ESF LEGAL PAPERS

Consolidated Structural Funds Regulationsfor the programming period 2007 – 2013(EC) 1083/2006, (EC) 1081/2006, (EC) 1828/2006

ESF LEGAL PAPERS – CONSOLIDATED STRUCTURAL FUNDS REGULATIONS FOR 2007-2013 CORRIGENDUM__________________________________

Please note that the text on page 83, should read as follows:

Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European

Regional Development Fund (OJ L 371, 27.12.2006, p. 1)

Amended by: Official Journal

No page date

Commission Regulation (EC) No 846/2009 of 1 September 2009 L 250 1 23.9.2009

Commission Regulation (EC) No 832/2010 of 17 September 2010 L 248 1 22.9.2010

Commission Regulation (EC) No 1236/2011 of 29 November 2011 L 317 24 30.11.2011

Corrected by:

C1 Corrigendum, OJ L 45, 15.2.2007, p. 3 (1828/2006)

-------------------

Pages 108-109: In Article 43, paragraphs 1 and 6 on, should be replaced as follows:

1. Articles 43 to 46 shall apply to financial engineering instruments in the form of actions which make repayable investments, or provide guarantees for repayable investments, or both, in the following:

a) enterprises, primarily small and medium-sized enterprises (SMEs), including micro-enterprises, as defined in Commission Recommendation 2003/361/EC (*) as of 1 January 2005;

b) public-private partnerships or other urban projects included in integrated plans for sustainable urban development, in the case of urban development funds;

c) funds or other incentive schemes for energy efficiency and use of renewable energy in buildings, including in existing housing. (*) OJ L 124, 20.5.2003, p. 36.

___________

6. Enterprises, public private partnerships and other projects included in an integrated plan for sustainable urban development, as well as operations for energy efficiency and use of renewable energy in buildings, including in existing housing which are supported by financial engineering instruments, may also receive a grant or other assistance from an operational programme.

Page 109: In Article 44, paragraph 1 should be replaced as follows:

a) as regards financial engineering instruments supporting enterprises, primarily SMEs, including micro-enterprises, the conclusions of an evaluation of gaps between supply of such instruments, and demand for such instruments;

_____________

c) as regards funds or other incentive schemes for energy efficiency and use of renewable energy in buildings, including in existing housing the relevant Union and national regulatory frameworks and the relevant national strategies.

------------------------

Page 109: Article 45 should be replaced as follows:

Additional provisions applicable to financial engineering instruments for enterprises

Financial engineering instruments for enterprises referred to in Article 43(1) (a) shall invest only in activities which the managers of the financial engineering instruments judge potentially economically viable.

They shall not invest in firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty (*) as of 10 October 2004.

___________

(*) OJ C 244, 1.10.2004, p. 2.

----------------------------

Page 110: In Article 47, paragraph 2 should be replaced as follows:

2. Having regard to Article 7(2) of Regulation (EC) No 1080/2006, expenditure for housing in favour of marginalized communities shall be eligible only if the following conditions are fulfilled:

a) such housing investment is part of an integrated approach and support for housing interventions for marginalized communities takes place together with other types of interventions including interventions in the areas of education, health, social inclusion and employment;

b) the physical location of such housing ensures spatial integration of these communities into mainstream society and does not contribute to segregation, isolation and exclusion.

---------------------------

Annexes XVIII, XX, XXI and XXII should be replaced by amendments that can be found at

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:248:0001:0035:en:PDF

KE-31-11-444-EN-K

ESF LEGAL PAPERS

Consolidated Structural Funds Regulationsfor the programming period 2007 – 2013

(EC) 1083/2006, (EC) 1081/2006, (EC) 1828/2006

European CommissionDirectorate-General for Employment, Social Affairs and Inclusion

Unit H1 - Relations with the Control Authorities, ex-ante control, Direct and Indirect Management

Manuscript completed in October 2011

Consolidation entails the integration of basic instruments of Community legislation, their amendments and corrections in single, non-official documents.

Each document is intended as a documentation tool and the Institutions do not assume any liability for its content.

Contact point in Unit H.1 of the Directorate-General for Employment, Social Affairs and Inclusion: EMPL-H1-UNIT@ec.europa.eu, or EMPL-ESF@ec.europa.eu.

More information on the European Union is available on the Internet (http://europa.eu).

Cataloguing data as well as an abstract can be found at the end of this publication.

Luxembourg: Publications Office of the European Union, 2012

ISBN 978-92-79-22524-6doi: 10.2767/51118

© European Union, 2012Reproduction is authorised provided the source is acknowledged.

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1. Consolidated Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 ...........................................................5

2. Consolidated Regulation (EC) No 1081/2006 of the Parliament and of the Council of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999 ....................... 71

3. Consolidated Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund ............................................................................................... 81

Table of Contents

Amended by: Official Journal

No page dateCouncil Regulation (EC) No 1989/2006 of 21 December 2006 L 411 6 30.12.2006ANNEX I 10ANNEX II 11ANNEX III 14ANNEX IV 15Council Regulation (EC) No 1341/2008 of 18 December 2008 L 348 19 24.12.2008Council Regulation (EC) No 284/2009 of 7 April 2009 L 94 10 8.4.2009Regulation (EU) No 539/2010 of the European Parliament and of the Council of 16 June 2010

L 158 1 24.6.2010

Corrected by:C1 Corrigendum, OJ L 239, 1.9.2006, p. 248 (1083/2006)C2 Corrigendum, OJ L 145, 7.6.2007, p. 38 (1083/2006)C3 Corrigendum, OJ L 301, 12.11.2008, p. 40 (1083/2006)C4 Corrigendum, OJ L 27, 2.2.2007, p. 5 (1989/2006)

Council Regulation (EC) No 1083/2006 of 11 July 2006

laying down general provisions on

the European Regional Development Fund,

the European Social Fund and the Cohesion Fund

and repealing Regulation (EC)

No 1260/1999

(OJ L 210, 31.7.2006, p. 25)

6

TITLE I – OBJECTIVES AND GENERAL RULES ON ASSISTANCE............................... 19CHAPTER I – Scope and definitions .......................................................................................................19

Article 1 – Subject matter ............................................................................................................... 19Article 2 – Definitions .................................................................................................................... 19

CHAPTER II – Objectives and missions .................................................................................................20Article 3 – Objectives ..................................................................................................................... 20Article 4 – Instruments and missions ............................................................................................. 20

CHAPTER III – Geographical eligibility ................................................................................................21Article 5 – Convergence ................................................................................................................. 21Article 6 – Regional competitiveness and employment ................................................................ 21Article 7 – European Territorial Cooperation ................................................................................ 21Article 8 – Transitional support ...................................................................................................... 21

CHAPTER IV – Principles of assistance .................................................................................................22Article 9 – Complementarity, consistency, coordination and compliance .................................... 22Article 10 – Programming .............................................................................................................. 22Article 11 – Partnership .................................................................................................................. 23Article 12 – Territorial level of implementation ............................................................................ 23Article 13 – Proportional intervention ........................................................................................... 23Article 14 – Shared management ................................................................................................... 23Article 15 – Additionality ............................................................................................................... 24Article 16 – Equality between men and women and non-discrimination ..................................... 24Article 17 – Sustainable development ............................................................................................ 24

CHAPTER V – Financial framework ......................................................................................................25Article 18 – Global resources ......................................................................................................... 25Article 19 – Resources for the Convergence objective .................................................................. 25Article 20 – Resources for the Regional competitiveness and employment objective ................. 25Article 21 – Resources for the European territorial cooperation objective ................................... 25Article 22 – Non transferability of resources ................................................................................. 26Article 23 – Resources for the performance reserve ...................................................................... 26Article 24 – Resources for technical assistance ............................................................................. 26

TITLE II – STRATEGIC APPROACH TO COHESION .............................................................. 27CHAPTER I – Community strategic guidelines on cohesion ................................................................27

Article 25 – Content........................................................................................................................ 27Article 26 – Adoption and review .................................................................................................. 27

CHAPTER II – National strategic reference framework ......................................................................27Article 27 – Content........................................................................................................................ 27Article 28 – Preparation and adoption ............................................................................................ 28

CHAPTER III – Strategic follow-up .......................................................................................................28Article 29 – Strategic reporting by the Member States ................................................................. 28Article 30 – Strategic reporting by the Commission and debate on cohesion policy ................... 29Article 31 – Cohesion report .......................................................................................................... 29

TABLE OF CONTENTS

7

TITLE III – PROGRAMMING ................................................................................................................ 30CHAPTER I – General provisions on the structural funds and the cohesion fund ............................30

Article 32 – Preparation and approval of operational programmes .............................................. 30Article 33 – Revision of operational programmes ......................................................................... 30Article 34 – Specific character of the Funds .................................................................................. 30Article 35 – Geographical scope .................................................................................................... 31Article 36 – Participation by the European Investment Bank and the European Investment Fund .... 31

CHAPTER II – Programming content ....................................................................................................31Section 1 – Operational programmes ................................................................................................31

Article 37 – Operational programmes for the Convergence and Regional competitiveness and employment objectives ......................................................................................... 31

Article 38 – Operational programmes for the European territorial cooperation objective ........... 33Section 2 – Major projects ..................................................................................................................33

Article 39 – Content........................................................................................................................ 33Article 40 – Information submitted to the Commission ................................................................ 33Article 41 – Decision of the Commission ...................................................................................... 33

Section 3 – Global grants ....................................................................................................................34Article 42 – General provisions ...................................................................................................... 34Article 43 – Implementing rules ..................................................................................................... 34

Section 4 – Financial engineering .......................................................................................................34Article 44 – Financial engineering instruments ............................................................................. 34

Section 5 – Technical assistance ..........................................................................................................35Article 45 – Technical assistance at the initiative of the Commission .......................................... 35Article 46 – Technical assistance of the Member States ................................................................ 35

TITLE IV – EFFECTIVENESS ............................................................................................................... 37CHAPTER I – Evaluation ........................................................................................................................37

Article 47 – General provisions ...................................................................................................... 37Article 48 – Responsibility of Member States ............................................................................... 37Article 49 – Responsibility of the Commission ............................................................................. 38

CHAPTER II – Reserves ..........................................................................................................................38Article 50 – National performance reserve .................................................................................... 38Article 51 – National contingency reserve ..................................................................................... 38

TITLE V – FINANCIAL CONTRIBUTION FROM THE FUNDS .......................................... 39CHAPTER I – Contribution from the funds ..........................................................................................39

Article 52 – Modulation of the contribution rates.......................................................................... 39Article 53 – Contribution from the Funds ...................................................................................... 39Article 54 – Other provisions ......................................................................................................... 40

CHAPTER II – Revenue-generating projects .........................................................................................40Article 55 – Revenue-generating projects ...................................................................................... 40

CHAPTER III – Eligibility of expenditure .............................................................................................41Article 56 – Eligibility of expenditure ........................................................................................... 41

CHAPTER IV – Durability of operations ...............................................................................................41Article 57 – Durability of operations ............................................................................................. 41

8

TITLE VI – MANAGEMENT, MONITORING AND CONTROLS ........................................ 43CHAPTER I – Management and control systems ..................................................................................43

Article 58 – General principles of the management and control systems ..................................... 43Article 59 – Designation of authorities .......................................................................................... 43Article 60 – Functions of the managing authority ......................................................................... 43Article 61 – Functions of the certifying authority .......................................................................... 44Article 62 – Functions of the audit authority ................................................................................. 45

CHAPTER II – Monitoring ......................................................................................................................45Article 63 – Monitoring committee ................................................................................................ 45Article 64 – Composition ............................................................................................................... 46Article 65 – Tasks ........................................................................................................................... 46Article 66 – Arrangements for monitoring ..................................................................................... 46Article 67 – Annual report and final report on implementation .................................................... 46Article 68 – Annual examination of programmes .......................................................................... 47

CHAPTER III – Information and publicity............................................................................................48Article 69 – Information and publicity ........................................................................................... 48

CHAPTER IV – Responsibilities of Member States and of the Commission ......................................48Section 1 – Responsibilities of Member States ..................................................................................48

Article 70 – Management and control ............................................................................................ 48Article 71 – Setting up of management and control systems ........................................................ 48

Section 2 – Responsibilities of the Commission ................................................................................49Article 72 – Responsibilities of the Commission .......................................................................... 49Article 73 – Cooperation with the audit authorities of the Member States ................................... 49

Section 3 – Proportionality in the control of operational programmes .........................................50Article 74 – Proportional control arrangements ............................................................................. 50

TITLE VII – FINANCIAL MANAGEMENT .................................................................................... 51CHAPTER I – Financial management ....................................................................................................51

Section 1 – Budget commitments .......................................................................................................51Article 75 – Budget commitments ................................................................................................. 51

Section 2 – Common rules for payments ...........................................................................................51Article 76 – Common rules for payments ...................................................................................... 51Article 77 – Common rules for calculating interim payments and payments of the final balance 51Article 78 – Statement of expenditure ............................................................................................ 51Article 79 – Accumulation of pre-financing and of interim payments .......................................... 53Article 80 –Wholeness of payment to beneficiaries ...................................................................... 53Article 81 – Use of the euro ........................................................................................................... 53

Section 3 – Pre-financing .....................................................................................................................53Article 82 – Payment ...................................................................................................................... 53Article 83 – Interest ........................................................................................................................ 54Article 84 – Clearance .................................................................................................................... 54

Section 4 – Interim payments .............................................................................................................54Article 85 – Interim payments ........................................................................................................ 54Article 86 – Acceptability of applications for payment ................................................................. 54Article 87 – Date of presentation of applications for payment and payment delays .................... 54

Section 5 – Programme closure and payment of final balance .......................................................55Article 88 – Partial closure ............................................................................................................. 55Article 89 – Conditions for the payment of the final balance ........................................................ 55Article 90 – Availability of documents........................................................................................... 56

9

Section 6 – Interruption of the payment deadline and suspension of payments ...........................56Article 91 – Interruption of the payment deadline ......................................................................... 56Article 92 – Suspension of payments ............................................................................................. 56

Section 7 – Automatic decommitment ...............................................................................................57Article 93 – Principles .................................................................................................................... 57Article 94 – Period of interruption for major projects and aid schemes ....................................... 57Article 95 – Period of interruption for legal proceedings and administrative appeals .................. 57Article 96 – Exceptions to the automatic decommitment .............................................................. 58Article 97 – Procedure .................................................................................................................... 58

CHAPTER II – Financial corrections......................................................................................................58Section 1 – Financial correction by Member States .........................................................................58

Article 98 – Financial corrections by Member States .................................................................... 58Section 2 – Financial corrections by the Commission ......................................................................59

Article 99 – Criteria for the corrections ......................................................................................... 59Article 100 – Procedure .................................................................................................................. 59Article 101 – Obligations of Member States ................................................................................. 60Article 102 – Repayment ................................................................................................................ 60

TITLE VIII – COMMITTEES.................................................................................................................. 61CHAPTER I – Coordination committee of the funds ............................................................................61

Article 103 – Committee procedure ............................................................................................... 61CHAPTER II – Committee under Article 147 of the treaty ..................................................................61

Article 104 – Committee under Article 147 of the Treaty ............................................................. 61

TITLE IX – FINAL PROVISIONS .......................................................................................................... 62Article 105 – Transitional provisions ............................................................................................. 62Article 106 – Review clause ........................................................................................................... 62Article 107 – Repeal ....................................................................................................................... 62Article 108 – Entry into force ......................................................................................................... 62

ANNEX I – Annual breakdown of commitment appropriations for 2007 to 2013 (referred to in Article 18) ............................................................................................................................. 63

ANNEX II – Financial framework criteria and methodology referred to in Article 18 .....64

ANNEX III – Ceilings applicable to co-financing rates (referred to in Article 53) ..............68

ANNEX IV – Categories of expenditure (referred to in Article 9(3)) ........................................ 69

11

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 161 thereof,

Having regard to the proposal from the Commission,

Having regard to the assent of the European Parliament (1),

Having regard to the opinion of the European Economic and Social Committee (2),

Having regard to the opinion of the Committee of the Regions (3),

Having regard to the opinion of the Court of Auditors (4),

Whereas:

(1) Article 158 of the Treaty provides that, in order to strengthen its economic and social cohesion, the Community is to aim at reducing dispari-ties between the levels of development of the various regions and the backwardness of the least favoured regions or islands, including rural areas. Article 159 of the Treaty requires this action to be supported by the Structural Funds, the European Investment Bank (EIB) and the other existing Financial Instruments.

(2) Cohesion policy should contribute to increasing growth, competi tiveness and employment by incorporating the Community’s prio rities for sustainable development as defined at the Lisbon European Council of 23 and 24 March 2000 and at the Göteborg European Council of 15 and 16 June 2001.

(3) Economic, social and territorial disparities at both regional and national level have increased in the enlarged European Union. Actions for convergence, competitiveness and employment should therefore be increased throughout the Community.

(1) Assent of 4 July 2006 (not yet published in the Official Journal).

(2) OJ C 255, 14.10.2005, p. 79. (3) OJ C 231, 20.9.2005, p. 1. (4) OJ C 121, 20.5.2005, p. 14.

(4) The increase in the number of the Community’s land and sea borders and the extension of its terri-tory mean that the value added of cross-border, transnational and interregional cooperation in the Community should be increased.

(5) The Cohesion Fund should be integrated into the programming of structural assistance in the interest of greater coherence in the intervention of the various Funds.

(6) The role of the instruments providing aid for rural development, namely the European Agri-cultural Fund for Rural Development pursuant to Council Regulation (EC) No 1698/2005 of 20 September 2005 on support for rural devel-opment by the European Agricultural Fund for Rural Development (EARDF) (5), and for the fisheries sector, namely a European Fisheries Fund (EFF), should be specified. Those instru-ments should be integrated into the instruments under the common agricultural policy and the common fisheries policy and coor dinated with those under the cohesion policy.

(7) The Funds providing assistance under the cohe-sion policy are therefore limited to the European Regional Development Fund (ERDF), the Euro-pean Social Fund (ESF) and the Cohesion Fund. The rules applicable to each Fund are to be speci-fied in implementing regulations adopted under Articles 148, 161 and 162 of the Treaty.

(8) Under Article 55 of Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (6), the Council is to review that Regulation on the basis of a proposal from the Commission by 31 December 2006 at the latest. In order to imple-ment the reform of the Funds proposed by this Regulation, Regulation (EC) No 1260/99 should be repealed.

(9) To increase the value added of Community cohe-sion policy, the work of the Structural Funds and of the Cohesion Fund should be concen-trated and simplified and the objectives set out

(5) OJ L 277, 21.10.2005, p. 1. (6) OJ L 161, 26.6.1999, p. 1. Regulation as last amended by

Regulation (EC) No 173/2005 (OJ L 29, 2.2.2005, p. 3).

COUNCIL REGULATION (EC) No 1083/2006 of 11 July 2006laying down general provisions on the European Regional

Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999

12

in Regu lation (EC) No 1260/1999 redefined accordingly as seeking the convergence of the Member States and the regions, regional compet-itiveness and employment and European territo-rial cooper ation.

(10) Within those three objectives, both economic and social charac teristics and territorial char-acteristics should be taken into account in an appropriate fashion.

(11) The outermost regions should benefit from specific measures and additional funding to offset the handicaps resulting from the factors referred to in Article 299(2) of the Treaty.

(12) The problems of accessibility and remoteness from large markets confronting areas with an extremely low population density, as referred to in Protocol 6 on special provisions for Objective 6 in the framework of the Structural Funds in Finland and Sweden to the 1994 Act of Acces-sion, require appropriate financial treatment to offset the effects of these handicaps.

(13) In view of the importance of sustainable urban development and the contribution of towns and cities, particularly medium-sized ones, to regional development, greater account should be taken of them by developing their role in programming to promote urban regeneration.

(14) The Funds should take special and complemen-tary action over and above that of the EAFRD and of the EFF to promote the economic diversi-fication of rural areas and of areas dependent on fisheries.

(15) Action for areas with a natural handicap, i.e. certain islands, mountainous areas and areas with a low population density, as well as for certain border areas of the Community following enlargement, should be strengthened to cope with their particular development difficulties.

(16) Objective criteria for designating eligible regions and areas should be fixed. To this end, the iden-tification of the priority regions and areas at Community level should be based on the common system of classification of the regions established by Regulation (EC) No 1059/2003 of the Euro-pean Parliament and the Council of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS) (7).

(7) OJ L 154, 21.6.2003, p. 1. Regulation as amended by Regula-tion (EC) No 1888/2005 (OJ L 309, 25.11.2005, p. 1).

(17) A Convergence objective is to cover the Member States and regions whose development is lagging behind. The regions targeted by the Conver-gence objective are those whose per capita gross domestic product (GDP) measured in purchasing power parities is less than 75 % of the Commu-nity average. The regions suffering from the statistical effect linked to the reduction in the Community average following the enlargement of the European Union are to benefit for that reason from substantial transitional aid in order to complete their convergence process. This aid is to end in 2013 and is not to be followed by a further transitional period. The Member States targeted by the Convergence objective whose per capita gross national income (GNI) is less than 90 % of the Community average are to benefit under the Cohesion Fund.

(18) A Regional competitiveness and employment objective is to cover the territory of the Commu-nity outside the Convergence objective. The regions eligible are those under Objective 1 in the 2000 to 2006 programming period which no longer satisfy the regional eligibility criteria of the Convergence objective and which therefore benefit from a transitional aid, as well as all the other regions of the Community.

(19) A European territorial cooperation objective is to cover regions having land or sea frontiers, the areas for transnational cooper ation being defined with regard to actions promoting integrated terri-torial development and support for interregional cooperation and exchange of experience.

(20) The improvement and simplification of coopera-tion along the external borders of the Community entail the use of the instruments of the Commu-nity’s external assistance, in particular a Euro-pean Neighbourhood and Partnership Instrument and the Instrument for Pre-Accession Assis-tance established by Council Regulation (EC) No 1085/2006 (8).

(21) The contribution from the ERDF to such coop-eration along the external borders of the Commu-nity assists in redressing the main regional imbal-ances in the Community and thus in strengthening its economic and social cohesion.

(22) The activities of the Funds and the operations which they help to finance should be consistent with the other Community policies and comply with Community legislation.

(8) See page 82 of this Official Journal.

13

(23) Action by the Community should be comple-mentary to that carried out by Member States or seek to contribute to it. The partnership should be strengthened through arrangements for the participation of various types of partner, in particular regional and local authorities, with full regard to the institutional arrangements of the Member States.

(24) Multiannual programming should be directed towards achieving the Funds’ objectives by ensuring the availability of the necessary finan-cial resources and the consistency and conti-nuity of joint action by the Community and the Member States.

(25) Since the Convergence, Regional competitive-ness and employment, and European territorial cooperation objectives cannot be sufficiently achieved by the Member States by reason of the extent of the disparities and the limit on the finan-cial resources of the Member States and regions eligible under the Convergence objective and can therefore be better achieved at Community level through the multiannual guarantee of Commu-nity finance which allows cohesion policy to be concentrated on the Community’s priorities, the Community may adopt measures, in accordance with the principle of subsi diarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(24) It is appropriate to set measurable targets for Member States of the European Union as consti-tuted before 1 May 2004 to aim to achieve through expenditure under the Convergence and Regional competitiveness and employment objectives with a view to promoting competitive-ness and creating jobs. It is necessary to iden-tify appropriate ways to measure and report the attainment of those targets.

(25) It is appropriate to strengthen the subsidiarity and proportionality of the intervention of the Struc-tural Funds and of the Cohesion Fund.

(28) Under Article 274 of the Treaty, in the context of shared management, the conditions allowing the Commission to exercise its responsibilities for implementation of the general budget of the European Union should be specified and the responsibilities of cooperation by the Member States clarified. Applying these conditions should enable the Commission to satisfy itself that Member States are using the Funds in a legal

and regular manner and in accordance with the principle of sound financial management within the meaning of the Financial Regu lation.

(29) In order to ensure a genuine economic impact, contributions from the Structural Funds should not replace public expenditure by Member States under the terms of this Regulation. Verification, through partnership, of the principle of addition-ality should concentrate on the regions under the Convergence objective because of the extent of the financial resources allocated to them and may result in a financial correction if additionality is not observed.

(30) In the context of its effort in favour of economic and social cohesion, the Community, at all stages of implementation of the Funds, has as its goals to eliminate inequalities and to promote equality between men and women as enshrined in Arti-cles 2 and 3 of the Treaty, as well as combating discrimi nation based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.

(31) The Commission should establish the indica-tive annual breakdown of available commitment appropriations using an objective and trans-parent method, taking into account the Commis-sion’s proposal, the conclusions of the European Council of 15 and 16 December 2005 and the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management (9) with a view to achieving a significant concentration on the regions whose development is lagging behind, including those receiving transitional support because of the statistical effect.

(32) Financial concentration on the Convergence objective should be increased because of the greater disparities within the enlarged Euro-pean Union, the effort in favour of the Regional competi tiveness and employment objective to improve competitiveness and employment in the rest of the Community should be main tained and the resources for European territorial coopera-tion objective should be increased in view of its particular value added.

(33) The annual appropriations allocated to a Member State under the Funds should be limited to a ceiling fixed with regard to its capacity for absorption.

(9) OJ C 139, 14.6.2006, p. 1.

14

(34) Three per cent of the Structural Funds appro-priations allocated to Member States under the Convergence and Regional competi tiveness and employment objectives may be placed in a national reserve for rewarding performance.

(35) The appropriations available under the Funds should be indexed on a flat-rate basis for use in programming.

(36) To increase the strategic content and promote the transparency of cohesion policy through integra-tion with the Community’s prio rities, the Council should adopt strategic guidelines on a proposal from the Commission. The Council should examine the im plementation of those guide-lines by Member States on the basis of strategic reporting by the Commission.

(37) On the basis of the strategic guidelines adopted by the Council, it is appropriate that each Member State prepare, in dialogue with the Commission, a national reference document on its develop ment strategy, which should constitute the framework for preparing operational programmes. On the basis of the national strategy, the Commission should take note of the national strategic refer-ence framework and take a decision on certain of its elements.

(38) The programming and management of the Struc-tural Funds should be simplified having regard to their specific features by providing for opera-tional programmes to be financed by either the ERDF or the ESF, with each being able to finance in a comple mentary and limited fashion actions which fall under the scope of the other Fund.

(39) With a view to improving complementari-ties and simplifying execution, the assistance of the Cohesion Fund and the ERDF should be jointly programmed in the case of operational programmes on transport and the environment and should have a national geographical coverage.

(40) Programming should ensure coordination of the Funds between themselves and with the other existing financial instruments, the EIB and the European Investment Fund (EIF). Such coordina-tion should also cover the preparation of complex financial schemes and public-private partnerships.

(41) It is appropriate to ensure that improved access to finance and innovative financial engineering are available primarily to micro, small and medium-sized enterprises and for investing in public-private partnerships and other projects

included in an integrated plan for sustainable urban development. Member States may decide to set up a holding fund through the award of public contracts pursuant to public procure-ment law, including any dero gation in national law compatible with Community law. In other cases, where Member States are satisfied that public procurement law is not applicable, the definition of tasks of the EIF and the EIB justi-fies that Member States award them a grant that is a direct financial contribution from operational programmes by way of donation. Under the same conditions, national law may provide for the possibility of awarding a grant to other financial institutions without a call for proposal.

(42) When appraising major productive investment projects, the Commission should have all neces-sary information to consider whether the finan-cial contribution from the Funds does not result in a substantial loss of jobs in existing locations within the European Union, in order to ensure that Community funding does not support relocation within the European Union

(43) The programming period is to last for a single period of seven years in order to maintain the simplification of the management system defined in Regulation (EC) No 1260/1999.

(44) Member States and managing authorities may organise within the operational programmes co-financed by the ERDF the arrangements for interregional cooperation and may take account of the special features of areas with natural handicaps.

(45) In order to address the need for simplification and decentrali sation, programming and financial management should be carried out at the level of the operational programmes and priority axes alone; the Community support framework and the programme complement provided for in Regula-tion (EC) No 1260/1999 should be discontinued.

(46) Within the operational programmes co-financed by the ERDF under the Convergence and the Regional competitiveness and employment objectives, Member States, regions and managing authorities may organise sub-delegation to urban authorities in respect of priorities concerning the regeneration of towns and cities.

(47) The additional allocation to offset the additional costs faced by the outermost regions should be integrated into the operational programmes financed by the ERDF in those regions.

15

(48) There should be separate arrangements for imple-mentation of the European territorial cooperation objective financed by the ERDF.

(49) The Commission should be able to approve major projects included in operational programmes, if necessary in consultation with the EIB, in order to evaluate their purpose and impact, as well as the arrangements for the planned use of Community resources.

(50) It is useful to specify the types of action which the Funds should support as technical assistance.

(51) There is a need to ensure that sufficient resources are devoted to assist Member States in project preparation and appraisal. The EIB has a role to play in providing such assistance and could be awarded a grant by the Commission to this end.

(52) Similarly it is appropriate to provide that the EIF could be awarded a grant from the Commission to undertake an evaluation of the needs of inno-vative financial engineering instruments available for micro, small and medium-sized enterprises.

(53) For the same reasons as mentioned above, the EIB and the EIF could be awarded a grant by the Commission to undertake technical assis-tance actions in the area of sustainable urban devel opment or to support restructuring meas-ures for sustainable economic activity in regions significantly affected by economic crisis.

(54) The effectiveness of assistance from the Funds also depends on the incorporation of a reliable evaluation into programming and monitoring. The responsibilities of Member States and the Commission in this regard should be specified.

(55) Within their national envelope under the Conver-gence and Regional competitiveness and employ-ment objectives, Member States may provide for a small reserve to respond swiftly to unexpected sectoral or local shocks resulting from socio-economic restructuring or the effects of trade agreements.

(56) It is appropriate to define what expenditure in a Member State can be assimilated to public expenditure for the purpose of calcu lating the total national public contribution to an operational programme; to this end it is appropriate to refer to the contri bution of the ‘bodies governed by public law’ as defined in the Community public procure-ment directives since such bodies comprise several types of public or private body established for the

specific purpose of meeting needs in the general interest not having an industrial or commercial character and which are controlled by the State, or regional and local authorities.

(57) It is necessary to determine the elements for modulating the contribution from the Funds to operational programmes, in particular, to increase the multiplier effect of Community resources. It is also appropriate to establish the maximum ceilings which contributions from the Funds cannot exceed on the basis of the type of Fund and objective.

(58) It is also necessary to define the notion of a revenue-generating project and to identify the community principles and rules for calculating the contribution from the Funds; for some invest-ments it is objectively not possible to estimate the revenue in advance and it is therefore neces-sary to define the methodology for ensuring that this revenue is excluded from public funding.

(59) The starting and closing dates for the eligi-bility of expenditure should be defined so as to provide a uniform and equitable rule applying to the implementation of the Funds across the Community. In order to facilitate the execution of operational programmes, it is appropriate to establish that the starting date for the eligibility of expenditure may be prior to 1 January 2007 if the Member State concerned submits an opera-tional programme before that date.

(60) In accordance with the principle of subsidiarity and subject to exceptions provided for in Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund (10), Regulation (EC) No 1081/2006 of the European Parliament and of the Council of 5 July 2006 on the European Social Fund (11) and Council Regulation (EC) No 1084/2006 of 11 July 2006 on the Cohesion Fund (12), there should be national rules on the elig ibility of expenditure.

(61) To ensure the effectiveness, fairness and sustain-able impact of the intervention of the Funds, there should be provisions guaran teeing that investments in businesses are long-lasting and preventing the Funds from being used to intro-duce undue advantage. It is necessary to ensure that investments which benefit from assis-tance under the Funds can be written off over a sufficiently long period.

(10) See page 1 of this Official Journal. (11) See page 12 of this Official Journal. (12) See page 79 of this Official Journal.

16

(62) Member States should adopt adequate meas-ures to guarantee the proper functioning of their management and control systems. To this end, it is necessary to establish the general principles and the necessary functions which the control systems of all operational programmes are to fulfil on the basis of the body of Community law in force for the programming period 2000 to 2006.

(63) It is therefore necessary to designate a single managing authority for each operational programme and to clarify its responsibilities as well as the functions of the audit authority. It is also necessary to guarantee uniform quality standards for the certification of expenditures and of payment requests before they are sent to the Commission. It is necessary to clarify the nature and quality of the information on which these requests are based and, to this end, to estab-lish the functions of the certifying authority.

(64) Monitoring of operational programmes is neces-sary to ensure the quality of their implementation. To this end, monitoring committees should be set up and their responsibilities defined, together with the information to be transmitted to the Commis-sion and the framework for examining that infor-mation. In order to improve the exchange of information on the im plementation of operational programmes, the principle of exchange of data by electronic means should be established.

(65) In accordance with the principles of subsidiarity and propor tionality, Member States should have the primary responsibility for the implementation and control of the interventions.

(66) The obligations on the Member States as regards management and control systems, the certifica-tion of expenditure, and the prevention, detec-tion and correction of irregularities and infrin-gements of Community law should be specified to guarantee the efficient and correct implemen-tation of operational programmes. In particular, concerning management and control, it is neces-sary to establish the procedures by which Member States give the assurance that the systems are in place and function satisfactorily.

(67) Without prejudice to the Commission’s powers as regards financial control, cooperation between the Member States and the Commission in this field should be increased and criteria should be established which allow the Commission to determine, in the context of its strategy of control of national systems, the level of assurance it can obtain from national audit bodies.

(68) The extent and intensity of Community controls should be proportionate to the extent of the Community’s contribution. Where a Member State is the main provider of the financing for a programme, it is appropriate that there should be an option for that Member State to organise certain elements of the control arrangements according to national rules. In these same circumstances, it is necessary to establish that the Commission differentiates the means by which Member States should fulfil the func-tions of certification of expenditures and of verification of the management and control system and to establish the conditions under which the Commission is entitled to limit its own audit and rely on the assurances provided by national bodies.

(69) The payment on account at the start of opera-tional programmes ensures a regular cash flow which facilitate payments to benefi ciaries in the implementation of the operational programme. Therefore, provisions should be made for payments on account for the Structural Funds of 5 % (for Member States of the European Union as constituted before 1 May 2004) and of 7 % (for Member States that acceded to the Euro-pean Union on or after 1 May 2004), and for the Cohesion Fund of 7,5 % (for Member States of the European Union as constituted before 1 May 2004) and of 10,5 % (for Member States that acceded to the European Union on or after 1 May 2004), to help speed up implementation of operational programmes.

(70) In addition to the suspension of payments where a serious defi ciency is detected in the management and control systems, there should be measures allowing the authorising officer by delegation to interrupt payments where there is evidence to suggest a significant deficiency in the sound operation of these systems.

(71) The rules on automatic decommitment will speed up the im plementation of programmes. To this end, it is appropriate to define the arrangements for their application and the parts of the budgetary commitment which may be excluded from them, notably when delays in implementation result from circumstances which are independent of the party concerned, abnormal or unfor eseeable and whose consequences cannot be avoided despite the diligence shown.

(72) The procedures for closure should be simpli-fied by offering the possibility to those Member States which so wish, in accordance with the

17

schedule which they select, to partially close an opera tional programme in respect of completed operations; the appro priate framework for doing so should be provided.

(73) The measures necessary for the implementation of this Regulation should be adopted in accord-ance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (13). The Commission is to adopt the measures im plementing this Regula-tion for ensuring the transparency and clarifying the provisions applicable to the management of opera tional programmes as regards the catego-risation of expenditure, financial engineering, management and control, electronic exchange of data and publicity after obtaining the opinion of the Coordination Committee of the Funds acting as a management committee. It is appro-priate that the Commission publishes the list of eligible areas for the European territorial coop-eration objective in application of the criteria set out in this Regulation, the indicative guidelines on the cost-benefit analysis necessary for the preparation and submission of major projects and for revenue generating projects, the indicative guidelines on evaluation and the list of actions eligible under technical assistance at the initia-tive of the Commission after consultation of the Coordination Committee of the Funds acting as a consultative committee,

HAS ADOPTED THIS REGULATION:

(13) OJ L 184, 17.7.1999, p. 23.

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CHAPTER I – Scope and definitions

Article 1 Subject matter

This Regulation lays down the general rules governing the European Regional Development Fund (ERDF), the European Social Fund (ESF) (hereinafter referred to as the Structural Funds) and the Cohesion Fund, without prejudice of the specific provisions laid down in Regulations (EC) No 1080/2006, (EC) No 1081/2006 and (EC) No 1084/2006.

This Regulation defines the objectives to which the Structural Funds and the Cohesion Fund (hereinafter referred to as the Funds) are to contribute, the criteria for Member States and regions to be eligible under those Funds, the financial resources available and the criteria for their allocation.

This Regulation defines the context for cohesion policy, including the method for establishing the Community strategic guidelines on cohesion, the national strategic reference framework and the process for examination at Community level.

To this end, this Regulation lays down the principles and rules on partnership, programming, evaluation, management, including financial management, moni-toring and control on the basis of responsibilities shared between the Member States and the Commission.

Article 2 Definitions

For the purposes of this Regulation, the following terms shall have the meanings assigned to them here:

(1) ‘operational programme’: document submitted by a Member State and adopted by the Commis-sion setting out a development strategy with a coherent set of priorities to be carried out with the aid of a Fund, or, in the case of the Conver-gence objective, with the aid of the Cohesion Fund and the ERDF;

(2) ‘priority axis’: one of the priorities of the strategy in an operational programme comprising a group of operations which are related and have specific measurable goals;

(3) ‘operation’: a project or group of projects selected by the managing authority of the opera-tional programme concerned or under its respon-sibility according to criteria laid down by the monitoring committee and implemented by one or more beneficiaries allowing achievement of the goals of the priority axis to which it relates;

(4) ‘beneficiary’: an operator, body or firm, whether public or private, responsible for initiating or initiating and implementing operations.

In the context of aid schemes under Article 87 of the Treaty, bene ficiaries are public or private firms carrying out an individual project and receiving public aid;

(5) ‘public expenditure’: any public contribution to the financing of operations whose origin is the budget of the State, of regional and local authori-ties, of the European Communities related to the Structural Funds and the Cohesion Fund and any similar expen diture. Any contribution to the financing of operations whose origin is the budget of public law bodies or associations of one or more regional or local authorities or public law bodies acting in accordance with Directive 2004/18/EC of the European Parlia-ment and of the Council of 31 March 2004 on the coordi nation of procedures for the award of public works contracts, public supply contracts and public service contracts (14) shall be regarded as similar expenditure;

(6) ‘intermediate body’: any public or private body or service which acts under the responsibility of a managing or certifying authority, or which carries out duties on behalf of such an authority vis-à-vis beneficiaries implementing operations;

(7) ‘irregularity’: any infringement of a provision of Community law resulting from an act or omission by an economic operator which has, or would have, the effect of prejudicing the general budget of the European Union by charging an unjustified item of expenditure to the general budget.

(14) OJ L 134, 30.04.2004, p. 114.

TITLE IOBJECTIVES AND GENERAL RULES ON ASSISTANCE

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CHAPTER II – Objectives and missions

Article 3 Objectives

1. The action taken by the Community under Article 158 of the Treaty shall be designed to strengthen the economic and social cohesion of the enlarged European Union in order to promote the harmonious, balanced and sustainable devel-opment of the Community. This action shall be taken with the aid of the Funds, the European Investment Bank (EIB) and other existing finan-cial instruments. It shall be aimed at reducing the economic, social and territorial disparities which have arisen particularly in countries and regions whose development is lagging behind and in connection with economic and social restructuring and the ageing of the population.

The action taken under the Funds shall incor-porate, at national and regional level, the Community’s priorities in favour of sustainable devel opment by strengthening growth, competi-tiveness, employment and social inclusion and by protecting and improving the quality of the environment.

2. To that end, the ERDF, the ESF, the Cohesion Fund, the EIB and the other existing Community financial instruments shall each contribute in an appropriate way towards achieving the following three objectives:

(a) the Convergence objective, which shall be aimed at speeding up the convergence of the least-developed Member States and regions by improving conditions for growth and employment through the increasing and improvement of the quality of investment in physical and human capital, the develop-ment of innovation and of the knowledge society, adaptability to economic and social changes, the protection and improvement of the environment, and adminis trative effi-ciency. This objective shall constitute the priority of the Funds;

(b) the Regional competitiveness and employ-ment objective, which shall, outside the least-developed regions, be aimed at strengthening regions’ competitiveness and attractiveness as well as employment by anticipating economic and social changes, including those linked to the opening of trade, through the increasing and improvement of the quality of invest-ment in human capital, innovation and the

promotion of the knowledge society, entre-preneurship, the protection and improvement of the environment, and the improvement of accessibility, adaptability of workers and businesses as well as the development of inclusive job markets; and

(c) the European territorial cooperation objective, which shall be aimed at strengthening cross-border cooperation through joint local and regional initiatives, strengthening transnational cooperation by means of actions conducive to integrated territorial development linked to the Community priorities, and strengthening inter-regional cooperation and exchange of experi-ence at the appropriate territorial level.

3. Under the three objectives referred to in para-graph 2, assistance from the Funds shall, according to their nature, take into account specific economic and social features, on the one hand, and specific territorial features, on the other. The assistance shall, in an appropriate manner, support sustainable urban develop-ment particularly as part of regional devel-opment and the renewal of rural areas and of areas dependent on fisheries through economic diversification. The assistance shall also support areas affected by geographical or natural handi-caps which aggravate the problems of develop-ment, particularly in the outermost regions as referred to in Article 299(2) of the Treaty as well as the northern areas with very low popula-tion density, certain islands and island Member States, and mountainous areas.

Article 4 Instruments and missions

1. The Funds shall contribute, each in accordance with the specific provisions governing it, towards achieving the three objectives referred to in Article 3(2) as follows:

(a) the Convergence objective: the ERDF, the ESF and the Cohesion Fund;

(b) the Regional competitiveness and employ-ment objective: the ERDF and the ESF; and

(c) the European territorial cooperation objec-tive: the ERDF.

2. The Cohesion Fund shall also intervene in those regions not eligible for support from the Conver-gence objective under the criteria set out in Article 5(1) which belong to:

21

(a) a Member State eligible for support from the Cohesion Fund under the criteria set out in Article 5(2); and

(b) a Member State eligible for support from the Cohesion Fund under the criteria set out in Article 8(3).

3. The Funds shall contribute towards the financing of technical assistance on the initiative of the Member States and the Commission.

CHAPTER III – Geographical eligibility

Article 5 Convergence

1. The regions eligible for funding from the Struc-tural Funds under the Convergence objective shall be regions corresponding to level 2 of the common classification of territorial units for statistics (hereinafter NUTS level 2) within the meaning of Regulation (EC) No 1059/2003 whose gross domestic product (GDP) per capita, measured in purchasing power parities and calculated on the basis of Community figures for the period 2000 to 2002, is less than 75 % of the average GDP of the EU-25 for the same reference period.

