and garnishment

The circumstance of the subjection of aid rights to acts of private autonomy – together with the prominence of an autonomous patrimonial value of the same that follows from the express provision for their circulation separately from the land – makes it insufficient simply to place them in the category of subsidies – understood as transfers of resources without consideration by public authorities to individuals in particular states of need or to an enterprise in order to limit the increase in prices of certain goods – into which, moreover, they undoubtedly fall.

Moreover, if the qualification of subsidy comprehensively describes the relationship between the state and the allottee farmer, the same notion is, on the other hand, insufficient to define the essence of payment entitlements when they become the subject of acts of disposition.

The issue of the legal nature of aid rights was addressed by the Internal Revenue Service precisely when providing clarification regarding the tax treatment of their transfer transactions: in Resolution 114/E of October 17, 2006, the Agency considered aid rights to be similar to credit rights and referred to the discipline of the assignment of credits dictated by Articles 1260 ff. of the Civil Code. However, the rationale regarding the genetic stage is not understandable. The Internal Revenue Service, adds in support of the assimilability of aid entitlements to credit entitlements, that “eligibility for the benefit does not give the beneficiary farmer any other right other than to receive a sum of money.”

Now, although Italian doctrine has not pronounced itself on the matter, there is a thesis according to which rights to ‘aid are configured by a European doctrine as intangible goods: as designed by EU law they would fall into that category adhering to that approach which defines intangible goods in a negative way, relying essentially on the lack of perceptibility of the thing through the senses or in any case of its physical determinability.

Other authors have made a substantial identification between intangible assets and intellectual assets.

In this uncertainty, the regulations on the pledge of rights to aid, expressly regulated by Article 18 of Legislative Decree No. 102, March 29, 2004, as amended and supplemented, contributes some clarity on the nature of such rights.

Pledging of payment entitlements is allowed to secure the fulfillment of obligations incurred in the operation of the agricultural enterprise and is subject to the regulations set forth in Art. 2806 of the Civil Code (
pledge of rights other than credits
), the same that applies to rights such as industrial property, industrial patent and copyright.

Therefore, the establishment of the pledge is subject to the same form required for the transfer of rights as explained above and is subject to registration in the National Securities Register.

It should be noted, however, that as an exception to the rule of dispossession dictated by Art. 2786 Civil Code, agricultural entrepreneurs continue to use the pledged rights.

It remains to be pointed out that, without prejudice to the possibility left to the farmer to pledge as security for the fulfillment of a given obligation the payment entitlements of which he is the holder, the legislature has denied the subjection of such entitlements to the satisfaction of the generality of the farmer’s creditors.

The regulations, in fact, exclude the possibility of seizing, garnishing, or subjecting to precautionary measures the payment entitlements (as well as the generality of the sums due to the entitled persons in implementation of the Community provisions on agricultural support), except for the recovery by the paying agencies of undue payments.

This framework certainly takes into account the fact that, apart from the peculiarities relating to payment entitlements, the ultimate essence of the entitlements themselves still remains that of subsidies to agriculture, so the circumstances in which an independent economic value of the entitlements is raised tend to be limited to cases in which this is functional to the better management of the farm and, therefore, to the optimization of production.

Attorney Chiara Roncarolo

Attorney Maurizio Randazzo