The circulation regime of rights-titles to aid

The relevant legislation provides for the possibility that the farmer to whom the quotas have been allocated may, as an alternative to claiming payment for them, transfer them, only, to another farmer established in the same member state, except in cases of succession or advance inheritance. It should be made clear, however, that even in the case of succession or anticipation of succession, payment entitlements can only be used in the member state where they were established, and that a member state may decide that payment entitlements can only be transferred or used in the same region. The law provides that aid rights may be transferred for consideration or by any other outright transfer, with or without land.

Leasing or other types of transfers are allowed only if the transfer of payment entitlements is accompanied by the transfer of an equivalent number of eligible hectares.

Except in the case of force majeure or exceptional circumstances, as provided for in the regulations, a farmer may transfer his payment entitlements without land only after using at least 80 percent of his payment entitlements for at least one calendar year, or after voluntarily surrendering to the national reserve all unused payment entitlements in the first year of application of the “single payment” scheme.

European states have the option to decide, in the event of a sale of payment entitlements, with or without land, that a portion of the payment entitlements sold be reserved for the national reserve or that their unit value be reduced in favor of the national reserve.

Art. 25 of Regulation 795/2004 stipulates that:

Aid entitlements may be transferred at any time during the year, but the transferor must inform the relevant authorities of the transfer.

Based on Art. 25 of Regulation 795/2004, the act of transfer shall become effective six weeks after the date of the communication, unless the competent authorities object notified to the transferor within that period. Opposition, however, can only be based on the non-compliance of the transfer with community provisions.

The transfer of the right to aid must be in writing and must be communicated to the paying agencies under penalty of being unenforceable against them, within ten days of signing. Within 30 days of receiving the notice, Agea, in implementation of Art. 21 of Regulation (EC) 1782/2003, validates the title transfer. Transferor and transferee applications must be submitted jointly to the paying agencies.

Aid title transfers can only take place within homogeneous regions as defined in Art. 2, Paragraph 5.”

It seems appropriate to point out that changes in the ownership of payment entitlements can occur basically on the basis of four ways, which the Agea Circular of April 18, 2006, no. 10 identifies as follows:

1. Inheritance concerning succession mortis causa as governed by national law;
2. anticipated succession (cases of consolidation of the usufruct in the hands of the bare owner, i.e., when the event of the death of the usufructuary occurs or by relinquishment of the usufruct; cases in which a farmer has received in any capacity the farm or part of the farm previously managed by another farmer, to whom the former may succeed by legitimate succession, cases in which the donation, sale, lease or commodate of all or part of the farm in favor of successor entities may be included);
3. deed between living persons permanently (a hypothesis to which the (EC) regulation refers the sale or any final transfer of ownership of land or rights to aid, excluding the transfer of land transferred to public authorities and/or for public utility or non-agricultural purposes);
4. deed between living persons on a temporary basis (lease or similar temporary transactions).

Notwithstanding the exception relating to cases of succession and anticipation of succession, rights fixed using the national reserve, as well as those allocated to farmers who began their agricultural activity in the reference period according to the provisions of Art. 37(2) of Regulation 1782/2003.

Any unused entitlement in each year of the said five-year period shall flow back into the national reserve.

Lease and other types of temporary transfers are permitted only to the extent that the transfer of titles to aid is accompanied by the granting of an equivalent number of eligible hectares, with the transaction transferring a greater number of titles having to be considered null and void for the excess portion.

It seems important to point out that the rationale behind the regulation of the circulation of aid certificates, in the Single Payment Scheme, is to avoid excessive commercialization of them, such as to distort the function of this scheme as an agricultural support tool, which, although providing subsidies that are untied to actual production, is nonetheless intended to encourage an improvement in production in the relationship between quality and price.

The final transfer of titles to the aid is, in addition, subject to withholdings, to be paid back to the national reserve, calculated in the maximum percentages stipulated in Art. 9 of reg. 795/04, viz:

– in case of sale of securities to the landless aid, 30 percent of the value of each security or the equivalent amount expressed in number of securities. In the first three years of application of the single payment scheme, the percentage is raised to 50 percent;

– in case of sale of securities with the corresponding land, 10% of the value of each security or the equivalent amount expressed in number of securities;

– in case of sale of securities to the aid with the entire holding, 5% of the value of each security and the equivalent amount expressed in number of securities.

Special percentages are provided for set-aside entitlements and for titles subject to special conditions; in contrast, no deduction is provided for when titles to aid are sold, with or without land, to a farmer starting farming and in the case of inheritance or advance inheritance.

Securities transfers must be registered in the National Securities Register. In the case of unduly granted aid titles, the obligation provided for the initial allottee to surrender such titles to the national reserve shall also be incumbent on the transferees in proportion to the number of rights transferred to them, if the rights they come to have as a result of the transfer are insufficient to provide for them.

Similarly, if as a result of the allocation the value of aid titles is corrected as being excessively high, the correction also applies to titles that have since been transferred to other farmers.
Attorney Chiara Roncarolo

Attorney Maurizio Randazzo