2. The Member States eligible for funding from the Cohesion Fund shall be those whose gross national income (GNI) per capita, measured in purchasing power parities and calculated on the basis of Community figures for the period 2001 to 2003, is less than 90 % of the average GNI of the EU-25 and which have a programme for meeting the economic convergence conditions referred to in Article 104 of the Treaty.

3. Immediately following the entry into force of this Regulation, the Commission shall adopt the list of regions fulfilling the criteria under paragraph 1 and of Member States fulfilling the criteria under paragraph 2. This list shall be valid from 1 January 2007 to 31 December 2013.

The eligibility of Member States for the Cohe-sion Fund shall be reviewed in 2010 on the basis of Community GNI figures for the EU-25.

Article 6 Regional competitiveness and employment

The regions eligible for funding from the Struc-tural Funds under the Regional competitiveness and

employment objective shall be those not covered by Article 5(1) and Article 8(1) and (2).

When presenting the national strategic reference framework referred to in Article 27, each Member State concerned shall indicate the NUTS level 1 or NUTS level 2 regions for which it will present a programme for financing by the ERDF.

Article 7 European Territorial Cooperation

1. For the purpose of cross-border cooperation, the NUTS level 3 regions of the Community along all internal and certain external land borders and all NUTS level 3 regions of the Community along maritime borders separated, as a general rule, by a maximum of 150 kilometres shall be eligible for financing taking into account poten-tial adjustments needed to ensure the coherence and continuity of the cooperation action.

Immediately following the entry into force of this Regulation, the Commission shall adopt, in accordance with the procedure referred to in Article 103(2), the list of the eligible regions. This list shall be valid from 1 January 2007 to 31 December 2013.

2. For the purpose of transnational cooperation, the Commission, in accordance with the procedure referred to in Article 103(2), shall adopt the list of the eligible transnational areas broken down by programme. This list shall be valid from 1 January 2007 to 31 December 2013.

3. For the purpose of interregional cooperation, coop-eration networks and exchange of experience, the entire territory of the Community shall be eligible.

Article 8 Transitional support

1. The NUTS level 2 regions which would have been eligible for Convergence objective status under Article 5(1) had the eligibility threshold remained at 75 % of the average GDP of the EU-15, but which lose eligibility because their nominal GDP per capita level will exceed 75 % of the average GDP of the EU-25, measured and calculated according to Article 5(1), shall be eligible, on a transitional and specific basis, for financing by the Structural Funds under the Convergence objective.

2. The NUTS level 2 regions totally covered by Objective 1 in 2006 under Article 3 of Regulation

22

(EC) No 1260/1999 whose nominal GDP level per capita, measured and calculated according to Article 5(1), will exceed 75 % of the average GDP of the EU15 shall be eligible, on a transitional and specific basis, for financing by the Structural Funds under the Regional competitiveness and employment objective.

Recognising that, on the basis of revised figures for the period 1997 to 1999, Cyprus should have been eligible for Objective 1 in 2004 to 2006, Cyprus shall benefit in 2007 to 2013 from the transitional financing applicable to the regions referred to in the first subparagraph.

3. The Member States eligible for funding from the Cohesion Fund in 2006 which would have continued to be eligible had the eligibility threshold remained at 90 % of the average GNI of the EU-15, but which lose eligibility because their nominal per capita GNI will exceed 90 % of the average GNI of the EU-25 measured and calculated according to Article 5(2), shall be eligible, on a transitional and specific basis, for financing by the Cohesion Fund under the Convergence objective.

4. Immediately following the entry into force of this Regulation, the Commission shall adopt the list of regions fulfilling the criteria under para-graphs 1 and 2 and of Member States fulfilling the criteria under paragraph 3. This list shall be valid from 1 January 2007 to 31 December 2013.

CHAPTER IV – Principles of assistance

Article 9 Complementarity, consistency, coordination and compliance

1. The Funds shall provide assistance which complements national actions, including actions at the regional and local levels, integrating into them the priorities of the Community.

2. The Commission and the Member States shall ensure that assistance from the Funds is consistent with the activities, policies and priorities of the Community and comple-mentary to other financial instruments of the Community. This consistency and comple-mentarity shall be indicated in particular in Community strategic guidelines on cohesion, in the national strategic reference framework and in the oper ational programmes.

3. The assistance co-financed by the Funds shall target the European Union priorities of promoting competitiveness and creating jobs, including meeting the objectives of the Integrated Guide-lines for Growth and Jobs (2005 to 2008) as set out by Council Decision 2005/600/EC of 12 July 2005 (15). To this end, in accordance with their respective responsibilities, the Commission and the Member States shall ensure that 60 % of expenditure for the Convergence objective and 75 % of expenditure for the Regional competi-tiveness and employment objective for all the Member States of the European Union as consti-tuted before 1 May 2004 is set for the abovemen-tioned priorities. These targets, based on the cate-gories of expenditure in Annex IV, shall apply as an average over the entire programming period.

With a view to ensuring that specific national circumstances, including the priorities identi-fied in the national reform programme of each Member State concerned, are taken into account, the Commission and that Member State may decide to complement in an appropriate manner the list of categories of Annex IV.

Each Member State concerned shall contribute to these targets.

At their own initiative, Member States that acceded to the European Union on or after 1 May 2004 may decide to apply these provisions.

4. In accordance with their respective responsi-bilities, the Commission and the Member States shall ensure the coordination between the assis-tance from the Funds, the EAFRD, the EFF and the interventions of the EIB and of other existing financial instruments.

5. Operations financed by the Funds shall comply with the provisions of the Treaty and of acts adopted under it.

Article 10 Programming

The objectives of the Funds shall be pursued in the framework of a multiannual programming system organised in several stages comprising the identifica-tion of the priorities, the financing, and a system of management and control.

(15) OJ L 205, 6.8.2005, p. 21.

23

Article 11 Partnership

1. The objectives of the Funds shall be pursued in the framework of close cooperation, (hereinafter referred to as partnership), between the Commis-sion and each Member State. Each Member State shall organise, where appropriate and in accord-ance with current national rules and practices, a partnership with authorities and bodies such as:

(a) the competent regional, local, urban and other public authorities;

(b) the economic and social partners;

(c) any other appropriate body representing civil society, environmental partners, non-govern-mental organisations, and bodies responsible for promoting equality between men and women.

Each Member State shall designate the most representative partners at national, regional and local level and in the economic, social, environ-mental or other spheres (hereinafter referred to as partners), in accordance with national rules and practices, taking account of the need to promote equality between men and women and sustainable development through the integration of environ-mental protection and improvement requirements.

2. The partnership shall be conducted in full compli-ance with the respective institutional, legal and financial powers of each partner category as defined in paragraph 1.

The partnership shall cover the preparation, imple-mentation, monitoring and evaluation of operational programmes. Member States shall involve, where appropriate, each of the relevant partners, and partic-ularly the regions, in the different stages of program-ming within the time limit set for each stage.

3. Each year the Commission shall consult the organi-sations rep resenting the economic and social partners at European level on assistance from the Funds.

Article 12 Territorial level of implementation

Implementation of operational programmes referred to in Article 32 shall be the responsibility of Member States at the appropriate territorial level, in accordance with the institutional system specific to each Member State. That responsibility shall be exercised in accord-ance with this Regulation.

Article 13 Proportional intervention

1. The financial and administrative resources employed by the Commission and Member States in the implementation of the Funds in relation to:

(a) the choice of indicators provided for in Article 37(1)(c);

(b) the evaluation under Articles 47 and 48;

(c) the general principles of management and control systems referred to in Article 58(e) and (f);

(d) the reporting as referred to in Article 67,

shall be proportional to the total amount of expend-iture allocated to an operational programme.

2. In addition, specific provisions relating to proportionality in relation to controls are set out in Article 74 of this Regulation.

Article 14 Shared management

1. The budget of the European Union allocated to the Funds shall be implemented within the framework of shared management between the Member States and the Commission, in accord-ance with Article 53(1)(b) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (16), with the exception of the technical assistance referred to in Article 45 of this Regulation.

The principle of sound financial management shall be applied in accordance with Article 48(2) of Regulation (EC, Euratom) No 1605/2002.

2. The Commission shall exercise its responsibility for implementing the general budget of the Euro-pean Union in the following ways:

(a) the Commission shall check the existence and proper functioning of management and control systems in the Member States in accordance with the procedures described in Articles 71, 72 and 73;

(b) the Commission shall interrupt the payment deadline or suspend all or part of payments

(16) OJ L 248, 16.9.2002, p. 1.

24

in accordance with Articles 91 and 92 if the national management and control systems fail, and shall apply any other financial correction required, in accordance with the procedures described in Articles 100 and 101;

(c) the Commission shall check reimbursements of payments on account and automatically decommit budget commitments in accord-ance with the procedures laid down in Article 82(2) and Articles 93 to 97.

Article 15 Additionality

1. Contributions from the Structural Funds shall not replace public or equivalent structural expendi-ture by a Member State.

2. For regions covered by the Convergence objec-tive, the Commission and the Member State shall determine the level of public or equivalent struc-tural expenditure which the Member State shall maintain in all the regions concerned during the programming period.

The level of expenditure by a Member State shall be one of the items covered by the decision of the Commission on the national strategic reference framework referred to in Article 28(3). The meth-odological paper of the Commission, adopted in accordance with the procedure referred to in Article 103(3), shall provide guidance.

3. As a general rule, the level of the expenditure referred to in paragraph 2 shall be at least equal to the amount of average annual expenditure in real terms attained during the previous program-ming period.

Furthermore, the level of expenditure shall be determined with reference to the general macro-economic conditions in which the financing is carried out and taking into account certain specific or exceptional economic situations, such as privatisations as well as an exceptional level of public or equivalent structural expenditure by the Member State during the previous program-ming period.

4. The Commission shall, in cooperation with each Member State, verify additionality mid-term in 2011 for the Convergence objective. As part of this mid-term verification, the Commission, in consultation with the Member State, may decide to modify the required level of structural expendi-ture if the economic situation in the Member State

concerned has significantly changed from the one existing at the moment of the determination of the level of public or equivalent structural expendi-ture referred to in paragraph 2. The decision of the Commission referred to in Article28(3) shall be amended to reflect this adjustment.

The Commission shall, in cooperation with each Member State, verify additionality ex post on 31 December 2016 for the Convergence objective.

The Member State shall transmit to the Commis-sion the information required to enable the verification of compliance with the level of public or equivalent structural expenditure determined ex ante. Where necessary, methods of statistical estimation should be used.

The Commission shall publish the results by Member State of the verification of the addition-ality, including the methodology and sources of information, after the conclusion of each of the three stages of verification.

Article 16 Equality between men and women

and non-discrimination

The Member States and the Commission shall ensure that equality between men and women and the integra-tion of the gender perspective is promoted during the various stages of implementation of the Funds.

The Member States and the Commission shall take appropriate steps to prevent any discrimination based on sex, racial or ethnic origin, religion or belief, disa-bility, age or sexual orientation during the various stages of implementation of the Funds and, in partic-ular, in the access to them. In particular, accessibility for disabled persons shall be one of the criteria to be observed in defining operations co-financed by the Funds and to be taken into account during the various stages of implementation.

Article 17 Sustainable development

The objectives of the Funds shall be pursued in the framework of sustainable development and the Community promotion of the goal of protecting and improving the environment as set out in Article 6 of the Treaty.

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CHAPTER V – Financial framework

Article 18 Global resources

1. The resources available for commitment from the Funds for the period 2007 to 2013 shall be EUR 308 041 000 000 at 2004 prices in accordance with the annual breakdown shown in Annex I.

For the purpose of programming and subsequent inclusion in the general budget of the European Union, the amount referred to in the first subpara-graph shall be indexed at 2 % per year.

The breakdown of budgetary resources by the objectives defined in Article 3(2) shall be such as to achieve a significant concentration on the regions of the Convergence objective.

2. The Commission shall make indicative annual breakdowns by Member States in accordance with the criteria and methodology set out in Annex II without prejudice to the provisions referred to in Articles 23 and 24.

3. The amounts referred to in paragraphs 12 to 30 of Annex II shall be included in the amounts referred to in Articles 19, 20 and 21 and shall be clearly identified in the programming documents.

Article 19 Resources for the Convergence objective

Overall resources for the Convergence objective shall amount to 81,54 % of the resources referred to in Article 18(1) (i.e. a total of EUR 251 163 134 221) and shall be distributed between the different components as follows:

(a) 70,51 % (i.e. a total of EUR 177 083 601 004) for the financing referred to in Article 5(1), using eligible population, regional pros-perity, national prosperity and unemploy-ment rate as the criteria for calculating the indicative breakdowns by Member State;

(b) 4,99 % (i.e. a total of EUR 12 521 289 405) for the transitional and specific support referred to in Article 8(1), using eligible population, regional prosperity, national prosperity and unemployment rate as the criteria for calculating the indicative breakdowns by Member State;

(c) 23,22 % (i.e. a total of EUR 58 308 243 811) for the financing referred to in Article 5(2),

using population, national prosperity, and surface area as the criteria for calculating the indicative breakdowns by Member State;

(d) 1,29 % (i.e. a total of EUR 3 250 000 000) for the transitional and specific support referred to in Article 8(3).

Article 20 Resources for the Regional competitiveness and

employment objective

Overall resources for the Regional competitiveness and employment objective shall amount to 15,95 % of the resources referred to in Article 18(1) (i.e. a total of EUR 49 127 784 318) and shall be distributed between the different components as follows:

(a) 78,86 % (i.e. a total of EUR 38 742 477 688) for the financing referred to in Article 6, using eligible population, regional pros-perity, unemployment rate, employment rate and population density as the criteria for calculating the indicative breakdowns by Member State; and

(b) 21,14 % (i.e. a total of EUR 10 385 306 630) for the transitional and specific support referred to in Article 8(2), using eligible popu lation, regional prosperity, national prosperity and unemployment rate as the criteria for calculating the indicative break-downs by Member State.

Article 21 Resources for the European territorial cooperation

objective

1. Overall resources for the European territorial cooperation objective shall amount to 2,52 % of the resources referred to in Article 18(1) (i.e. a total of EUR 7 750 081 461) and, excluding the amount referred to in paragraph 22 of Annex II, shall be distributed between the different compo-nents as follows:

(a) 73,86 % (i.e. a total of EUR 5 576 358 149) for the financing of cross-border coopera-tion referred to in Article 7(1), using eligible population as the criterion for calculating the indicative breakdowns by Member State;

(b) 20,95 % (i.e. a total of EUR 1 581 720 322) for the financing of transnational coopera-tion referred to in Article 7(2), using eligible population as the criterion for calculating the indicative breakdowns by Member State;

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(c) 5,19 % (i.e. a total of EUR 392 002 991) for the financing of interregional cooperation, cooperation networks and exchange of expe-rience referred to in Article 7(3).

2. The contribution from the ERDF to the cross-border and sea-basin programmes under the European Neighbourhood and Partnership Instru-ment and to the cross-border programmes under the Instrument for Pre-Accession Assistance pursuant to Regulation (EC) No 1085/2006 shall be EUR 813 966 000, as a result of the indica-tion of each Member State concerned, deducted from their allocations under paragraph 1(a). These ERDF contributions shall not be subject to real-location between the Member States concerned.

3. The contribution from the ERDF to each cross-border and sea-basin programme under the instruments referred to in paragraph 2 shall be granted provided that the contribution from such instruments to each such programme is at least equivalent to the contribution from the ERDF. However, this equivalence shall be subject to a maximum amount of EUR 465 690 000 under the European Neighbourhood and Partnership Instrument and of EUR 243 782 000 under the Instrument for Pre-Accession Assistance.

4. The annual appropriations corresponding to the contribution from the ERDF mentioned in para-graph 2 shall be entered in the relevant budget lines of the cross-border strand of the instruments referred to in paragraph 2 with the 2007 budg-etary exercise.

5. In 2008 and in 2009, the annual contribution from the ERDF mentioned in paragraph 2 for which no operational programme has been submitted to the Commission by 30 June at the latest under the cross-border and sea-basin strands of the instru-ments referred to in paragraph 2 shall then be made available to the Member State concerned for the financing of cross-border cooperation under paragraph 1(a), including cooperation on external borders.

If by 30 June 2010 at the latest, there are still oper-ational programmes under the cross-border and sea-basin strands of the instruments referred to in paragraph 2 which have not been submitted to the Commission, the entire contribution from the

ERDF mentioned in paragraph 2 for the remaining years up to 2013 shall then be made available to the Member States concerned for financing cross-border cooperation under paragraph 1(a), including cooperation on external borders.

6. If, following the adoption by the Commission of the cross-border and sea basin programmes mentioned in paragraph 2, such programmes need to be discontinued on the grounds that:

(a) the partner country does not sign the financing agreement by the end of the year following the adoption of the programme; or

(b) the programme cannot be implemented owing to problems arising in relations between the participating countries,

the contribution from the ERDF mentioned in paragraph 2 corre sponding to the annual instal-ments not yet committed shall be made available to the Member States concerned, at their request, for the financing of cross-border cooperation under paragraph 1(a), including cooperation on external borders.

Article 22 Non transferability of resources

The total appropriations allocated by Member State under each of the objectives of the Funds and their components shall not be transferable between them.

By way of derogation from the first subparagraph, each Member State under the European territorial coopera-tion objective may transfer up to 15 % of the finan-cial allocation of one of the components referred to in Article 21(1)(a) and (b) to the other.

Article 23 Resources for the performance reserve

Three per cent of the resources referred to in Article 19(a) and (b) and Article 20 may be allocated in accordance with Article 50.

Article 24 Resources for technical assistance

Of the resources referred to in Article 18(1), 0,25 % shall be devoted to technical assistance for the Commission as defined in Article 45.

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CHAPTER I – Community strategic guidelines on cohesion

Article 25 Content

The Council shall establish at Community level concise strategic guidelines on economic, social and territorial cohesion defining an indi cative framework for the intervention of the Funds, taking account of other relevant Community policies.

For each of the objectives of the Funds, those guide-lines shall in particular give effect to the priorities of the Community with a view to promoting the harmo-nious, balanced and sustainable development of the Community referred to in Article 3(1).

Those guidelines shall be established taking into account the integrated guidelines, comprising broad economic policy guidelines and employment guidelines, adopted by the Council in accordance with the procedures laid down in Articles 99 and 128 of the Treaty.

Article 26 Adoption and review

The Commission shall propose, following close coop-eration with Member States, the Community strategic guidelines on cohesion referred to in Article 25 of this Regulation. By 1 February 2007 the Community strategic guidelines on cohesion shall be adopted in accordance with the procedure laid down in Article 161 of the Treaty. The Community strategic guidelines on cohesion shall be published in the Official Journal of the European Union.

The Community strategic guidelines on cohesion may be subject, following close cooperation with Member States, to mid-term review in accordance with the procedure laid down in the first subparagraph if required in order to take account of any major changes in the priorities of the Community.

The mid-term review of the Community strategic guidelines on cohesion shall not impose an obliga-tion on Member States to revise either the operational programmes or their respective national strategic refer-ence frameworks.

CHAPTER II – National strategic reference framework

Article 27 Content

1. The Member State shall present a national stra-tegic reference framework which ensures that assistance from the Funds is consistent with the Community strategic guidelines on cohesion, and which iden tifies the link between Commu-nity priorities, on the one hand, and its national reform programme, on the other.

2. Each national strategic reference framework shall constitute a reference instrument for preparing the programming of the Funds.

3. The national strategic reference framework shall apply to the Convergence objective and the Regional competitiveness and employment objective. It may also, if a Member State so decides, apply to the European territorial coop-eration objective, without prejudice to the future choices of other Member States concerned.

4. The national strategic reference framework shall contain the following elements:

(a) an analysis of development disparities, weak-nesses and potential, taking into account trends in the European and world economy;

(b) the strategy chosen on the basis of that analysis, including the thematic and territorial priorities. Where appropriate these priorities shall include actions relating to sustainable urban develop-ment, the diversification of rural economies and areas dependent on fisheries;

(c) the list of operational programmes for the Convergence and Regional competitiveness and employment objectives;

(d) a description of how the expenditure for the Convergence and Regional competi-tiveness and employment objectives will contribute to the European Union priorities of promoting competi tiveness and creating jobs, including meeting the objectives of the Integrated Guidelines for Growth and Jobs (2005 to 2008) as laid down in Article 9(3).

TITLE IISTRATEGIC APPROACH TO COHESION

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(e) the indicative annual allocation from each Fund by programme;

(f) for regions of the Convergence objective only:

(i) the action envisaged for reinforcing the Member State’s admin istrative efficiency;

(ii) the amount of the total annual appropria-tion provided for under the EAFRD and the EFF;

►C3 (iii) the information required for ex ante veri-fication of compliance with the addition-ality principle referred to in Article 15; ◄

(g) for Member States eligible for the Cohesion Fund under Articles 5(2) and 8(3), informa-tion on the mechanisms for ensuring coor-dination between operational programmes themselves and between these and the EAFRD, the EFF and, where appro priate, the interventions of the EIB and of other existing financial instruments.

5. In addition, the national strategic reference framework may also contain, where relevant, the following elements:

(a) the procedure for coordination between Community cohesion policy and the relevant national, sectoral and regional policies of the Member State concerned;

(b) for Member States other than those referred to in paragraph 4(g), information on the mechanisms for ensuring coordination between operational programmes them-selves and between these and the EAFRD, the EFF and the interventions of the EIB and of other existing financial instruments.

6. The information contained in the national stra-tegic reference framework shall take account of the specific institutional arrangements of each Member State.

Article 28 Preparation and adoption

1. The national strategic reference framework shall be prepared by the Member State, after consultation with relevant partners as referred to in Article 11, in accordance with the procedure that it considers most appropriate and with its institutional structure. It shall cover the period 1 January 2007 to 31 December 2013.

The Member State shall prepare the national stra-tegic reference framework in dialogue with the Commission, with a view to ensuring a common approach.

2. Each Member State shall transmit the national strategic reference framework to the Commis-sion within five months following the adoption of the Community strategic guidelines on cohesion. The Commission shall take note of the national strategy and the priority themes chosen for assis-tance from the Funds, and make such obser vations as it considers appropriate within three months from the date of receipt of the framework.

The Member State may present at the same time the national strategic reference framework and the operational programmes referred to in Article 32.

3. Before or at the same time as the adoption of the operational programmes referred to in Article 32(5), the Commission, following consultation with the Member State, shall take a decision covering:

(a) the list of operational programmes referred to in Article 27(4)(c);

(b) the indicative annual allocation from each Fund by programme referred to in Article 27(4)(e); and

(c) for the Convergence objective only, the level of expenditure guar anteeing compliance with the additionality principle referred to in Article 15 and the action envisaged for rein-forcing administrative efficiency as referred to in Article 27(4)(f)(i).

CHAPTER III – Strategic follow-up

Article 29 Strategic reporting by the Member States

1. For the first time in 2007, each Member State shall include in the annual implementation report on its national reform programme a concise section on the contribution of the operational programmes co-financed by the Funds towards the implemen-tation of the national reform programme.

2. At the latest by the end of 2009 and 2012, the Member States shall provide a concise report containing information on the contribution of the programmes co-financed by the Funds:

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(a) towards implementing the objectives of cohe-sion policy as estab lished by the Treaty;

(b) towards fulfilling the tasks of the Funds as set out in this Regu lation;

(c) towards implementing the priorities detailed in the Community strategic guidelines on cohesion referred to in Article 25 and speci-fied in the priorities set by the national stra-tegic reference framework referred to in Article 27; and

(d) towards achieving the objective of promoting competitiveness and job creation and working towards meeting the objectives of the Integrated Guidelines for Growth and Jobs (2005 to 2008) as laid down in Article 9(3).

3. Each Member State shall define the content of the reports referred to in paragraph 2, with a view to identifying:

(a) the socio-economic situation and trends;

(b) achievements, challenges and future pros-pects in relation to im plementation of the agreed strategy; and

(c) examples of good practice.

4. References to the national reform programme in this Article shall relate to the Integrated Guide-lines for Growth and Jobs (2005 to 2008) and shall equally apply to any equivalent guidelines defined by the European Council.

Article 30 Strategic reporting by the Commission

and debate on cohesion policy

1. For the first time in 2008, and annually there-after, the Commission shall include in its Annual Progress Report to the Spring European Council a section summarising the reports of the Member States referred to in Article 29(1), in partic-ular progress towards achieving the European Union priorities of promoting competitive-ness and creating jobs, including meeting the objectives of the Integrated Guidelines for

Growth and Jobs (2005 to 2008) as laid down in Article 9(3).

2. In the years 2010 and 2013, and at the latest by 1 April, the Commission shall prepare a strategic report summarising the reports of the Member States referred to in Article 29(2). As appropriate, this report shall be incorporated as a specific section in the report referred to in Article 159 of the Treaty.

3. The Council shall examine the strategic report referred to in paragraph 2 as soon as possible after its publication. It shall be submitted to the European Parliament, the European Economic and Social Committee and the Committee of the Regions, and these insti tutions shall be invited to hold a debate on it.

Article 31 Cohesion report

1. The report of the Commission referred to in Article 159 of the Treaty shall include in particular:

(a) a record of the progress made on economic and social cohesion, including the socio-economic situation and development of the regions, as well as the integration of Community priorities;

(b) a record of the role of the Funds, the EIB and the other financial instruments, as well as the effect of other Community and national poli-cies on the progress made.

2. The report shall also contain, if necessary:

(a) any proposals on Community measures and policies which should be adopted in order to strengthen economic and social cohesion;

(b) any proposed adjustments to the Community strategic guidelines on cohesion needed to reflect changes in Community policy.

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CHAPTER I – General provisions on the structural funds and the cohesion fund

Article 32 Preparation and approval

of operational programmes

1. The activities of the Funds in the Member States shall take the form of operational programmes within the national strategic refer-ence framework. Each operational programme shall cover a period between 1 January 2007 and 31 December 2013. An operational programme shall cover only one of the three objectives referred to in Article 3, save as otherwise agreed between the Commission and the Member State.

2. Each operational programme shall be drawn up by the Member State or any authority designated by the Member State, in cooperation with the partners referred to in Article 11.

3. The Member State shall submit a proposal for an operational programme to the Commis-sion containing all the components referred to in Article 37 as soon as possible but no later than five months following the adoption of the Community strategic guidelines on cohesion, as referred to in Article 26.

4. The Commission shall appraise the proposed operational programme to determine whether it contributes to the goals and prio rities of the national strategic reference framework and the Community strategic guidelines on cohe-sion. Where the Commission, within two months following the receipt of the opera-tional programme, considers that an operational programme does not contribute to the achieve-ment of the objectives of the national strategic reference framework and the Community stra-tegic guidelines on cohesion, it may invite the Member State to provide all necessary additional infor mation and, where appropriate, to revise the proposed programme accordingly.

5. The Commission shall adopt each operational programme as soon as possible but no later than four months following its formal submis-sion by the Member State and not before 1 January 2007.

Article 33 Revision of operational programmes

1. At the initiative of the Member State or the Commission in agreement with the Member State concerned, operational programmes may be re-examined and, if necessary, the remainder of the programme revised, in one or more of the following cases:

(a) following significant socio-economic changes;

(b) in order to take greater or different account of major changes in Community, national or regional priorities;

(c) in the light of the evaluation referred to in Article 48(3); or

(d) following implementation difficulties.

Operational programmes shall, if necessary, be revised following allo cation of the reserves referred to in Articles 50 and 51.

2. The Commission shall adopt a decision on a request for revision of operational programmes as soon as possible but no later than three months after its formal submission by the Member State.

3. The revision of operational programmes shall not require revision of the decision of the Commis-sion referred to in Article 28(3).

Article 34 Specific character of the Funds

1. Operational programmes shall receive financing from only one Fund, save as otherwise provided in paragraph 3.

2. Without prejudice to the derogations laid down in the specific regulations of the Funds, the ERDF and the ESF may finance, in a comple-mentary manner and subject to a limit of 10 % of Community funding for each priority axis of an operational programme, actions falling within the scope of assistance from the other Fund, provided that they are necessary for the satis-factory implementation of the operation and are directly linked to it.

TITLE IIIPROGRAMMING

31

3. In the Member States receiving support from the Cohesion Fund, the ERDF and the Cohesion Fund shall jointly provide assistance for operational programmes on transport infrastructure and the environment, including for major projects.

Article 35 Geographical scope

1. Operational programmes submitted under the Convergence objective shall be drawn up at the appropriate geographical level and at least at NUTS level 2.

Operational programmes submitted under the Convergence objective with a contribution from the Cohesion Fund shall be drawn up at national level.

2. Operational programmes submitted under the Regional competi tiveness and employment objective shall be drawn up at NUTS level 1 or NUTS level 2, in accordance with the institu-tional system specific to the Member State, for regions benefiting from financing by the ERDF, save as otherwise agreed between the Commis-sion and the Member State. They shall be drawn up by the Member State at the appropriate level if they are financed by the ESF.

3. Operational programmes submitted under the European territorial cooperation objective for cross-border cooperation shall be drawn up, as a general rule, for each border or group of borders by an appropriate grouping at NUTS level 3, including enclaves. Operational programmes submitted under the European territorial coopera-tion objective for trans national cooperation shall be drawn up at the level of each transnational cooperation area. Interregional cooperation and exchange of experience programmes shall relate to the whole territory of the Community.

Article 36 Participation by the European Investment Bank

and the European Investment Fund

1. The EIB and the EIF may participate, in accordance with the modalities laid down in their statutes, in the programming of assistance from the Funds.

2. The EIB and the EIF may, at the request of Member States, participate in the preparation of national strategic reference frameworks and operational programmes, as well as in activities relating to the preparation of projects, in partic-ular major projects, the arrangement of finance, and public-private partnerships. The Member

State, in agreement with the EIB and the EIF, may concentrate the loans granted on one or more priorities of an operational programme, in particular in the spheres of innovation and the knowledge economy, human capital, the environ-ment and basic infrastructure projects.

3. The Commission may consult the EIB and the EIF before adoption of the decision referred to in Article 28(3) and of the operational programmes. That consultation shall relate in particular to opera-tional programmes containing an indicative list of major projects or programmes which, by the nature of their priorities, are suitable for mobilising loans or other types of market-based financing.

4. The Commission may, if it considers it appro-priate for the appraisal of major projects, request the EIB to examine the technical quality and economic and financial viability of the projects concerned, in particular as regards the financial engineering instruments to be im plemented or developed.

5. The Commission, in implementing the provi-sions of this Article, may award a grant to the EIB or the EIF.

CHAPTER II – Programming content

Section 1 – Operational programmes

Article 37 Operational programmes for the Convergence

and Regional competitiveness and employment objectives

1. Operational programmes relating to the Conver-gence and Regional competitiveness and employment objectives shall contain:

(a) an analysis of the situation of the eligible area or sector in terms of strengths and weak-nesses and the strategy chosen in response;

(b) a justification of the priorities chosen having regard to the Community strategic guidelines on cohesion, the national strategic reference framework, as well as the results of the ex ante evaluation referred to in Article 48;

(c) information on the priority axes and their specific targets. Those targets shall be quan-tified using a limited number of indicators for output and results, taking into account

32

the proportionality principle. The indicators shall make it possible to measure the progress in relation to the baseline situation and the achievement of the targets of the priority axis;

(d) for information purposes, an indicative breakdown by category of the programmed use of the contribution from the Funds to the operational programme in accord-ance with the implementing rules of this Regulation adopted by the Commission in accordance with the procedure referred to in Article 103(3);

(e) a financing plan containing two tables:

(i) a table breaking down for each year, in accordance with Articles 52, 53 and 54, the amount of the total financial appro-priation envisaged for the contribution from each Fund. The financing plan shall show separately within the total annual contribution from the Structural Funds the appropriations provided for regions receiving transitional support. The total contribution from the Funds provided for annually shall be compatible with the applicable financial framework taking into account the phased reduction laid down in paragraph 6 of Annex II;

(ii) a table specifying, for the whole programming period, for the operational programme and for each priority axis, the amount of the total financial appro-priation of the Community contribu-tion and the national counterparts and the rate of contribution from the Funds. Where in accordance with Article 53, the national counterpart is made up of public and private expenditure, the table shall give the indicative breakdown between the public and the private components. Where in accordance with Article 53, the national counterpart is made up of public expen diture, the table shall indicate the amount of the national public contribu-tion. It shall show, for information, the contribution from the EIB and the other existing financial instruments;

(f) information on complementarity with meas-ures financed by the EAFRD and those financed by the EFF, where relevant;

(g) the implementing provisions for the opera-tional programme, including:

(i) designation by the Member State of all the entities referred to in Article 59 or, if the Member State exercises the option provided for in Article 74, the designation of other bodies and procedures in accord-ance with the rules laid down in Article 74;

(ii) a description of the monitoring and eval-uation systems;

(iii) information about the competent body for receiving the payments made by the Commission and the body or bodies responsible for making payments to the beneficiaries;

(iv) a definition of the procedures for the mobilisation and circu lation of finan-cial flows in order to ensure their transparency;

(v) the elements aiming at ensuring the publicity and the infor mation of the operational programme as referred to in Article 69;

(vi) a description of the procedures agreed between the Commission and the Member State for the exchange of compu terised data to meet the payment, monitoring and evaluation requirements laid down by this Regulation;

(h) an indicative list of major projects within the meaning of Article 39, which are expected to be submitted within the programming period for Commission approval.

2. Operational programmes financed jointly by the ERDF and the Cohesion Fund with respect to transport and the environment shall contain priority axis specific to each Fund and a specific commitment by Fund.

3. Without prejudice to the second subparagraph of Article 5 of Regulation (EC) No 1080/2006, each operational programme under the Regional competitiveness and employment objective shall include a justification for the thematic, geograph-ical and financial concentration on the priorities as laid down respectively in Article 5 of that Regulation and in Article 4 of Regulation (EC) No 1081/2006.

4. Operational programmes financed by the ERDF shall contain in addition for the Convergence and Regional competitiveness and employment objectives:

33

(a) information on the approach to the sustain-able urban development where appropriate;

(b) Specific priority axis for the measures financed under the additional allocation referred to in paragraph 20 of Annex II in operational programmes providing assis-tance in outermost regions;

5. Operational programmes affected by one or more specific allo cations referred to in the additional provisions in Annex II shall contain information on the procedures foreseen to allocate and ensure the monitoring of these specific allocations.

6. At the initiative of the Member State, the opera-tional programmes financed by the ERDF may also contain for the Convergence and Regional competitiveness and employment objectives:

(a) the list of cities chosen for addressing urban issues and the procedures for sub-delegation to urban authorities, possibly by means of a global grant;

(b) actions for interregional cooperation with, at least, one regional or local authority of another Member State.

7. At the initiative of the Member State concerned, the operational programmes for the ESF may also contain for the Convergence and Regional Competitiveness and Employment objectives a horizontal approach or a dedicated priority axis for interregional and transnational actions involving the national, regional or local authori-ties of at least one other Member State.

Article 38 Operational programmes for the European

territorial cooperation objective

Specific rules on operational programmes are laid down in the Regu lation (EC) No 1080/2006 as regards operational programmes under the European territorial cooperation objective.

Section 2 – Major projects

Article 39 Content

As part of an operational programme or operational programmes, the ERDF and the Cohesion Fund may finance expenditure comprising a series of works, activities or services intended in itself to accomplish an indivisible task of a precise economic or technical

nature which has clearly identified goals and whose total cost exceeds EUR 50 million (hereinafter a major project).

Article 40 Information submitted to the Commission

The Member State or the managing authorities shall provide the Commission with the following informa-tion on major projects:

(a) information on the body to be responsible for implementation;

(b) information on the nature of the investment and a description of it, its financial volume and location;

(c) the results of the feasibility studies;

(d) a timetable for implementing the major project and, where the im plementation period is expected to be longer than the programming period, the phases for which Union co-financing is requested during the 2007 to 2013 programming period;

(e) a cost-benefit analysis, including a risk assessment and the fore seeable impact on the sector concerned and on the socio-economic situation of the Member State and/or the region and, when possible and where appro-priate, of other regions of the Community;

(f) an analysis of the environmental impact;

(g) a justification for the public contribution;

(h) the financing plan showing the total planned financial resources and the planned contribu-tion from the Funds, the EIB, the EIF and all other sources of Community financing, including the indicative annual plan of the financial contribution from the ERDF or the Cohesion Fund for the major project.

The Commission shall provide indicative guidance on the methodology to be used in carrying out the cost-benefit analysis in (e) above in accordance with the procedure referred to in Article 103(2).

Article 41 Decision of the Commission

1. The Commission shall appraise the major project, if necessary consulting outside experts, including the EIB, in the light of the factors referred to in

34

Article 40, its consistency with the priorities of the operational programme or programmes concerned, its contribution to achieving the goals of those priori-ties and its consistency with other Union policies.

2. The Commission shall adopt a decision as soon as possible but no later than three months after the submission by the Member State or the managing authority of a major project, provided that it is submitted in accordance with Article 40. That decision shall define the physical object, the amount to which the co-financing rate for the priority axis of the operational programme or programmes concerned applies, and the annual plan or plans of financial contribution from the ERDF or the Cohesion Fund.

3. Where the Commission refuses to make a finan-cial contribution from the Funds to a major project, it shall notify the Member State of its reasons within the period and the related condi-tions laid down in paragraph 2.

Section 3 – Global grants

Article 42 General provisions

1. The Member State or the managing authority may entrust the management and implementa-tion of a part of an operational programme to one or more intermediate bodies, designated by the Member State or the managing authority, including local authorities, regional development bodies or non-governmental organisations, in accordance with the provisions of an agreement concluded between the Member State or the managing authority and that body.

Such delegation shall be without prejudice to the financial responsibility of the managing authority and of the Member States.

2. The intermediate body responsible for managing the global grant shall provide guarantees of its solvency and competence in the domain concerned as well as in administrative and financial management. It shall as a general rule be established or represented in the region or regions covered by the operational programme at the moment of its designation.

Article 43 Implementing rules

The agreement referred to in the first subparagraph of Article 42(1) shall detail in particular:

(a) the types of operation to be covered by the global grant;

(b) the criteria for selecting beneficiaries;

(c) the rates of assistance from the Funds and the rules governing that assistance, including as regards the use of any interest accruing;

(d) the arrangements for monitoring, evaluating and ensuring the financial control of the global grant referred to in Article 59(1) vis-à-vis the managing authority, including the arrangements for recovering amounts unduly paid and the presentation of accounts;

(e) where applicable, any use of a financial guar-antee or equivalent facility, unless the Member State or the managing authority provides such guarantee according to the institutional arrangements of each Member State.

Section 4 – Financial engineering

Article 44 Financial engineering instruments

As part of an operational programme, the Structural Funds may finance expenditure in respect of an operation comprising contributions to support any of the following:

(a) financial engineering instruments for enter-prises, primarily small and medium-sized ones, such as venture capital funds, guar-antee funds and loan funds;

(b) urban development funds, that is, funds investing in public-private partnerships and other projects included in an integrated plan for sustainable urban development;

(c) funds or other incentive schemes providing loans, guarantees for repayable investments, or equivalent instruments, for energy effi-ciency and use of renewable energy in build-ings, including in existing housing.

Where such operations are organised through holding funds, that is, funds set up to invest in several venture capital funds, guarantee funds, loan funds, urban development funds, funds or other incentive schemes providing loans, guarantees for repayable investments, or equivalent instruments, for energy efficiency and use of renewable energy in buildings, including in existing housing, the Member State or the managing authority shall implement them through one or more of the following forms:

35

(a) the award of a public contract in accordance with applicable public procurement law;

(b) when the agreement is not a public service contract within the meaning of applicable public procurement law, the award of a grant, defined for this purpose as a direct financial contribution by way of donation to a finan-cial institution without a call for proposals, if this is in accordance with a national law compatible with the Treaty;

(c) the award of a contract directly to the EIB or the EIF.

The implementing rules of this Article shall be adopted by the Commission in accordance with the procedure referred to in Article 103(3).

Section 5 – Technical assistance

Article 45 Technical assistance at the initiative of the

Commission

1. At the initiative of and/or on behalf of the Commission, subject to a ceiling of 0,25 % of their respective annual allocation, the Funds may finance the preparatory, monitoring, administra-tive and technical support, evaluation, audit and inspection measures necessary for imple menting this Regulation.

Those actions shall include, in particular:

(a) assistance for project preparation and appraisal, including with the EIB through a grant or other forms of cooperation, as appropriate;

(b) studies linked to the drawing up of the Community strategic guidelines on cohe-sion, the Commission’s reporting on cohesion policy and the three-yearly cohesion report;

(c) evaluations, expert reports, statistics and studies, including those of a general nature concerning the operation of the Funds, which may be carried out where appropriate by the EIB or the EIF through a grant or other forms of cooperation;

(d) measures aimed at the partners, the beneficiaries of assistance from the Funds and the general public, including information measures;

(e) measures to disseminate information, networking, raise awareness, promote coop-eration and exchange experiences throughout the Community;

(f) the installation, operation and interconnec-tion of computerised systems for manage-ment, monitoring, inspection and evaluation;

(g) improvements in evaluation methods and the exchange of infor mation on practices in this field.

2. The Commission shall adopt a decision concerning the types of action listed under para-graph 1 of this Article, in accordance with the procedure referred to in Article 103(2), when a contribution from the ERDF or the Cohesion Fund is foreseen.

3. The Commission shall adopt a decision concerning the types of action listed under paragraph 1 of this Article, after consulting the committee referred to in Article 104, in accordance with the procedure referred to in Article 103(2), when a contribution from the ESF is foreseen.

Article 46 Technical assistance of the Member States

1. At the initiative of the Member State, the Funds may finance the preparatory, management, monitoring, evaluation, information and control activities of operational programmes together with activities to reinforce the administrative capacity for imple-menting the Funds within the following limits:

(a) 4 % of the total amount allocated under the Convergence and Regional competitiveness and employment objectives;

(b) 6 % of the total amount allocated under the European territorial cooperation objective.

The EIB or the EIF may, upon request of the Member States, take part in technical assistance activities referred to in the first subparagraph.

2. For each of the three objectives, technical assis-tance actions, within the limits set in paragraph 1, shall, in principle, be undertaken within the framework of each operational programme. On a comple mentary basis, however, such actions may be undertaken partially and subject to the overall limits for technical assistance set in paragraph 1, in the form of a specific operational programme.

36

3. ►C2 If the Member State decides to undertake technical assistance actions in the framework of each operational programme, the proportion of the total amount allocated for technical assis-tance in respect of each operational programme shall not exceed the limits set in paragraph 1.

In this case, where technical assistance actions are also undertaken in the form of a specific operational programme, the total amount allocated for technical assistance in such a specific programme shall not cause the total proportion of Funds allocated to technical assistance to exceed the limits set in paragraph 1. ◄

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CHAPTER I – Evaluation

Article 47 General provisions

1. Evaluations shall aim to improve the quality, effec-tiveness and consistency of the assistance from the Funds and the strategy and im plementation of operational programmes with respect to the specific structural problems affecting the Member States and regions concerned, while taking account of the objective of sustainable devel opment and of the relevant Community legislation concerning environ mental impact and strategic environmental assessment.

2. Evaluations may be of a strategic nature in order to examine the evolution of a programme or group of programmes in relation to Commu-nity and national priorities, or of an operational nature in order to support the monitoring of an operational programme. Evaluations shall be carried out before, during and after the program-ming period.

3. Evaluations shall be carried out under the respon-sibility of the Member State or the Commission, as appropriate, in accordance with the principle of proportionality laid down in Article 13.

Evaluations shall be carried out by experts or bodies, internal or external, functionally independent of the authorities referred to in Article 59(b) and (c). The results shall be published according to the applicable rules on access to documents.

4. Evaluations shall be financed from the budget for technical assistance.

5. The Commission shall provide indicative guid-ance on evaluation methods, including quality standards, in accordance with the procedure laid down in Article 103(2).

Article 48 Responsibility of Member States

1. The Member States shall provide the resources necessary for carrying out evaluations, organise the production and gathering of the necessary data and use the various types of information provided by the monitoring system.

They may also draw up, where appropriate, under the Convergence objective, in accord-ance with the principle of proportionality set out in Article 13, an evaluation plan presenting the indicative evaluation activities which the Member State intends to carry out in the different phases of the implementation.

2. Member States shall carry out an ex ante evalu-ation for each operational programme separately under the Convergence objective. In duly justified cases, taking into account the proportionality prin-ciple as set out in Article 13 and as agreed between the Commission and the Member State, Member States may carry out a single ex ante evaluation covering more than one operational programme.

For the Regional competitiveness and employ-ment objective, Member States shall carry out either an ex ante evaluation covering all the opera-tional programmes or an evaluation for each Fund or an evaluation for each priority or an evaluation for each operational programme.

For the European territorial cooperation objective, the Member States shall jointly carry out an ex ante evaluation covering either each oper ational programme or several operational programmes.

Ex ante evaluations shall be carried out under the responsibility of the authority responsible for the preparation of the programming documents.

Ex ante evaluations shall aim to optimise the allocation of budgetary resources under opera-tional programmes and improve programming quality. They shall identify and appraise the disparities, gaps and potential for development, the goals to be achieved, the results expected, the quantified targets, the coherence, if neces-sary, of the strategy proposed for the region, the Community value-added, the extent to which the Community’s priorities have been taken into account, the lessons drawn from previous programming and the quality of the procedures for implementation, monitoring, evaluation and financial management.

3. During the programming period, Member States shall carry out evaluations linked to the moni-toring of operational programmes in particular where that monitoring reveals a significant

TITLE IVEFFECTIVENESS

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departure from the goals initially set. Where proposals are made for the revision of opera-tional programmes, as referred to in Article 33, analyses shall be provided on the reasons for the revision, including any implementation difficulties, and the expected impact of the revi-sion, including that on the strategy of the opera-tional programme. The results of such evalua-tions or analyses shall be sent to the monitoring committee for the operational programme and to the Commission.

Article 49 Responsibility of the Commission

1. The Commission may carry out strategic evalua-tions.

2. The Commission may carry out, at its initia-tive and in partnership with the Member State concerned, evaluations linked to the monitoring of operational programmes where the monitoring of programmes reveals a significant departure from the goals initially set. The results shall be sent to the monitoring committee for the opera-tional programme.

3. The Commission shall carry out an ex post evalu-ation for each objective in close cooperation with the Member State and managing authorities.

Ex post evaluation shall cover all the operational programmes under each objective and examine the extent to which resources were used, the effectiveness and efficiency of Fund programming and the socio-economic impact.

It shall be carried out for each of the objectives and shall aim to draw conclusions for the policy on economic and social cohesion.

It shall identify the factors contributing to the success or failure of the implementation of operational programmes and identify good practice.

Ex post evaluation shall be completed by 31 December 2015.

CHAPTER II – Reserves

Article 50 National performance reserve

1. At its own initiative, a Member State may decide to establish a national performance reserve for the Convergence objective and/or the Regional compet-itiveness and employment objective, consisting of 3 % of its total allocation for each one.

2. Where a Member State has decided to establish such a reserve, it shall assess under each of the objectives not later than 30 June 2011 the perfor-mance of its operational programmes.

3. Not later than 31 December 2011, on the basis of proposals from and in close consultation with each Member State concerned, the Commission shall allocate the national performance reserve.

Article 51 National contingency reserve

At its own initiative, a Member State may reserve an amount of 1 % of the annual Structural Fund contri-bution to the Convergence objective and 3 % of the annual Structural Fund contribution to the Regional competitiveness and employment objective to cover unforeseen local or sectoral crises linked to economic and social restructuring or to the consequences of the opening up of trade.

The Member State may allocate the reserve for each objective to a specific national programme or within operational programmes.

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CHAPTER I – Contribution from the funds

Article 52 Modulation of the contribution rates

The contribution from the Funds may be modulated in the light of the following:

(a) the gravity of the specific problems, in partic-ular of an economic, social or territorial nature;

(b) the importance of each priority axis for the Community’s priorities as set out in the Community strategic guidelines on cohesion, as well as for national and regional priorities;

(c) protection and improvement of the environ-ment, principally through the application of the precautionary principle, the principle of preven-tive action, and the polluter-pays principle;

(d) the rate of mobilisation of private financing, in particular under public-private partner-ships, in the fields concerned;

(e) the inclusion of interregional cooperation as referred to in Article 37(6)(b) under the Convergence and Regional competi tiveness and employment objectives;

(f) under the Regional competitiveness and employment objective, the coverage of areas with a geographical or natural handicap defined as follows:

(i) island Member States eligible under the Cohesion Fund, and other islands except those on which the capital of a Member State is situated or which have a fixed link to the mainland;

(ii) mountainous areas as defined by the national legislation of the Member State;

(iii) sparsely (less than 50 inhabitants per square kilometre) and very sparsely (less than 8 inhabitants per square kilometre) populated areas;

(iv) the areas which were external borders of the Community on 30 April 2004 and which ceased to be so on the day after that date.

Article 53 Contribution from the Funds

1. The contribution from the Funds, at the level of operational programmes, shall be calculated with reference to:

(a) either the total eligible expenditure including public and private expenditure;

(b) or the public eligible expenditure.

2. The contribution from the Funds at the level of operational programmes under the Convergence and Regional competitiveness and employment objectives shall be subject to the ceilings set out in Annex III.

3. For operational programmes under the Euro-pean territorial cooper ation objective in which at least one participant belongs to a Member State whose average GDP per capita for the period 2001 to 2003 was below 85 % of the EU-25 average during the same period, the contri bution from the ERDF shall not be higher than 85 % of the eligible expenditure. For all other operational programmes, the contribu-tion from the ERDF shall not be higher than 75 % of the eligible expenditure co-financed by the ERDF.

4. The contribution from the Funds at the priority axis level shall not be subject to the ceilings set out in paragraph 3 and in Annex III. However, it shall be fixed so as to ensure compliance with the maximum amount of contribution from the Funds and the maximum contribution rate per Fund fixed at the level of the opera-tional programme.

5. For operational programmes co-financed jointly:

(a) by the ERDF and the Cohesion Fund; or

(b) by the additional allocation for the outermost regions provided for in Annex II, the ERDF and/or the Cohesion Fund,

the decision adopting the operational programme shall fix the maximum rate and the maximum amount of the contribution for each Fund and allocation separately.

TITLE VFINANCIAL CONTRIBUTION FROM THE FUNDS

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6. The Commission’s decision adopting an opera-tional programme shall fix the maximum rate and the maximum amount of the contri bution from Fund for each operational programme and for each priority axis. The decision shall show sepa-rately the appropriations for regions receiving transitional support.

Article 54 Other provisions

1. The contribution from the Funds for each priority axis shall not be less than 20 % of the eligible public expenditure.

2. Technical assistance measures implemented at the initiative of or on behalf of the Commission may be financed at the rate of 100 %.

3. During the period of eligibility referred to in Article 56(1):

(a) a priority axis may receive assistance from only one Fund and one objective at a time;

(b) an operation may receive assistance from a Fund under only one operational programme at a time;

(c) an operation shall not receive an assistance from a Fund higher than the total public expenditure allocated.

4. For State aid to enterprises within the meaning of Article 87 of the Treaty, public aid granted under operational programmes shall observe the ceil-ings on State aid.

5. An expenditure co-financed by the Funds shall not receive assistance from another Community financial instrument.

CHAPTER II – Revenue-generating projects

Article 55 Revenue-generating projects

1. For the purposes of this Regulation, a revenue-gener-ating project means any operation involving an invest-ment in infrastructure the use of which is subject to charges borne directly by users or any operation

involving the sale or rent of land or buildings or any other provision of services against payment.

2. Eligible expenditure on revenue-generating projects shall not exceed the current value of the investment cost less the current value of the net revenue from the investment over a specific reference period for:

(a) investments in infrastructure; or

(b) other projects where it is possible to objec-tively estimate the revenues in advance.

Where not all the investment cost is eligible for co-financing, the net revenue shall be allocated pro rata to the eligible and non-eligible parts of the investment cost.

In the calculation, the managing authority shall take account of the reference period appropriate to the category of investment concerned, the category of project, the profitability normally expected of the category of investment concerned, the application of the polluter-pays principle, and, if appropriate, considerations of equity linked to the relative prosperity of the Member State concerned.

3. Where it is objectively not possible to estimate the revenue in advance, the net revenue gener-ated within five years of the completion of an operation shall be deducted from the expenditure declared to the Commission.

4. Where it is established that an operation has generated net revenue that has not been taken into account under paragraphs 2 and 3, such net revenue shall be deducted by the certi-fying authority at the latest on submission of the documents for the operational programme referred to in Article 89(1)(a). The applica-tion for payment of the final balance shall be corrected accordingly.

5. Paragraphs 1 to 4 of this Article shall apply only to operations which are co-financed by the ERDF or Cohesion Fund and the total cost of which exceeds EUR 1 000 000.

6. This Article shall not apply to projects subject to the rules on State aid within the meaning of Article 87 of the Treaty.

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CHAPTER III – Eligibility of expenditure

Article 56 Eligibility of expenditure

1. Expenditure, including for major projects, shall be eligible for a contribution from the Funds if it has actually been paid between the date of submission of the operational programmes to the Commission or from 1 January 2007, whichever is earlier, and 31 December 2015. Operations must not have been completed before the starting date for eligibility.

2. By way of derogation from paragraph 1, contri-butions in kind, depreciation costs and overheads may be considered as incurred expen diture by beneficiaries for the implementation of opera-tions under the conditions laid down in the third subparagraph of this paragraph.

By way of derogation from paragraph 1, contri-butions in kind, as regards financial engineering instruments as defined in Article 78(6), first subparagraph, can be treated as expenditure paid at the constitution of the funds or holding funds or contributing to those funds or holding funds, under the conditions established in the third subparagraph of this paragraph.

Expenditure mentioned in the first and second subparagraphs must fulfil the following conditions:

(a) the eligibility rules drawn up on the basis of paragraph 4 foresee the eligibility of such expenditure;

(b) the amount of the expenditure is duly justified by supporting documents having equivalent probative value to invoices, without prejudice to provisions set out in specific Regulations;

(c) in the case of contributions in kind, the co-financing from the Funds does not exceed the total of eligible expenditure, excluding the value of such contribu-tions.

3. Expenditure shall be eligible for a contribution from the Funds only where incurred for opera-tions decided on by the managing authority of the operational programme concerned or under its respon sibility, in accordance with criteria fixed by the monitoring committee.

Where a new category of expenditure as referred to in Table 1 of Part A of Annex II to Commission Regu-lation (EC) No 1828/2006 (17) is added at the time of the revision of an operational programme referred to in Article 33 of this Regulation, any expenditure falling under such category shall be eligible from the date of the submission to the Commission of the request for revision of the operational programme.

4. The rules on the eligibility of expenditure shall be laid down at national level subject to the exceptions provided for in the specific Regula-tions for each Fund. They shall cover the entirety of the expen diture declared under the operational programme.

5. This Article shall be without prejudice to the expenditure referred to in Article 45.

CHAPTER IV – Durability of operations

Article 57 Durability of operations

1. The Member State or managing authority shall ensure that an operation comprising invest-ment in infrastructure or productive investment retains the contribution from the Funds only if it does not, within five years from its comple-tion, undergo a substantial modifi cation which is caused by a change in the nature of ownership of an item of infrastructure or the cessation of a productive activity and which affects the nature or the implementation conditions of the opera-tion or gives to a firm or a public body an undue advantage.

Actions falling within the scope of assistance from the ESF shall be considered as not having retained the contribution only where they are subject to an obligation for maintenance of investment under the applicable rules on State aid within the meaning of Article 107 of the Treaty on the Functioning of the European Union and where they undergo a substantial modification as a result of the cessation of productive activity within the period laid down in those rules.

(17) Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Reg-ulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (OJ L 371, 27.12.2006, p. 1.)

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Member States may reduce the time limit set out in the first subpara-graph to three years in cases concerning the maintenance of investments by small and medium-sized enterprises.

2. The Member State and the managing authority shall inform the Commission in the annual implementa-tion report referred to in Article 67 of any modifi-cation referred to in paragraph 1. The Commission shall inform the other Member States.

3. Sums unduly paid shall be recovered in accord-ance with Articles 98 to 102.

4. The Member States and the Commission shall ensure that under takings which are or have been subject to a procedure of recovery in accord-ance with paragraph 3 following the transfer of a productive activity within a Member State or to another Member State do not benefit from a contribution from the Funds.

5. Paragraphs 1 to 4 shall not apply to any oper-ation which undergoes a substantial modi-fication as a result of the cessation of the productive activity due to a non-fraudulent bankruptcy.

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CHAPTER I – Management and control systems

Article 58 General principles of the management

and control systems

The management and control systems of operational programmes set up by Member States shall provide for:

(a) the definition of the functions of the bodies concerned in management and control and the allocation of functions within each body;

(b) compliance with the principle of separation of functions between and within such bodies;

(c) procedures for ensuring the correctness and regularity of expen diture declared under the operational programme;

(d) reliable accounting, monitoring and financial reporting systems in computerised form;

(e) a system of reporting and monitoring where the responsible body entrusts the execution of tasks to another body;

(f) arrangements for auditing the functioning of the systems;

(g) systems and procedures to ensure an adequate audit trail;

(h) reporting and monitoring procedures for irregularities and for the recovery of amounts unduly paid.

Article 59 Designation of authorities

1. For each operational programme the Member State shall designate the following:

(a) a managing authority: a national, regional or local public authority or a public or private body designated by the Member State to manage the operational programme;

(b) a certifying authority: a national, regional or local public authority or body designated by the Member State to certify statement of

expenditure and applications for payment before they are sent to the Commission;

(c) an audit authority: a national, regional or local public authority or body, function-ally independent of the managing authority and the certifying authority, designated by the Member State for each oper ational programme and responsible for verifying the effective func tioning of the management and control system.

The same authority may be designated for more than one operational programme.

2. The Member State may designate one or more intermediate bodies to carry out some or all of the tasks of the managing or certifying authority under the responsibility of that authority.

3. The Member State shall lay down rules governing its relations with the authorities referred to in paragraph 1 and their relations with the Commission.

Without prejudice to this Regulation, the Member State shall lay down the mutual relations between the authorities referred to in paragraph 1, which shall carry out their tasks in full accordance with the institutional, legal and financial systems of the Member State concerned.

4. Subject to Article 58(b), some or all of the authorities referred to in paragraph 1 may be part of the same body.

5. Specific rules on management and control are laid down in the Regulation (EC) No 1080/2006 for operational programmes under the European territorial cooperation objective.

6. The Commission shall adopt implementing rules of Articles 60, 61 and 62 in accordance with the procedure referred to in Article 103(3).

Article 60 Functions of the managing authority

The managing authority shall be responsible for managing and imple menting the operational programme in accordance with the principle of sound financial management and in particular for:

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(a) ensuring that operations are selected for funding in accordance with the criteria appli-cable to the operational programme and that they comply with applicable Community and national rules for the whole of their imple-mentation period;

(b) verifying that the co-financed products and services are delivered and that the expenditure declared by the beneficiaries for operations has actually been incurred and complies with Community and national rules; verifications on-the-spot of individual operations may be carried out on a sample basis in accordance with the detailed rules to be adopted by the Commission in accordance with the proce-dure referred to in Article 103(3);

(c) ensuring that there is a system for recording and storing in compu terised form accounting records for each operation under the oper-ational programme and that the data on implementation necessary for financial management, monitoring, verifications, audits and evaluation are collected;

(d) ensuring that beneficiaries and other bodies involved in the im plementation of operations maintain either a separate accounting system or an adequate accounting code for all trans-actions relating to the operation without prej-udice to national accounting rules;

(e) ensuring that the evaluations of operational programmes referred to in Article 48(3) are carried out in accordance with Article 47;

(f) setting up procedures to ensure that all docu-ments regarding expen diture and audits required to ensure an adequate audit trail are held in accordance with the requirements of Article 90;

(g) ensuring that the certifying authority receives all necessary infor mation on the procedures and verifications carried out in relation to expenditure for the purpose of certification;

(h) guiding the work of the monitoring committee and providing it with the documents required to permit the quality of the implementation of the operational programme to be moni-tored in the light of its specific goals;

(i) drawing up and, after approval by the monitoring committee, submitting to the Commission the annual and final reports on im plementation;

(j) ensuring compliance with the information and publicity requirements laid down in Article 69;

(k) providing the Commission with information to allow it to appraise major projects.

Article 61 Functions of the certifying authority

The certifying authority of an operational programme shall be responsible in particular for:

(a) drawing up and submitting to the Commis-sion certified statements of expenditure and applications for payment;

(b) certifying that:

(i) the statement of expenditure is accurate, results from reliable accounting systems and is based on verifiable supporting documents;

(ii) the expenditure declared complies with applicable Community and national rules and has been incurred in respect of operations selected for funding in accordance with the criteria applicable to the programme and complying with Community and national rules;

(c) ensuring for the purposes of certification that it has received adequate information from the managing authority on the procedures and verifications carried out in relation to expend-iture included in statements of expenditure;

(d) taking account for certification purposes of the results of all audits carried out by or under the responsibility of the audit authority;

(e) maintaining accounting records in comput-erised form of expenditure declared to the Commission;

(f) keeping an account of amounts recoverable and of amounts withdrawn following cancel-lation of all or part of the contribution for an operation. Amounts recovered shall be repaid to the general budget of the European Union prior to the closure of the operational programme by deducting them from the next statement of expen diture.

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Article 62 Functions of the audit authority

1. The audit authority of an operational programme shall be responsible in particular for:

(a) ensuring that audits are carried out to verify the effective func tioning of the manage-ment and control system of the operational programme;

(b) ensuring that audits are carried out on opera-tions on the basis of an appropriate sample to verify expenditure declared;

(c) presenting to the Commission within nine months of the approval of the operational programme an audit strategy covering the bodies which will perform the audits referred to under points (a) and (b), the method to be used, the sampling method for audits on operations and the indicative planning of audits to ensure that the main bodies are audited and that audits are spread evenly throughout the programming period.

Where a common system applies to several operational programmes, a single audit strategy may be submitted.;

(d) by 31 December each year from 2008 to 2015:

(i) submitting to the Commission an annual control report setting out the findings of the audits carried out during the previous 12 month-period ending on 30 June of the year concerned in accord-ance with the audit strategy of the operational programme and reporting any shortcomings found in the systems for the management and control of the programme. The first report to be submitted by 31 December 2008 shall cover the period from 1 January 2007 to 30 June 2008. The information concerning the audits carried out after 1 July 2015 shall be included in the final control report supporting the closure declaration referred to in point (e);

(ii) issuing an opinion, on the basis of the controls and audits that have been carried out under its responsibility, as to whether the management and control system functions effectively, so as to provide a reasonable assurance that statements of

expenditure presented to the Commission are correct and as a consequence reason-able assurance that the underlying trans-actions are legal and regular;

(iii) submitting, where applicable under Article 88, a declaration for partial closure assessing the legality and regu-larity of the expenditure concerned.

When a common system applies to several operational programmes, the information referred to in point (i) may be grouped in a single report, and the opinion and decla-ration issued under points (ii) and (iii) may cover all the operational programmes concerned;

(e) submitting to the Commission at the latest by 31 March 2017 a closure declaration assessing the validity of the application for payment of the final balance and the legality and regu-larity of the underlying transactions covered by the final statement of expen diture, which shall be supported by a final control report.

2. The audit authority shall ensure that the audit work takes account of internationally accepted audit standards.

3. Where the audits and controls referred to in para-graph 1(a) and (b) are carried out by a body other than the audit authority, the audit authority shall ensure that such bodies have the necessary func-tional independence.

4. The Commission shall provide its comments on the audit strategy presented under paragraph 1(c) no later than three months from receipt thereof. In the absence of comments within this period it shall be considered to be accepted.

CHAPTER II – Monitoring

Article 63 Monitoring committee

1. The Member State shall set up a monitoring committee for each operational programme, in agreement with the managing authority, within three months from the date of the notification to the Member State of the decision approving the operational programme. A single monitoring committee may be set up for several operational programmes.

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2. Each monitoring committee shall draw up its rules of procedure within the institutional, legal and financial framework of the Member State concerned and adopt them in agreement with the managing authority in order to exercise its missions in accordance with this Regu lation.

Article 64 Composition

1. The monitoring committee shall be chaired by a representative of the Member State or the managing authority.

Its composition shall be decided by the Member State in agreement with the managing authority.

2. At its own initiative or at the request of the monitoring committee, a representative of the Commission shall participate in the work of the monitoring committee in an advisory capacity. A representative of the EIB and the EIF may partici-pate in an advisory capacity for those operational programmes to which the EIB or the EIF makes a contri bution.

Article 65 Tasks

The monitoring committee shall satisfy itself as to the effectiveness and quality of the implementation of the operational programme, in accordance with the following provisions:

(a) it shall consider and approve the criteria for selecting the operations financed within six months of the approval of the operational programme and approve any revision of those criteria in accordance with program-ming needs;

(b) it shall periodically review progress made towards achieving the specific targets of the operational programme on the basis of docu-ments submitted by the managing authority;

(c) it shall examine the results of implementa-tion, particularly the achievement of the targets set for each priority axis and the eval-uations referred to in Article 48(3);

(d) it shall consider and approve the annual and final reports on im plementation referred to in Article 67;

(e) it shall be informed of the annual control report, or of the part of the report referring

to the operational programme concerned, and of any relevant comments the Commis-sion may make after examining that report or relating to that part of the report;

(f) it may propose to the managing authority any revision or examina tion of the opera-tional programme likely to make possible the attainment of the Funds’ objectives referred to in Article 3 or to improve its management, including its financial management;

(g) it shall consider and approve any proposal to amend the content of the Commission deci-sion on the contribution from the Funds.

Article 66 Arrangements for monitoring

1. The managing authority and the monitoring committee shall ensure the quality of the imple-mentation of the operational programme.

2. The managing authority and the monitoring committee shall carry out monitoring by refer-ence to financial indicators and the indicators referred to in Article 37(1)(c) specified in the operational programme.

Where the nature of the assistance permits, statis-tics shall be broken down by sex and by the size of the recipient undertakings.

3. Data exchange between the Commission and the Member States for this purpose shall be carried out electronically, in accordance with the imple-menting rules of this Regulation adopted by the Commission in accordance with the procedure referred to in Article 103(3).

Article 67 Annual report and final report on implementation

1. For the first time in 2008 and by 30 June each year, the managing authority shall send the Commission an annual report and by 31 March 2017 a final report on the implementation of the operational programme.

2. The reports referred to in paragraph 1 shall include the following information in order to obtain a clear view of the implementation of the operational programme:

(a) the progress made in implementing the oper-ational programme and priority axes in rela-tion to their specific, verifiable targets, with a quantification, wherever and whenever they

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lend themselves to quantification, using the indicators referred to in Article 37(1)(c) at the level of the priority axis;

(b) quantification of the financial indicators referred to in Article 66(2) expressing the cumulative financial implementation of the opera tional programme, detailing for each priority axis the following:

(i) the total amount of certified eligible expenditure paid by bene ficiaries and the corresponding public contribution;

(ii) the ratio between the total amount of certified eligible expen diture paid by the beneficiaries and the total funding of the programme including Union funding and national counterpart.

Where appropriate, financial implementation in areas receiving tran sitional support shall be presented separately within each opera-tional programme;

(c) for information purposes only, the indica-tive breakdown of the allocation of Funds by categories, in accordance with the implemen-tation rules adopted by the Commission in accordance with the procedure referred to in Article 103(3);

(d) the steps taken by the managing authority or the monitoring committee to ensure the quality and effectiveness of implemen tation, in particular:

(i) monitoring and evaluation measures, including data collection arrangements;

(ii) a summary of any significant prob-lems encountered in imple menting the operational programme and any meas-ures taken, including the response to comments made under Article 68(2) where appropriate;

(iii) the use made of technical assistance;

(e) the measures taken to provide information on and publicise the operational programme;

(f) information about significant problems relating to compliance with Community law which have been encountered in the implemen tation of the operational programme and the measures taken to deal with them;

(g) where appropriate, the progress and financing of major projects;

(h) the use made of assistance released following cancellation as referred to in Article 98(2) to the managing authority or to another public authority during the period of implementation of the operational programme;

(i) cases where a substantial modification has been detected under Article 57.

The breadth of information transmitted to the Commis-sion shall be proportional to the total amount of expenditure of the operational programme concerned. Where appropriate, such information may be provided in summary form.

Information referred to in points (d), (g), (h) and (i) shall not be included if there has been no significant modification since the previous report.

3. The reports referred to in paragraph 1 shall be judged admissible where they contain all the appropriate information listed in paragraph 2. The Commission shall inform the Member State on the admissibility of the annual report within 10 working days from the date of its receipt.

4. The Commission shall inform the Member State of its opinion on the content of an admissible annual report on implementation submitted by the managing authority within two months from the date of receipt. For the final report on an operational programme, the time limit shall be a maximum of five months from the date of receipt of an admissible report. If the Commission does not respond within the time limit laid down, the report shall be deemed to be accepted.

Article 68 Annual examination of programmes

1. Every year, when the annual report on implemen-tation referred to in Article 67 is submitted, the Commission and the managing authority shall examine the progress made in implementing the operational programme, the principal results achieved over the previous year, the financial implementation and other factors with a view to improving implementation.

Any aspects of the operation of the manage-ment and control system raised in the last annual control report, referred to in Article 62(1)(d)(i), may also be examined.

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2. After the examination referred to in paragraph 1, the Commission may make comments to the Member State and the managing authority, which shall inform the monitoring committee thereof. The Member State shall inform the Commission of the action taken in response to those comments.

3. When the ex post evaluations of assistance granted over the 2000 to 2006 programming period, where appropriate, are available, the overall results may be examined in the next annual examination.

CHAPTER III – Information and publicity

Article 69 Information and publicity

1. The Member State and the managing authority for the operational programme shall provide information on and publicise operations and co-financed programmes. The information shall be addressed to European Union citizens and beneficiaries with the aim of highlighting the role of the Community and ensure that assistance from the Funds is transparent.

The Commission shall adopt implementing rules for this Article in accordance with the procedure referred to in Article 103(3).

2. The managing authority for the operational programme shall be responsible for publicity in accordance with the implementing rules of this Regulation adopted by the Commission in accord-ance with the procedure referred to in Article 103(3).

CHAPTER IV – Responsibilities of Member States and of the Commission

Section 1 – Responsibilities of Member States

Article 70 Management and control

1. Member States shall be responsible for the manage-ment and control of operational programmes, in particular through the following measures:

(a) ensuring that management and control systems for operational programmes are set up in accordance with Articles 58 to 62 and function effectively;

(b) preventing, detecting and correcting irregu-larities and recovering amounts unduly paid together with interest on late payments where appropriate. They shall notify these to the Commission and keep the Commission informed of the progress of administrative and legal proceedings.

2. When amounts unduly paid to a beneficiary cannot be recovered, the Member State shall be responsible for reimbursing the amounts lost to the general budget of the European Union, when it is established that the loss has been incurred as a result of fault or negligence on its part.

3. The implementing rules for paragraphs 1 and 2 shall be adopted by the Commission in accordance with the procedure referred to in Article 103(3).

Article 71 Setting up of management and control systems

1. Before the submission of the first interim appli-cation for payment or at the latest within twelve months of the approval of each operational programme, the Member States shall submit to the Commission a description of the systems, covering in particular the organisation and proce-dures of:

(a) the managing and certifying authorities and intermediate bodies;

(b) the audit authority and any other bodies carrying out audits under its responsibility.

2. The description referred to in paragraph 1 shall be accompanied by a report setting out the results of an assessment of the systems set up and giving an opinion on their compliance with Articles 58 to 62. If the opinion contains reser-vations, the report shall indicate the seriousness of the shortcomings and, where the shortcom-ings do not concern the whole programme, the priority axis or axes concerned. The Member State shall inform the Commission of the correc-tive measures to be taken and the timetable for their implementation and subsequently provide confir mation of the implementation of the meas-ures and the withdrawal of the corresponding reservations.

The report referred to in the first subparagraph shall be deemed to be accepted, and the first interim payment shall be made, in the following circumstances:

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(a) within two months of the date of receipt of the report when the opinion referred to in the first subparagraph is without reservations and in the absence of observations by the Commission;

(b) if the opinion contains reservations, upon confirmation to the Commission that correc-tive measures concerning key elements of the systems have been implemented, and the corresponding reser vations withdrawn, and in the absence of observations by the Commission within two months of the date of confirmation.

Where the reservations concern only a single priority axis, the first interim payment shall be made as regards the other priority axes of the operational programme for which there is no reservation.

3. The report and the opinion referred to in para-graph 2 shall be drawn up by the audit authority or by a public or private body func tionally inde-pendent of the managing and certifying authori-ties, which shall carry out its work taking account of internationally accepted audit standards.

4. Where a common system applies to several operational programmes, a description of the common system may be notified under para-graph 1 accompanied by a single report and opinion under paragraph 2.

5. The implementing rules for paragraphs 1 to 4 shall be adopted by the Commission in accordance with the procedure referred to in Article 103(3).

Section 2 – Responsibilities of the Commission

Article 72 Responsibilities of the Commission

1. The Commission shall satisfy itself in accordance with the procedure laid down in Article 71 that the Member States have set up management and control systems that comply with Articles 58 to 62 and, on the basis of the annual control reports and annual opinion of the audit authority and its own audits, that the systems function effectively during the periods of implementation of opera-tional programmes.

2. Without prejudice to audits carried out by Member States, Commission officials or author-ised Commission representatives may carry out on-the-spot audits to verify the effective func-

tioning of the management and control systems, which may include audits on operations included in operational programmes, with a minimum of 10 working days’ notice, except in urgent cases. Officials or authorised representatives of the Member State may take part in such audits. The implementing rules of this Regulation concerning the use of data collected during audits shall be adopted by the Commission in accordance with the procedure referred to in Article 103(3).

Commission officials or authorised Commission repre-sentatives, duly empowered to carry out on-the-spot audits, 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 Funds.

The aforementioned powers of audit shall not affect the application of national provisions which reserve certain acts for agents specifically designated by national legislation. Authorised Commission represen-tatives shall not take part, inter alia, in home visits or the formal questioning of persons within the frame-work of the national legislation of the Member State concerned. However, they shall have access to infor-mation thus obtained.

3. The Commission may require a Member State to carry out an on-the-spot audit to verify the effec-tive functioning of systems or the correctness of one or more transactions. Commission officials or authorised Commission representatives may take part in such audits.

Article 73 Cooperation with the audit authorities of the

Member States

1. The Commission shall cooperate with the audit authorities of op erational programmes to coor-dinate their respective audit plans and audit methods and shall immediately exchange the results of audits carried out on management and control systems in order to make the best possible use of resources and to avoid unjustified duplica-tion of work.

In order to facilitate this cooperation in cases where a Member State designates several audit authorities, the Member State may designate a coordination body.

The Commission and the audit authorities, and the coordination body, where such a body has been designated, shall meet on a regular basis and at least once a year unless otherwise agreed

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between them in order to examine together the annual control report and opinion presented under Article 62 and to exchange views on other issues relating to the improvement of the management and control of operational programmes.

2. In determining its own audit strategy, the Commis-sion shall identify those operational programmes for which the opinion on the compliance of systems under Article 71(2) is without reserva-tions, or where reservations have been withdrawn following corrective measures, where the audit strategy of the audit authority is satisfactory and where reasonable assurance has been obtained that the management and control systems function effectively on the basis of the results of audits by the Commission and the Member State.

3. For those programmes, the Commission may conclude that it can rely principally on the opinion referred to in Article 62(1)(d)(ii) with regard to the effective functioning of the systems and that it will carry out its own on-the-spot audits only if there is evidence to suggest short comings in the system affecting expenditure certified to the Commission in a year for which an opinion under Article 62(1)(d)(ii) has been provided which contains no reser-vation in respect of such shortcomings.

Where the Commission reaches such a conclu-sion, it shall inform the Member State concerned accordingly. Where there is evidence to suggest shortcomings, it may require the Member State to carry out audits in accordance with Article 72(3) or it may carry out its own audits under Article 72(2).

Section 3 – Proportionality in the control of operational programmes

Article 74 Proportional control arrangements

1. For operational programmes for which the total eligible public expenditure does not exceed EUR 750 million and for which the level of Community co-financing does not exceed 40 % of the total public expenditure:

(a) the audit authority is not required to present to the Commission an audit strategy under Article 62(1)(c);

(b) where the opinion on the compliance of systems under Article 71(2) is without reser-vations, or where reservations have been withdrawn following corrective measures, the Commission may conclude that it can rely principally on the opinion referred to in Article 62(1)(d)(ii) with regard to the effec-tive functioning of the systems and that it will carry out its own on-the-spot audits only if there is evidence to suggest shortcomings in the system affecting expenditure certified to the Commission in a year for which an opinion under Article 62(1)(d)(ii) has been provided which contains no reservation in respect of such shortcomings.

Where the Commission reaches such a conclusion, it shall inform the Member State concerned accordingly. Where there is evidence to suggest shortcomings it may require the Member State to carry out audits in accordance with Article 72(3) or it may carry out its own audits under Article 72(2).

2. For the operational programmes referred to in paragraph 1, a Member State may in addition exer-cise the option to establish according to national rules the bodies and procedures for carrying out:

(a) the functions of the managing authority in relation to the verifi cation of the co-financed products and services and expenditure declared under Article 60(b);

(b) the functions of the certifying authority under Article 61; and

(c) the functions of the audit authority under Article 62.

Where a Member State exercises this option it need not designate a certifying authority and an audit authority under Article 59(1) (b) and (c).

Article 71 shall apply mutatis mutandis.

When the Commission adopts implementing rules for Articles 60, 61 and 62, it shall specify the provisions which shall not apply to opera tional programmes for which the option in this paragraph has been exercised by the Member State concerned.

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CHAPTER I – Financial management

Section 1 – Budget commitments

Article 75 Budget commitments

1. The Community budget commitments in respect of operational programmes (hereinafter budget commitments) shall be effected annually for each Fund and objective during the period between 1 January 2007 and 31 December 2013. The first budget commitment shall be made before the adop-tion by the Commission of the decision approving the operational programme. Each subsequent commitment shall be made, as a general rule, by 30 April each year by the Commission on the basis of the decision to grant a contribution from the Funds referred to in Article 32.

2. Where no payment has been made, the Member State may request, by 30 September of the year n at the latest, the transfer of any commitments in respect of operational programmes related to the national contingency reserve referred to in Article 51 to other opera tional programmes. The Member State shall specify in its request the oper-ational programmes benefiting from that transfer.

Section 2 – Common rules for payments

Article 76 Common rules for payments

1. Payments by the Commission of the contribution from the Funds shall be made in accordance with the budget appropriations. Each payment shall be posted to the earliest open budget commitments of the Fund concerned.

2. Payments shall take the form of pre-financing, interim payments and payment of the final balance. They shall be made to the body desig-nated by the Member State.

3. At the latest by 30 April each year, Member States shall send the Commission a provisional forecast of their likely applications for payment for the current financial year and the subsequent financial year.

4. All exchanges concerning financial transactions between the Commission and the authorities and

bodies designated by the Member States shall be made by electronic means, in accordance with the im plementing rules of this Regulation adopted by the Commission in accordance with the proce-dure referred to in Article 103(3). In cases of force majeure, and in particular of malfunction of the common computerised system or a lack of a lasting connection, Member States may forward statements of expenditure and applications for payment in hard copy.

Article 77 Common rules for calculating interim payments

and payments of the final balance

Interim payments and payments of the final balance shall be calculated by applying the co-financing rate laid down in the decision on the operational programme concerned for each priority axis to the eligible expenditure mentioned under that priority axis in each statement of expenditure certified by the certi-fying authority.

However the Community contribution through the interim payments and payments of the final balance shall not be higher than the public contri bution and the maximum amount of assistance from the Funds for each priority axis as laid down in the decision of the Commission approving the operational programme.

Article 78 Statement of expenditure

1. All statements of expenditure shall include, for each priority axis, the total amount of eligible expenditure, in accordance with Article 56, paid by beneficiaries in implementing the operations and the corre sponding public contribution paid or due to be paid to the beneficiaries according to the conditions governing the public contribu-tion. Expenditure paid by beneficiaries shall be supported by receipted invoices or accounting documents of equivalent probative value, unless otherwise provided in specific Regulations for each Fund.

However, as regards aid schemes within the meaning of Article 87 of the Treaty only, in addition to the conditions set out in the previous subparagraph, the public contribution corresponding to the expenditure included in a statement of expenditure shall have been paid to the beneficiaries by the body granting the aid.

TITLE VIIFINANCIAL MANAGEMENT

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2. By way of derogation from paragraph 1, as regards State aid within the meaning of Article 87 of the Treaty, the statement of expen diture may include advances paid to the beneficiaries by the body granting the aid, under the following cumu-lative conditions:

(a) they shall be subject to a guarantee provided by a bank or other financial institution estab-lished in a Member State;

Point (b) deleted.

(c) they shall be covered by expenditure paid by beneficiaries in im plementing the project and supported by receipted invoices or accounting documents of equivalent proba-tive value at the latest three years after the year of the payment of the advance or on 31 December 2015, whichever earlier; if they are not, the next statement of expenditure shall be corrected accordingly.

A facility provided as a guarantee by a public entity or by the Member State itself shall be considered equiva-lent to a guarantee referred to in point (a) in the first subparagraph.

3. Statements of expenditure shall identify, for each operational programme, the elements referred to in paragraph 1 relating to regions receiving tran-sitional assistance.

4. When, in application of Article 41(3), the Commission refuses to make a financial contri-bution to a major project, the expenditure decla-ration following the adoption of the Commission decision must be rectified accordingly.

5. Where the contribution from the Funds is calcu-lated with reference to public expenditure as provided for in Article 53(1), any information on expenditure other than public expenditure shall not affect the amount due as calculated on the basis of the payment request.

6. By way of derogation from paragraph 1, as regards financial engi neering instruments as defined in Article 44, the statement of expen-diture shall include the total expenditure paid in establishing or contri buting to such funds or holding funds.

However, at the partial or final closure of the opera-tional programme, eligible expenditure shall be the total of:

(a) any payments from urban development funds for investment in public private partnerships or other projects included in an inte grated plan for urban development; or

(b) any payments for investment in enterprises from each of the above-mentioned funds; or

(c) any guarantees provided including amounts committed as guar antees by guarantee funds; and

(d) eligible management costs or fees; and

(e) any loans or guarantees for repayable invest-ments from funds or other incentive schemes providing loans, guarantees for repayable investments, or equivalent instruments, for energy efficiency and use of renewable energy in buildings, including in existing housing.

The co-financing rate shall be applied to the eligible expenditure paid by the beneficiary.

The corresponding statement of expenditure shall be corrected accordingly.

7. Interest generated by payments from operational programmes to funds as defined in Article 44 shall be used to finance any of the following:

(a) urban development projects in the case of urban development funds;

(b) financial engineering instruments for small and medium-sized enter prises;

(c) in the case of funds or other incentive schemes providing loans, guarantees for repayable investments, or equivalent instru-ments, for energy efficiency and use of renewable energy in buildings, including in existing housing.

Resources returned to the operation from invest-ments undertaken by funds as defined in Article 44 or left over after all guarantees have been honoured shall be reused by the competent authorities of the Member States concerned for the benefit of urban development projects, of small and medium-sized enterprises or for energy efficiency and use of renewable energy in buildings, including in existing housing.

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Article 79 Accumulation of pre-financing

and of interim payments

1. The cumulative total of pre-financing and interim payments made shall not exceed 95 % of the contri-bution from the Funds to the oper ational programme.

2. When this ceiling is reached, the certifying authority shall continue transmitting to the Commission any certified statement of expendi-ture on 31 December of year n, as well as the amounts recovered during the year for each Fund, at the latest by the end of February of year n+1.

Article 80 –Wholeness of payment to beneficiaries

Member States shall satisfy themselves that the bodies responsible for making the payments ensure that the beneficiaries receive the total amount of the public contri-bution as quickly as possible and in full. No amount shall be deducted or withheld and no specific charge or other charge with equivalent effect shall be levied that would reduce these amounts for the beneficiaries.

Article 81 Use of the euro

1. Amounts set out in operational programmes submitted by Member States, certified statements of expenditure, applications for payment and expendi-ture mentioned in the annual and final report of implementation shall be denominated in euro.

2. Commission decisions on operational programmes and Commission commitments and payments, shall be denominated and carried out in euro.

3. Member States which have not adopted the euro as their currency on the date of an application for payment shall convert into euro the amounts of expenditure incurred in national currency. This amount shall be converted into euro using the monthly accounting exchange rate of the Commission in the month during which the expenditure was registered in the accounts of the certifying authority of the operational programme concerned. This rate shall be published electroni-cally by the Commission each month.

4. When the euro becomes the currency of a Member State, the conversion procedure set out in paragraph 3 shall continue to apply to all expenditure recorded in the accounts by the certi-fying authority before the date of entry into force of the fixed conversion rate between the national currency and the euro.

Section 3 – Pre-financing

Article 82 Payment

1. Following the Commission decision approving a contribution from the Funds to an operational programme, a single pre-financing amount for the 2007 to 2013 period shall be paid by the Commission to the body designated by the Member State.

The pre-financing amount shall be paid in different instalments as follows:

(a) for Member States of the European Union as constituted before 1 May 2004: in 2007 2 % of the contribution from the Structural Funds to the operational programme, in 2008 3 % of the contri bution from the Structural Funds to the operational programme, and in 2009 2,5 % of the contribution from the Structural Funds to the operational programme;

(b) for Member States that acceded to the Euro-pean Union on or after 1 May 2004: in 2007 2 % of the contribution from the Structural Funds to the operational programme, in 2008 3 % of the contri bution from the Structural Funds to the operational programme and in 2009 4 % of the contribution from the Struc-tural Funds to the operational programme;

(c) if the operational programme falls under the European territorial cooperation objective and at least one of the participants is a Member State that acceded to the European Union on or after 1 May 2004, in 2007 2 % of the contribution from the ERDF to the operational programme, in 2008 3 % of the contribution from the ERDF to the operational programme and in 2009 4 % of the contribution from the ERDF to the operational programme;

(d) for Member States of the European Union as constituted before 1 May 2004, in 2007 2 % of the contribution from the Cohesion Fund to the operational programme, in 2008 3 % of the contri bution from the Cohesion Fund to the operational programme, and in 2009 2,5 % of the contribution from the Cohesion Fund to the operational programme;

(e) for Member States that acceded to the Euro-pean Union on or after 1 May 2004, in 2007 2,5 % of the contribution from the Cohesion Fund to the operational programme, in 2008

54

4 % of the contri bution from the Cohesion Fund to the operational programme, and in 2009 4 % of the contribution from the Cohe-sion Fund to the operational programme;

(f) for Member States that were granted loans in 2009 in accordance with Council Regula-tion (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term assistance for Member States’ balances of payments (18) or for Member States with a decrease in GDP in 2009 of more than 10 % in real terms in comparison to 2008: in 2010, 2 % of the contribution from the Cohesion Fund and 4 % of the contribution from the ESF to the operational programme.

2. The total amount paid as pre-financing shall be reim-bursed to the Commission by the body designated by the Member State if no appli cation for payment under the operational programme is sent within 24 months from the date on which the Commission pays the first instalment of the pre-financing amount.

The total contribution from the Funds to the operational programme shall not be affected by such reimbursement.

For the purpose of applying the criteria referred to in point (f) of the second subparagraph, GDP figures shall be based on Community statistics published in November 2009 (19).

Article 83 Interest

Any interest generated by the pre-financing shall be posted to the oper ational programme concerned, being regarded as a resource for the Member State in the form of a national public contribution, and shall be declared to the Commission at the time of the final closure of the operational programme.

Article 84 Clearance

The amount paid as pre-financing shall be totally cleared from the Commission accounts when the operational programme is closed in accordance with Article 89.

(18) OJ L 53, 23.2.2002, p. 1. (19) European Economic Forecast Autumn 2009 (European

Economy. No 10, 2009; Office for Official Publications of the EC, Luxembourg).

Section 4 – Interim payments

Article 85 Interim payments

Interim payments shall be made for each operational programme. The first interim payment shall be made in accordance with Article 71(2).

Article 86 Acceptability of applications for payment

1. Each interim payment made by the Commission shall be subject to the following conditions being met:

(a) the Commission must have been sent a application for payment and a statement of expenditure in accordance with Article 78;

(b) no more than the maximum amount of assis-tance from the Funds as laid down in the decision of the Commission approving the opera tional programme has been paid by the Commission during the whole period for each priority axis;

(c) the managing authority must have sent the Commission the most recent annual implementation report in accordance with Article 67(1) and (3);

(d) there is no reasoned opinion by the Commission in respect of an infringement under Article 226 of the Treaty as regards the operation(s) for which the expenditure is declared in the appli-cation for payment in question.

2. If one or more of the conditions referred to in para-graph 1 are not met, the Member State and the certi-fying authority shall be informed by the Commission within a period of one month so that the necessary steps can be taken to remedy the situation.

Article 87 Date of presentation of applications for payment

and payment delays

1. The certifying authority shall satisfy itself that requests for interim payments for each opera-tional programme are grouped together and sent to the Commission, as far as possible, on three separate occasions a year. For a payment to be made by the Commission in the current year, the latest date on which a application for payment shall be submitted is 31 October.

55

2. Subject to available funding, and the absence of a suspension of payments in accordance with Article 92, the Commission shall make the interim payment no later than two months after the date on which a application for payment meeting the conditions referred to in Article 86 is registered with the Commission.

Section 5 – Programme closure and payment of final balance

Article 88 Partial closure

1. Partial closure of operational programmes may be made at periods to be determined by the Member State.

Partial closure shall relate to operations completed during the period up to 31 December of the previous year. For the purposes of this Regu lation, an operation shall be deemed completed where the activities under it have been actually carried out and for which all expenditure by the beneficiaries and the corresponding public contribution have been paid.

2. Partial closure shall be made on the condition that the Member State sends the following to the Commission by 31 December of a given year:

(a) a statement of expenditure relating to the operations referred to in paragraph 1;

(b) a declaration for partial closure in accord-ance with Article 62(1)(d)(iii).

3. Any financial corrections made in accordance with Articles 98 and 99 concerning operations subject to partial closure shall be net financial corrections.

However, in cases where irregularities in operations which have been subject to a declaration of partial closure are detected by the Member State, Article 98(2) and (3) shall apply. The statement of expenditure referred to in paragraph 2(a) of this Article shall be adjusted accordingly.

Article 89 Conditions for the payment of the final balance

1. The Commission shall pay the final balance provided that:

(a) the Member State has sent an application for payment comprising the following docu-ments by 31 March 2017:

(i) an application for payment of the final balance and a statement of expenditure in accordance with Article 78;

(ii) the final implementation report for the operational programme, including the information set out in Article 67;

(iii) a closure declaration referred to in Article 62(1)(e); and

(b) there is no reasoned opinion by the Commission in respect of an infringement under Article 226 of the Treaty as regards the operation(s) for which the expenditure is declared in the appli-cation for payment in question.

2. Failure to send any of the documents referred to in paragraph 1 to the Commission shall auto-matically result in the decommitment of the final balance, in accordance with Article 93.

3. The Commission shall inform the Member State of its opinion on the content of the closure decla-ration referred to in paragraph 1(a)(iii) within five months of the date of its receipt. The closure declaration shall be deemed to be accepted in the absence of observations by the Commission within that five-month period.

4. Subject to available funding, the Commission shall pay the final balance within no more than 45 days from the later of the following dates:

(a) the date on which it accepts the final report in accordance with Article 67(4); and

(b) the date on which it accepts the closure declaration referred to in paragraph 1(a)(iii) of this Article.

5. Without prejudice to paragraph 6, the balance of the budgetary commitment shall be decommitted 12 months following the payment. The closure of the operational programme shall be on the date of the earliest of the following three events:

(a) the payment of the final balance determined by the Commission on the basis of the docu-ments referred to in paragraph 1;

56

(b) the sending of a debit note for sums unduly paid by the Commission to the Member State in respect of the operational programme;

(c) the decommitment of the final balance of the budgetary commitment.

The Commission shall inform the Member State about the date of the closure of the operational programme within a deadline of two months.

6. Notwithstanding the results of any audits performed by the Commission or the European Court of Auditors, the final balance paid by the Commission for the operational programme may be amended within nine months of the date on which it is paid or, where there is a negative balance to be reimbursed by the Member State, within nine months of the date on which the debit note is issued. Such amendment of the balance shall not affect the date of the closure of the opera-tional programme as set out in paragraph 5.

Article 90 Availability of documents

1. Without prejudice to the rules governing State aid under Article 87 of the Treaty, the managing authority shall ensure that all the supporting docu-ments regarding expenditure and audits on the opera-tional programme concerned are kept available for the Commission and the Court of Auditors for:

(a) ►C3 a period of three years following the closure of an operational programme as defined in Article 89(5); ◄

(b) a period of three years following the year in which partial closure took place, in the case of documents regarding expenditure and audits on operations referred to in paragraph 2.

These periods shall be interrupted either in the case of legal proceedings or at the duly motivated request of the Commission.

2. The managing authority shall make available to the Commission on request a list of completed operations which have been subject to partial closure under Article 88.

3. The documents shall be kept either in the form of the originals or in versions certified to be in conformity with the originals on commonly accepted data carriers.

Section 6 – Interruption of the payment deadline and suspension of payments

Article 91 Interruption of the payment deadline

1. The payment deadline may be interrupted by the authorising officer by delegation within the meaning of Regulation (EC, Euratom) No 1605/2002 for a maximum period of six months if:

(a) in a report of a national or Community audit body there is evidence to suggest a signifi-cant deficiency in the functioning of the management and control systems;

(b) the authorising officer by delegation has to carry out additional verifications following information coming to his attention alerting him that expenditure in a certified statement of expenditure is linked to a serious irregu-larity which has not been corrected.

2. The Member State and the certifying authority shall be informed immediately of the reasons for the interruption. The interruption shall be ended as soon as the necessary measures have been taken by the Member State.

Article 92 Suspension of payments

1. All or part of the interim payments at the level of priority axes or programmes may be suspended by the Commission where:

(a) there is a serious deficiency in the manage-ment and control system of the programme which affects the reliability of the procedure for certification of payments and for which corrective measures have not been taken; or

(b) expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected; or

(c) there is a serious breach by a Member State of its obligations under Article 70(1) and (2).

2. The Commission may decide to suspend all or part of interim payments after having given the Member State the opportunity to present its observations within a period of two months.

3. The Commission shall end suspension of all or part of interim payments where the Member

57

State has taken the necessary measures to enable the suspension to be lifted. Where the required measures are not taken by the Member State, the Commission may adopt the decision to cancel all or part of the Community contribution to the oper-ational programme in accordance with Article 99.

Section 7 – Automatic decommitment

Article 93 Principles

1. The Commission shall automatically decommit any part of the amount calculated in accordance with the second subparagraph in an operational programme that has not been used for payment of the pre financing or interim payments or for which an application for payment has not been sent in conformity with Article 86 by 31 December of the second year following the year of budget commitment under the programme, with the exception mentioned in paragraph 2.

For the purpose of the automatic decommitment, the Commission shall calculate the amount by adding one sixth of the annual budget commit-ment related to the 2007 total annual contribution to each of the 2008 to 2013 budget commitments.

2. ►C3 For Member States whose GDP from 2001 to 2003 was below 85 % of the EU-25 average in the same period, as listed in Annex III, the deadline referred to in paragraph 1 shall be 31 December ◄ of the third year following the year of the annual budget commitment from 2007 to 2010 under their operational programmes.

This deadline shall also apply to the annual budget commitment from 2007 to 2010 in an operational programme falling under the Euro-pean territorial cooperation objective if at least one of the participants is a Member State referred to in the first subparagraph.

2a. By way of derogation from the first subpara-graph of paragraph 1 and from paragraph 2, the deadlines for automatic decommitment shall not apply to the annual budget commitment related to the 2007 total annual contribution.

3. That part of commitments still open on 31 December 2015 shall be automatically decom-mitted if the Commission has not received an acceptable application for payment for it by 31 March 2017.

4. If this Regulation enters into force after 1 January 2007, the period after which the first automatic decommitment as referred to in paragraph 1 may be made shall be extended, for the first commitment, by the number of months between 1 January 2007 and the date of the first budget commitment.

Article 94 Period of interruption for major projects and aid

schemes

1. Where the Member State submits a major project application which meets all the requirements laid down in Article 40, the amounts potentially concerned by automatic decommitment shall be reduced by the annual amounts concerned by such major projects.

Where the Commission takes a decision to authorise an aid scheme, the amounts potentially concerned by automatic decommitment shall be reduced by the annual amounts concerned by such aid schemes.

2. For the annual amounts referred to in paragraph 1, the starting date for the calculation of the automatic decommitment deadlines referred to in Article 93 shall be the date of the subsequent decision necessary in order to authorise such major projects or aid schemes.

Article 95 Period of interruption for legal proceedings and

administrative appeals

The amount potentially concerned by automatic decom-mitment shall be reduced by the amounts that the certifying authority has not been able to declare to the Commission because of operations suspended by a legal proceeding or an administrative appeal having suspen-sory effect, on condition that the Member State sends the Commission information stating the reasons by 31 December of the second or third year following the year of the budget commitment pursuant to Article 93.

►C3 For that part of commitments still open on 31 December 2015, the time limit referred to in Article 93(3) ◄ shall be interrupted under these same conditions in respect of the amount relating to the oper-ations concerned.

The abovementioned reduction may be requested once if the suspension lasted up to one year or several times corresponding to the number of years between the date of the legal or administrative decision suspending the implementation of the operation and the date of the final legal or administrative decision.

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Article 96 Exceptions to the automatic decommitment

The following shall be disregarded in calculating the automatic decom-mitment:

(a) that part of the budget commitment for which a application for payment has been made but whose reimbursement has been inter rupted or suspended by the Commis-sion on 31 December of the second or third year following the year of the budget commitment pursuant to Article 93 and in accordance with Articles 91 and 92. When the problem resulting in the interruption or suspension has been resolved, the automatic decommitment rule shall be applied to that part of the budget commitment which is concerned;

(b) that part of the budget commitment for which a application for payment has been made but whose reimbursement has been capped in particular due to a lack of budget resources;

(c) that part of the budget commitment for which it has not been possible to make an accept-able application for payment for reasons of force majeure seriously affecting implemen-tation of the operational programme. The national authorities claiming force majeure shall demonstrate its direct consequences on the im plementation of all or part of the operational programme.

Article 97 Procedure

1. The Commission shall inform the Member State and the auth orities concerned in good time when-ever there is a risk of application of automatic decommitment under Article 93. The Commis-sion shall inform the Member State and the authorities concerned of the amount of the auto-matic decommitment resulting from the informa-tion in its possession.

2. The Member State shall have two months from the date of receipt of that information to agree to the amount or submit its observations. The Commission shall carry out the automatic decommitment not later than nine months after the deadline referred to in Article 93.

3. The Fund’s contribution to the operational programme shall be reduced, for the year

concerned, by the amount automatically decom-mitted. The Member State shall produce within two months of the date of decommitment a revised financing plan reflecting the reduced amount of assistance over one or several priority axes of the opera-tional programme. Failing this, the Commis-sion shall reduce the amounts allocated to each priority axis proportionately.

CHAPTER II – Financial corrections

Section 1 – Financial correction by Member States

Article 98 Financial corrections by Member States

1. The Member States shall in the first instance bear the responsi bility for investigating irregulari-ties, acting upon evidence of any major change affecting the nature or the conditions for the implementation or control of operations or oper-ational programmes and making the financial corrections required.

2. The Member State shall make the financial corrections required in connection with the individual or systemic irregularities detected in operations or operational programmes. The corrections made by a Member State shall consist of cancelling all or part of the public contri bution to the operational programme. The Member State shall take into account the nature and gravity of the irregularities and the financial loss to the Funds.

The resources from the Funds released in this way may be reused by the Member State until 31 December 2015 for the operational programme concerned in accordance with the provisions referred to in paragraph 3.

3. The contribution cancelled in accordance with paragraph 2 may not be reused for the operation or operations that were the subject of the correc-tion, nor, where a financial correction is made for a systemic irregularity, for existing operations within the whole or part of the priority axis where the systemic irregularity occurred.

4. In the case of a systemic irregularity, the Member State shall extend its enquiries to cover all opera-tions liable to be affected.

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Section 2 – Financial corrections by the Commission

Article 99 Criteria for the corrections

1. The Commission may make financial correc-tions by cancelling all or part of the Community contribution to an operational programme where, after carrying out the necessary examination, it concludes that:

(a) there is a serious deficiency in the manage-ment and control system of the programme which has put at risk the Community contri-bution already paid to the programme;

(b) expenditure contained in a certified state-ment of expenditure is irregular and has not been corrected by the Member State prior to the opening of the correction procedure under this paragraph;

(c) a Member State has not complied with its obligations under Article 98 prior to the opening of the correction procedure under this paragraph.

2. The Commission shall base its financial correc-tions on individual cases of irregularity identi-fied, taking account of the systemic nature of the irregularity to determine whether a flat-rate or extrapolated correction should be applied.

3. The Commission shall, when deciding the amount of a correction, take account of the nature and gravity of the irregularity and the extent and financial implications of the deficiencies found in the operational programme concerned.

4. Where the Commission bases its position on facts established by auditors other than those of its own services, it shall draw its own conclu-sions regarding the financial consequences after examining the measures taken by the Member State concerned under Article 98(2), the reports supplied under Article 70(1)(b), and any replies from the Member State.

5. When a Member State does not comply with its obligations as referred to in Article 15(4), the Commission may, in relation to the degree of non-compliance with these obligations, make a financial correction by cancelling all or part of the Structural Funds contribution to the Member State concerned.

The rate applicable to the financial correction referred to in this paragraph shall be laid down in the implementing rules of this Regu lation adopted by the Commission in accordance with the procedure referred to in Article 103(3).

Article 100 Procedure

1. Before taking a decision on a financial correc-tion, the Commission shall open the procedure by informing the Member State of its provi sional conclusions and requesting the Member State to submit its comments within two months.

Where the Commission proposes a financial correction on the basis of extrapolation or at a flat rate, the Member State shall be given the oppor-tunity to demonstrate, through an examination of the documen tation concerned, that the actual extent of irregularity was less than the Commis-sion’s assessment. In agreement with the Commis-sion, the Member State may limit the scope of this examination to an appropriate proportion or sample of the documentation concerned. Except in duly justified cases, the time allowed for this examination shall not exceed a further period of two months after the two-month period referred to in the first subparagraph.

2. The Commission shall take account of any evidence supplied by the Member State within the time limits mentioned in paragraph 1.

3. Where the Member State does not accept the provisional conclusions of the Commission, the Member State shall be invited to a hearing by the Commission, in which both sides in cooperation based on the partnership shall make efforts to reach an agreement concerning the observations and the conclusions to be drawn from them.

4. In case of an agreement, the Member State may reuse the Community funds concerned in conformity with the second subpara-graph of Article 98(2).

5. In the absence of agreement, the Commission shall take a decision on the financial correction within six months of the date of the hearing taking account of all information and observa-tions submitted during the course of the proce-dure. If no hearing takes place, the six-month period shall begin to run two months after the date of the letter of invitation sent by the Commission.

60

Article 101 Obligations of Member States

A financial correction by the Commission shall not prejudice the Member State’s obligation to pursue recoveries under Article 98(2) of this Regulation and to recover State aid under Article 87 of the Treaty and under Article 14 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 88 of the EC Treaty (20).

Article 102 Repayment

1. Any repayment due to be made to the general budget of the European Union shall be effected before the due date indicated in the order for recovery drawn up in accordance with Article 72 of Regu lation (EC, Euratom) No 1605/2002. The due date shall be the last day of the second month following the issuing of the order.

2. Any delay in effecting repayment shall give rise to interest on account of late payment, starting on the due date and ending on the date of actual payment. The rate of such interest shall be one-and-a-half percentage points above the rate applied by the European Central Bank in its main refinancing operations on the first working day of the month in which the due date falls.

(20) OJ L 83, 27.3.1999, p. 1. Regulation as amended by the 2003 Act of Accession. Editorial note: the title of Regulation (EC) No 659/1999 has been adjusted to take account of the renum-bering of the Articles of the Treaty establishing the European Community, in accordance of Article 12 of the Treaty of Am-sterdam; the original reference was to Article 93 of the Treaty.

61

CHAPTER I – Coordination committee of the funds

Article 103 Committee procedure

1. The Commission shall be assisted by a coordina-tion committee of the Funds (hereinafter referred to as the Coordination Committee of the Funds).

2. Where reference is made to this paragraph, Articles 3 and 7 of Decision 1999/468/EC shall apply.

3. Where reference is made to this paragraph, Articles 4 and 7 of Decision 1999/468/EC shall apply.

The period referred to in Article 4(3) of Decision 1999/468/EC shall be set at three months.

4. The Coordination Committee of the Funds shall adopt its Rules of Procedure.

5. The EIB and the EIF shall each appoint a non-voting representa tive.

CHAPTER II – Committee under Article 147 of the treaty

Article 104 Committee under Article 147 of the Treaty

1. The Commission shall be assisted by a committee set up under Article 147 of the Treaty (hereinafter referred to as the Committee). The Committee shall be composed of one government representative, one representative of the workers’ organisations and one representative of the employers’ organi-sations from each Member State. The Member of the Commission responsible for chairing the Committee may delegate that responsibility to a senior Commission official.

2. Each Member State shall nominate a representa-tive and an alternate for each representative of each category referred to in paragraph 1. In the absence of one member, the alternate shall be automatically entitled to take part in the proceedings.

3. The members and alternates shall be appointed by the Council, acting on a proposal from the Commission, for a period of three years. They may be reappointed. The Council shall, as regards the composition of the Committee, endeavour to ensure fair representation of the different cate-gories concerned. For the items on the agenda affecting it, the EIB and the EIF may appoint a non-voting representative.

4. The Committee shall:

(a) deliver its opinion on the implementing rules of this Regulation;

(b) deliver opinions on the draft Commission decisions relating to programming in the case of support from the ESF;

(c) be consulted when it deals with the catego-ries of technical assistance measure referred to in Article 45 in the case of support from the ESF and other relevant issues having an impact on the implementation of employ-ment, training and social inclusion stra tegies at EU level relevant to the ESF.

5. The Commission may consult the Committee on questions other than those referred to in para-graph 4.

6. For their adoption, the opinions of the Committee shall require an absolute majority of the votes validly cast. The Commission shall inform the Committee of the manner in which it has taken account of its opinions.

TITLE VIIICOMMITTEES

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Article 105 Transitional provisions

1. This Regulation shall not affect the continua-tion or modification, including the total or partial cancellation, of assistance co-financed by the Structural Funds or of a project co-financed by the Cohesion Fund approved by the Commission on the basis of Regulations (EEC) No 2052/88 (21), (EEC) No 4253/88 (22), (EC) No 1164/94 (23) and (EC) No 1260/1999 or any other legislation which applies to that assistance on 31 December 2006, which shall consequently apply thereafter to that assistance or the projects concerned until their closure.

2. While taking decision on operational programmes, the Commission shall take account of any assistance co-financed by the Structural Funds or of any project co-financed by the Cohe-sion Fund approved by the Council or by the Commission before the entry into force of this Regulation and having financial repercussions during the period covered by those operational programmes.

3. By way of derogation from Articles 31(2), 32(4) and 37(1) of Regulation (EC) No 1260/1999, partial sums committed for assistance co-financed by the ERDF or the ESF approved by the Commission between 1 January 2000 and 31 December 2006 for which the certified state-ment of expenditure actually paid, the final report on im plementation and the statement referred to in Article 38(1)(f) of that Regulation have not been sent to the Commission within15 months after the final date of eligibility of expenditure laid down in the decision granting a contribu-

(21) Council Regulation (EEC) No 2052/88 of 24 June 1988 on the tasks of the Structural Funds and their effectiveness and on coordination of their activities between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ L 185, 15.7.1988, p. 9). Regulation repealed by Regulation (EC) No 1260/1999.

(22) Council Regulation (EEC) No 4253/88 of 19 December 1988, laying down provisions for implementing Regulation (EEC) No 2052/88 as regards coor dination of the activities of the different Structural Funds between themselves and with the operations of the European Investment Bank and the other existing financial instruments (OJ L 374, 31.12.1988, p. 1). Regulation repealed by Regulation (EC) No 1260/1999.

(23) Council Regulation (EC) No 1164/94 of 16 May 1994 establishing a Cohesion Fund (OJ L 130, 25.5.1994, p. 1). Regulation as last amended by the 2003 Act of Accession.

tion from the Funds, shall be automatically decommitted by the Commission not later than 6 months after that deadline, giving rise to the repayment of amounts unduly paid.

Amounts relating to operations or programmes which have been suspended due to legal proceedings or administrative appeals having suspensory effect shall be disregarded in calculating the amount to be auto-matically decommitted.

Article 106 Review clause

The Council shall review this Regulation by 31 December 2013 at the latest in accordance with the procedure laid down in Article 161 of the Treaty.

Article 107 Repeal

Without prejudice to the provisions laid down in Article 105(1) of this Regulation, Regulation (EC) No 1260/1999 is hereby repealed as of 1 January 2007.

References to the repealed Regulation shall be construed as references to this Regulation.

Article 108 Entry into force

This Regulation shall enter into force on the day following its publi cation in the Official Journal of the European Union.

The provisions laid down in Articles 1 to 16, 25 to 28, 32 to 40, 47 to 49, 52 to 54, 56, 58 to 62, 69 to 74, 103 to 105 and 108 shall apply from the date of entry into force of this Regulation only for programmes for the period 2007 to 2013. The other provisions shall apply from 1 January 2007.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

TITLE IXFINAL PROVISIONS

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ANNEX I

Annual breakdown of commitment appropriations for 2007 to 2013

(referred to in Article 18)

(EUR, 2004 prices)

2007 2008 2009 2010 2011 2012 2013

42 863 000 000 43 318 000 000 43 862 000 000 43 860 000 000 44 073 000 000 44 723 000 000 45 342 000 000

▼B

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ANNEX IAnnual breakdown of commitment appropriations for 2007 to 2013

(referred to in Article 18)

64

Allocation method for the regions eligible under the Convergence objective referred to in Article 5(1)

1. Each Member State’s allocation is the sum of the allocations for its indi vidual eligible regions, which are calculated on the basis of relative regional and national prosperity and the unem-ployment rate according to the following steps:

(a) determination of an absolute amount (in euro) obtained by multiplying the popula-tion of the region concerned by the differ-ence between that region’s GDP per capita, measured in purchasing power parities, and the EU-25 average GDP per capita;

(b) application of a percentage to the above absolute amount in order to determine that region’s financial envelope; this percentage is graduated to reflect the relative prosperity, as compared to the EU-25 average, of the Member State in which the eligible region is situated, i.e.:

for regions in Member States whose level of GNI per capita is below 82 % of the Community average: 4,25 %

for regions in Member States whose level of GNI per capita is between 82 % and 99 % of the Community average: 3,36 %

for regions in Member States whose level of GNI per capita is over 99 % of the Community average: 2,67 %;

(c) to the amount obtained under step (b) is added, if applicable, an amount resulting from the allocation of a premium of EUR 700 per unemployed person, applied to the number of persons unemployed in that region exceeding the number that would be unem-ployed if the average unem ployment rate of all the EU convergence regions applied.

Allocation method for the Member States eligible for the Cohesion Fund under Article 5(2)

2. The total theoretical financial envelope for the Cohesion Fund is obtained by multiplying an average per capita aid intensity of EUR 44,70 by the eligible population. Each eligible Member

State’s a priori allocation of the theoretical financial envelope corresponds to a percentage based on its population, surface area and national prosperity and obtained by applying the following steps:

(a) calculation of the arithmetical average of that Member State’s population and surface area shares of the total population and surface area of all the eligible Member States; if, however, a Member State’s share of total population exceeds its share of total surface area by a factor of five or more, reflecting an extremely high population density, only the share of total population will be used for this step;

(b) adjustment of the percentage figures so obtained by a coefficient rep resenting one third of the percentage by which that Member State’s GNI per capita, measured in purchasing power parities, exceeds or falls below the average GNI per capita of all the eligible Member States (average expressed as 100 %).

3. In order to reflect the significant needs in terms of transport and environment infrastructure of the Member States that acceded to the Union on or after 1 May 2004, the share of the Cohe-sion Fund will be set at one third of their total financial allocation (Structural Funds plus Cohe-sion Fund) on average over the period. For the other Member States, their financial envelope will result directly from the allocation method described in paragraph 2.

Allocation method for the Member States and regions eligible under the Regional competitiveness and employment objective referred to in Article 6

4. The share of each Member State concerned is the sum of the shares of its eligible regions, which are determined on the basis of the following criteria, weighted as indicated: total population (weighting 0,5), number of unem ployed people in NUTS level 3 regions with an unemploy-ment rate above the group average (weighting 0,2), number of jobs needed to reach an employ-ment rate of 70 % (weighting 0,15), number of employed people with a low educational level (weighting 0,10), and low population density (weighting 0,05). The shares are then adjusted

ANNEX IIFinancial framework criteria and methodology referred to in Article 18

65

according to relative regional prosperity (for each region, increase or decrease of its total share by + 5 %/-5 % according to whether its GDP per capita is below or above the average GDP per capita for the group). The share of each Member State will not however be less than three-quarters of its share in 2006 of combined funding under Objectives 2 and 3.

Allocation method for the European territorial coop-eration objective referred to in Article 7

5. The allocation of resources among the benefi-ciary Member States (including the contribution from the ERDF to the European Neighbour-hood and Part nership Instrument and the Instru-ment for Pre-Accession Assistance referred to in Article 21(2)) is determined as follows:

(a) for the cross-border component as referred to in Article 7(1), on the basis of the population of the NUTS level 3 regions in terrestrial and maritime border areas, as a share of the total population of all the eligible regions;

(b) for the transnational component as referred to in Article 7(2), on the basis of the total population of the Member State, as a share of the total population of all the Member States concerned.

Allocation method for the Member States and regions eligible for the transitional support referred to in Article 8

6. The allocations under the transitional support referred to in Article 8 will result from the appli-cation of the following parameters:

(a) for the regions defined in Article 8(1), 80 % of their individual 2006 per capita aid inten-sity level in 2007 and a linear reduction thereafter to reach the national average per capita aid intensity level for the Regional competitiveness and employment objective in 2013. To the allocation thus obtained is added, if applicable, an amount resulting from the allocation of a premium of EUR 600 per unemployed person, applied to the number of persons unemployed in that region exceeding the number that would be unem-ployed if the average unem ployment rate of all the EU convergence regions applied.

(b) for the regions defined in Article 8(2), 75 % of their individual 2006 per capita aid inten-sity level in 2007 and a linear reduction

thereafter to reach the national average per capita aid intensity level for the Regional competitiveness and employment objective by 2011. To the allocation thus obtained is added, if applicable, an amount resulting from the allocation of a premium of EUR 600 per unemployed person, applied to the number of persons unemployed in that region exceeding the number that would be unemployed if the average unem ployment rate of all the EU convergence regions applied;

(c) for the Member States defined in Article 8(3), the allocation will be degressive over seven years, with the amount in 2007 being EUR 1,2 billion, in 2008 EUR 850 million, in 2009 EUR 500 million, in 2010 EUR 250 million, in 2011 EUR 200 million, in 2012 EUR 150 million and in 2013 EUR 100 million.

Maximum level of transfers from funds supporting cohesion

7. In order to contribute to the objectives of adequately concentrating cohesion funding on the least developed regions and Member States and reducing disparities in average per capita aid intensities resulting from capping, the maximum level of transfer from the Funds to each indi-vidual Member State pursuant to this Regulation will be as follows:

for Member States whose average 2001 to 2003 GNI per capita (PPS) is under 40 % of the EU-25 average: 3,7893 % of their GDP

for Member States whose average 2001 to 2003 GNI per capita (PPS) is equal to or above 40 % and below 50 % of the EU-25 average: 3,7135 % of their GDP

for Member States whose average 2001 to 2003 GNI per capita (PPS) is equal to or above 50 % and below 55 % of the EU-25 average: 3,6188 % of their GDP

for Member States whose average 2001 to 2003 GNI per capita (PPS) is equal to or above 55 % and below 60 % of the EU-25 average: 3,5240 % of their GDP

for Member States whose average 2001 to 2003 GNI per capita (PPS) is equal to or above 60 % and below 65 % of the EU-25 average: 3,4293 % of their GDP

66

for Member States whose average 2001 to 2003 GNI per capita (PPS) is equal to or above 65 % and below 70 % of the EU-25 average: 3,3346 % of their GDP

for Member States whose average 2001 to 2003 GNI per capita (PPS) is equal to or above 70 % and below 75 % of the EU-25 average: 3,2398 % of their GDP

— thereafter, the maximum level of transfer is reduced by 0,09 percentage points of GDP for each increment of 5 percentage points of average 2001 to 2003 per capita GNI (PPS) as compared to the EU-25 average.

8. The ceilings referred to in paragraph 7 above include the contributions from the ERDF to the financing of the cross-border strand of the Euro-pean Neigh bourhood and Partnership Instrument and of the Instrument for Pre-Accession Assis-tance, and from the part of the EAFRD origi-nating from the Guidance Section of the Euro-pean Agricultural Guidance and Guarantee Fund, and from the EFF.

9. Calculations of GDP by the Commission will be based on the statistics published in April 2005. Indi-vidual national growth rates of GDP for 2007 to 2013, as projected by the Commission in April 2005, will be applied for each Member State separately.

10. If it is established in 2010 that any Member State’s cumulated GDP for the years 2007 to 2009 has diverged by more than ±5 % from the cumulated GDP estimated in according with paragraph 9 above, including as a conse quence of exchange rate changes, the amounts allocated for that period to that Member State pursuant to paragraph 7 will be adjusted accordingly. The total net effect, whether positive or negative, of these adjustments may not exceed EUR 3 billion. In any event, if the net effect is positive, total additional resources will be limited to the level of under-spending against the ceilings for category 1B set out for the years 2007 to 2010 in the Inter-institutional Agreement of 17 May 2006 on budg-etary discipline and sound financial management. Final adjustments will be spread in equal propor-tions over the years 2011 to 2013.

11. In order to reflect the value of the Polish zloty in the reference period, the result of the application of the maximum level of transfer as defined in paragraph 7 for Poland will be multiplied by a coefficient 1,04 for the period up to the review referred to in paragraph 10 (2007 to 2009).

Additional provisions

12. When in a given Member State the phasing-out regions defined in Article 8(1)) represent at least one third of the total population of the regions fully eligible for Objective 1 assistance in 2006, the rates of assistance will be 80 % of their indi-vidual 2006 per capita aid intensity level in 2007, 75 % in 2008, 70 % in 2009, 65 % in 2010, 60 % in 2011, 55 % in 2012 and 50 % in 2013.

13. As far as the transitional arrangements under paragraphs 6(a) and (b) are concerned, the starting point in 2007 for those regions which were not eligible for Objective 1 status in the 2000 to 2006 period, or whose elig ibility started in 2004, will be 90 % of their theoretical 2006 per capita aid intensity level calculated on the basis of the 1999 Berlin allocation method with their regional GDP per capita level being assimilated to 75 % of the EU 15 average.

14. Notwithstanding paragraph 7, the Polish NUTS level 2 regions of Lubelskie, Podkar-packie, Warmihsko-Mazurskie, Podlaskie and Świ^tokrzyskie, whose GDP per capita levels (PPS) are the five lowest in the EU-25, will benefit from funding from the ERDF over and above the funding to which they are otherwise eligible. This additional funding will amount to EUR 107 per inhabitant over the period 2007 to 2013 under the Convergence objective. Any upward adjustment of the amounts allocated to Poland pursuant to paragraph 10 will be net of this additional funding.

15. Notwithstanding paragraph 7, the NUTS level 2 region of Közép-Magyar-ország will be allocated an additional envelope of EUR 140 million over the period 2007 to 2013. For this region the same regulatory provisions would apply as for the regions referred to in Article 8(1)

16. Notwithstanding paragraph 7, the NUTS level 2 region of Prague will be allocated an additional envelope of EUR 200 million over the period 2007 to 2013 under the Regional competitive-ness and employment objective.

17. Cyprus will benefit in 2007 to 2013 from the transitional arrangements applicable to the regions defined in paragraph 6(b), its starting point in 2007 being established in accordance with paragraph 13.

18. The NUTS level 2 regions of Itä-Suomi and Madeira, while keeping the status of phasing-in

67

regions, will benefit from the transitional finan-cial arrangements laid down in paragraph 6(a).

19. The NUTS level 2 region of the Canaries will benefit from an additional envelope of EUR 100 million over the period 2007 to 2013 under the transitional support referred to in Article 8(2).

20. The outermost regions identified in Article 299 of the Treaty and the NUTS level 2 regions fulfilling the criteria laid down in Article 2 of Protocol No 6 to the Treaty of Accession of Austria, Finland and Sweden will, in view of their specific constraints, benefit from additional funding from the ERDF. This funding will amount to EUR 35 per inhabitant per year and will be in addition to any funding for which these regions are otherwise eligible.

21. As far as allocations under the cross-border strand of the European territorial cooperation objective referred to in Article 7(1) are concerned, aid inten-sity for regions along the former external terres-trial borders between the EU-15 and the EU-12 and between the EU-25 and the EU ‘+2’ will be 50 % higher than for the other regions concerned.

22. In recognition of the special effort for the peace process in Northern Ireland, a total of EUR 200 million will be allocated for the PEACE Programme for the period 2007 to 2013. The PEACE programme will be implemented as a cross-border programme within the meaning of Article 3(2)(c) and, in order to promote social and economic stability in the regions concerned, will include, notably, actions to promote cohe-sion between communities. The eligible area will be the whole of Northern Ireland and the border counties of Ireland. This programme will be implemented under the European terri torial cooperation objective in full compliance with additionality of structural fund interventions.

23. The Swedish regions falling under the Regional competitiveness and employment objective will be allocated an additional ERDF envelope of EUR 150 million.

24. Notwithstanding paragraph 7, Estonia, Latvia and Lithuania, which represent single NUTS II regions, will each be allocated additional funding of EUR 35 per inhabitant over the period 2007 to 2013.

25. The Austrian regions falling under the Regional competitiveness and employment objective and situated on the former external borders of the European Union will be allocated an additional ERDF envelope of EUR 150 million. Bavaria

will similarly be allocated an additional envelope of EUR 75 million under the Regional competi-tiveness and employment objective.

26. Spain will benefit from an additional allocation of EUR 2,0 billion under the ERDF to enhance research, development and innovation by and for the benefit of enterprises as set out in Articles 4(1) and 5(1) of Regulation (EC) No 1080/2006. The indicative split will be 70 % for the regions eligible under the Convergence objective referred to in Article 5,5 % for the regions eligible for the transi-tional support referred to in Article 8(1), 10 % for the regions eligible under the Regional competi-tiveness and employment objective referred to in Article 6 and 15 % for the regions eligible for the transitional support referred to in Article 8(2).

27. Ceuta and Melilla will be allocated an addi-tional ERDF envelope of EUR 50 million over the period 2007 to 2013 under the transitional support referred to in Article 8(1).

28. Italy will be allocated an additional envelope of EUR 1,4 billion under the Structural Funds as follows: EUR 828 million for the regions eligible under the Convergence objective referred to in Article 5(1), EUR 111 million for the region eligible for the transitional support referred to in Article 8(1), EUR 251 million for the region eligible for the transitional support referred to in Article 8(2) and EUR 210 million for the regions eligible under the Regional competitiveness and employment objective referred to in Article 6.

29. France will receive an additional allocation of EUR 100 million over the period 2007 to 13 under the Regional competitiveness and employ-ment objective in recognition of the particular circumstances of Corsica (EUR 30 million) and French Hainaut (EUR 70 million).

30. An additional allocation of EUR 167 million will be allocated to the eastern Länder of Germany which are eligible for support under the Convergence objective referred to in Article 5(1). An additional allocation of EUR 58 million will be allocated to the eastern Länder of Germany eligible for the tran-sitional support referred to in Article 8(1).

31. Notwithstanding paragraph 7, an additional ERDF envelope of EUR 300 million is allocated to the European territorial cooperation objective as follows: EUR 200 million to transnational cooperation within the meaning of Article 7(2) and EUR 100 million to interregional coopera-tion within the meaning of Article 7(3).

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▼C4 ANNEX III

Ceilings applicable to co-financing rates

(referred to in Article 53)

Criteria Member States ERDF and ESF

Percentage of eligible expenditure

Cohesion Fund Percentage of eligible

expenditure

1. Member States whose average GDP per capita for the period 2001 to 2003 was below 85 % of the EU-25 average during the same period

Bulgaria, Czech Republic, Estonia, Greece, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Portugal, Romania, Slovenia, Slovakia

85 % for the Convergence and Regional competi­tiveness and employment objectives

85 %

2. Member States other than those under (1) eligible for the tran­sitional regime of the Cohesion Fund on 1 January 2007

Spain 80 % for the Convergence and the phasing-in regions under the Regional compe­titiveness and employment objective 50 % for the Regional competitiveness and employment objective outside phasing-in regions

85 %

3. Member States other than those referred to under 1 and 2

Belgium, Denmark, Germany, France, Ireland, Italy, Luxemburg, the Netherlands, Austria, Finland, Sweden and United Kingdom

75 % for the Convergence objective

—

4. Member States other than those referred to under 1 and 2

Belgium, Denmark, Germany, France, Ireland, Italy, Luxemburg, the Netherlands, Austria, Finland, Sweden and United Kingdom

50 % for the Regional competitiveness and employment objective

—

5. Outermost Regions referred to in Article 299(2) of the Treaty benefiting from the additional allocation for these regions provided for in paragraph 20 of Annex II

Spain, France and Portugal 50 % —

6. Outermost Regions referred to in Article 299(2) of the Treaty

Spain, France and Portugal 85 % under the Convergence and Regional competitiveness and employment objectives

—

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ANNEX IIICeilings applicable to co-financing rates (referred to in Article 53)

►C4

◄

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ANNEX IV

Categories of expenditure

(referred to in Article 9(3))

Objectives: Convergence and Regional competitiveness and employment

Objective: Convergence and regions referred to in Article 8(2) without prejudice to the decision taken in accordance with last subparagraph of Article 5(3) of Regulation (EC) No 1080/2006.

Code Priority themes

Research and technological development (R&TD), innovation and entrepreneurship

01 R&TD activities in research centres

02 R&TD infrastructure (including physical plant, instrumentation and high-speed computer networks linking research centres) and centres of competence in a specific technology

03 Technology transfer and improvement of cooperation networks between small and medium-sized businesses (SMEs), between these and other businesses and universities, post-secondary education establishments of all kinds, regional authorities, research centres and scientific and technological poles (scientific and techno­logical parks, technopoles, etc.)

04 Assistance to R&TD, particularly in SMEs (including access to R&TD services in research centres)

05 Advanced support services for firms and groups of firms

06 Assistance to SMEs for the promotion of environmentally-friendly products and production processes (intro­duction of effective environment managing system, adoption and use of pollution prevention technologies, integration of clean technologies into firm production)

07 Investment in firms directly linked to research and innovation (innovative technologies, establishment of new firms by universities, existing R&TD centres and firms, etc.)

08 Other investment in firms

09 Other measures to stimulate research and innovation and entrepreneurship in SMEs

Information society

10 Telephone infrastructures (including broadband networks)

11 Information and communication technologies (access, security, interoperability, risk-prevention, research, innovation, e-content, etc.)

12 Information and communication technologies (TEN-ICT)

13 Services and applications for the citizen (e-health, e-government, e-learning, e-inclusion, etc.)

14 Services and applications for SMEs (e-commerce, education and training, networking, etc.)

15 Other measures for improving access to and efficient use of ICT by SMEs

Transport

16 Railways

17 Railways (TEN-T)

20 Motorways

21 Motorways (TEN-T)

26 Multimodal transport

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ANNEX IVCategories of expenditure (referred to in Article 9(3))

►C1

70

27 Multimodal transport (TEN-T)

28 Intelligent transport systems

29 Airports

30 Ports

32 Inland waterways (TEN-T)

Energy

34 Electricity (TEN-E)

36 Natural gas (TEN-E)

38 Petroleum products (TEN-E)

39 Renewable energy: wind

40 Renewable energy: solar

41 Renewable energy: biomass

42 Renewable energy: hydroelectric, geothermal and other

43 Energy efficiency, co-generation, energy management

Environmental protection and risk prevention

52 Promotion of clean urban transport

Increasing the adaptability of workers and firms, enterprises and entrepreneurs

62 Development of life-long learning systems and strategies in firms; training and services for employees to step up their adaptability to change; promoting entrepreneurship and innovation

63 Design and dissemination of innovative and more productive ways of organising work

64 Development of specific services for employment, training and support in connection with restructuring of sectors and firms, and development of systems for anticipating economic changes and future requirements in terms of jobs and skills

Improving access to employment and sustainability

65 Modernisation and strengthening of labour market institutions

66 Implementing active and preventive measures on the labour market

67 Measures encouraging active ageing and prolonging working lives

68 Support for self-employment and business start-up

69 Measures to improve access to employment and increase sustainable participation and progress of women in employment to reduce gender-based segregation in the labour market and to reconcile work and private life, such as facilitating access to childcare and care for dependent persons

70 Specific action to increase participation of migrants in employment and thereby strengthen their social integration

Improving the social inclusion of less-favoured persons

71 Pathways to integration and re-entry into employment for disadvantaged people; combating discrimination in accessing and progressing in the labour market and promoting acceptance of diversity at the workplace

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71

Improving human capital

72 Design, introduction and implementation of reforms in education and training systems in order to develop employability, improving the labour market relevance of initial and vocational education and training, updating skills of training personnel with a view to innovation and a knowledge based economy.

73 Measures to increase participation in education and training throughout the life-cycle, including through action to achieve a reduction in early school leaving, gender-based segregation of subjects and increased access to and quality of initial vocational and tertiary education and training

74 Developing human potential in the field of research and innovation, in particular through post-graduate studies and training of researchers, and networking activities between universities, research centres and businesses

▼C1

2006R1083 — EN — 25.06.2010 — 004.001 — 89

◄

Amended by: Official Journal

No page dateRegulation (EC) No 396/2009 of the European Parliament and of the Council of 6 May 2009

L 126 1 21.5.2009

Regulation (EC) No 1081/2006 of the European Parliament

and of the Council of 5 July 2006 on the European Social Fund

and repealing Regulation (EC)

No 1784/1999

(OJ L 210, 31.7.2006, p. 12)

74

REGULATION (EC) No 1081/2006 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 5 July 2006 on the European Social Fund and repealing Regulation (EC) No 1784/1999 ..................................................................................... 75

Article 1 – Subject matter ............................................................................................................... 77Article 2 – Tasks ............................................................................................................................. 77Article 3 – Scope of assistance ....................................................................................................... 77Article 4 – Consistency and concentration of support ................................................................... 79Article 5 – Good governance and partnership ............................................................................... 79Article 6 – Gender equality and equal opportunities ..................................................................... 80Article 7 – Innovation ..................................................................................................................... 80Article 8 – Transnational and interregional actions ....................................................................... 80Article 9 – Technical assistance ...................................................................................................... 80Article 10 – Reports ........................................................................................................................ 80Article 11 – Eligibility of expenditure ............................................................................................ 81Article 12 – Transitional provisions ............................................................................................... 81Article 13 – Repeal ......................................................................................................................... 81Article 14 – Review clause ............................................................................................................. 81Article 15 – Entry in force .............................................................................................................. 81

TABLE OF CONTENTS

75

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 148 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Economic and Social Committee (1),

Having regard to the opinion of the Committee of the Regions (2),

Acting in accordance with the procedure laid down in Article 251 of the Treaty (3),

Whereas:

(1) Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund (4) estab lishes the framework for action by the Structural Funds and the Cohesion Fund and lays down, in particular, the objectives, prin ciples and rules concerning partnership, programming, evaluation and management. It is therefore neces-sary to define the mission of the European Social Fund (ESF) in relation to the tasks prescribed under Article 146 of the Treaty and in the context of the work by Member States and the Commu-nity towards developing a coordinated strategy for employment under Article 125 of the Treaty.

(2) Specific provisions concerning the type of activities which may be financed by the ESF under the objectives set out in Regulation (EC) No 1083/2006 should be laid down.

(3) The ESF should strengthen economic and social cohesion by improving employment opportuni-ties within the framework of the tasks entrusted to the ESF by Article 146 of the Treaty and of

(1) OJ C 234, 22.9.2005, p. 27. (2) OJ C 164, 5.7.2005, p. 48. (3) Opinion of the European Parliament of 6 July 2005 (not yet

published in the Official Journal), Council Common Position of 12 June 2006 (not yet published in the Official Journal) and Position of the European Parliament of 4 July 2006 (not yet published in the Official Journal).

(4) See p. 25 of this Official Journal.

the tasks entrusted to the Structural Funds by Article 159 of the Treaty, in accordance with the provisions of Regulation (EC) No 1083/2006.

(4) This is all the more important in the light of the challenges arising from the enlargement of the Union and the phenomenon of economic globali-sation. In this connection, the importance of the European social model and its modernisation should be acknowledged.

(5) In accordance with Articles 99 and 128 of the Treaty, and with a view to refocusing the Lisbon strategy on growth and jobs, the Council has adopted an integrated package comprising Broad Economic Policy Guidelines and Employment Guidelines, the latter setting out employment objectives, priori-ties and targets. In this regard, the Brussels Euro-pean Council of 22 and 23 March 2005 called for the mobilisation of all appropriate national and Community resources, including cohesion policy.

(6) New lessons have been learnt from the Commu-nity initiative EQUAL, especially in respect of the combination of local, regional, national and European action. These lessons should be integrated into ESF support. Particular atten-tion should be paid to the participation of target groups, the integration of migrants, including those seeking asylum, the identification of policy issues and their subsequent mainstreaming, inno-vation and experimentation techniques, method-ologies for transnational cooperation, outreach to groups marginalised in relation to the labour market, the impact of social issues on the internal market, and access to and management of projects taken on by non governmental organisations.

(7) The ESF should support the policies of Member States which are closely in line with the guide-lines and recommendations under the European Employment Strategy and the relevant objectives of the Community in relation to social inclusion, non-discrimination, the promotion of equality, and education and training, in order to better contribute to the implementation of the objec-tives and targets agreed at the Lisbon European Council of 23 and 24 March 2000 and at the Gote-borg European Council of 15 and 16 June 2001.

(8) The ESF should also act to tackle the relevant dimensions and consequences of demographic

REGULATION (EC) No 1081/2006 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 5 July 2006 on the European Social Fund and repealing Regulation

(EC) No 1784/1999

76

changes in the active population of the Community, in particular through lifelong vocational training.

(9) With a view to better anticipating and managing change and increasing economic growth, employment opportunities for both women and men, and quality and productivity at work under the Regional competitiveness and employment and Convergence objectives, assistance from the ESF should focus, in particular, on improving the adaptability of workers and enterprises, enhancing human capital and access to employ-ment and partici pation in the labour market, reinforcing the social inclusion of disadvantaged people, combating discrimination, encouraging economically inactive persons to enter the labour market and promoting partnerships for reform.

(10) In addition to these priorities, in the least devel-oped regions and Member States, under the Convergence objective and with a view to increasing economic growth, employment oppor-tunities for both women and men, and quality and productivity at work, it is necessary to expand and improve investment in human capital and to improve institutional, administrative and judicial capacity, in particular to prepare and implement reforms and enforce the acquis.

(11) Within the range of these priorities, the selec-tion of ESF inter ventions should be flexible in order to address the specific chal lenges in each Member State, and the types of priority action financed by the ESF should allow for a margin of flexibility to respond to these challenges.

(12) The promotion of innovative transnational and interregional activities is an important dimen-sion which should be integrated in the scope of the ESF. In order to foster cooperation, Member States should programme transnational and inter-regional actions using a horizontal approach or through a dedicated priority axis.

(13) It is necessary to ensure that the action of the ESF is consistent with the policies provided for under the European Employment Strategy and to concentrate ESF support on the implementation of the guide-lines and recommendations under that strategy.

(14) Efficient and effective implementation of actions supported by the ESF depends on good governance and partnership between all relevant territorial and socio-economic actors, and in particular the social partners and other stakeholders, including those at national, regional and local level. The social part-ners have a central role in the broad partnership

for change, and their commitment to strength-ening economic and social cohesion by improving employment and job opportunities is essential. In this context, where employers and workers collectively contribute to financially supporting ESF actions, this financial contribution, although private expenditure, would be included for the purposes of calculating ESF co-financing.

(15) The ESF should support actions in line with the guidelines and relevant recommendations under the European Employment Strategy. However, changes to the guidelines and recommen dations would require the revision of an operational programme only where a Member State, or the Commission in agreement with a Member State, considered that the operational programme should take account of significant socioeconomic changes or take greater or different account of major changes in Community, national or regional priorities, or in the light of evaluations or following implementation difficulties.

(16) The Member States and the Commission are to ensure that the implementation of the priori-ties financed by the ESF under the Convergence and Regional competitiveness and employment objectives contribute to the promotion of equality and the elim ination of inequalities between women and men. A gender main-streaming approach should be combined with specific action to increase the sustainable participation and progress of women in employment.

(17) The ESF should also support technical assis-tance, with a particular focus on encouraging mutual learning through exchanges of experience and dissemination of good practice and on high-lighting the contribution of the ESF to the policy objectives and priorities of the Community in relation to employment and social inclusion.

(18) Regulation (EC) No 1083/2006 provides that rules on eligibility of expenditure are to be established at national level, with certain exceptions for which it is necessary to lay down specific provisions. Specific provisions should therefore be laid down for the exceptions related to the ESF.

(19) In the interest of clarity, Regulation (EC) No 1784/1999 of the European Parliament and of the Council of 12 July 1999 on the European Social Fund (5) should therefore be repealed,

HAVE ADOPTED THIS REGULATION:

(5) OJ L 213, 13.8.1999, p. 5.

77

Article 1 Subject matter

1. This Regulation establishes the tasks of the European Social Fund (ESF), the scope of its assistance, specific provisions and the types of expenditure eligible for assistance.

2. The ESF is governed by Regulation (EC) No 1083/2006 and by this Regulation.

Article 2 Tasks

1. The ESF shall contribute to the priorities of the Community as regards strengthening economic and social cohesion by improving employment and job opportunities, encouraging a high level of employment and more and better jobs. It shall do so by supporting Member States’ policies aiming to achieve full employment and quality and productivity at work, promote social inclusion, including the access of disadvantaged people to employment, and reduce national, regional and local employment disparities.

In particular, the ESF shall support actions in line with measures taken by Member States on the basis of the guidelines adopted under the Euro-pean Employment Strategy, as incorporated into the Integrated Guidelines for Growth and Jobs, and the accompanying recommen dations.

2. In carrying out the tasks referred to in paragraph 1, the ESF shall support the priorities of the Commu-nity as regards the need to reinforce social cohesion, strengthen productivity and competitiveness, and promote economic growth and sustainable develop-ment. In so doing, the ESF shall take into account the relevant priorities and objectives of the Community in the fields of education and training, increasing the participation of economically inactive people in the labour market, combating social exclusion — espe-cially that of disadvantaged groups such as people with disabilities — and promoting equality between women and men and non-discrimination.

Article 3 Scope of assistance

1. Within the framework of the Convergence and Regional competi tiveness and employment objectives, the ESF shall support actions in Member States under the priorities listed below:

(a) increasing adaptability of workers, enterprises and entrepreneurs with a view to improving

the anticipation and positive management of economic change, in particular by promoting:

(i) lifelong learning and increased invest-ment in human resources by enterprises, especially SMEs, and workers, through the development and implementation of systems and strategies, including appren-ticeships, which ensure improved access to training by, in particular, low-skilled and older workers, the development of quali-fications and competences, the dissemi-nation of information and communica-tion technologies, e-learning, eco-friendly technologies and management skills, and the promotion of entrepreneurship and innovation and business start-ups;

(ii) the design and dissemination of innova-tive and more productive forms of work organisation, including better health and safety at work, the identification of future occupational and skills requirements, and the development of specific employment, training and support services, including outplacement, for workers in the context of company and sector restructuring;

(b) enhancing access to employment and the sustainable inclusion in the labour market of job seekers and inactive people, preventing unemployment, in particular long-term and youth unemployment, encouraging active ageing and longer working lives, and increasing participation in the labour market, in particular by promoting:

(i) the modernisation and strengthening of labour market insti tutions, in particular employment services and other relevant initiatives in the context of the strategies of the European Union and the Member States for full employment;

(ii) the implementation of active and preven-tive measures ensuring the early identifica-tion of needs with individual action plans and personalised support, such as tailored training, job search, outplacement and mobility, self-employment and business creation, including cooperative enterprises, incentives to encourage participation in the labour market, flexible measures to keep older workers in employment longer, and measures to reconcile work and private life, such as facilitating access to childcare and care for dependent persons;

78

(iii) mainstreaming and specific action to improve access to employment, increase the sustainable participation and progress of women in employment and reduce gender-based segregation in the labour market, including by addressing the root causes, direct and indirect, of gender pay gaps;

(iv) specific action to increase the partici-pation of migrants in employment and thereby strengthen their social integration and to facilitate geographic and occupa-tional mobility of workers and integra-tion of cross-border labour markets, including through guidance, language training and validation of competences and acquired skills;

(c) reinforcing the social inclusion of disadvan-taged people with a view to their sustainable integration in employment and combating all forms of discrimination in the labour market, in particular by promoting:

(i) pathways to integration and re-entry into employment for disad-vantaged people, such as people experiencing social exclusion, early school leavers, minori-ties, people with disabilities and people providing care for dependent persons, through employ-ability measures, including in the field of the social economy, access to vocational education and training, and accompanying actions and relevant support, community and care services that improve employment opportunities;

(ii) acceptance of diversity in the workplace and the combating of discrimination in accessing and progressing in the labour market, including through awareness-raising, the involvement of local commu-nities and enterprises and the promotion of local employment initiatives;

(d) enhancing human capital, in particular by promoting:

(i) the design and introduction of reforms in education and training systems in order to develop employability, the improvement of the labour market relevance of initial and vocational education and training and the continual updating of the skills of training personnel with a view to innova-tion and a knowledge-based economy;

(ii) networking activities between higher education institutions, research and technological centres and enterprises;

(e) promoting partnerships, pacts and initiatives through networking of relevant stakeholders, such as the social partners and non-govern-mental organisations, at the transnational, national, regional and local levels in order to mobilise for reforms in the field of employ-ment and labour market inclusiveness.

2. Within the framework of the Convergence objec-tive, the ESF shall support actions in Member States under the priorities listed below:

(a) expanding and improving investment in human capital, in particular by promoting:

(i) the implementation of reforms in educa-tion and training systems, especially with a view to raising people’s respon-siveness to the needs of a knowledge-based society and lifelong learning;

(ii) increased participation in education and training throughout the life-cycle, including through actions aiming to achieve a reduction in early school leaving and in gender-based segregation of subjects and increased access to and quality of initial, vocational and tertiary education and training;

(iii) the development of human potential in research and innovation, notably through post-graduate studies and the training of researchers;

(b) strengthening institutional capacity and the efficiency of public administrations and public services at national, regional and local level and, where relevant, of the social partners and non-govern mental organisations, with a view to reforms, better regulation and good governance especially in the economic, employment, education, social, environmental and judicial fields, in particular by promoting:

(i) mechanisms to improve good policy and programme design, monitoring and evaluation, including through studies, statistics and expert advice, support for interdepartmental coordination and dialogue between relevant public and private bodies;

79

(ii) capacity building in the delivery of poli-cies and programmes in the relevant fields, including with regard to the enforce-ment of legislation, especially through continuous managerial and staff training and specific support to key services, inspectorates and socio-economic actors including social and environmental part-ners, relevant non-governmental organ-isations and represen tative professional organisations.

3. Within the priorities referred to in paragraphs 1 and 2, Member States may concentrate on those which are the most appropriate to address their specific challenges.

4. The ESF may support actions set out in Article 3(2) of this Regu lation throughout the territory of the Member States eligible for support or transitional support under the Cohesion Fund, as determined respec tively in Articles 5(2) and 8(3) of Regulation (EC) No 1083/2006.

5. In implementing the objectives and priorities referred to in para graphs 1 and 2, the ESF shall support the promotion and mainstreaming of innovative activities in the Member States.

6. The ESF shall also support transnational and inter-regional actions in particular through the sharing of information, experiences, results and good practices, and through developing complementary approaches and coordinated or joint action.

7. By way of derogation from Article 34(2) of Regu-lation (EC) No 1083/2006, the funding of meas-ures under the social inclusion priority referred to in paragraph 1(c)(i) of this Article and within the scope of Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Devel-opment Fund (6) may be raised to 15 % of the priority axis concerned.

Article 4 Consistency and concentration of support

1. The Member States shall ensure that the actions supported by the ESF are consistent with and contribute to actions undertaken in pursuance of the European Employment Strategy. In partic-ular, they shall ensure that the strategy set out in the national strategic reference framework and the actions set out in the operational programmes

(6) See p. 1 of this Official Journal.

promote the objectives, priorities and targets of the strategy in each Member State within the framework of the national reform programmes and national action plans for social inclusion.

The Member States shall also concentrate support, where the ESF can contribute to poli-cies, on the implementation of the relevant employment recommendations made under Article 128(4) of the Treaty and of the relevant employment-related objectives of the Commu-nity in the fields of social inclusion, education, and training. Member States shall do so in a stable programming environment.

2. Within operational programmes, resources shall be directed towards the most important needs and focus on those policy areas where ESF support can have a significant effect in attaining the objec-tives of the programme. To maximise the effi-ciency of ESF support, operational programmes shall, where appropriate, take particular account of the regions and localities facing the most serious problems, such as deprived urban and outermost regions, declining rural and fisheries-dependent areas, and areas particularly adversely affected by business relocations.

3. Where appropriate, a concise section on the contribution of the ESF to promoting the relevant labour market aspects of social inclusion shall be included in Member States’ national reports under the open method of coordination on social protection and social inclusion.

4. The indicators included in the operational programmes co-financed by the ESF shall be stra-tegic in nature and limited in number and shall reflect those used in the implementation of the European Employment Strategy and in the context of the relevant Community objectives in the fields of social inclusion and education and training.

5. Evaluations undertaken in relation to ESF action shall also assess the contribution of the actions supported by the ESF to the implemen tation of the European Employment Strategy and to the Community objectives in the fields of social inclusion, non-discrimination and equality between women and men, and education and training in the Member State concerned.

Article 5 Good governance and partnership

1. The ESF shall promote good governance and partnership. Its support shall be designed and

80

implemented at the appropriate territorial level taking into account the national, regional and local level according to the institutional arrangements specific to each Member State.

2. The Member States shall ensure the involvement of the social partners and adequate consultation and participation of other stake holders, at the appropriate territorial level, in the preparation, implemen tation and monitoring of ESF support.

3. The managing authority of each operational programme shall encourage adequate participa-tion of the social partners in actions funded under Article 3.

Under the Convergence objective, an appropriate amount of ESF resources shall be allocated to capacity-building, which shall include training, networking measures, strengthening the social dialogue and activities jointly undertaken by the social partners, in particular as regards adapt-ability of workers and enterprises referred to in Article 3(1)(a).

4. The managing authority of each operational programme shall encourage adequate partici-pation and access by non-governmental orga-nisations to the funded activities, notably in the domains of social inclusion, gender equality and equal opportunities.

Article 6 Gender equality and equal opportunities

The Member States shall ensure that operational programmes include a description of how gender equality and equal opportunities are promoted in the preparation, implementation, monitoring and evaluation of operational programmes. Member States shall promote a balanced participation of women and men in the management and implementation of operational programmes at local, regional and national level, as appropriate.

Article 7 Innovation

In the framework of each operational programme, particular attention shall be paid to the promotion and mainstreaming of innovative activities. The managing authority shall choose the themes for the funding of innovation in the context of partnership and shall define the appropriate implementation arrangements. It shall inform the moni toring committee referred to in Article 63 of Regulation (EC) No 1083/2006 of the themes chosen.

Article 8 Transnational and interregional actions

1. Where Member States support actions in favour of transnational and/or interregional actions as set out in Article 3(6) of this Regulation as a specific priority axis within an operational programme, the contri bution from the ESF may be increased by 10 % at the priority axis level. This increased contribution shall not be included in the calcu-lation of the ceilings set out in Article 53 of R egulation (EC) No 1083/2006.

2. Member States shall, with the assistance of the Commission where appropriate, ensure that the ESF does not support specific operations being concurrently supported through other Commu-nity transnational programmes, in particular in the field of education and training.

Article 9 Technical assistance

The Commission shall promote, in particular, exchanges of experience, awareness-raising activities, semi-nars, networking and peer reviews serving to identify and disseminate good practice and encourage mutual learning and transnational and interregional coopera-tion with the aim of enhancing the policy dimension and contribution of the ESF to the Community objectives in relation to employment and social inclusion.

Article 10 Reports

The annual and final implementation reports referred to in Article 67 of Regulation (EC) No 1083/2006 shall contain, where appropriate, a synthesis of the implementation of:

(a) gender mainstreaming as well as of any gender-specific action;

(b) action to increase participation of migrants in employment and thereby strengthen their social integration;

(c) action to strengthen integration in employ-ment and thereby improve the social inclu-sion of minorities;

(d) action to strengthen integration in employment and social inclusion of other disadvantaged groups, including people with disabilities;

(e) innovative activities, including a presenta-tion of the themes and their results, dissemi-nation and mainstreaming;

(f) transnational and/or interregional actions.

81

Article 11 Eligibility of expenditure

1. The ESF shall provide support towards eligible expenditure which, notwithstanding Article 53(1)(b) of Regulation (EC) No 1083/2006 may include any financial resources collectively contributed by employers and workers. The assistance shall take the form of non-reimbursable individual or global grants, reimbursable grants, loan interest rebates, micro-credits, guarantee funds and the purchase of goods and services in compliance with public procurement rules.

2. The following expenditure shall not be eligible for a contribution from the ESF:

(a) recoverable value added tax;

(b) interest on debt;

(c) purchase of furniture, equipment, vehicles, infrastructure, real estate and land.

3. The following costs shall be expenditure eligible for a contribution from the ESF as defined in para-graph 1 provided that they are incurred in accord-ance with national rules, including accountancy rules, and under the specific conditions provided for below:

(a) the allowances or salaries disbursed by a third party for the benefit of the participants in an operation and certified to the beneficiary;

(b) in the case of grants:

(i) indirect costs, declared on a flat-rate basis, of up to 20 % of the direct costs of an operation;

(ii) flat-rate costs calculated by application of standard scales of unit cost as defined by the Member State;

(iii) lump sums to cover all or part of the costs of an operation.

(c) the depreciation costs of depreciable assets listed under paragraph 2(-c), allocated exclu-sively for the duration of an operation, to the extent that public grants have not contributed towards the acqui sition of those assets.

The options referred to in points (i), (ii) and (iii) of point (b) may be combined only where each of them covers a different category of eligible costs

or where they are used for different projects within the same operation.

Costs referred to in points (i), (ii) and (iii) of point (b) shall be estab lished in advance on the basis of a fair, equitable and verifiable calcu lation.

The lump sum referred to in point (iii) of point (b) shall not exceed EUR 50 000.

4. The eligibility rules set out in Article 7 of Regu-lation (EC) No 1080/2006 shall apply to actions co-financed by the ESF which fall within the scope of Article 3 of that Regulation.

Article 12 Transitional provisions

1. This Regulation shall not affect either the contin-uation or modifi cation, including the total or partial cancellation, of assistance approved by the Commission on the basis of Regulation (EC) No 1784/1999 or any other legislation applying to that assistance on 31 December 2006, which shall consequently apply thereafter to that assis-tance or the projects concerned until their closure.

2. Applications made under Regulation (EC) No 1784/1999 shall remain valid.

Article 13 Repeal

1. Without prejudice to the provisions laid down in Article 12 of this Regulation, Regulation (EC) No 1784/1999 is hereby repealed with effect from 1 January 2007.

2. References to the repealed Regulation shall be construed as references to this Regulation.

Article 14 Review clause

The European Parliament and the Council shall review this Regulation by 31 December 2013 in accordance with the procedure laid down in Article 148 of the Treaty.

Article 15 Entry in force

This Regulation shall enter into force on the day following its publi cation in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Amended by: Official Journal

No page dateCommission Regulation (EC) No 846/2009 of 1 September 2009 L 250 1 23.9.2009

Corrected by:C1 Corrigendum, OJ L 45, 15.2.2007, p. 3 (1828/2006)

Commission Regulation (EC) No 1828/2006 of 8 December 2006

setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European

Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC)

No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund

(OJ L 371, 27.12.2006, p. 1)

84

CHAPTER I – Introduction .....................................................................................................................93Article 1 – Subject matter ............................................................................................................... 93

CHAPTER II – Provisions implementing regulation (EC) No 1083/2006 ............................................93Section 1 – Information and publicity ...............................................................................................93

Article 2 – Preparation of the communication plan ....................................................................... 93Article 3 – Examination of compatibility of the communication plan .......................................... 93Article 4 – Implementation and monitoring of the communication plan ...................................... 93Article 5 – Information measures for potential beneficiaries ........................................................ 94Article 6 – Information measures for beneficiaries ........................................................................ 94Article 7 – Responsibilities of the managing authority relating to information

and publicity measures for the public ........................................................................... 95Article 8 – Responsibilities of beneficiaries relating to information

and publicity measures for the public ........................................................................... 95Article 9 – Technical characteristics of information and publicity measures for the operation ... 96Article 10 – Network and exchange of experience ........................................................................ 96

Section 2 – Information on use of the Funds .....................................................................................96Article 11 – Indicative breakdown of use of the Funds ................................................................. 96

Section 3 – Management and control systems ..................................................................................96Article 12 – Intermediate bodies .................................................................................................... 96Article 13 – Managing authority and controllers ........................................................................... 96Article 14 – Accounting records ..................................................................................................... 97Article 15 – Audit trail .................................................................................................................... 97Article 16 – Audits of operations ................................................................................................... 98Article 17 – Sampling ..................................................................................................................... 98Article 18 – Documents presented by the audit authority ............................................................. 99Article 19 – Availability of documents........................................................................................... 99Article 20 – Documents submitted by the certifying authority ................................................... 100Article 21 – Description of management and control systems .................................................... 101Article 22 – Information concerning the managing authority, the certifying authority

and intermediate bodies .............................................................................................. 101Article 23 – Information concerning the audit authority and bodies carrying out audits ........... 101Article 24 – Description of the management and control systems

of the European territorial cooperation objective ....................................................... 102Article 25 – Assessment of management and control systems .................................................... 102Article 26 – Derogations concerning operational programmes referred to in Article 74

of Regulation (EC) No 1083/2006 ............................................................................. 102Section 4 – Irregularities ...................................................................................................................103

Article 27 – Definitions ................................................................................................................ 103Article 28 – Initial reporting — derogations ................................................................................ 103Article 29 – Urgent cases .............................................................................................................. 104Article 30 – Follow-up reporting .................................................................................................. 104Article 31 – Electronic transmission ............................................................................................ 105Article 32 – Reimbursement of judicial costs .............................................................................. 105Article 33 – Co-operation with Member States ........................................................................... 105Article 34 – Use of information ................................................................................................... 105Article 35 is deleted ...................................................................................................................... 105Article 36 – Irregularities under the reporting threshold ............................................................. 105

TABLE OF CONTENTS

85

Section 5 – Personal data ..................................................................................................................106Article 37 – Protection of personal data ....................................................................................... 106

Section 6 – Financial correction for non-respect of additionality .................................................106Article 38 – Rates of financial correction..................................................................................... 106

Section 7 – Electronic exchange of data ...........................................................................................106Article 39 – Computer system for data exchange ........................................................................ 106Article 40 – Content of computer system for data exchange....................................................... 106Article 41 Functioning of computer system for data exchange .................................................. 107Article 42 – Transmission of data through the computer system for data exchange .................. 107

Section 8 – Financial engineering instruments ...............................................................................108Article 43 – General provisions .................................................................................................... 108Article 44 – Holding funds ........................................................................................................... 109Article 45 – Additional provisions applicable to financial engineering instruments

other than holding funds and urban development funds ............................................ 109Article 46 – Urban development funds .........................................................................................110

CHAPTER III – Provisions implementing Regulation (EC) No 1080/2006 ....................................... 110Section 1 – Eligibility of expenditure on housing ...........................................................................110

Article 47 – Interventions in the field of housing .........................................................................110Section 2 – Rules of eligibility applicable to operational programmes for the European territorial cooperation objective ........................................................................110

Article 48 – Rules on eligibility of expenditure ............................................................................110Article 49 – Financial charges and guarantee costs ......................................................................110Article 50 – Expenditure by public authorities relating to the implementation of operations .....111Article 51 – In-kind contributions .................................................................................................111Article 52 – Overheads ..................................................................................................................111Article 53 – Depreciation ..............................................................................................................111

CHAPTER IV – Final provisions ........................................................................................................... 112Article 54 – Repeal ........................................................................................................................112Article 55 – Entry into force ..........................................................................................................112

ANNEX I – INSTRUCTIONS FOR CREATING THE EMBLEM AND A DEFINITION OF THE STANDARD COLOURS ...................................................................................................................... 113

ANNEX II – CATEGORISATION OF FUNDS (1) ASSISTANCE FOR 2007-2013 ......................................... 115

ANNEX III – LIST OF DATA ON OPERATIONS TO BE COMMUNICATED ON REQUEST TO THE COMMISSION FOR THE PURPOSE OF DOCUMENTARY AND ON-THE-SPOT CHECKS PURSUANT TO ARTICLE 14 ................................................................................ 121

ANNEX IV – TECHNICAL PARAMETERS FOR RANDOM STATISTICAL SAMPLING PURSUANT TO Article 17 (SAMPLING) .................................................................................... 123

ANNEX V – MODEL AUDIT STRATEGY PURSUANT TO Article 62(1)(c) OF REGULATION (EC) No 1083/2006 .................................................................................................................... 124

ANNEX VI – MODEL ANNUAL CONTROL REPORT PURSUANT TO Article 62(1) (d)(i) OF COUNCIL REGULATION (EC) No 1083/2006 AND Article 18 (2) OF THE PRESENT REGULATION..... 126

ANNEX VII – MODEL ANNUAL OPINION PURSUANT TO Article 62(1)(d)(ii) OF COUNCIL REGULATION (EC) No 1083/2006 AND Article 18(2) OF THE PRESENT REGULATION ......................................................................................................................... 128

86

ANNEX VIII – MODEL FINAL CONTROL REPORT AND CLOSURE DECLARATION FOR OPERATIONAL PROGRAMMES PURSUANT TO Article 62(1) (e) OF COUNCIL REGULATION (EC) No 1083/2006 AND Article 18 (3) OF THE PRESENT REGULATION .............................................................................................................. 130

ANNEX IX – MODEL DECLARATION FOR THE PARTIAL CLOSURE OF OPERATIONAL PROGRAMMES PURSUANT TO Article 18(5) ................................................................................................ 134

ANNEX X – CERTIFICATE AND STATEMENT OF EXPENDITURE AND APPLICATION FOR INTERIM PAYMENT ................................................................................................................................. 135

ANNEX XI – ANNUAL STATEMENT ON WITHDRAWN AND RECOVERED AMOUNTS, PENDING RECOVERIES AND IRRECOVERABLE AMOUNTS (ARTICLE 20(2)) .................................... 143

ANNEX XII – DESCRIPTION OF MANAGEMENT AND CONTROL SYSTEMS ...................................... 146

ANNEX XIII – MODEL OPINION ISSUED PURSUANT TO Article 71(2) OF COUNCIL REGULATION (EC) No 1083/2006 AND Article 25 OF THE PRESENT REGULATION ON THE COMPLIANCE OF MANAGEMENT AND CONTROL SYSTEMS ................................................................................................. 149

ANNEX XIV – MODEL STATEMENT OF EXPENDITURE FOR A PARTIAL CLOSURE ........................ 150

ANNEX XV – FINANCIAL TABLE FOR THE NATIONAL STRATEGIC REFERENCE FRAMEWORK (NSRF) — INDICATIVE ANNUAL ALLOCATION BY FUND AND OPERATIONAL PROGRAMME (OP) ..................................................................................................... 151

ANNEX XVI – FINANCING PLANS FOR THE OPERATIONAL PROGRAMME ...................................... 153

ANNEX XVII – FORECASTS OF LIKELY PAYMENT APPLICATIONS ..................................................... 155

ANNEX XVIII – ANNUAL AND FINAL REPORTING ................................................................................. 156

ANNEX XIX – OBJECTIVE – EX ANTE VERIFICATION Summary financial table of public or other equivalent structural expenditure in convergence objective regions (in EUR millions, 2006 prices) ............................................................................................................................. 161

ANNEX XX – MAJOR PROJECT STRUCTURED DATA TO BE ENCODED .............................................. 162

ANNEX XXI – MAJOR PROJECT REQUEST FOR CONFIRMATION OF ASSISTANCE UNDER ARTICLES 33 TO 41 OF REGULATION (EC) No 10S3/2006 .......................................................................... 164

ANNEX XXII – MAJOR PROJECT REQUEST FOR CONFIRMATION OF ASSISTANCE UNDER ARTICLES 33 TO 41 OF REGULATION (EC) No 1O83/2D06 ......................................................... 178

ANNEX XXIII – DATA ON PARTICIPANTS IN ESF OPERATIONS BY PRIORITY .................................. 192

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THE COMMISSION OF THE EUROPEAN COMMU-NITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provi-sions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (1), and in particular Article 37(1)(d), the third paragraph of Article 44, Articles 59(6), 60(b) and 66(3), Article 67(2)(c), Articles 69(1), 70(3), 71(5), 72(2), 74(2) and 76(4) and the second subparagraph of Article 99 (5) thereof,

Having regard to Regulation (EC) No 1080/2006 of the European Parliament and of the Council of 5 July 2006 on the European Regional Development Fund and repealing Regulation (EC) No 1783/1999 (2), and in particular the second subparagraph of Article 7(2) and the second paragraph of Article 13 thereof,

Whereas:

(1) Regulation (EC) No 1083/2006 replaces Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds (3), and Regulation (EC) No 1080/2006 replaces Regulation (EC) No 1783/1999 of the European Parliament and of the Council of 12 July 1999 on the European Regional Develop-ment Fund (4), both Regulations taking into account new developments in the field of Struc-tural Funds. It is therefore appropriate also to lay down new provisions implementing Regulations (EC) No 1080/2006 and (EC) No 1083/2006.

(2) Experience has shown that citizens of the European Union are insufficiently aware of the role played by the Community in funding programmes aimed at reinforcing economic competi tiveness, creating jobs and strengthening internal cohesion. It is there-fore appropriate to provide for the preparation of a commu nication plan which identifies in detail the

(1) OJ L 210, 31.7.2006, p. 25. (2) OJ L 210, 31.7.2006, p. 1. (3) OJ L 161, 26.6.1999, p. 1. Regulation as last amended by

Regulation (EC) No 173/2005 (OJ L 29, 2.2.2005, p. 3). (4) OJ L 213, 13.8.1999, p. 1.

information and publicity measures necessary to bridge this communication and information gap. For the same purpose, it is also necessary to iden-tify the responsibilities and the roles that should be played by each of the actors involved.

(3) In order to guarantee that information on possible funding oppor tunities is disseminated widely to all interested parties and for the sake of transparency, the minimum content of the information measures needed to inform potential beneficiaries about the financing opportunities offered jointly by the Community and the Member States through the Funds should be set out, including an obligation to publicise the steps that a potential beneficiary should take to submit an application for funding and the selection criteria that will be used.

(4) In order to enhance transparency regarding use of the Funds, the list of beneficiaries, the names of the operations and the amount of public funding allocated to operations should be published, elec-tronically or otherwise.

(5) In order to ensure a better implementation of the information measures and to allow a better exchange of information between the Member States and the Commission on the infor mation and publicity strategies and results, contact persons responsible for the information and publicity measures should be designated and should participate in appropriate Community networks.

(6) For the purposes of Articles 37 and 67 of Regula-tion (EC) No 1083/2006, it is necessary to lay down detailed rules and categories to allow the Member States to submit to the Commission uniform infor-mation on the programmed use of the Funds, as well as information on the cumulative allocation of the Funds by categories throughout the life of a programme, and to enable the Commission to inform the other Institutions and the citizens of the European Union in an appropriate manner about the use of the Funds, including the achievement of the targets set out in Article 9(3) of Regulation (EC) No 1083/2006.

(7) With regard to Article 60 of Regulation (EC) No 1083/2006 and in the light of the experience gained, it is necessary to lay down the obligations which the managing authorities should have with regard to beneficiaries in the phase leading to the

Commission regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying

down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the

European Parliament and of the Council on the European Regional Development Fund

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selection and approval of the operations to be funded, with regard to the aspects which the veri-fications of the expenditure declared by the bene-ficiary should cover, including administrative verifi cations of the applications for reimburse-ment, and on-the-spot verifications of individual operations and with regard to the conditions to be observed when on-the-spot verifications are carried out on a sample basis.

(8) It is also necessary to set out in detail the informa-tion which should be included in the accounting records of operations and the information to be kept as data on implementation which the managing authorities should record, store and send to the Commission upon request.

(9) In order to ensure that expenditure under opera-tional programmes can be properly audited, it is necessary to set out the criteria with which an audit trail should comply so as to be considered adequate.

(10) The audit of operations is carried out under the responsibility of the audit authority. To ensure that the scope and effectiveness of those audits are adequate and that they are carried out according to the same standards in all Member States, it is necessary to set out the conditions which those audits should fulfil.

(11) Experience has shown that it is necessary to set out in detail the basis for the sampling of opera-tions to be audited, which the audit authority should observe in establishing or approving the sampling method, including certain technical criteria to be used for a random statistical sample and factors to be taken into account for a comple-mentary sample.

(12) In order to simplify and harmonise standards for the preparation and presentation of the audit strategy, the annual control report and the closure declarations for which the audit authority is responsible pursuant to Article 62 of Regula-tion (EC) No 1083/2006, it is necessary to make detailed provision about their content and specify the nature and quality of the information on which they rely.

(13) In order to ensure the most effective appli-cation of Article 90 of Regulation (EC) No 1083/2006 with regard to the availability of documents and the right of the Court of Audi-tors and the Commission to have access to all supporting documents regarding expenditure and audits, managing authorities should ensure

that information on the identity and location of the bodies holding the supporting documents is readily available and those documents should be readily supplied to a minimum list of persons and bodies. For the same purpose, it is necessary to set out which data carriers can be considered as commonly accepted for the purpose of keeping such documents. To this end, the national author-ities should lay down the procedures necessary to ensure that the documents kept are in conformity with the originals, when this is relevant, and can be relied on for audit purposes.

(14) In order to harmonise standards for the certifi-cation of expen diture and for the preparation of applications for payments, the content of such certificates and applications should be laid down and the nature and quality of the information on which they rely specified. Detailed procedures should be set out for keeping, in accordance with Article 61(f) of Regulation (EC) No 1083/2006, an account of amounts recoverable and of amounts withdrawn following cancellation of all or part of the contribution for an operation and for informing the Commission accordingly.

(15) Pursuant to Article 71 of Regulation (EC) No 1083/2006, the Member States are, before the submission of the first interim application for payment or at least within twelve months of the approval of each operational programme, to submit to the Commission a description of the management and control systems, a report setting out the results of an assessment of the systems set up and an opinion on their compliance with the provisions of that Regulation on management and control systems. Since those documents are among the principal elements on which the Commission relies, in the context of the shared management of the Community budget, to satisfy itself that the financial assistance concerned is used by the Member States in accordance with the applicable rules and principles necessary for protecting the Community’s financial interests, it is necessary to set out in detail the information that such documents should contain and the basis for the assessment and the opinion.

(16) Operational programmes funded under the Euro-pean territorial cooperation objective referred to in Article 3 of Regulation (EC) No 1083/2006 are presented by two or more Member States and have specific features, which are laid down in Regu-lation (EC) No 1080/2006. It is therefore appro-priate to set out the specific information which the description of the management and control system for those programmes should contain.

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(17) Article 74 of Regulation (EC) No 1083/2006 provides, inter alia, that for operational programmes for which the total eligible public expenditure does not exceed EUR 750 million and for which the level of Community co-financing does not exceed 40 % of the total public expendi-ture, a Member State may choose to rely more on national bodies and rules for carrying out certain functions related to the control and audit requirements. It is therefore necessary to set out which verifications, which audits of opera-tions and which obligations can be carried out and executed according to national rules and by national bodies.

(18) As part of their management and control obli-gations Member States are required to report and monitor irregularities. Detailed rules to implement that requirement were laid down in Commission Regulation (EC) No 1681/94 of 11 July 1994 concerning irregularities and the recovery of sums wrongly paid in connection with the financing of the structural policies and the organisation of an information system in this field (5), and Commission Regulation (EC) No 1831/94 of 26 July 1994 concerning irregularities and the recovery of sums wrongly paid in connec-tion with the financing of the Cohesion Fund and the organisation of an information system in this field (6). It is appro priate, for reasons of clarity and simplification, to incorporate those rules into this Regulation.

(19) Provision should be made for the Commission to reimburse judicial costs when it requests a Member State to initiate or continue legal proceedings with a view to recovering amounts unduly paid following an irregularity, and for it to be supplied with information enabling it to decide on the apportionment of the loss from irrecoverable amounts pursuant to Article 70(2) of Regulation (EC) No 1083/2006. Regular contact should also be provided for between the Commission and the Member States on the subject of irregularities, for the use of the infor-mation supplied for making risk analyses and compiling reports, and for the provision of infor-mation to the relevant committees.

(20) In order to limit the administrative burden imposed by the reporting system while safe-guarding the necessary level of infor mation,

(5) OJ L 178, 12.7.1994, p. 43. Regulation as amended by Regu-lation (EC) No 2035/2005 (OJ L 328, 15.12.2005, p. 8).

(6) OJ L 191, 27.7.1994, p. 9. Regulation as amended by Regula-tion (EC) No 2168/2005 (OJ L 345, 28.12.2005, p. 15).

Member States should, without prejudice to the obli gations arising directly from Article 61(f) of Regulation (EC) No 1083/2006, not be obliged to report irregularities involving amounts below a certain threshold unless the Commission expressly so requests.

(21) In the light of Directive 95/46/EC of the Euro-pean Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data (7) and Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protec-tion of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (8), it is necessary to provide, in relation to the information and publicity measures and the audit work pursuant to this Regu lation, that the Commission and the Member States should prevent any unauthorised disclosure of or access to personal data, and to specify the purpose for which the Commission and the Member States can process such data.

(22) For reasons of legal certainty and of equal treat-ment of all Member States, it is necessary to fix the rate applicable to the financial correc-tion which the Commission may make when a Member State does not comply with its obligation to maintain in all the regions concerned during the programming period an agreed target level of public or equivalent structural expenditure. For reasons of simplification and proportionality, no financial correction should be applied if the difference between the agreed target level and the level achieved is equal to or less than 3 % of the agreed target level (de minimis threshold); for the same reasons, when the difference between the two levels is higher that 3 % of the agreed target level, the rate should be calculated by subtracting that de minimis threshold.

(23) The use of electronic means for the exchange of information and financial data leads to simpli-fication, increased efficiency and transparency and to savings in time. In order to exploit these advantages fully, while preserving the secu-rity of exchanges, a common computer system should be established as well as a list of docu-ments of common interest to the Commission and the Member States. It is therefore neces-

(7) OJ L 281, 23.11.1995, p. 31. Directive as amended by Regu-lation (EC) No 1882/2003 (OJ L 284, 31.10.2003, p. 1).

(8) OJ L 8, 12.1.2001, p. 1.

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sary to specify the format each document should have and to provide a detailed description of the information such documents should contain. For the same reasons, it is necessary to specify how such a computer system functions with regard to the identification of the party responsible for uploading the documents and any updates thereto.

(24) In the framework of Directive 1999/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures (9), taking account of the level of security and confidentiality required for the financial management of the use of the Funds, of the state of the art and of a cost-benefit analysis, it is necessary to require the use of an electronic signature.

(25) In order to ensure the quick development and proper functioning of the common computer system, the cost of its development should be financed by the budget of European Communi-ties pursuant to Article 45 of Regulation (EC) No 1083/2006, and the costs of the interface with national, regional, and local computer systems should be eligible for a financial contribution from the funds pursuant to Article 46 of the same Regulation.

(26) Building on the experience of the 2000-2006 programming period, it is necessary to set out in detail the conditions which financial engi-neering instruments should fulfil to be funded under an operational programme, it being under-stood that contributions to financial engineering instruments from the operational programme and other public sources, as well as the investments made by financial engineering instruments in individual enter prises, are subject to the rules on State aid including the Community Guidelines on State aid to promote risk capital investments in small and medium- sized enterprises (10).

(27) It is necessary to adopt the list of criteria to be used for iden tifying the areas where expenditure on housing can be eligible for a contribution from the European Regional Development Fund pursuant to Article 7(2) of Regulation (EC) No 1080/2006 and the list of eligible interventions. Given the diversity of the situations prevailing in the Member States concerned, it is appro priate to establish a list of criteria for identifying the areas experi encing or threatened by physical

(9) OJ L 13, 19.1.2000, p. 12. (10) OJ C 194, 18.8.2006, p. 2.

deterioration and social exclusion where invest-ment in housing may be eligible for co-financing. It is also appropriate to set out that, in the case of multi-family housing or housing designated for low-income households or people with special needs, the interventions eligible for co-financing should be those aimed at renovating the common parts of multi-family residential buildings or at deli vering modern social housing of good quality through investing in the renovation and change of use of existing buildings owned by public authorities or non-profit operators.

(28) Article 56(4) of Regulation (EC) No 1083/2006 provides that rules on the eligibility of expendi-ture are to be laid down at national level, subject to the exceptions provided in the specific regu-lations for each Fund. With regard to Article 13 of Regu lation (EC) No 1080/2006, common rules on the eligibility of expenditure should be laid down which are applicable to opera tional programmes under the European territorial coop-eration objective in order to ensure consistency between the rules applicable to projects imple-mented in different Member States. Building upon experience with similar programmes in the programming period 2000-2006, it is appropriate to lay down common rules for the categories of expenditure for which national rules are most likely to differ. In order to reduce the adminis-trative burden on beneficiaries and programme authorities, flat rates for overheads should under certain conditions be eligible.

(29) Regulations (EC) No 1681/94 and (EC) No 1831/94 as well as Commission Regulations (EC) No 1159/2000 of 30 May 2000 on informa-tion and publicity measures to be carried out by the Member States concerning assistance from the Structural Funds (11), (EC) No 1685/2000 of 28 July 2000 laying down detailed rules for the implementation of Council Regulation (EC) No 1260/1999 as regards eligibility of expendi-ture of operations co-financed by the Structural Funds (12), (EC) No 438/2001 of 2 March 2001 laying down detailed rules for the implementa-tion of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the Structural Funds (13), (EC) No 448/2001 of 2 March 2001 laying down detailed rules for the implementation of Council

(11) OJ L 130, 31.5.2000, p. 30. (12) OJ L 193, 29.7.2000, p. 39. Regulation as last amended by

Regulation (EC) No 448/2004 (OJ L 72, 11.3.2004, p. 66). (13) OJ L 63, 3.3.2001, p. 21. Regulation as amended by Regula-

tion (EC) No 2355/2002 (OJ L 351, 28.12.2002, p. 42).

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Regulation (EC) No 1260/1999 as regards the procedure for making financial corrections to assistance granted under the Structural Funds (14), (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the implementation of Council Regulation (EC) No 1164/94 as regards the management and control systems for assis-tance granted from the Cohesion Fund and the procedure for making financial corrections (15), (EC) No 16/2003 of 6 January 2003 laying down special detailed rules for implementing Council Regulation (EC) No 1164/94 as regards eligi-bility of expenditure in the context of measures part-financed by the Cohesion Fund (16) and (EC) No 621/2004 of 1 April 2004 laying down rules for implementing Council Regulation (EC) No 1164/94 as regards information and publicity measures concerning the activities of the Cohe-sion Fund (17) should be repealed.

(30) The measures provided for in this Regulation are in accordance with the opinion of the Coordina-tion Committee of the Funds,

HAS ADOPTED THIS REGULATION:

(14) OJ L 64, 6.3.2001, p. 13. (15) OJ L 201, 31.7.2002, p. 5. (16) OJ L 2, 7.1.2003, p. 7. (17) OJ L 98, 2.4.2004, p. 22.

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CHAPTER I – Introduction

Article 1 Subject matter

This Regulation lays down rules for the implementa-tion of Regulation (EC) No 1083/2006 and Regulation (EC) No 1080/2006 as regards the following:

(a) information and publicity;

(b) information on use of the Funds;

(c) management and control systems;

(d) irregularities;

(e) personal data;

(f) financial corrections for non-respect of addi-tionality;

(g) electronic exchange of data;

(h) financial engineering instruments;

(i) eligibility of housing;

(j) eligibility of operational programmes for the European territorial cooperation objective as referred to in Article 3(2)(c) of Regulation (EC) No 1083/2006.

CHAPTER II – Provisions implementing regulation (EC) No 1083/2006

Section 1 – Information and publicity

Article 2 Preparation of the communication plan

1. A communication plan, as well as any major amendments to it, shall be drawn up by the managing authority for the operational programme for which it is responsible or by the Member State to cover several or all opera-tional programmes co-financed by the European Regional Development Fund (ERDF), the Euro-pean Social Fund (ESF) or the Cohesion Fund.

2. The communication plan shall include at least the following:

(a) the aims and target groups;

(b) the strategy and content of the information and publicity measures to be taken by the

Member State or the managing authority, aimed at potential beneficiaries, beneficiaries and the public, having regard to the added value of Community assistance at national, regional and local level;

(c) the indicative budget for implementation of the plan;

(d) the administrative departments or bodies responsible for implemen tation of the infor-mation and publicity measures;

(e) an indication of how the information and publicity measures are to be evaluated in terms of visibility and awareness of opera-tional programmes and of the role played by the Community.

Article 3 Examination of compatibility

of the communication plan

The Member State or the managing authority shall submit the commu nication plan to the Commission within four months of the date of adoption of the opera-tional programme or, where the communication plan covers two or more operational programmes, of the date of adoption of the last of these operational programmes.

In the absence of observations made by the Commission within two months of receipt of the communication plan, the plan shall be deemed to comply with Article 2(2).

If the Commission sends observations within two months of receipt of the communication plan, the Member State or the managing authority shall within two months send a revised communication plan to the Commission.

In the absence of further observations by the Commis-sion within two months of submission of a revised communication plan, it shall be considered that the communication plan may be implemented.

The Member State or the managing authority shall commence the infor mation and publicity activities provided for in Articles 5, 6 and 7, where relevant, even in the absence of the final version of the communication plan.

Article 4 Implementation and monitoring

of the communication plan

1. The managing authority shall inform the moni-toring committee for each operational programme of the following:

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(a) the communication plan and progress in its implementation;

(b) information and publicity measures carried out;

(c) the means of communication used.

The managing authority shall provide the monitoring committee with examples of such measures.

2. The annual reports and the final report on implementation of an operational programme, referred to in Article 67 of Regulation (EC) No 1083/2006, shall include:

(a) examples of information and publicity meas-ures for the operational programme carried out when implementing the communication plan;

(b) the arrangements for the information and publicity measures referred to in Article 7(2)(d) including, where applicable, the elec-tronic address at which such data may be found;

(c) the content of any major amendments to the communication plan.

The annual implementation report for the year 2010 and the final imple mentation report shall contain a chapter assessing the results of the information and publicity measures in terms of visibility and awareness of operational programmes and of the role played by the Community, as provided for in Article 2(2)(e).

3. The means used for implementing, monitoring and evaluating the communication plan shall be proportional to the information and publicity measures identified in the communication plan.

Article 5 Information measures for potential beneficiaries

1. The managing authority shall, in accordance with the communi cation plan, ensure that the opera-tional programme is disseminated widely, with details of the financial contributions from the Funds concerned, and that it is made available to all interested parties.

It shall in addition ensure that information on the financing opportu nities offered by joint assis-tance from the Community and the Member State

through the operational programme is dissemi-nated as widely as possible.

2. The managing authority shall provide poten-tial beneficiaries with clear and detailed information on at least the following:

(a) the conditions of eligibility to be met in order to qualify for financing under an operational programme;

(b) a description of the procedures for exam-ining applications for funding and of the time periods involved;

(c) the criteria for selecting the operations to be financed;

(d) the contacts at national, regional or local level who can provide information on the operational programmes.

In addition, the managing authority shall inform potential beneficiaries of the publication provided for in Article 7(2)(d).

3. The managing authority shall involve in informa-tion and publicity measures, in accordance with national laws and practices, at least one of the following bodies that can widely disseminate the information listed in paragraph 2:

(a) national, regional and local authorities and development agencies;

(b) trade and professional associations;

(c) economic and social partners;

(d) non-governmental organisations;

(e) organisations representing business;

(f) information centres on Europe as well as Commission represen tations in the Member States;

(g) educational institutions.

Article 6 Information measures for beneficiaries

The managing authority shall inform beneficiaries that acceptance of funding is also an acceptance of their inclusion in the list of benefi ciaries published in accordance with Article 7(2)(d).

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Article 7 Responsibilities of the managing authority relating

to information and publicity measures for the public

1. The managing authority shall ensure that the information and publicity measures are imple-mented in accordance with the communi cation plan and that they aim at the widest possible media coverage using various forms and methods of communication at the appropriate territorial level.

2. The managing authority shall be responsible for organising at least the following information and publicity measures:

(a) a major information activity publicising the launch of an operational programme, even in the absence of the final version of the commu nication plan;

(b) at least one major information activity a year, as set out in the communication plan, presenting the achievements of the opera-tional programme(s) including, where rele-vant, major projects;

(c) flying the flag of the European Union for one week starting 9 May, in front of the premises of each managing authority;

(d) the publication, electronically or otherwise, of the list of benefi ciaries, the names of the operations and the amount of public funding allocated to the operations.

Participants in an operation of the ESF shall not be named.

Article 8 Responsibilities of beneficiaries relating to

information and publicity measures for the public

1. The beneficiary shall be responsible for informing the public, by means of the measures laid down in paragraphs 2, 3 and 4, about the assistance obtained from the Funds.

2. The beneficiary shall put up a permanent explan-atory plaque that is visible and of significant size no later than six months after completion of an operation that fulfils the following conditions:

(a) the total public contribution to the operation exceeds EUR 500 000;

(b) the operation consists in the purchase of a physical object or in the financing of infra-structure or of construction operations.

The plaque shall state the type and name of the operation, in addition to the information referred to in Article 9. The information referred to in Article 9 shall take up at least 25 % of the plaque.

Where it is not possible to place a permanent explanatory plaque on a physical object as referred to in point (b) of the first subpara-graph, other appropriate measures shall be taken in order to publicise the Community contribution.

3. The beneficiary shall, during the implementa-tion of the operation, put up a billboard at the site of each operation which fulfils the following conditions:

(a) the total public contribution to the operation exceeds EUR 500 000;

(b) the operation consists in the financing of infrastructure or of construction operations.

The information referred to in Article 9 shall take up at least 25 % of the billboard.

When the operation is completed, the billboard shall be replaced by the permanent explanatory plaque referred to in paragraph 2.

4. Where an operation receives funding under an operational programme co-financed by the ESF and, in appropriate cases, where an operation receives funding under the ERDF or the Cohe-sion Fund, the beneficiary shall ensure that those taking part in the operation have been informed of that funding.

The beneficiary shall provide clear notice to the effect that the operation being imple-mented has been selected under an operational programme co-financed by the ESF, the ERDF or the Cohesion Fund.

Any document, including any attendance or other certificate, concerning such an operation shall include a statement to the effect that the operational programme was co-financed by the ESF or, where appropriate, the ERDF or the Cohesion Fund.

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Article 9 Technical characteristics of information and

publicity measures for the operation

All information and publicity measures provided by managing autho rities or beneficiaries and aimed at beneficiaries, potential beneficiaries and the public shall include the following:

(a) the emblem of the European Union, in accordance with the graphic standards set out in Annex I, and reference to the Euro-pean Union;

(b) reference to the Fund concerned:

(i) for the ERDF: ‘European Regional Devel-opment Fund’; (ii) for the Cohesion Fund: ‘Cohesion Fund’; (iii) for the ESF: ‘Euro-pean Social Fund’;

(c) a statement chosen by the managing authority, highlighting the added value of the intervention of the Community, and prefer-ably ‘Investing in your future’.

For small promotional objects, points (b) and (c) shall not apply.

Where an information or publicity measure promotes several operations co-financed by more than one Fund, the reference provided for in point (b) of the first para-graph shall not be required.

Article 10 Network and exchange of experience

1. Each managing authority shall designate the contact persons to be responsible for information and publicity and shall inform the Commission accordingly. In addition, Member States may designate a single contact person for all opera-tional programmes.

2. Community networks comprising the persons designated under paragraph 1 may be set up to ensure exchanges of good practice, including the results of implementation of the communica-tion plan, and exchanges of experience in imple-menting the information and publicity measures under this Section.

3. Exchanges of experience in the field of infor-mation and publicity may be supported through technical assistance pursuant to Article 45 of Regulation (EC) No 1083/2006.

Section 2 – Information on use of the Funds

Article 11 Indicative breakdown of use of the Funds

1. Member States shall submit to the Commis-sion the indicative breakdown by category of the programmed use of the Funds at opera tional programme level, as referred to in Article 37(1)(d) of Regulation (EC) No 1083/2006 and Article 12(5) of Regulation (EC) No 1080/2006, in accordance with Parts A and B of Annex II to this Regulation.

2. The annual and final implementation reports referred to in Article 67 of Regulation (EC) No 1083/2006 shall contain updated information at operational programme level on the cumulative allocation of the Funds by categories, as from the start of the opera-tional programme, to the operations selected under the operational programme, presented for each combination of codes, in accordance with Parts A and C of Annex II to this Regulation.

3. The data provided by Member States pursuant to paragraphs 1 and 2 shall be used by the Commis-sion only for information purposes.

Section 3 – Management and control systems

Article 12 Intermediate bodies

Where one or more of the tasks of a managing authority or certifying authority are performed by an interme-diate body, the relevant arrangements shall be formally recorded in writing.

The provisions of this Regulation concerning the managing authority and certifying authority shall apply to the intermediate body.

Article 13 Managing authority and controllers

1. For the purposes of the selection and approval of operations pursuant to Article 60(a) of Regulation (EC) No 1083/2006, the managing authority shall ensure that beneficiaries are informed of the specific conditions concerning the products or services to be delivered under the operation, the financing plan, the time-limit for execution and the financial and other information to be kept and communicated.

It shall satisfy itself that the beneficiary has the capacity to fulfil these conditions before the approval decision is taken.

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2. The verifications to be carried out by the managing authority pursuant to Article 60(b) of Regulation (EC) No 1083/2006, or by the rele-vant controllers designated by Member States in the case of the European territorial cooperation objective programmes pursuant to Article 16 of Regulation (EC) No 1080/2006, shall cover, as appro priate, administrative, financial, technical and physical aspects of operations.

Verifications shall ensure that the expenditure declared is real, that the products or services have been delivered in accordance with the approval decision, that the applications for reimbursement by the bene ficiary are correct and that the opera-tions and expenditure comply with Community and national rules. They shall include procedures to avoid double-financing of expenditure with other Community or national schemes and with other programming periods.

Verifications shall include the following proce-dures:

(a) administrative verifications in respect of each application for reim bursement by bene-ficiaries;

(b) on-the-spot verifications of individual opera-tions.

3. Where on-the-spot verifications pursuant to point (b) of the third subparagraph of paragraph 2 are carried out on a sample basis for an opera-tional programme, the managing authority, or the relevant controllers in the case of European territorial cooperation objective programmes, shall keep records describing and justifying the sampling method and identifying the operations or transactions selected for veri fication.

The managing authority, or the relevant control-lers in the case of European territorial coopera-tion objective programmes, shall determine the size of the sample in order to achieve reasonable assurance as to the legality and regularity of the underlying transactions, having regard to the level of risk identified by the managing authority, or the relevant controllers as appropriate, for the type of beneficiaries and operations concerned. The managing authorities or the relevant control-lers shall review the sampling method each year.

4. The managing authority, or the relevant control-lers in the case of European territorial coop-eration objective programmes, shall establish

written standards and procedures for the verifi-cations carried out pursuant to paragraph 2 and shall keep records for each verification, stating the work performed, the date and the results of the verification, and the measures taken in respect of irregularities detected.

5. Where the managing authority is also a benefi-ciary under the operational programme, arrange-ments for the verifications referred to in para-graphs 2, 3 and 4 shall ensure adequate separation of functions in accordance with Article 58(b) of Regulation (EC) No 1083/2006.

Article 14 Accounting records

1. The accounting records of operations and the data on implemen tation referred to in Article 60(c) of Regulation (EC) No 1083/2006 shall include the information set out in Annex III to this Regulation.

The managing, certifying and audit authorities and the bodies referred to in Article 62(3) of Regulation (EC) No 1083/2006 shall have access to that information.

2. At the written request of the Commission, the Member State shall provide the Commission with the information referred to in paragraph 1 within 15 working days of receipt of the request, or any other agreed period, for the purpose of carrying out documentary and on-the-spot checks.

3. In the accounting records maintained in accord-ance with Article 61(f) of Regulation (EC) No 1083/2006, any amount related to an irregularity reported to the Commission under Article 28 of this Regulation shall be identified by the refer-ence number attributed to that irregularity or by any other adequate method.

Article 15 Audit trail

For the purposes of Article 60(f) of Regulation (EC) No 1083/2006, an audit trail shall be considered adequate where, for the operational programme concerned, it complies with the following criteria:

(a) it permits the aggregate amounts certi-fied to the Commission to be reconciled with the detailed accounting records and supporting documents held by the certi-fying authority, managing authority, inter-

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mediate bodies and beneficiaries as regards operations co-financed under the operational programme;

(b) it permits verification of payment of the public contribution to the beneficiary;

(c) it permits verification of application of the selection criteria estab lished by the monitoring committee for the operational programme;

(d) it contains in respect of each operation, as appropriate, the technical specifications and financing plan, documents concerning the grant approval, documents relating to public procurement procedures, progress reports and reports on verifications and audits carried out.

Article 16 Audits of operations

1. The audits referred to in Article 62(1)(b) of Regulation (EC) No 1083/2006 shall be carried out each 12-month period from 1 July 2008 on a sample of operations selected by a method established or approved by the audit authority in accordance with Article 17 of this Regulation.

The audits shall be carried out on-the-spot on the basis of documen tation and records held by the beneficiary.

2. The audits shall verify that the following condi-tions are fulfilled:

(a) the operation meets the selection criteria for the operational programme, has been imple-mented in accordance with the approval decision and fulfils any applicable condi-tions concerning its functionality and use or the objectives to be attained;

(b) the expenditure declared corresponds to the accounting records and supporting docu-ments held by the beneficiary;

(c) the expenditure declared by the beneficiary is in compliance with Community and national rules;

(d) the public contribution has been paid to the beneficiary in accordance with Article 80 of Regulation (EC) No 1083/2006.

3. Where problems detected appear to be systemic in nature and therefore entail a risk for other opera-tions under the operational programme, the audit authority shall ensure that further examination

is carried out, including additional audits where necessary, to establish the scale of such problems. The necessary preventive and corrective action shall be taken by the relevant authorities.

4. Only expenditure falling within the scope of an audit carried out pursuant to paragraph 1 shall be counted towards the amount of expen diture audited, for the purposes of reporting in the tables in point 9 of Annex VI and point 9 of Annex VIII.

Article 17 Sampling

1. The sample of operations to be audited each year shall in the first instance be based on a random statistical sampling method as set out in para-graphs 2, 3 and 4. Additional operations may be selected as a complementary sample as set out in paragraphs 5 and 6.

2. The method used to select the sample and to draw conclusions from the results shall take account of internationally accepted audit stand-ards and be documented. Having regard to the amount of expen diture, the number and type of operations and other relevant factors, the audit authority shall determine the appropriate statis-tical sampling method to apply. The technical parameters of the sample shall be determined in accordance with Annex IV.

3. The sample to be audited each twelve-month period shall be selected from those operations for which, during the year preceding the year in which the annual control report pursuant to Article 18(2) is communicated to the Commission, expenditure has been declared to the Commission for the oper-ational programme or, where appropriate, for the operational programmes covered by a common management and control system. For the first 12-month period, the audit authority may decide to group the operations for which expenditure has been declared to the Commission in 2007 and 2008 as a basis for the selection of the operations to be audited.

4. The audit authority shall draw conclusions on the basis of the results of the audits relating to expenditure declared to the Commission during the year referred to in paragraph 3 and commu-nicate them to the Commission in the annual control report.

In operational programmes for which the projected error rate is above the materiality level, the audit authority shall analyse its significance

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and take the necessary actions, including making appropriate recommen dations, which will be communicated in the annual control report.

5. The audit authority shall regularly review the coverage provided by the random sample, having regard in particular to the need to have sufficient audit assurance for the declarations to be provided at partial and final closure for each operational programme.

It shall decide on the basis of professional judg-ment whether it is necessary to audit a comple-mentary sample of additional operations in order to take account of specific risk factors identified and to guarantee for each programme sufficient coverage of different types of operation, benefi-ciaries, intermediate bodies and priority axes.

6. The audit authority shall draw conclusions on the basis of the results of the audits of the comple-mentary sample and communicate them to the Commission in the annual control report.

Where the number of detected irregularities is high or where systemic irregularities have been detected, the audit authority shall analyse the significance thereof and take the necessary actions, including making appropriate recom-mendations, which shall be communicated in the annual control report.

The results of the audits on the complementary sample shall be analysed separately from those of the random sample. In particular, irregularities detected in the complementary sample shall not be taken into account when the error rate of the random sample is calculated.

Article 18 Documents presented by the audit authority

1. The audit strategy referred to in Article 62(1)(c) of Regulation (EC) No 1083/2006 shall be established in accordance with the model in Annex V to this Regulation. It shall be updated and reviewed annually and, if necessary, during the course of the year.

2. The annual control report and the opinion referred to in Article 62 (1)(d) of Regulation (EC) No 1083/2006 shall be based on the systems audits and audits of operations carried out pursuant to Article 62(1)(a) and (b) of that Regulation in accordance with the audit strategy and shall be drawn up in accordance with the models set out in Annexes VI and VII to this Regulation.

For European territorial cooperation objective programmes, the annual control report and the opinion shall cover the whole of the programme and all programme expenditure eligible for a contribution from the ERDF.

3. The closure declaration referred to in Article 62(1)(e) of Regu lation (EC) No 1083/2006 shall be based on all the audit work carried out by, or under the responsibility of, the audit authority in accord-ance with the audit strategy. The closure declara-tion and final control report shall be drawn up in accordance with the model set out in Annex VIII to this Regulation.

For European territorial cooperation objec-tive programmes, the closure declaration and final control report shall cover the whole of the programme and all programme expenditure eligible for contribution from the ERDF.

4. If there is a limitation in the scope of examination or if the level of irregular expenditure detected does not allow the provision of an unqua-lified opinion for the annual opinion referred to in Article 62(1)(d) of Regulation (EC) No 1083/2006 or in the closure declaration referred to in point (e) of that Article, the audit authority shall give the reasons and estimate the scale of the problem and its financial impact.

5. In the event of partial closure of an operational programme, the declaration relating to the legality and regularity of the transactions covered by the statement of expenditure referred to in Article 88 of Regulation (EC) No 1083/2006 shall be drawn up by the audit authority in accordance with the model in Annex IX to this Regulation and submitted with the opinion referred to in Article 62(1)(d)(ii) of Regulation (EC) No 1083/2006.

Article 19 Availability of documents

1. For the purposes of Article 90 of Regulation (EC) No 1083/2006, the managing authority shall ensure that a record is available of the identity and location of bodies holding the supporting documents relating to expenditure and audits, which includes all documents required for an adequate audit trail.

2. The managing authority shall ensure that the documents referred to in paragraph 1 are made available for inspection by, and extracts or copies thereof are supplied to, persons and bodies enti-

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tled thereto, including at least authorised staff of the managing authority, certifying authority, intermediate bodies and audit authority and the bodies referred to in Article 62(3) of Regulation (EC) No 1083/2006, and authorised officials of the Community and their authorised represen tatives.

3. The managing authority shall keep information necessary for the purposes of evaluation and reporting, including the information referred to in Article 14, in relation to operations referred to in Article 90(2) of Regulation (EC) No 1083/2006 for the whole of the period referred to in para-graph (1)(a) of that Article.

4. The following at least shall be considered commonly accepted data carriers as referred to in Article 90 of Regulation (EC) No 1083/2006:

(a) photocopies of original documents;(b) microfiches of original documents;(c) electronic versions of original documents;(d) documents existing in electronic version

only.

5. The procedure for certification of conformity of documents held on commonly accepted data carriers with the original document shall be laid down by the national authorities and shall ensure that the versions held comply with national legal requirements and can be relied on for audit purposes.

6. Where documents exist in electronic version only, the computer systems used must meet accepted security standards that ensure that the documents held comply with national legal requirements and can be relied on for audit purposes.

Article 20 Documents submitted

by the certifying authority

1. Certified statements of expenditure and payment applications referred to in Article 61(a) of Regu-lation (EC) No 1083/2006 shall be drawn up in the format in Annex X to this Regulation and transmitted to the Commission.

2. By 31 March 2010 and by 31 March of each year thereafter, the certifying authority shall send a statement to the Commission in the format set out in Annex XI, identifying for each priority axis of the operational programme:

(a) the amounts withdrawn from statements of expenditure submitted during the preceding year following cancellation of all or part of the public contribution for an operation;

(b) the amounts recovered which have been deducted from statements of expenditure submitted during the preceding year;

(c) a statement of amounts to be recovered as at 31 December of the preceding year, classified by the year in which recovery orders were issued;

(d) a list of amounts for which it was established during the preceding year that they cannot be recovered or which are not expected to be recovered, classified by the year in which the recovery orders were issued.

For the purposes of points (a), (b) and (c) of the first subparagraph, aggregate amounts related to irregularities reported to the Commission under Article 28 shall be provided for each priority axis.

For the purposes of point (d) of the first subpar-agraph, any amount related to an irregularity reported to the Commission under Article 28 shall be identified by the reference number of that irregularity or by any other adequate method.

2a. For each amount referred to in point (d) of the first subparagraph of paragraph 2 the certifying authority shall indicate whether it requests the Community share to be borne by the general budget of the European Union.

If, within one year from the date of the submis-sion of the statement, the Commission does not request information for the purposes of Article 70 (2) of Regulation (EC) No 1083/2006, inform the Member State in writing about its intention to open an enquiry in respect of that amount or request that the Member State continue the recovery procedure, the Community share shall be borne by the general budget of the European Union.

The time limit of one year shall not apply in cases of suspected or established fraud.

2b. For the purposes of the statement provided for in paragraph 2, Member States which have not adopted the euro as their currency by the date when the statement is submitted shall convert amounts in national currency into euro using

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the exchange rate referred to in Article 81(3) of Regulation (EC) No 1083/2006. Where the amounts relate to expen diture registered in the accounts of the certifying authority during more than one month, the exchange rate in the month during which expen diture was last registered may be used.

3. In order to proceed to the partial closure of an operational programme, the certifying authority shall send to the Commission a statement of expenditure referred to in Article 88 of Regula-tion (EC) No 1083/2006 in the format set out in Annex XIV to this Regulation.

Article 21 Description of management and control systems

1. The description of the management and control systems for opera tional programmes referred to in Article 71(1) of Regulation (EC) No 1083/2006 shall contain information on the matters referred to in Article 58 of that Regulation in respect of each operational programme, and the informa-tion set out in Articles 22, 23, and, where appli-cable, Article 24 of this Regulation.

That information shall be submitted in accord-ance with the model set out in Annex XII.

2. The description of the management and control systems of opera tional programmes under the European territorial cooperation objective shall be provided by the Member State on whose terri-tory the managing authority is located.

Article 22 Information concerning the managing authority, the certifying authority and intermediate bodies

As regards the managing authority, the certifying authority and each intermediate body, the Member State shall provide to the Commission the following information:

(a) a description of the tasks entrusted to them;

(b) the organisation chart of each of them, a description of the allo cation of tasks between or within their departments, and the indi-cative number of posts allocated;

(c) the procedures for selecting and approving operations;

(d) the procedures by which beneficiaries’ appli-cations for reimbur sement are received, veri-fied and validated, and in particular the rules and procedures laid down for verification purposes in Article 13, and the procedures by which payments to beneficiaries are author-ised, executed and entered in the accounts;

(e) the procedures by which statements of expenditure are drawn up, certified and submitted to the Commission;

(f) reference to the written procedures established for the purposes of points (c), (d) and (e);

(g) eligibility rules laid down by the Member State and applicable to the operational programme;

(h) the system for keeping the detailed accounting records of operations and data on implementation referred to in Article 14(1), under the operational programme.

Article 23 Information concerning the audit authority

and bodies carrying out audits

As regards the audit authority and the bodies referred to in Article 62(3) of Regulation (EC) No 1083/2006, the Member State shall provide to the Commission the following information:

(a) a description of their respective tasks and their inter-relationship, including, where applicable, the relation with the coordination body referred to in Article 73(1) of Regula-tion (EC) No 1083/2006;

(b) the organisation chart of the audit authority and of each of the bodies involved in carrying out audits concerning the opera-tional programme, describing how their independence is ensured, the indicative number of posts allocated and the qualifica-tions or experience required;

(c) the procedures for monitoring the implemen-tation of recommen dations and corrective measures resulting from audit reports;

(d) the procedures, where appropriate, for the supervision by the audit authority of the work of bodies involved in carrying out audits concerning the operational programme;

(e) the procedures for the preparation of the annual control report and closure declarations.

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Article 24 Description of the management and control

systems of the European territorial cooperation objective

In addition to the information set out in Articles 21, 22 and 23, the description of the management and control system shall include the arrangements agreed between the Member States for the following purposes:

(a) to provide the managing authority with access to all the information which it requires to discharge its responsibilities pursuant to Article 60 of Regulation (EC) No 1083/2006 and Article 15 of Regulation (EC) No 1080/2006;

(b) to provide the certifying authority with access to all the information which it requires to discharge its responsibilities pursuant to Article 61 of Regulation (EC) No 1083/2006;

(c) to provide the audit authority with access to all the information which it requires to discharge its responsibilities pursuant to Article 62 of Regulation (EC) No 1083/2006 and Article 14(2) of Regulation (EC) No 1080/2006;

(d) to ensure compliance by the Member States with their obligations as regards the recovery of amounts unduly paid as set out in Article 17 (2) of Regulation (EC) No 1080/2006;

(e) to ensure the legality and regularity of expenditure paid outside the Community and included in the statement of expendi-ture, where the Member States taking part in a programme avail themselves of the flexi-bility allowed by Article 21(3) of Regulation (EC) No 1080/2006, in order to allow the managing authority, the certifying authority and the audit authority to exercise their respon sibilities as regards expenditure paid in third countries and the arrangements for recovering amounts unduly paid relating to irre gularities.

Article 25 Assessment of management and control systems

The report referred to in Article 71(2) of Regulation (EC) No 1083/2006 shall be based on an examina-tion of the systems description, of relevant documents concerning the systems and of the system for keeping accounting records and data on implementation of

operations, and on interviews with the staff in the main bodies considered important by the audit authority or other body responsible for the report in order to complete, clarify or verify the information.

The opinion referred to in Article 71(2) of Regulation (EC) No 1083/2006 shall be drawn up in accordance with the model set out in Annex XIII to this Regulation.

Where the management and control systems concerned are essentially the same as those in place for assistance approved pursuant to Regu lation (EC) No 1260/1999, account may be taken of the results of audits carried out by national and Community auditors in relation to those systems for the purpose of establishing the report and opinion pursuant to Article 71(2) of Regulation (EC) No 1083/2006.

Article 26 Derogations concerning operational programmes

referred to in Article 74 of Regulation (EC) No 1083/2006

1. For operational programmes in respect of which a Member State has exercised the option referred to in the first subparagraph of Article 74(2) of Regulation (EC) No 1083/2006, paragraphs 2 to 5 of this Article shall apply.

2. The verifications referred to in Article 13(2) of this Regulation shall be carried out by the national body referred to in Article 74(2) of Regulation (EC) No 1083/2006.

3. The audits of operations referred to in point (b) of Article 62(1) of Regulation (EC) No 1083/2006 shall be carried out in accordance with national procedures. Articles 16 and 17 of this Regulation shall not apply.

4. Article 18(2) to (5) of this Regulation shall apply, mutatis mutandis, to the preparation of the docu-ments issued by the national body referred to in Article 74(2) of Regulation (EC) No 1083/2006.

5. The annual control report and the annual opinion shall be drawn up following, as appropriate, the models set out in Annexes VI and VII to this Regulation.

The obligations laid down in Article 20(2) of this Regulation shall be carried out by the national body referred to in Article 74(2) of Regu lation (EC) No 1083/2006.

The statement of expenditure shall be drawn up following the models set out in Annexes X and XIV to this Regulation.

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6. The information to be included in the description of the management and control systems referred to in Articles 21(1), 22 and 23 of this Regulation shall, where applicable, include the infor mation concerning the national bodies referred to in Article 74(2) of Regulation (EC) No 1083/2006.

Section 4 – Irregularities

Article 27 Definitions

For the purposes of this section, the following defini-tions shall apply:

(a) ‘economic operator’ means any natural or legal person or other entity taking part in the implementation of assistance from the Funds, with the exception of a Member State exercising its prero gatives as a public authority;

(b) ‘primary administrative or judicial finding’ means a first written assessment by a compe-tent authority, either administrative or judi-cial, concluding on the basis of specific facts that an irregularity has been committed, without prejudice to the possibility that this conclusion may subsequently have to be revised or withdrawn as a result of develop-ments in the course of the administrative or judicial procedure;

(c) ‘suspected fraud’ means an irregularity giving rise to the initiation of administrative or judi-cial proceedings at national level in order to establish the presence of intentional behav-iour, in particular fraud, as referred to in Article 1(1)(a) of the Convention drawn up on the basis of Article K.3 of the Treaty on Euro-pean Union, on the protection of the European Communities’ financial interests (18);

(d) ‘bankruptcy’ means insolvency proceedings within the meaning of Article 2(a) of Council Regulation (EC) No 1346/2000 (19).

Article 28 Initial reporting — derogations

1. Without prejudice to the other obligations pursuant to Article 70 of Regulation (EC) No 1083/2006, within two months following the end of each quarter, Member States shall report to the

(18) OJ C 316, 27.11.1995, p. 49. (19) OJ L 160, 30.6.2000, p. 1.

Commission any irregularities which have been the subject of a primary administrative or judicial finding.

In that report Member States shall in all cases give details concerning the following:

(a) the Fund, objective, operational programme, priority axis and operation concerned and the Common Identification Code (CCI) number;

(b) the provision which has been infringed;

(c) the date and source of the first information leading to suspicion that an irregularity has been committed;

(d) the practices employed in committing the irregularity;

(e) where appropriate, whether the practice gives rise to a suspicion of fraud;

(f) the manner in which the irregularity was discovered;

(g) where appropriate, the Member States and third countries involved;

(h) the period during which, or the moment at which, the irregularity was committed;

(i) the national authorities or bodies which drew up the official report on the irregularity and the authorities responsible for administrative or judicial follow-up;

(j) the date on which the primary administrative or judicial finding on the irregularity was established;

(k) the identity of the natural and legal persons involved or of any other participating enti-ties, except where this information is irre-levant for the purposes of combating irregu-larities, given the nature of the irregularity concerned;

(l) the total eligible expenditure and the public contribution approved for the operation together with the corresponding amount of the Community contribution calculated by application of the co-financing rate of the priority axis;

(m) the expenditure and the public contribu-tion certified to the Commission which are

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affected by the irregularity and the corre-sponding amount of the Community contri-bution at risk calculated by application of the co-financing rate of the priority axis;

(n) in case of a suspected fraud and where no payment of the public contribution has been made to the persons or other entities iden-tified pursuant to point (k), the amounts which would have been unduly paid had the irregularity not been identified;

(o) the code of region or area where the operation has been located or carried out, by specifying the NUTS level or otherwise;

(p) the nature of the irregular expenditure.

2. By way of derogation from paragraph 1, the following cases need not be reported:

(a) cases where the irregularity consists solely in the failure to execute, in whole or in part, an operation included in the co-financed opera-tional programme owing to the bankruptcy of the beneficiary;

(b) cases brought to the attention of the managing authority or certifying authority by the beneficiary voluntarily and before detection by either of them, whether before or after the inclusion of the expenditure concerned in a certified statement submitted to the Commission;

(c) cases which are detected and corrected by the managing authority or certifying authority before inclusion of the expendi-ture concerned in a statement of expenditure submitted to the Commission.

However, irregularities preceding a bankruptcy and cases of suspected fraud must be reported.

3. Where some of the information referred to in paragraph 1, and in particular information concerning the practices employed in commit-ting the irregularity and the manner in which it was discovered, is not available or needs to be rectified, Member States shall as far as possible supply the missing or correct information when forwarding subsequent quarterly reports of irreg-ularities to the Commission.

4. Irregularities relating to operational programmes under the European territorial cooperation objective shall be reported by

the Member State in which the expenditure is paid by the beneficiary in implementing the operation. The Member State shall at the same time inform the managing authority, the certi-fying authority for the programme and the audit authority.

5. If national provisions provide for the confiden-tiality of investi gations, communication of the information shall be subject to the authorisation of the competent court or tribunal.

6. Where a Member State has no irregularities to report pursuant to paragraph 1, it shall inform the Commission of that fact within the time limit set out in that paragraph.

Article 29 Urgent cases

Each Member State shall immediately report to the Commission and, where necessary, to the other Member States concerned, any irregula rities discov-ered or supposed to have occurred, where it is feared that they may very quickly have repercussions outside its territory or they show that a new malpractice has been employed.

Article 30 Follow-up reporting

1. In addition to the information referred to in Article 28(1), Member States shall provide the Commission within two months following the end of each quarter, with reference to any previous report made pursuant to that Article, with details concerning the initiation, conclusion or abandonment of any procedures for imposing adminis trative or criminal penalties related to the reported irregularities as well as of the outcome of such procedures.

With regard to irregularities for which penalties have been imposed, Member States shall also indicate the following:

(a) whether the penalties are of an administra-tive or a criminal nature;

(b) whether the penalties result from a breach of Community or national law;

(c) the provisions in which the penalties are laid down;

(d) whether fraud was established.

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2. At the written request of the Commission, the Member State shall provide information in relation to a specific irregularity or group of irregularities.

Article 31 Electronic transmission

The information referred to in Articles 28, 29 and 30(1) shall be sent, whenever it is possible to do so, by electronic means, using the module provided by the Commission for this purpose via a secure connection.

Article 32 Reimbursement of judicial costs

Where the competent authorities of a Member State decide, at the express request of the Commission, to initiate or continue judicial proceedings with a view to recovering amounts unduly paid, the Commission may undertake to reimburse to the Member State all or part of the judicial costs and costs arising directly from the proceedings, on presentation of documentary evidence, even if the proceedings are unsuccessful.

Article 33 Co-operation with Member States

1. The Commission shall maintain appropriate contacts with the Member States concerned for the purpose of supplementing the infor-mation supplied on the irregularities referred to in Article 28, on the procedures referred to in Article 30, and, in particular, on the possibility of recovery.

2. Without prejudice to the contacts referred to in paragraph 1, where the Commission considers that, due to the nature of the irregularity, identical or similar practices could occur in other Member States, it shall submit the matter to the advisory Committee for the Coordination of Fraud Preven-tion set up by Commission Decision 94/140/EC (20).

The Commission shall, each year, inform that Committee and the committees referred to in Articles 103 and 104 of Regulation (EC) No 1083/2006 of the order of magnitude of the Funds affected by the irregularities which have been discovered and of the various categories of irregularities, broken down by type and number.

(20) OJ L 61, 4.3.1994, p. 27.

3. The Commission shall organise information meet-ings at Community level for representatives of the Member States in order to examine with them the information obtained pursuant to Articles 28, 29 and 30, and paragraph 1 of this Article. The exami-nation shall focus on the lessons to be learned from the information in connection with irre gularities, preventive measures and judicial proceedings.

4. At the request of a Member State or of the Commission, the Member States and the Commission shall consult one another for the purpose of closing any loopholes preju-dicial to Community interests, which become apparent in the course of the enforcement of provisions in force.

Article 34 Use of information

The Commission may use any information of a general or operational nature communicated by Member States under this Regulation to perform risk analyses and may, on the basis of the information obtained, produce reports and develop early-warning systems serving to identify risks more effectively.

Article 35 is deleted.

Article 36 Irregularities under the reporting threshold

1. Where the irregularities relate to amounts of less than EUR 10 000 chargeable to the general budget of the European Communities, Member States shall not send the Commission the infor-mation provided for in Articles 28 and 30, unless the Commission expressly requests it.

The second and third subparagraphs are deleted.

2. Member States which have not adopted the euro as their currency by the date when the report under Article 28(1) is submitted shall convert amounts in national currency into euro using the exchange rate referred to in Article 81(3) of Regulation (EC) No 1083/2006.

Where the amounts relate to expenditure regis-tered in the accounts of the certifying authority during a period of more than one month, the exchange rate in the month during which expend-iture was last registered may be used. Where the expenditure has not been registered in the accounts of the certifying authority, the most recent accounting exchange rate published elec-tronically by the Commission shall be used.

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Section 5 – Personal data

Article 37 Protection of personal data

1. Member States and the Commission shall take all necessary measures to prevent any unauthor-ised disclosure of, or access to, the information referred to in Article 14(1), information collected by the Commission in the course of its audits and information referred to in Section 4.

2. The information referred to in Article 14(1), together with infor mation collected by the Commission in the course of its audits, shall be used by the Commission for the sole purpose of fulfilling its responsibilities pursuant to Article 72 of Regulation (EC) No 1083/2006. The European Court of Auditors and the Euro-pean Anti-Fraud Office shall have access to that information.

3. The information referred to in Section 4 may not be sent to persons other than those in the Member States or within the Community institutions whose duties require that they have access to it, unless the Member State supplying such infor-mation has expressly so agreed.

4. Any personal data included in the information referred to in Article 7(2) (d) shall be processed only for the purpose specified in that Article.

Section 6 – Financial correction for non-respect of additionality

Article 38 Rates of financial correction

1. Where the Commission makes a financial correction in accordance with Article 99(5) of Regulation (EC) No 1083/2006, the correction shall be calculated in accordance with para-graph 2 of this Article.

2. The rate of financial correction shall be obtained by subtracting 3 percentage points from the difference between the agreed target level and the level achieved, expressed as a percentage of the agreed target level, and then dividing the result by 10.

The financial correction shall be determined by applying that rate of financial correction to the Structural Fund contribution to the Member State concerned under the convergence objective for the full programming period.

3. If the difference between the agreed target level and the level achieved, expressed as a percentage of the agreed target level, referred to in paragraph 2, is 3 % or less, no financial correction shall be made.

4. The financial correction shall not exceed 5 % of the Structural Fund allocation to the Member State concerned under the convergence objective for the full programming period.

Section 7 – Electronic exchange of data

Article 39 Computer system for data exchange

For the purposes of Articles 66 and 76 of Regulation (EC) No 1083/2006, a computer system for exchange of data shall be estab lished as a tool for the exchange of all data relating to the operational programme.

The exchange of data between each Member State and the Commission shall be carried out using a computer system established by the Commission which permits the secure exchange of data between the Commission and each Member State.

The Member States shall be involved in the further development of the computer system for data exchange.

Article 40 Content of computer system for data exchange

1. The computer system for data exchange shall contain information of common interest to the Commission and the Member States, and at least the following data necessary for financial transactions:

(a) the indicative annual allocation of each Fund in each operational programme, as set out in the national strategic reference framework, in accordance with the model set out in Annex XV;

(b) the financing plans for operational programmes, in accordance with the model set out in Annex XVI;

(c) statements of expenditure and applications for payment, in accordance with the model set out in Annex X;

(d) annual forecasts of likely payment of expenditure, in accordance with the model set out in Annex XVII;

(e) the financial section of the annual reports and final implementation reports, in accordance with the model set out in Annex XVIII, point 2.1.

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2. In addition to paragraph 1, the computer system for data exchange shall contain at least the following documents and data of common interest enabling monitoring to be carried out:

(a) the national strategic reference framework referred to in Article 27 (1) of Regulation (EC) No 1083/2006;

(b) data establishing compliance with addition-ality, in accordance with the model set out in Annex XIX;

(c) the operational programmes, including data concerning categori sation following the model set out in Part B of Annex II and in accordance with the tables set out in Part A of Annex II;

(d) the Commission decisions concerning the contribution of the Funds;

(e) the requests for assistance for major projects referred to in Articles 39, 40 and 41 of Regu-lation (EC) No 1083/2006, in accordance with Annexes XXI and XXII to this Regula-tion, together with selected data from those Annexes identified in Annex XX;

(f) the implementing reports in accordance with Annex XVIII, including data concerning categorisation following the model set out in Part C of Annex II and in accordance with the tables set out in Part A of Annex II;

(g) data on participants in ESF operations by priority, in accordance with the model set out in Annex XXIII;

(h) the description of management and control systems, in accordance with the model set out in Annex XII;

(i) the audit strategy, in accordance with the model set out in Annex V;

(j) the reports and opinions on audits, in accordance with the models set out in Annexes VI, VII, VIII, IX and XIII, and correspondence between the Commission and each Member State;

(k) the statements of expenditure concerning partial closure, in accordance with the model set out in Annex XIV;

(l) the annual statement on withdrawn and recovered amounts and pending recoveries, in accordance with Annex XI;

(m) the communication plan referred to in Article 2.

3. The data referred to in paragraphs 1 and 2 shall, where applicable, be transmitted in the format given in the Annexes.

Article 41 Functioning of computer system for data exchange

1. The Commission and the authorities designated by the Member State pursuant to Regulation (EC) No 1083/2006, as well as the bodies to which that task has been delegated, shall record into the computer system for data exchange the documents for which they are responsible, and any updates thereto, in the format required.

2. Member States shall centralise and send to the Commission requests for access rights to the computer system for data exchange.

3. Exchanges of data and transactions shall bear an electronic signature within the meaning of Direc-tive 1999/93/EC. The Member States and the Commission shall recognise the legal effective-ness and admissibility of the electronic signature used in the computer system for data exchange as evidence in legal proceedings.

4. The cost of developing the computer system for data exchange shall be financed by the general budget of the European Communities pursuant to Article 45 of Regulation (EC) No 1083/2006.

Any costs of an interface between the common computer system for data exchange and national, regional and local computer systems, and any costs of adapting national, regional and local systems to requirements pursuant to Regulation (EC) No 1083/2006, shall be eligible pursuant to Article 46 of that Regulation.

Article 42 Transmission of data through the computer system

for data exchange

1. The computer system for data exchange shall be accessible to the Member States and the Commission either directly or via an interface for automatic synchronisation and recording of data with national, regional and local computer management systems.

2. The date taken into account for the forwarding of documents to the Commission shall be the date on which the Member State records the documents into the computer system for data exchange.

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3. In cases of force majeure, and in particular of malfunctioning of the computer system for data exchange or a lack of a lasting connection, the Member State concerned may forward to the Commission the documents required by Regula-tion (EC) No 1083/2006 in hard copy, using the forms set out in Annexes II, V, VI, VII, IX, X, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXII and XXIII to this Regulation. As soon as the cause of force majeure ceases, the Member State shall record the corresponding documents into the computer system for data exchange without delay.

By way of derogation from paragraph 2, the date taken into account for forwarding shall be deemed to be the date of sending of the docu-ments in hard copy.

Section 8 – Financial engineering instruments

Article 43 General provisions

1. Articles 43 to 46 shall apply to financial engi-neering instruments in the form of actions which make repayable investments, or provide guaran-tees for repayable investments, or both, in the following:

(a) enterprises, primarily small and medium-sized enterprises (SMEs), including micro-enterprises, as defined in Commission Recommendation 2003/361/EC (1) as of 1 January 2005, in the case of financial engi-neering instruments other than urban devel-opment funds;

(b) public-private partnerships or other urban projects included in inte grated plans for sustainable urban development, in the case of urban development funds.

2. Financial engineering instruments, including holding funds, shall be independent legal enti-ties governed by agreements between the co- financing partners or shareholders or as a separate block of finance within a financial institution.

Where the financial engineering instrument is within a financial insti tution, it shall be set up as a separate block of finance, subject to specific imple-mentation rules within the financial institution, stipulating, in particular, that separate accounts are kept which distinguish the new resources invested in the financial engineering instrument, including those contributed by the operational programme, from those initially available in the institution.

The Commission may not become a co-financing partner or shareholder in financial engineering instruments.

3. When managing authorities or holding funds select financial engi neering instruments, the financial engineering instruments shall submit a business plan or other appropriate document.

The terms and conditions for contributions from operational programmes to financial engineering instruments shall be set out in a funding agree-ment, to be concluded between the duly mandated repre sentative of the financial engineering instru-ment and the Member State or the managing authority, or the holding fund where applicable.

The funding agreement shall include at least the following elements:

(a) the investment strategy and planning;

(b) provisions for monitoring of implementation;

(c) an exit policy for the contribution from the operational programme out of the financial engineering instrument;

(d) provisions for the winding-up of the financial engineering instrument, including the reutili-sation of resources returned to the financial engineering instrument from investments or left over after all guarantees have been honoured that are attributable to the contri-bution from the operational programme.

4. Management costs may not exceed, on a yearly average, for the duration of the assistance any of the following thresholds, unless a higher percentage proves necessary following a competi-tive tender, in accordance with applicable rules:

The thresholds set out in the first subparagraph may be increased by 0,5% for the outermost regions.

(a) 2 % of the capital contributed from the oper-ational programme to holding funds, or of the capital contributed from the operational programme or holding fund to the guarantee funds;

(b) 3 % of the capital contributed from the oper-ational programme or the holding fund to the financial engineering instrument in all other cases, with the exception of micro-credit instruments directed at micro-enterprises;

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(c) 4 % of the capital contributed from the opera-tional programme or the holding fund to micro-credit instruments directed at micro-enterprises.

5. Returns from equity, loans and other repayable investments, and from guarantees for repayable investments, less a pro rata share of the manage-ment costs and performance incentives, may be allocated preferen tially to investors operating under the market economy investor principle. Such returns may be allocated up to the level of remuneration laid down in the by-laws of the financial engineering instruments, and they shall then be allocated proportionally among all co-financing partners or shareholders.

6. Enterprises, as well as public private partnerships and other projects included in an integrated plan for sustainable urban development, which are supported by financial engineering instruments, may also receive a grant or other assistance from an operational programme.

7. Managing authorities shall take precautions to minimise distortion of competition in the venture capital or lending markets and the private guar-antee market.

Article 44 Holding funds

1. Where the Structural Funds finance financial engineering instruments organised through holding funds, the Member State or managing authority shall conclude a funding agreement with the holding fund, setting out the funding arrangements and objectives.

The funding agreement shall, where appropriate, take account of the following:

(a) as regards financial engineering instru-ments other than urban devel opment funds, the conclusions of an evaluation of gaps between supply of such instruments to, and demand for such instruments by, SMEs;

(b) as regards urban development funds, urban development studies or evaluations and inte-grated urban development plans included in operational programmes.

2. The funding agreement referred to in paragraph 1 shall, in particular, make provision for:

(a) the terms and conditions for contributions from the operational programme to the holding fund;

(b) calls for expression of interest addressed to financial engineering instruments in accord-ance with applicable rules;

(c) the appraisal and selection of financial engi-neering instruments by the holding fund;

(d) the setting up and monitoring of the invest-ment policy or the targeted urban develop-ment plans and actions;

(e) reporting by the holding fund to Member States or managing autho rities;

(f) monitoring of the implementation of investments;

(g) audit requirements;

(h) an exit policy for the holding fund out of the financial engineering instruments;

(i) the provisions for the winding-up of the holding fund, including the reutilisation of resources returned from investments made or left over after all guarantees have been honoured which are attributable to the contri-bution from the operational programme.

In the case of financial engineering instruments supporting enterprises, the provisions on the setting up and monitoring of the investment policy referred to in point (d) of the first subparagraph shall comprise at least an indication of the targeted enterprises and the financial engineering products to be supported.

Paragraph 3 is deleted.

Article 45 Additional provisions applicable to financial

engineering instruments other than holding funds and urban development funds

Financial engineering instruments other than holding funds and urban development funds shall invest in enterprises, primarily in SMEs. Such investments may be made only at the establishment, in the early stages, including seed capital, or on expansion of those enter-prises, and only in activities which the managers of the financial engineering instruments judge potentially economically viable.

They shall not invest in firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty (21) as of 10 October 2004.

(21) OJ C 244, 1.10.2004, p. 2.

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Article 46 Urban development funds

1. Where Structural Funds finance urban develop-ment funds, those funds shall invest in public-private partnerships or other projects included in an integrated plan for sustainable urban develop-ment. Such public-private partnerships or other projects shall not include the creation and devel-opment of financial engineering instruments such as venture capital, loan and guarantee funds for enterprises.

2. For the purposes of paragraph 1, urban develop-ment funds shall invest by means of loans and guarantees, or equivalent instruments and by means of equity.

3. Where Structural Funds finance urban devel-opment funds, the funds concerned shall not re-finance acquisitions or participations in projects already completed.

CHAPTER III – Provisions implementing Regulation (EC) No 1080/2006

Section 1 – Eligibility of expenditure on housing

Article 47 Interventions in the field of housing

1. In determining areas referred to in point (a) of the first subpar-agraph of Article 7(2) of Regulation (EC) No 1080/2006, Member States shall take into consideration at least one of the following criteria:

(a) a high level of poverty and exclusion;

(b) a high level of long-term unemployment;

(c) precarious demographic trends;

(d) a low level of education, significant skills deficiencies and high dropout rates from school;

(e) a high level of criminality and delinquency;

(f) a particularly rundown environment;

(g) a low level of economic activity;

(h) a high number of immigrants, ethnic and minority groups, or refugees;

(i) a comparatively low level of housing value;

(j) a low level of energy performance in buildings.

2. Only the following interventions shall be eligible pursuant to point (c) of the first subparagraph of Article 7(2) of Regulation (EC) No 1080/2006:

(a) renovation of the common parts of multi-family residential buildings;

(b) delivery of modern social housing of good quality through reno vation and change of use of existing buildings owned by public authorities or non-profit operators.

Section 2 – Rules of eligibility applicable to operational programmes for the European

territorial cooperation objective

Article 48 Rules on eligibility of expenditure

Without prejudice to the list of ineligible expenditure in Article 7 of Regulation (EC) No 1080/2006, Arti-cles 49 to 53 of this Regulation shall apply in accord-ance with Article 13 of Regulation (EC) No 1080/2006 to the determination of the eligibility of expenditure under operations selected as part of an operational programme under the European territorial cooperation objective.

Article 49 Financial charges and guarantee costs

The following charges and costs shall be eligible for a contribution from the ERDF:

(a) charges for transnational financial transac-tions;

(b) where the implementation of an operation requires a separate account or accounts to be opened, the bank charges for opening and administering the account or accounts;

(c) legal consultancy fees, notarial fees, costs of technical and financial experts, and account-ancy and audit costs, if they are directly linked to the co-financed operation and are necessary for its preparation or implementa-

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tion or, in the case of accounting and audit costs, if they relate to requirements imposed by the managing authority;

(d) the cost of guarantees provided by a bank or other financial insti tution to the extent to which the guarantees are required by national or Community legislation.

Fines, financial penalties and expenditure on legal disputes shall not be eligible.

Article 50 Expenditure by public authorities relating to the

implementation of operations

1. In addition to technical assistance for the oper-ational programme pursuant to Article 46 of Regulation (EC) No 1083/2006, the following expenditure paid by public authorities in the preparation or implemen tation of an operation shall be eligible:

(a) the costs of professional services provided by a public authority other than the benefi-ciary in the preparation or implementation of an operation;

(b) the costs of the provision of services relating to the preparation and implementa-tion of an operation provided by a public authority which is itself the beneficiary and which is executing an operation for its own account without recourse to outside service-providers.

2. The public authority concerned shall either invoice the costs referred to in paragraph 1(a) to the beneficiary or certify those costs on the basis of documents of equivalent probative value which permit the identification of real costs paid by that authority for that operation.

3. The costs referred to in point (b) of paragraph 1 shall be eligible if they do not arise from statu-tory responsibilities of the public authority or its day-to-day management, monitoring and control tasks and relate either to expenditure actually and directly paid for the co-financed operation or to in-kind contributions, as referred to in Article 51.

Article 51 In-kind contributions

1. In-kind contributions of a public or private bene-ficiary shall be eligible expenditure if they fulfil the following conditions:

(a) they consist of the provision of land or real estate, equipment or raw materials, research or professional work or unpaid voluntary work;

(b) their value can be independently assessed and audited.

2. In the case of the provision of land or real estate, the value shall be certified by an independent qualified valuer or duly authorised official body.

3. In the case of unpaid voluntary work, the value of that work shall be determined taking into account the time spent and the hourly and daily rates of remuneration for equivalent work.

Article 52 Overheads

Overheads shall be eligible provided that they are based on real costs attributable to the implementation of the operation concerned or on the average real costs attributable to operations of the same type.

Flat rates based on average costs may not exceed 25 % of those direct costs of an operation which can affect the level of overheads. The calculation of flat rates shall be properly documented and periodically reviewed.

The first and second paragraphs shall only apply to operations approved before 13 October 2009 and where the option available to Member States in Article 7(4)(i) of Regulation (EC) No 1080/2006 has not been exercised.

Article 53 Depreciation

The depreciation expenditure of depreciable assets directly used for an operation, and incurred during the period of its co-financing, shall be eligible, provided that the acquisition of the assets is not declared as eligible expenditure.

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CHAPTER IV – Final provisions

Article 54 Repeal

1. Regulations (EC) No 1681/94, (EC) No 1159/2000, (EC) No 1685/2000, (EC) No 438/2001 and (EC) No 448/2001 are hereby repealed.

References to the repealed Regulations shall be construed as references to this Regulation.

The provisions of the repealed Regulations shall continue to apply to assistance approved pursuant to Regulation (EC) No 1260/1999.

2. Regulations (EC) No 1831/94, (EC) No 1386/2002, (EC) No 16/2003 and (EC) No 621/2004 are hereby repealed.

References to the repealed Regulations shall be construed as references to this Regulation.

The provisions of the repealed Regulations shall continue to apply to decisions adopted pursuant to Regulation (EC) No 1164/94.

Article 55 Entry into force

This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

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ANNEX I

INSTRUCTIONS FOR CREATING THE EMBLEM AND A DEFINITIONOF THE STANDARD COLOURS

SYMBOLIC DESCRIPTION

Against a background of blue sky, twelve golden stars form a circle representingthe union of the peoples of Europe. The number of stars is fixed, twelve beingthe symbol of perfection and unity.

HERALDIC DESCRIPTION

On an azure field a circle of twelve golden mullets, their points not touching.

GEOMETRIC DESCRIPTION

The emblem has the form of a blue rectangular flag of which the fly is one-and-a-half times the length of the hoist. Twelve gold stars situated at equal intervalsform an invisible circle whose centre is the point of intersection of the diagonalsof the rectangle. The radius of the circle is equal to one third of the height of thehoist. Each of the stars has five points which are situated on the circumference ofan invisible circle whose radius is equal to 1/18th of the height of the hoist. Allthe stars are upright, i.e. with one point vertical and two points in a straight lineat right angles to the mast. The circle is arranged so that the stars appear in theposition of the hours on the face of a clock. Their number is invariable.

REGULATION COLOURS

The emblem is in the following colours:

— PANTONE REFLEX BLUE for the surface of the rectangle;

— PANTONE YELLOW for the stars.

FOUR-COLOUR PROCESS

If the four-colour process is used, recreate the two standard colours by using thefour colours of the four-colour process.

— PANTONE YELLOW is obtained by using 100 % ‘Process Yellow’.

— PANTONE REFLEX BLUE is obtained by mixing 100 % ‘Process Cyan’and 80 % ‘Process Magenta’.

INTERNET

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MONOCHROME REPRODUCTION PROCESS

Using black, outline the rectangle in black and print the stars in black on white.

2006R1828 — EN — 13.10.2009 — 001.001— 39

ANNEX IINSTRUCTIONS FOR CREATING THE EMBLEM AND A DEFINITION

OF THE STANDARD COLOURS

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Using blue (Reflex Blue), use 100 % with the stars reproduced in negative white.

REPRODUCTION ON A COLOURED BACKGROUND

If there is no alternative to a coloured background, put a white border around therectangle, the width of the border being 1/25th of the height of the rectangle.

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ANNEX II

CATEGORISATION OF FUNDS (1) ASSISTANCE FOR 2007-2013

Part A: Codes by dimension

TABLE 1: CODES FOR THE PRIORITY THEME DIMENSION

Code Priority theme

Research and technological development (R&TD), innovation and entrepreneurship

01 R&TD activities in research centres

02 R&TD infrastructure (including physical plant, instrumentation and high-speedcomputer networks linking research centres) and centres of competence in aspecific technology

03 Technology transfer and improvement of cooperation networks between small businesses(SMEs), between these and other businesses and universities, post-secondary educationestablishments of all kinds, regional authorities, research centres and scientific and tech-nological poles (scientific and technological parks, technopoles, etc.)

04 Assistance to R&TD, particularly in SMEs (including access to R&TD services inresearch centres)

05 Advanced support services for firms and groups of firms

06 Assistance to SMEs for the promotion of environmentally-friendly products andproduction processes (introduction of effective environment managing system,adoption and use of pollution prevention technologies, integration of clean tech-nologies into firm production)

07 Investment in firms directly linked to research and innovation (innovative tech-nologies, establishment of new firms by universities, existing R&TD centres andfirms, etc.)

08 Other investment in firms

09 Other measures to stimulate research and innovation and entrepreneurship in SMEs

Information society

10 Telephone infrastructures (including broadband networks)

11 Information and communication technologies (access, security, interoperability, risk-prevention, research, innovation, e-content, etc.)

12 Information and communication technologies (TEN-ICT)

13 Services and applications for the citizen (e-health, e-government, e-learning, e-inclusion, etc.)

14 Services and applications for SMEs (e-commerce, education and training, networking,etc.)

15 Other measures for improving access to and efficient use of ICT by SMEs

Transport

16 Railways

17 Railways (TEN-T)

18 Mobile rail assets

19 Mobile rail assets (TEN-T)

20 Motorways

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(1) European Regional Development Fund, Cohesion Fund and European Social Fund.

ANNEX IICATEGORISATION OF FUNDS (1) ASSISTANCE FOR 2007-2013

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Code Priority theme

21 Motorways (TEN-T)

22 National roads

23 Regional/local roads

24 Cycle tracks

25 Urban transport

26 Multimodal transport

27 Multimodal transport (TEN-T)

28 Intelligent transport systems

29 Airports

30 Ports

31 Inland waterways (regional and local)

32 Inland waterways (TEN-T)

Energy

33 Electricity

34 Electricity (TEN-E)

35 Natural gas

36 Natural gas (TEN-E)

37 Petroleum products

38 Petroleum products (TEN-E)

39 Renewable energy: wind

40 Renewable energy: solar

41 Renewable energy: biomass

42 Renewable energy: hydroelectric, geothermal and other

43 Energy efficiency, co-generation, energy management

Environmental protection and risk prevention

44 Management of household and industrial waste

45 Management and distribution of water (drinking water)

46 Water treatment (waste water)

47 Air quality

48 Integrated prevention and pollution control

49 Mitigation and adaptation to climate change

50 Rehabilitation of industrial sites and contaminated land

51 Promotion of biodiversity and nature protection (including NATURA 2000)

52 Promotion of clean urban transport

53 Risk prevention (including the drafting and implementation of plans and measures toprevent and manage natural and technological risks)

54 Other measures to preserve the environment and prevent risks

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Code Priority theme

Tourism

55 Promotion of natural assets

56 Protection and development of natural heritage

57 Other assistance to improve tourist services

Culture

58 Protection and preservation of the cultural heritage

59 Development of cultural infrastructure

60 Other assistance to improve cultural services

Urban and rural regeneration

61 Integrated projects for urban and rural regeneration

Increasing the adaptability of workers and firms, enterprises and entrepreneurs

62 Development of life-long learning systems and strategies in firms; training andservices for employees to step up their adaptability to change; promoting entrepre-neurship and innovation

63 Design and dissemination of innovative and more productive ways of organising work

64 Development of specific services for employment, training and support in connectionwith restructuring of sectors and firms, and development of systems for anticipatingeconomic changes and future requirements in terms of jobs and skills

Improving access to employment and sustainability

65 Modernisation and strengthening labour market institutions

66 Implementing active and preventive measures on the labour market

67 Measures encouraging active ageing and prolonging working lives

68 Support for self-employment and business start-up

69 Measures to improve access to employment and increase sustainable participation andprogress of women in employment to reduce gender-based segregation in the labourmarket, and to reconcile work and private life, such as facilitating access to childcareand care for dependent persons

70 Specific action to increase migrants’ participation in employment and therebystrengthen their social integration

Improving the social inclusion of less-favoured persons

71 Pathways to integration and re-entry into employment for disadvantaged people;combating discrimination in accessing and progressing in the labour market andpromoting acceptance of diversity at the workplace

Improving human capital

72 Design, introduction and implementation of reforms in education and training systemsin order to develop employability, improving the labour market relevance of initial andvocational education and training, updating skills of training personnel with a view toinnovation and a knowledge based economy

73 Measures to increase participation in education and training throughout the life-cycle,including through action to achieve a reduction in early school leaving, gender-basedsegregation of subjects and increased access to and quality of initial vocational andtertiary education and training

74 Developing human potential in the field of research and innovation, in particularthrough post-graduate studies and training of researchers, and networking activitiesbetween universities, research centres and businesses

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Code Priority theme

Investment in social infrastructure

75 Education infrastructure

76 Health infrastructure

77 Childcare infrastructure

78 Housing infrastructure

79 Other social infrastructure

Mobilisation for reforms in the fields of employment and inclusion

80 Promoting partnerships, pacts and initiatives through the networking of relevant stake-holders

Strengthening institutional capacity at national, regional and local level

81 Mechanisms for improving good policy and programme design, monitoring andevaluation at national, regional and local level, capacity building in the delivery ofpolicies and programmes.

Reduction of additional costs hindering the outermost regions development

82 Compensation of any additional costs due to accessibility deficit and territorial frag-mentation

83 Specific action addressed to compensate additional costs due to size market factors

84 Support to compensate additional costs due to climate conditions and relief difficulties

Technical assistance

85 Preparation, implementation, monitoring and inspection

86 Evaluation and studies; information and communication

TABLE 2: CODES FOR THE FORM OF FINANCE DIMENSION

Code Form of finance

01 Non-repayable aid

02 Aid (loan, interest subsidy, guarantees)

03 Venture capital (participation, venture-capital fund)

04 Other forms of finance

TABLE 3: CODES FOR THE TERRITORIAL DIMENSION

Code Territory type

01 Urban

02 Mountains

03 Islands

04 Sparsely and very sparsely populated areas

05 Rural areas (other than mountains, islands or sparsely and very sparsely populatedareas)

06 Former EU external borders (after 30 April 2004)

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Code Territory type

07 Outermost region

08 Cross-border cooperation area

09 Transnational cooperation area

10 Inter-regional cooperation area

00 Not applicable

TABLE 4: CODES FOR THE ECONOMIC ACTIVITY DIMENSION

Code Economic activity (1)

01 Agriculture, hunting and forestry

02 Fishing

03 Manufacture of food products and beverages

04 Manufacture of textiles and textile products

05 Manufacture of transport equipment

06 Unspecified manufacturing industries

07 Mining and quarrying of energy producing materials

08 Electricity, gas, steam and hot water supply

09 Collection, purification and distribution of water

10 Post and telecommunications

11 Transport

12 Construction

13 Wholesale and retail trade

14 Hotels and restaurants

15 Financial intermediation

16 Real estate, renting and business activities

17 Public administration

18 Education

19 Human health activities

20 Social work, community, social and personal services

21 Activities linked to the environment

22 Other unspecified services

00 Not applicable

(1) Based on the statistical classification of economic activities in the European Community (NACE Rev. 1);Regulation (EC) No 29/2002 of 19 December 2001 amending Regulation (EEC) No 3037/90 of9 October 1990.

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TABLE 5: CODES FOR THE LOCATION DIMENSION

Code Location (1)

Code of region or area where operation is located/carried out (NUTS Level (2) orother, if appropriate, eg: cross-border, transnational, inter-regional)

(1) Field 4 of Annex IIIA.(2) The codes for this dimension may be found in the Nomenclature of Territorial Units for Statistics (NUTS)

which appears in the Annex to Regulation (EC) No 1059/2003 of 26 May 2003, as amended by Regulation(EC) No 1888/2005 of 26 October 2005.

Part B: Indicative breakdown of the Community contribution by category in the operationalprogramme

Commission reference No: … ................................................................................................................

Name of the programme: … ..................................................................................................................

Date of the last Commission decision for the operational programme concerned: …/…/…

(in EUR) (in EUR) (in EUR)

Dimension 1Priority theme

Dimension 2Form of finance

Dimension 3Territory

Code (*) Amount (**) Code (*) Amount (**) Code (*) Amount (**)

Total Total Total

(*) The categories should be coded for each dimension using the standard classification.(**) Estimated amount of the Community contribution for each category.

Part C: Cumulative breakdown of allocations of the Community contribution by category inthe annual and final report on implementation

Commission reference No: … ................................................................................................................

Name of the programme: … ..................................................................................................................

Date of the last Commission decision for the operational programme concerned: …/…/…

Combination of codes of dimensions 1 to 5

Code (*)Dimension 1Priority theme

Code (*)Dimension 2

Form of finance

Code (*)Dimension 3Territory

Code (*)Dimension 4

Economic activity

Code (*)Dimension 5Location

Amount (**)

Total

(*) The categories should be coded for each dimension using the standard classification.(**) Allocated amount of the Community contribution for each combination of categories.

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ANNEX III

LIST OF DATA ON OPERATIONS TO BE COMMUNICATED ON REQUEST TO THECOMMISSION FOR THE PURPOSE OF DOCUMENTARY AND ON-THE-SPOT

CHECKS PURSUANT TO ARTICLE 14

A. Data on operations (as per approval decision, as amended)

Field 1. Operational programme CCI code

Field 2. Number of priority

Field 3. Name of fund

Field 4. Code of region or area where operation is located/carried out (NUTS Level orother, if appropriate)

Field 5. Certifying authority

Field 6. Managing authority

Field 7. Intermediate body that declares expenditure to certifying authority, if applicable

Field 8. Unique code number of operation

Field 9. Short description of operation

Field 10. Starting date of operation

Field 11. Completion date of operation

Field 12. Body issuing approval decision

Field 13. Approval date

Field 14. Reference of beneficiary

Field 15. Currency (if not euro)

Field 16.

Field 17. Total amount of eligible expenditure to be paid by beneficiaries

Field 18. Corresponding public contribution

Field 19.

B. Expenditure declared on operation

Field 20. Internal reference number of last application for reimbursement from operation

Field 21. Date on which last application for reimbursement from operation was entered intomonitoring system

Field 22. Total amount of eligible expenditure paid by beneficiaries and declared in lastapplication for reimbursement from operation entered into monitoring system

Field 23. Total amount of eligible expenditure paid by beneficiaries for which applicationsfor reimbursement have been made

Field 24. Location of detailed supporting documents for claim if not on premises of bene-ficiary

Field 25. ERDF-related expenditure for operational programmes co-financed by ESF (1)

Field 26. ESF-related expenditure for operational programmes co-financed by ERDF (2)

Field 27. Expenditure paid in areas adjacent to the eligible areas (cross bordercooperation) (3)

Field 28. Expenditure paid by partners located outside the area (transnational cooperation) (4)

2006R1828 — EN — 13.10.2009 — 001.001— 47

ANNEX IIILIST OF DATA ON OPERATIONS TO BE COMMUNICATED ON REQUEST

TO THE COMMISSION FOR THE PURPOSE OF DOCUMENTARY AND ON-THE-SPOT CHECKS PURSUANT TO ARTICLE 14

122

▼M1

Field 29. Expenditure paid outside the Community (cross-border, transnational and interre-gional cooperation) (5)

Field 30. Expenditure paid for the purchase of land (6)

Field 31. Expenditure paid for housing (7)

Field 32. Expenditure paid for indirect costs/overheads declared on a flat rate basis, flat ratcosts calculated by application of standard scale of unit costs and lump sums (8)

Field 33. Revenue deducted from the expenditure of the operation and included in thestatement of expenditure and application for payment

Field 34. Financial corrections deducted from the expenditure of the operation and includedin the statement of expenditure and application for payment

Field 35. Total amount of eligible expenditure declared from operation and correspondingpublic contribution included in statement of expenditure sent to the Commission bycertifying authority (in EUR)

Field 36. Total amount of eligible expenditure declared from operation and correspondingpublic contribution included in statement of expenditure sent to the Commission bycertifying authority (national currency)

Field 37. Date of last statement of expenditure of the certifying authority containing expen-diture from operation

Field 38. Date of verifications carried out pursuant to Article 13(2)(b)

Field 39. Date of audits pursuant to Article 16(1)

Field 40. Body carrying out the audit or verification

Field 41.

(1) Field 25: to be provided for operational programmes co-financed by ESF where use is made of the optionreferred to in Article 34(2) of Regulation (EC) No 1083/2006 or of the option referred to in Article 8 ofRegulation (EC) No 1080/2006.

(2) Field 26 to be provided for operational programmes co-financed by ERDF where use is made of the optionreferred to in Article 34 (2) of Regulation (EC) No 1083/2006 or of the option referred to in Article 8 ofRegulation (EC) No 1080/2006.

(3) Article 21(1) of Regulation (EC) No 1080/2006.(4) Article 21(2) of Regulation (EC) No 1080/2006.(5) Article 21(3) of Regulation (EC) No 1080/2006.(6) Article 7(1)(b) of Regulation (EC) No 1080/2006.(7) Article 7(2)(c) of Regulation (EC) No 1080/2006(8) Article (7) of Regulation 1080/2006 and Article (11) of Regulation 1081/2006 of the European Parliament

and of the Council (OJ L 210, 31.7.2006, p. 12).

2006R1828 — EN — 13.10.2009 — 001.001— 48

123

1. A random statistical sampling method allows conclusions to be drawn from the results of audits of the sample on the overall expenditure from which the sample was taken, and hence provides evidence to obtain assurance on the functioning of the management and control systems.

2. The assurance provided on the functioning of the systems is determined by the degree of confidence resulting from the conclusions of the system audits and from the audits of operations in the sample selected by a random statistical sampling method. In order to obtain a high level of assurance, that is, a reduced audit risk, the audit authority should combine the results of system audits and audits of operations. The audit authority first evaluates the reliability of the systems (high, average or low) taking into account the results of systems audits, so as to determine the technical parameters of the sampling, in particular the confidence level and the expected error rate. Member States may also use the results of the report on the compliance assessment pursuant to Article 71(2) of Regula-tion (EC) No 1083/2006. The combined level of assurance obtained from the systems audits and the audits of operations should be high. The confi-dence level used for sampling operations should not be less than 60 % with a maximum materiality level of 2 %. For a system evaluated as having low reliability, the confidence level used for sampling operations should not be below 90 %. The audit authority should describe in the annual control report the way assurance has been obtained.

3. The reliability of management and control systems is determined using criteria estab-lished by the audit authority for systems audits, including a quantified assessment of all key elements of the systems and encompassing the main authorities and intermediate bodies partici-pating in the management and control of the operational programme. A record of the assess-ments carried out is kept in the audit file.

4. Where the management and control system is common to a number of similar operational programmes, for example for the same Fund, in accordance with Article 71(4) of Regulation (EC) No 1083/2006, a single sample guaranteeing the same technical parameters of confidence and materiality levels and taking into account the same expected rate of error, as indicated above, may be selected for all programmes together.

5. Where the number of operations for a given reference year is insufficient to allow the use of a statistical method for the random selection of the sample, a non- statistical method may be used. The method applied must ensure a random selection of the sample. The size of the sample must be determined taking into account the level of assurance provided by the system, and must be sufficient to enable the audit authority to draw valid conclusions (for example low sampling risk) on the effective functioning of the system.

ANNEX IV TECHNICAL PARAMETERS FOR RANDOM STATISTICAL SAMPLING

PURSUANT TO Article 17 (SAMPLING)

124

1. INTRODUCTION

— Identification of the audit authority respon-sible for drawing up the audit strategy and of any other bodies which have contributed. Explanation of the procedure followed for drawing up the audit strategy.

— Specification of the overall objectives of the audit strategy.

— Explanation of the functions and responsi-bility of the audit authority and other bodies carrying out audits under its responsibility.

— Indication of the independence of the audit authority from the managing authority and certifying authority.

— Confirmation by the audit authority that the bodies carrying out audits pursuant to Article 62(3) of Regulation (EC) No 1083/2006 have the requisite functional independence.

2. LEGAL BASIS AND SCOPE

— Indication of any national regulatory frame-work that affects the audit authority and its functions.

— Indication of the period covered by the strategy.

— Indication of the Funds, programmes and areas covered by the strategy.

3. METHODOLOGY

— Indication of the audit methodology to be followed taking account of internationally accepted audit standards (including, but not limited to, INTOSAI, IFAC and IIA), audit manuals and other specific documents.

4. AUDIT APPROACH AND PRIORITIES

— Materiality thresholds for planning purposes and for reporting deficiencies.

— Indication of the types of audits to be carried out (system audits, audits of operations).

— For system audits:

(a) specification of the body or bodies responsible for the audit work;

(b) specification of the bodies to be audited;

(c) indication of any horizontal issues to be covered by the system audits, such as public procurement, state aid, environ-mental requirements, equal opportunities and IT systems.

— For audits of operations:

(a) specification of the body or bodies responsible for the audit work;

(b) specification of the criteria for deter-mining the assurance level gained from system audits and reference to the docu-mentation used for applying the sampling methodology set out in Article 17;

(c) specification of the procedure for deter-mining steps to be taken where material errors are detected.

— Indication and justification of the priori-ties and audit objectives established for the whole of the programming period.

— Explanation of the linkage of the risk assess-ment results to the audit work planned.

— An indicative audit schedule of audit assign-ments for the forthcoming year provided in a table format.

5. RISK ASSESSMENT

— Indication of the procedures followed, including the extent to which the results of previous audits of the bodies and systems have been taken into account (for example, audits from the 2000-2006 period, audit work for the compliance assessment).

— Indication of the managing authority, certi-fying authority and intermediate bodies covered.

ANNEX V MODEL AUDIT STRATEGY PURSUANT TO Article 62(1)(c) OF

REGULATION (EC) No 1083/2006

125

— Indication of the risk factors taken into account, including any horizontal issues identified as risk areas.

— Indication of the results through identifica-tion and prioritisation of the key bodies, processes, controls and programmes and priority axes to audit.

6. RELIANCE ON THE WORK OF OTHERS

— Indication of the extent to which certain components are audited by other auditors and the extent of potential reliance on such work.

— Explanation of how the audit authority will ensure the quality of the work carried out by the other audit bodies, taking account of internationally accepted audit standards.

7. RESOURCES

— Indication of planned resources to be allo-cated, at least for the forth coming year.

8. REPORTING

— Indication of internal procedures for reporting, such as provisional and final audit reports, and of the right of the body audited to be heard and to provide an explanation before a final position is taken.

126

1. INTRODUCTION

— Indication of the responsible audit authority and other bodies that have been involved in preparing the report.

— Indication of the 12 month (reference) period from which the random sample was drawn.

— Identification of the operational programme(s) covered by the report and of its/their managing and certifying authorities. Where the report covers more than one programme or Fund, the information shall be broken down by programme and by Fund.

— Description of the steps taken to prepare the report.

2. CHANGES IN MANAGEMENT AND CONTROL SYSTEMS

— Indication of any significant changes in the management and control systems noti-fied to the audit authority as compared with the description provided pursuant to Article 71(1) of Regulation (EC) No 1083/2006 and of the dates from which the changes apply.

3. CHANGES TO AUDIT STRATEGY

— Indication of any changes that have been made to the audit strategy or are proposed, and of the reasons behind them.

4. SYSTEMS AUDITS

— Indication of the bodies that have carried out systems audits, including the audit authority itself.

— Summary list of the audits carried out (bodies audited).

— Description of the basis for selection of the audits in the context of the audit strategy.

— Description of the principal findings and conclusions drawn from the audit work for the management and control systems and

their functioning, including the sufficiency of management checks, certification proce-dures and the audit trail, adequate separation of functions and compliance with Commu-nity requirements and policies.

— Indication of whether any problems identi-fied were considered to be of a systemic char-acter, and of the measures taken, including a quantification of the irregular expenditure and any related financial corrections.

5. AUDITS OF SAMPLES OF OPERATIONS

— Indication of the bodies that carried out the sample audits, including the audit authority.

— Description of the basis for selection of the sample(s).

— Indication of the materiality level and, in the case of statistical sampling, the confidence level applied and the interval, if applicable.

— Summary table (see below), broken down by programme and by Fund, indicating the eligible expenditure declared to the Commission during the calendar (refer-ence) year (ending in the audit period), the amount of expenditure audited, and the percentage of expenditure audited in rela-tion to total eligible expenditure declared to the Commission (both for the last calendar year and cumulatively). Informa-tion relating to the random sample should be distinguished from that related to other samples.

— Description of the principal results of the audits, indicating in particular the amount of irregular expenditure and the error rate resulting from the random sample audited.

— Indication of the conclusions drawn from the results of the audits with regard to the effectiveness of the management and control system.

— Information on the follow-up of irregu-larities, including revision of previously reported error rates.

ANNEX VIMODEL ANNUAL CONTROL REPORT PURSUANT TO Article 62(1) (d)(i) OF

COUNCIL REGULATION (EC) No 1083/2006 AND Article 18 (2) OF THE PRESENT REGULATION

127

— Indication of whether any problems iden-tified were considered to be systemic in nature, and the measures taken, including a quantification of the irregular expenditure and any related financial corrections.

6. COORDINATION BETWEEN AUDIT BODIES AND SUPERVISORY WORK OF THE AUDIT AUTHORITY

— Description of the procedure for coordina-tion between different national audit bodies and the audit authority itself (if applicable).

— Description of the procedure for supervision applied by the audit authority to other audit bodies (if applicable).

7. FOLLOW-UP OF PREVIOUS YEARS’ AUDIT ACTIVITY

— Information on the follow-up of outstanding audit recommendations and on the follow-up of results of systems audits and audits of operations from earlier years.

8. OTHER INFORMATION (IF APPLICABLE)

9. TABLE FOR DECLARED EXPENDITURE AND SAMPLE AUDITS22232425

Fund Reference (CCI No) Programme

Expenditure declared in reference

year

Expenditure in reference year audited

for the random sample

Amount and percentage (error rate) of irregular expenditure in

random sample (24)

Other expenditure audited (25)

Amount of irregular expen-diture in other expenditure

sample

Total expenditure

declared cumula tively

Total expenditure audited cumulatively

as a percentage of total expen diture

declared cumula tively(22) (23) Amount % (22)

(22) Amount of expenditure audited. (23) Percentage of expenditure audited in relation to expenditure declared to the Commission in the reference year. (24) Where the random sample covers more than one Fund or programme, the information is provided for the whole sample. (25) Expenditure from complementary sample and expenditure for random sample not in reference year.

128

To the European Commission, Directorate-General…

INTRODUCTION

I, the undersigned, representing the … (name of body designated by Member State), have examined the func-tioning of the management and control systems in the operational programme … (name of operational programme, CCI code number, period), in order to issue an opinion on whether the systems functioned effectively so as to provide reasonable assurance that statements of expenditure presented to the Commis-sion are correct and, as a consequence, reasonable assurance that the underlying transactions are legal and regular.

SCOPE OF THE EXAMINATION

The examination was carried out in accordance with the audit strategy in respect of this programme during the period 1 July to 30 June … (year) and reported in the attached annual control report pursuant to Article 62(1)(d)(i) of Council Regulation (EC) No 1083/2006.

Either

There were no limitations on the scope of the examina-tion.

Or

The scope of the examination was limited by the following factors:

(a) …

(b) …

(c) etc.

(Indicate any limitation on the scope of the exami-nation, for example any systemic problems, weak-nesses in the management and control system, lack of supporting documentation, cases under legal proceed-ings, etc., and estimate the amounts of expenditure and the Community contribution affected. If the audit authority does not consider that the limitations have an impact on the final expenditure declared, this should be stated.)

OPINION

Either

(Unqualified opinion)

Based on the examination referred to above, it is my opinion that, for the above-mentioned period, the management and control system established for the programme … (name of operational programme, CCI code number, period) complied with the applicable requirements of Articles 58 to 62 of Council Regu-lation (EC) No 1083/2006 and Section 3 of Commis-sion Regulation (EC) No 1828/2006 and functioned effectively so as to provide reasonable assurance that statements of expenditure presented to the Commis-sion are correct and, as a consequence, reasonable assurance that the underlying transactions are legal and regular.

Or

(Qualified opinion)

Based on the examination referred to above, it is my opinion that, for the above- mentioned period, the management and control systems established for the programme … (name of operational programme, CCI code number, period) complied with the applicable requirements of Articles 58 to 62 of Council Regu-lation (EC) No 1083/2006 and Section 3 of Commis-sion Regulation (EC) No 1828/2006 and functioned effectively so as to provide reasonable assurance that statements of expenditure presented to the Commis-sion are correct and, as a consequence, reasonable assurance that the underlying transactions are legal and regular, except in the following respects: .................................................................................. (26).

My reasons for considering that this (these) aspect(s) of the systems did not comply with the requirements and/or did not operate in such a way as to give a reasonable assurance on the correctness of the statements of expend-iture presented to the Commission are as follows ................................................................................. (27).

(26) Indicate the body or bodies and the aspect(s) of their systems that did not comply with requirements and/or did not operate effectively.

(27) Indicate for each body and each aspect of the system the reasons for the qualification.

ANNEX VIIMODEL ANNUAL OPINION PURSUANT TO Article 62(1)(d)(ii) OF COUNCIL REGULATION (EC) No 1083/2006 AND Article 18(2) OF

THE PRESENT REGULATION

129

I estimate the impact of the qualification(s) to be … of the total expenditure declared. The Community contri-bution affected is thus

Or

(Adverse opinion)

Based on the examination referred to above, it is my opinion that, for the above-mentioned period, the management and control system established for the programme … (name of operational programme, CCI code number, period) did not comply with the require-ments of Articles 58 to 62 of Council Regulation (EC) No 1083/2006 and Section 3 of Commission Regulation (EC) No 1828/2006 and did not function effectively so as to provide reasonable assurance that statements of expenditure presented to the Commission are correct and, as a consequence, does not provide reasonable assurance that the underlying transactions are legal and regular.

This adverse opinion is based on ................................................................................... (28)

Date Signature

(28) Indicate for each body and each aspect the reasons for the adverse opinion.

130

Part A: Model final control report

1. INTRODUCTION

— Indication of the responsible audit authority and other bodies that have been involved in preparing the report.

— Indication of the last reference period from which the random sample was drawn.

— Identification of the operational programme(s) covered by the report and its/their managing and certifying authorities, where applicable, broken down by Fund and programme.

— Description of the steps taken to prepare the report.

2. CHANGES IN MANAGEMENT AND CONTROL SYSTEMS AND AUDIT STRATEGY (29)

— Indication of any significant changes in the management and control systems noti-fied to the audit authority as compared with the description provided pursuant to Article 71(1) of Regulation (EC) No 1083/2006, and of the dates from which the changes apply.

— Indication of any changes that have been made to the audit strategy and reasons for such changes

3. SUMMARY OF AUDITS CARRIED OUT PURSUANT TO Article 62 (1)(a) AND (b) OF REGULATION (EC) No 1083/2006 AND Article 17 OF THE PRESENT REGULATION

For systems audits:

— Indication of the bodies that have carried out systems audits, including the audit authority itself.

— Summary list of audits carried out: bodies audited and year of audit.

— Description of the basis for selection of audits in the context of the audit strategy (30).

(29) For changes not indicated in earlier annual control reports. (30) For audits not covered by earlier annual control reports.

— Description of the principal findings and the conclusions drawn from the audit work for the management and control systems and their func tioning, including the sufficiency of management checks, certification proce-dures and the audit trail, adequate separation of functions and compliance with Commu-nity requirements and policies (30).

— Indication of whether any problems identi-fied were considered to be of a systemic character, and the measures taken, including a quantification of the irregular expenditure and any related financial corrections (30).

For audits of operations:

— Indication of the bodies that carried out the sample audits, including the audit authority itself.

— Description of the basis for selection of the sample(s).

— Indication of the materiality level and, in the case of statistical sampling, the confidence level applied and the interval, if applicable.

— Description of the principal results of the audits, indicating in particular the amount of irregular expenditure and the error rate resulting from the random sample audited (30).

— Indication of the conclusions drawn from the results of the audits with regard to the effective-ness of the management and control system.

— Information on the follow-up of irregu-larities, including revision of previously reported error rates.

— Indication of whether any problems iden-tified were considered to be systemic in nature, and the measures taken, including a quantification of the irregular expenditure and any related financial corrections (30).

ANNEX VIIIMODEL FINAL CONTROL REPORT AND CLOSURE DECLARATION

FOR OPERATIONAL PROGRAMMES PURSUANT TO Article 62(1) (e) OF COUNCIL REGULATION (EC) No 1083/2006 AND Article 18

(3) OF THE PRESENT REGULATION

131

4. FOLLOW-UP OF AUDIT ACTIVITY

— Information on the follow-up of the results of systems audits and audits of operations.

5. ADDITIONAL WORK UNDERTAKEN BY AUDIT AUTHORITY IN PREPARING ITS CLOSURE DECLARATION

— Summary of audits of the closure procedure of the managing and certifying authorities and intermediate bodies.

— Summary of the results of the examina-tion of the debtors’ ledger kept pursuant to Article 61(f) of Regulation (EC) No 1083/2006.

— Summary of the results of the re-perfor-mance of controls on the accuracy of the amounts declared in relation to supporting documents.

— Summary of the results of examination of reports of other national or Community audit bodies (specify, by category, which reports have been received and examined).

— Summary of the results of examination of information relating to follow-up of audit findings and reported irregularities.

— Summary of the results of examination of additional work carried out by managing and certifying authorities to enable an unquali-fied opinion to be provided.

— Other.

6. LIMITATIONS ON THE SCOPE OF THE EXAMINATION BY THE AUDIT AUTHORITY

— Details of any factors that have limited the scope of the examination by the audit authority should be reported (31).

— Estimated amounts of expenditure and the Community contribution that are affected must be stated.

7. REPORTED IRREGULARITIES

— Confirmation that the procedure for reporting and following up irregula rities, including the treatment of systemic problems, has been carried out in accordance with regulatory requirements.

— Confirmation of the accuracy of the infor-mation given in the final imple mentation report on the irregularities reported pursuant to Article 70(1)(b) of Regulation (EC) No 1083/2006.

— A list of cases of irregularity regarded as systemic and the amounts of expenditure affected.

8. OTHER INFORMATION (IF APPLICABLE)

(31) Examples of such matters include systemic problems, weak-nesses in management and control systems, lack of support-ing documents, and cases under legal proceedings.

9. TABLE FOR DECLARED EXPENDITURE AND SAMPLE AUDITS32333435

Fund Reference (CCI No) Programme

Expendituredeclared inreference

year

Expenditure in reference year audited

for the random sample

Amount and percentage (error rate) of irregular expenditure in

random sample (34)

Other expenditure audited (35)

Amount of irregular expen-diture in other expenditure

sample

Total expenditure

declared cumula tively

Total expenditure audited cumulatively

as a percentage of total expen diture

declared cumula tively(32) (33) Amount % (32)

(32) Amount of expenditure audited. (33) Percentage of expenditure audited in relation to expenditure

declared to the Commission in the reference year. (34) Where the random sample covers more than one Fund or

programme, the information is provided for the whole sample. (35) Expenditure from complementary sample and expenditure

for random sample not in reference year.

132

Part B: Closure declaration

To the European Commission, Directorate-General

1. INTRODUCTION

I, the undersigned, representing the … (name of the body designated by Member State), have for the operational programme … (name of the opera tional programme, CCI code number, period) examined the results of the audit work carried out on this programme by or under the responsibility of the audit authority in accordance with the audit strategy (and have carried out the additional work I judged necessary). The results of the examination and any additional work I have performed are summarised in the attached final control report (which also contains the information required by the annual control report for the period 1 January 2015 to 31 December 2016). I have planned and performed this work with a view to obtaining a reasonable assurance as to whether the payment applica-tion for the final balance of the Community contribution to the operational programme is correct and valid and the underlying transactions covered by the final statement of expenditure are legal and regular.

2. SCOPE OF THE EXAMINATION

The examination was carried out in accordance with the audit strategy in respect of this programme and reported in the attached final control report pursuant to Article 62(1)(e) of Council Regulation (EC) No 1083/2006.

Either

There were no limitations on the scope of the examination.

Or

The scope of the examination was limited by the following factors:

(a) …

(b) …

(c) etc.

(Indicate any limitation on the scope of the examina-tion, for example any systemic problems, weaknesses in the management and control system, lack of supporting documentation, cases under legal proceedings, etc., and estimate the amounts of expenditure and the Commu-nity contribution affected. If the audit authority does not consider that the limitations have an impact on the final expenditure declared, this should be stated.)

3. IRREGULARITIES AND ERROR RATES

Either

The cases of irregularity and error rates found in the audit work are not such as to preclude an unqualified opinion given the satisfactory way they have been dealt with by the managing authority and the trend in the level of their occurrence over time.

Or

The cases of irregularity and error rates found in the audit work and the way they have been dealt with by the managing authority are such as to preclude an unqualified opinion. A list of these cases is provided in the final control report, together with an indication of their possible systemic character and the scale of the problem. The amounts of total declared expendi-ture and public contribution that could be affected are … respectively. As a conse quence, the corresponding Community contribution that could be affected is

4. OPINION

Either

(Unqualified opinion)

If there were no limitations on the scope of the exami-nation and the cases of irregularity and error rates and the way they have been dealt with by the managing authority do not preclude an unqualified opinion:

Based on the examination referred to above, it is my opinion that the final statement of expenditure presents fairly, in all material respects, the expen diture paid under the operational programme, that the application for payment of the final balance of the Community contribution to this programme is valid and that the underlying transactions covered by the final statement of expenditure are legal and regular.

Or

(Qualified opinion)

If there were limitations on the scope of the examina-tion and/or the cases of irregularity and error rates and the way they have been dealt with by the managing authority call for a qualified opinion but do not justify an unfa vourable opinion for all the expenditure concerned:

Based on the examination referred to above, it is my opinion that the final statement of expenditure presents

133

fairly, in all material respects, the expen diture paid under the operational programme, that the applica-tion for payment of the final balance of the Commu-nity contribution to this programme is valid and that the underlying transactions covered by the final state-ment of expenditure are legal and regular, except with regard to the matters referred to at point 2 and/or to the observations at point 3 regarding the error rates and cases of irregularity and the way they have been dealt with by the managing authority, the impact of which is quantified above. I estimate the impact of these qualifi-cations to be … of the total expenditure declared. The Community contribution affected is thus

Or

(Adverse opinion)

If there were major limitations on the scope of the examination error rates and cases of irregularity and the way they have been dealt with by the managing authority such that no conclusion can be reached on the reliability of the final statement of expenditure without considerable further work:

Based on the examination referred to above, and in particular in view of the matters referred to at point 2 and/or the error rates and cases of irregularity and the fact that they have not been dealt with satisfactorily by the managing authority as reported at point 3, it is my opinion that the final statement of expenditure does not present fairly, in all material respects, the expenditure paid under the operational programme, that, as a conse-quence, the application for payment of the final balance of the Community contribution to this programme is not valid and that the underlying transactions covered by the final statement of expenditure are not legal and regular.

Date Signature

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

134

To the European Commission, Directorate-General

The managing authority for the programme … (name of operational programme, CCI code number, period) has submitted a statement of expenditure relating to operations (completed as at … (date up to which opera-tions were completed)/-completed between … and … (dates between which operations were completed)) and is applying for partial closure of the programme pursuant to Article 88(2)(b) of Regulation (EC) No 1083/2006 for these operations.

I, the undersigned, representing the … (name of body designated by the Member State) have examined the results of the audit work carried out on this programme as set out in the annual control reports and annual opinions issued pursuant to Articles 62(1)(d)(i) and (ii) of Council Regulation (EC) No 1083/2006 for the year/years …,

I have planned and performed this work with a view to obtaining a reasonable assurance as to whether the statement of expenditure concerned is correct and valid and the underlying transactions covered by the statement of expenditure are legal and regular.

Opinion

Based on the examination referred to above, it is my opinion that the statement of expenditure on completed operations submitted by the managing authority for the programme … (name of operational programme, CCI code number, period) for the purpose of partial closure of the programme in respect of operations (completed as at …/completed between … and …) presents fairly, in all material respects, the expenditure paid and that the underlying transactions are legal and regular.

Date Signature

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

ANNEX IXMODEL DECLARATION FOR THE PARTIAL CLOSURE OF OPERATIONAL

PROGRAMMES PURSUANT TO Article 18(5)

135

ANNEX XCERTIFICATE AND STATEMENT OF EXPENDITURE AND APPLICATION

FOR INTERIM PAYMENT

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138

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139

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140

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141

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142

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143

2006R1828 — EN — 13.10.2009 — 001.001— 72▼M1

ANNEX

XI

ANNUAL

STATEMENT

ON

WIT

HDRAW

NAND

RECOVERED

AMOUNTS,PENDIN

GRECOVERIE

SAND

IRRECOVERABLE

AMOUNTS(A

RTIC

LE

20(2))

1.WITHDRAWALSAND

RECOVERIESDEDUCTED

FROM

STATEMENTSOFEXPENDITURE

DURIN

GTHEYEAR

20…

(A)with

draw

als(1)

(B)recoveries

(2)

ab

cd

ef

gh

i

Priority

axis

Total

amou

ntof

expen-

diture

paid

bybenefi-

ciarieswith

draw

n(3)

Correspon

ding

public

contribu

tion

with

draw

n(4)

Total

amou

ntof

expen-

diture

with

draw

nrelatin

gto

irregu

larities

repo

rted

underArt.28

(1)of

Regulation(EC)

No18

28/200

6(5)

Amou

ntof

correspo

nding

public

contribu

tion

with

draw

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laritiesrepo

rted

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(1)of

Regulation(EC)

No18

28/200

6(6)

Pub

liccontribu

tion

recovered(7)

Total

amou

ntof

expend

iture

paid

bybeneficiaries(8)

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public

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butio

nrecovered

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gto

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larities

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rted

underArt.28

(1)of

Regulation(EC)

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28/200

6(9)

Total

amou

ntof

expen-

diture

relatin

gto

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la-

ritiesrepo

rted

under

Art.28

(1)of

Regulation(EC)

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28/200

6(10 )

1 2 3 4 …

Total

(1)

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thetable(w

ithdraw

als)

iscompleted

relatin

gto

expend

iture

alreadydeclared

totheCom

mission

andwhich

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draw

nfrom

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wingdetectionof

theirregu

larity.In

thiscase

thetables

2and3of

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annexwill

notneed

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completed.

(2)

PartB)of

thetable(recov

eries)

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relatin

gto

expend

iture

which

was

left

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ebeingin

theprog

rammepend

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tcom

eof

recovery

proceeding

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ount

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ount

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iture

alreadydeclared

totheCom

mission

which

was

affected

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laritiesandwhich

hasbeen

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draw

n.(4)

Thiscolumnhasto

becompleted

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public

eligible

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ount

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ount

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rted

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dertherepo

rtingprocedures

laid

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Article

28of

Regulation(EC)No18

28/200

6.(6)

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becompleted

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tionof

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dsis

calculated

with

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eligible

expend

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(7)

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theam

ount

ofpu

blic

contribu

tioneffectivelyrecoveredfrom

thebeneficiary.

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ount

istheam

ount

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iture

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ndingto

thepu

blic

contribu

tionin

columnf).

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ount

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thepartof

theam

ount

incolumnf)

which

hasbeen

repo

rted

asirregu

larun

dertherepo

rtingprocedures

laid

downin

Article

28of

Regulation(EC)No18

28/200

6.(10 )

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ount

relatesto

thepartof

theam

ount

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which

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rted

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Article

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6.

AN

NEX

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AN

NUA

L S

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AWN

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EN

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REC

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OU

NTS

(AR

TIC

LE

20(

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144

2006R1828 — EN — 13.10.2009 — 001.001— 73

▼M1

2.PENDIN

GRECOVERIESASAT

31.12.20

..

ab

cd

ef

Priority

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Yearof

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latio

n(EC)No18

28/200

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tionto

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toirregu

larities

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rted

underArt.28

(1)of

Regulation(EC)No18

28/200

6(4)

120

07

2008

…

220

07

2008

…

320

07

2008

Total

(1)

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thepu

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tionsubjectto

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thebeneficiary.

(2)

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ount

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ount

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blic

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28/200

6.(4)

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Article

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6.

145

2006R1828 — EN — 13.10.2009 — 001.001— 74▼M1

3.IRRECOVERABLE

AMOUNTSASAT

31.12.20

..

ab

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gh

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k

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eof

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Irregu

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s

Pub

liccontribu

tion

declared

asirrecoverable(2)

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expend

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paid

bybenefi-

ciariesdeclared

asirrecoverable(3)

Dateof

last

paym

entof

public

contribu

tionto

beneficiary

Dateof

estab-

lishm

entof

irre-

coverability

Reasonforirre-

coverability

Recov

erymeasures

takeninclud

ing

date

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order

Indicate

whether

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mun

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ldbe

borneby

the

budg

etof

the

Europ

eanUnion

(Y/N)(4)

X20

..

Y20

..

Z20

..

Total

(1)

Thisis

thereferencenu

mberattributed

totheirregu

larity

orotheridentificationreferred

toin

Article

14(3)of

Regulation(EC)No18

28/200

6.(2)

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ount

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bythebeneficiaryforwhich

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establishedthat

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ndingto

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mun

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column

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rsuant

toArticle

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Regulation

(EC)No

1083

/200

6.

146

Model description of management and control systems pursuant to Article 21

1. GENERAL

1.1. Information submitted by:— (name of the) Member State:— title of the programme and CCI No:— name of main contact point, including

e-mail and fax: (body responsible for coordination of descriptions)

1.2. The information provided describes the situ-ation on: (dd/mm/yyyy)

1.3. System structure (general information and flowchart showing the organi sational rela-tionship between the bodies involved in the management and control system)

1.3.1. Managing authority (name, address and contact point in the managing authority)

1.3.2. Intermediate bodies (name, address and contact points in the intermediate bodies)

1.3.3. Certifying authority (name, address and contact point in the certifying authority)

1.3.4. The audit authority and audit bodies (name, address and contact point in the audit authority and other audit bodies)

1.4. Guidance provided to the managing and certifying authorities and inter mediate bodies to ensure sound financial management of Structural Funds (date and reference).

2. MANAGING AUTHORITY

NB: This section should be completed separately for each managing authority.

2.1. Managing authority and its main functions2.1.1. The date and form of the formal

designation authorising the managing authority to carry out its functions

2.1.2. Specification of the functions and tasks carried out directly by the managing authority

2.1.3. Functions formally delegated by the managing authority (functions, inter-mediate bodies, form of delegation)

2.2. Organisation of the managing authority2.2.1. Organisation chart and specifications

of the functions of the units (including indicative number of posts allocated)

2.2.2. Written procedures prepared for use by staff of the managing authority/ intermediate bodies (date and reference)

2.2.3. Description of procedures for selecting and approving operations and for ensuring their compliance, for their whole implementa-tion period, with applicable Community and national rules (Article 60(a) of Regula-tion (EC) No 1083/2006)

2.2.4. Verification of operations (Article 60(b) of Council Regulation (EC) No 1083/2006):

— description of the procedures for verification

— bodies carrying out such verifica-tions

— written procedures (reference to manuals) issued for this work

2.2.5. Processing of applications for reim-bursement:

— description of the procedures by which applications for reimburse-ment are received, verified, and vali-dated, and by which payments to bene ficiaries are authorised, executed and accounted for (including flow-chart indicating all bodies involved)

— bodies carrying out each step in the processing of the application for reimbursement

— written procedures (reference to manuals) issued for this work

2.2.6. Description of how information will be transmitted to the certifying authority by the managing authority

2.2.7. Eligibility rules laid down by the Member State and applicable to the operational programme

2.3. In cases where the managing authority and the certifying authority are both designated in the same body, describe how separation of functions is ensured

2.4. Public procurement, State aid, equal opportunities and environment rules2.4.1. Instructions and guidance issued on the

applicable rules (date and reference)2.4.2. Measures foreseen to ensure that appli-

ANNEX XIIDESCRIPTION OF MANAGEMENT AND CONTROL SYSTEMS

147

cable rules are complied with, for example, management checks, controls, audits

2.5. Audit trail2.5.1. Description of how the requirements

pursuant to Article 15 will be imple-mented for the programme and/or for individual priorities

2.5.2. Instructions given on retention of supporting documents by beneficiaries (date and reference):

— indication of the retention period — format in which the documents are

to be held

2.6. Irregularities and recoveries2.6.1. Instructions issued on reporting

and correction of irregularities and recording of debt and recoveries of undue payments (date and reference)

2.6.2. Description of the procedure (including flowchart) to comply with the obligation to report irregularities to the Commis-sion in accordance with Article 28.

3. INTERMEDIATE BODIES

NB: This section should be completed separately for each intermediate body. Indicate the authority which has delegated the function to the interme-diate bodies.

3.1. The intermediate body and its main functions3.1.1. Specification of the main functions and

tasks of the intermediate bodies

3.2. Organisation of each intermediate body3.2.1. Organisation chart and specifications

of the functions of the units (including indicative number of posts allocated)

3.2.2. Written procedures prepared for use by staff of the intermediate body (date and reference)

3.2.3. Description of procedures for selecting and approving operations (if not described under 2.2.3)

3.2.4. Verification of operations (Article 60(b) of Council Regulation (EC) No 1083/2006) (if not described under 2.2.4)

3.2.5. Description of procedures for processing of applications for reimbur sement (if not described under 2.2.5).

4. CERTIFYING AUTHORITY

4.1. Certifying authority and its main functions4.1.1. The date and form of the formal

designation authorising the certifying authority to carry out its functions

4.1.2. Specification of the functions carried out by the certifying authority

4.1.3. Functions formally delegated by the certifying authority (functions, inter-mediate bodies, form of delegation)

4.2. Organisation of the certifying authority4.2.1. Organisation chart and specification

of the functions of the units (including indicative number of posts allocated)

4.2.2. Written procedures prepared for use by staff of the certifying authority (date and reference)

4.3. Certification of statements of expenditure4.3.1. Description of the procedure by which

statements of expenditure are drawn up, certified and submitted to the Commission

4.3.2. Description of the steps performed by the certifying authority to ensure fulfilment of requirements pursuant to Article 61 of Council Regulation (EC) No 1083/2006

4.3.3. Arrangements for access of the certifying authority to the detailed infor mation on operations and verifications and audits held by the managing authority, interme-diate bodies and audit authority

4.4. Accounting system4.4.1. Description of the accounting system to

be set up and used as a basis for certi-fication of expenditure to the Commis-sion:

— arrangements for forwarding aggre-gated data to the certifying authority in case of decentralised system

— the link between the accounting system and the information system to be set up (point 6)

— identification of Structural Funds transactions in case of common system with other Funds

4.4.2. Level of detail of the accounting system: — total expenditure by priority and by

Fund

4.5. Recoveries4.5.1. Description of the system for ensuring

the prompt recovery of Community assistance

4.5.2. Arrangements made to maintain a debtors’ ledger and to deduct amounts recovered from expenditure to be declared

148

5. AUDIT AUTHORITY AND AUDIT BODIES

5.1. Description of the main tasks and inter-relationships of the audit authority and audit bodies under the responsibility of the audit authority

5.2. Organisation of the audit authority and audit bodies under its responsi bility5.2.1. Organisation charts (including the

number of posts attributed)5.2.2. Arrangements for ensuring indepen-

dence5.2.3. Required qualification or experience5.2.4. Description of procedures for moni-

toring the implementation of recom-mendations and corrective measures resulting from audit reports

5.2.5. Description of the procedures (where appropriate) for the supervision of the work of other audit bodies under the responsibility of the audit authority

5.3. Annual control report and closure declaration5.3.1. Description of the procedures for prep-

aration of the annual control report, annual opinion and closure declaration

5.4. Designation of the coordinating audit body5.4.1. Description of the role of the coordi-

nating audit body, if applicable.

6. INFORMATION SYSTEM (Article 60(c) of Council Regulation (EC) No 1083/2006)

6.1. Description of the information system including flowchart (central or common network system or decentralised system with links between the systems)

Indication as to whether the system is already operational to gather reliable financial and statistical information on implementation of the 2007-2013 programmes.

If not, indication of the date when it will be operational.

149

To the European Commission, Directorate-General

INTRODUCTION

I, the undersigned, representing … (name of audit authority or the operationally independent body desig-nated by the Member State pursuant to Article 71 (3) of Council Regulation (EC) No 1083/2006) as the body responsible for drawing up a report setting out the results of an assessment of the management and control systems established for the programme … (name of operational programme(s), CCI code number(s), period (36)) and for giving an opinion on their compliance with Articles 58 to 62 of Regulation (EC) No 1083/2006, have carried out an examination in accordance with Article 25 of Commission Regulation (EC) No 1828/2006.

SCOPE OF THE EXAMINATION

The examination was based on the description of the management and control systems received on dd/mm/yyyy from (name of body or bodies submitting the description). In addition, we have examined further information concerning … (subjects) and interviewed staff of … (bodies whose staff were interviewed).

The examination covered the managing, certifying and audit authorities, the body designated to receive the payments made by the Commission and to make the payments to beneficiaries and the following interme-diate bodies (list …).

OPINION (37)

Either

(Unqualified opinion)

On the basis of the examination referred to above, it is my opinion that the management and control systems established for the programme(s) … (name of opera-tional programme(s), CCI code number(s), period) comply with the requirements of Articles 58 to 62 of Council Regulation (EC) No 1083/2006 and Section 3 of Commission Regulation (EC) No 1828/2006.

(36) Where a common system applies to two or more operational programmes, a description of the common system may be accompanied by a single report and opinion.

(37) Where the opinion is issued by the audit authority, the latter should provide a separate ‘Declaration of Competence and Operational Independence’ on its own functions under Arti-cle 62 of Council Regulation (EC) No 1083/2006.

Or

(Qualified opinion)

On the basis of the examination referred to above, it is my opinion that the management and control systems for the programme(s) … (name of opera-tional programme(s), CCI code number(s), period) comply with the requirements of Articles 58 to 62 of Council Regulation (EC) No 1083/2003 and Section 3 of Commission Regulation (EC) No 1828/2006, except in the following respects … (38).

My reasons for considering that this/these aspect(s) of the systems do(es) not comply with the requirements and my assessment of the seriousness are as follows (39):

Or

(Adverse opinion)

On the basis of the examination referred to above, it is my opinion that the management and control systems for the programme(s) … (name of operational programme(s), CCI code number(s), period) do not comply with the requirements of Articles 58 to 62 of Council Regulation (EC) No 1083/2006 and Section 3 of Commission Regulation (EC) No 1828/2006.

This adverse opinion is based on … (40).

Date ................................................................ Signature ........................................................................................

(38) Indicate the body or bodies and the aspects of their systems that appear not to comply with the requirements.

(39) Indicate the reason(s) for the reservations entered for each body and on each aspect.

(40) Indicate the reason(s) for the adverse opinion for each body and on each aspect.

ANNEX XIIIMODEL OPINION ISSUED PURSUANT TO Article 71(2) OF COUNCIL

REGULATION (EC) No 1083/2006 AND Article 25 OF THE PRESENT REGULATION ON THE COMPLIANCE OF MANAGEMENT AND CONTROL SYSTEMS

150

ANNEX XIVMODEL STATEMENT OF EXPENDITURE FOR A PARTIAL CLOSURE

▼M1

2006R1828 — EN — 13.10.2009 — 001.001— 82

151

▼C1

ANNEX XV

FINANCIAL TABLE FOR THE NATIONAL STRATEGIC REFERENCE FRAMEWORK(NSRF) — INDICATIVE ANNUAL ALLOCATION BY FUND AND OPERATIONAL

PROGRAMME (OP)

NB: Article 27(4)(e) and Article 28(3)(b) of the Regulation (EC) No 1083/2006 (in EUR)

Convergence Community participation

OP Fund Total 2007 2008 2009 2010 2011 2012 2013

ERDF and CF

OP1 ERDF

OP2 ERDF + CF

ERDFCF

OP3 ERDF + CF

ERDFCF

OP … …

ESF

OP4 ESF

OP5 ESF

OP6 ESF

OP … ESF

Total all FundsNSRF 2007-2013

Total ERDF

Total CF

Total ESF

EAFRD

EFF

Competitiveness/employment Community participation

OP Fund Total 2007 2008 2009 2010 2011 2012 2013

ERDF

OP1 ERDF

OP2 ERDF

ERDF

OP3 ERDF

ERDF

OP … …

2006R1828 — EN — 13.10.2009 — 001.001— 83

ANNEX XVFINANCIAL TABLE FOR THE NATIONAL STRATEGIC REFERENCE

FRAMEWORK (NSRF) — INDICATIVE ANNUAL ALLOCATION BY FUND AND OPERATIONAL PROGRAMME (OP)

152

▼C1

Competitiveness/employment Community participation

OP Fund Total 2007 2008 2009 2010 2011 2012 2013

ESF

OP4 ESF

OP5 ESF

OP6 ESF

OP … ESF

Total all fundsNSRF 2007-2013

Total ERDF

Total ESF

2006R1828 — EN — 13.10.2009 — 001.001— 84

153

▼C1

ANNEX XVI

FINANCING PLANS FOR THE OPERATIONAL PROGRAMME

1. FINANCING PLAN OF THE OPERATIONAL PROGRAMME GIVING THE ANNUALCOMMITMENT OF EACH FUND IN THE OPERATIONAL PROGRAMME

Operational programme reference (CCI number):

Year by source for the programme, in EUR (1):

Structural Funding(ERDF or ESF)

(1)

Cohesion Fund

(2)

Total

(3) = (1) + (2)

2007

In regions without transitional support

In regions with transitional support

Total 2007

2008

In regions without transitional support

In regions with transitional support

Total 2008

2009

In regions without transitional support

In regions with transitional support

Total 2009

2010

In regions without transitional support

In regions with transitional support

Total 2010

2011

In regions without transitional support

In regions with transitional support

Total 2011

2012

In regions without transitional support

In regions with transitional support

Total 2012

2013

In regions without transitional support

In regions with transitional support

Total 2013

Total in regions without transitionalsupport (2007-2013)

Total in regions with transitionalsupport (2007-2013)

Grand total 2007-2013

2006R1828 — EN — 13.10.2009 — 001.001— 85

(1) In case of multi-objective operational programmes, the annual financing plan shall also be broken down byobjective.

ANNEX XVIFINANCING PLANS FOR THE OPERATIONAL PROGRAMME

154

▼C1

2. FINANCIAL PLAN OF THE OPERATIONAL PROGRAMME GIVING, FOR THE WHOLEPROGRAMMING PERIOD, THE AMOUNT OF THE TOTAL FINANCIAL ALLOCATIONOF EACH FUND IN THE OPERATIONAL PROGRAMME, THE NATIONALCONTERPART AND THE RATE OF REIMBURSEMENT BY PRIORITY AXIS

Operational programme reference (CCI number):

Priority axes by source of funding (in EUR):

Communityfunding

Nationalcounterpart

Indicative breakdown ofthe national counterpart

Totalfunding

Co-financing

rateFor information

(a)(b) (= (c) +

(d))

NationalPublicfunding

(c)

Nationalprivate

funding (1)

(d)

(e) = (a) +(b)

(f) (2) =(a)/(e)

EIB contri-butions

Otherfunding (3)

Priority axis 1

Specify the Fundand the basis forcalculating theCommunitycontribution(totalor public) (4)

Priority axis 2

Specify the Fundand the basis forcalculating theCommunitycontribution(total or public)

Priority axis …

Specify the Fundand the basis forcalculating theCommunitycontribution(total or public)

Total

(1) To be completed only when priority axes are expressed in total costs.(2) This rate may be rounded to the nearest whole number in the table. The precise rate used to reimburse payments is the ratio

(f).(3) Including national private funding when priority axes are expressed in public costs.(4) In case of pluri-objective operational programmes, indicate in addition the objective.

2006R1828 — EN — 13.10.2009 — 001.001— 86

155

Provisional forecasts of likely payment applications by Fund and by programme (41), for the current and subsequent financial year (in EUR)42

Community co-financing (1)

current year following year

Operational programme 1 (CCI number) total

ERDF

ESF

Cohesion Fund

Operational programme 2 (CCI number) total

ERDF

ESF

Cohesion Fund

Grand total

(41) In case of multi-fund or multi-objective operational programmes, the forecasts shall be also indicated by Fund and by objective. (42) Only provisional forecasts of likely payment applications in respect of the Community contribution, and not total expenditure fore-

cast, should be stated in the table. In the provisional forecasts of likely payment applications, the Community contribution should be stated for the year in question, and should not be cumulated from the beginning of the programming period.

ANNEX XVIIFORECASTS OF LIKELY PAYMENT APPLICATIONS

156

ANNEX XVIIIANNUAL AND FINAL REPORTING

▼M1

ANNEX XVIII

ANNUAL AND FINAL REPORTING

1. IDENTIFICATION

OPERATIONALPROGRAMME

Objective concerned

Eligible area concerned

Programming period

Programme number (CCI No)

Programme title

ANNUAL IMPLEMEN-TATION REPORT

Reporting year

Date of approval of the annual report by the monitoringcommittee

2. OVERVIEW OF THE IMPLEMENTATION OF THE OPERATIONALPROGRAMME

2.1. Achievement and analysis of the progress

2.1.1. Information on the physical progress of the Operational Programme

For each quantified indicator and in particular the core indicators:

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total

Indicator 1: Achievement (1)

Target (2)

Baseline (3)

… …

Indicator n: Achievement

Target

Baseline

(1) The achievement should be expressed cumulatively – the value for the indicator should be the total achieved value by theend of the reporting year. Previous years' achievements can be updated when submitting later years' annual implementationreports, if more accurate information is available.

(2) The target can be given either annually or for the whole programming period.(3) Baseline inserted only for first year when the information is available, unless the concept of a dynamic baseline is being used.

All indicators shall be broken down by gender, where possible. If thefigures (data) are not yet available, information on when they willbecome available and when the managing authority will provide it tothe Commission shall be stated.

2.1.2. Financial information (all financial data should be expressed in euro)

Expenditure paid outby the beneficiariesincluded in paymentclaims sent to themanaging authority

Corresponding publiccontribution

Expenditure paid bythe body responsiblefor making paymentsto the beneficiaries

Total paymentsreceived from the

Commission

Priority axis 1

Specify the Fund

of which ESF typeexpenditure

of which ERDF typeexpenditure

— — — —

2006R1828 — EN — 13.10.2009 — 001.001— 88

157

▼M1

Expenditure paid outby the beneficiariesincluded in paymentclaims sent to themanaging authority

Corresponding publiccontribution

Expenditure paid bythe body responsiblefor making paymentsto the beneficiaries

Total paymentsreceived from the

Commission

Priority axis 2

Specify the Fund

of which ESF typeexpenditure

of which ERDF typeexpenditure

— — — —

Priority axis …

Specify the Fund

of which ESF typeexpenditure

of which ERDF typeexpenditure

— — — —

Grand total

Total in transitionalregions in the grand total

Total in non-transitionalregions in the grand total

ESF type expenditure inthe grand total where theoperational programme isco-financed by theERDF (1)

ERDF type expenditurein the grand total wherethe operationalprogramme is co-financed by the ESF (1)

(1) This field shall be completed where the operational programme is co-financed by the ERDF or the ESF where use is madeof the option under Article 34(2) of Regulation (EC) No 1083/2006.

— For operational programmes receiving a contribution of the ERDFunder the specific allocation for outermost regions: the breakdownof the expenditure between operational costs and investments in infra-structures.

2.1.3. Information about the breakdown of use of the Funds

— Information in accordance with Part C of Annex II.

2.1.4. Assistance by target groups

— For ESF co-financed operational programmes: information by targetgroups in accordance with Annex XXIII.

— For ERDF co-financed operational programme: any relevant infor-mation on any specifically targeted groups, sectors or areas (whererelevant).

2.1.5. Assistance repaid or re-used

— Information on the use made of assistance repaid or re-used followingcancellation of assistance as referred to in Articles 57 and 98(2) ofRegulation (EC) No 1083/2006.

2.1.6. Qualitative analysis

— Analysis of the achievements as measured by physical and financialindicators, including a qualitative analysis on the progress achieved inrelation to the targets set out initially. Particular attention shall be paidto the operational programme's contribution to the Lisbon process

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including its contribution to the achievement of the targets of Article 9(3) of Regulation (EC) No 1083/2006.

— Demonstration of the effects of the implementation of the operationalprogramme on the promotion of equal opportunities between men andwomen as appropriate and description of the partnership agreements.

— For ESF co-financed operational programmes: information required byArticle 10 of Regulation (EC) No1081/2006.

2.2. Information about compliance with Community law

Any significant problems relating to the compliance with Community lawwhich have been encountered in the implementation of the operationalprogramme and the measures taken to deal with them.

2.3. Significant problems encountered and measures taken to overcomethem

— Any significant problems encountered in implementing the operationalprogramme, including a summary of serious problems identified underthe procedure in Article 62(1)(d)(i) of Regulation (EC) No 1083/2006,where appropriate, as well as any measures taken by the managingauthority or the monitoring committee to solve the problems.

— For ESF funded programmes: any significant problems encountered inimplementing the actions and activities of Article 10 of Regulation(EC) No 1081/2006.

2.4. Changes in the context of the operational programme implementation(if relevant)

Description of any elements which, without stemming directly from theassistance of the operational programme, have a direct impact on theprogramme's implementation (such as legislative changes or unexpectedsocio-economic developments).

2.5. Substantial modification pursuant to Article 57 of Regulation (EC)No 1083/2006 (if relevant)

Cases where a substantial modification pursuant to Article 57 of Regu-lation (EC) No 1083/2006 has been detected.

2.6. Complementarity with other instruments

Summary of the implementation of the arrangements made ensuringdemarcation and coordination between the assistance from the ERDF,the ESF, the Cohesion Fund, the EAFRD, the EFF, and the interventionsof the EIB and other existing financial instruments (Article 9(4) of Regu-lation (EC) No 1083/2006).

2.7. Monitoring and evaluation

Monitoring and evaluation measures taken by the management authorityor the monitoring committee, including difficulties encountered and stepstaken to solve them.

2.8. National performance reserve (where applicable and only for the annualimplementation report submitted for 2010)

Information described in Article 50 of Regulation (EC) No 1083/2006.

3. IMPLEMENTATION BY PRIORITY

3.1. Priority 1

3.1.1. Achievement of targets and analysis of the progress

Information on the physical progress of the priority

For each quantified indicator in the priority axis and in particular the coreindicators:

Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total

Indicator 1: Achievement (1)

Target (2)

Baseline (3)

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Indicators 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total

… …

Indicator n: Achievement

Target

Baseline

(1) The achievement should be expressed cumulatively – the value for the indicator should be the total achieved value by theend of the reporting year. Previous years' achievements can be updated when submitting later years' annual implementationreports, if more accurate information is available.

(2) The target can be given either annually or for the whole programming period.(3) Baseline inserted only for first year when the information is available, unless the concept of a dynamic baseline is being

used.

All indicators shall be broken down by gender, where possible. If the dataare not yet available, the information on when they will become availableand when the managing authority will provide it to the Commission shallbe stated.

— For ESF co-financed operational programmes: information by targetgroups in accordance with Annex XXIII.

Qualitative analysis

— Analysis of the achievements using the financial information(point 2.1.2) and physical indicators (point 3.1.1) and other relevantinformation.

— Demonstration of the effects of the promotion of equal opportunitiesbetween men and women (as appropriate).

— Analysis of the use of the Funds in accordance with Article 34(2) ofRegulation (EC) No 1083/2006. For ESF programmes, informationrequired in Article 10 of Regulation (EC) No 1081/2006.

— List of unfinished operations and the schedule for their completion(final report only).

3.1.2. Significant problems encountered and measures taken to overcome them

Information on any significant problems encountered in implementing thepriority, including a summary of serious problems identified pursuant tothe procedure in Article 62(1)(d)(i) of Regulation (EC) No 1083/2006,where appropriate, as well as any measures taken by the managingauthority or the monitoring committee to solve the problems.

3.2. Priority 2

Idem.

3.3. Priority 3

Idem.

4. ESF PROGRAMMES: COHERENCE AND CONCENTRATION

For ESF programmes:

— a description of how the actions supported by the ESF are consistentwith and contribute to the actions undertaken in pursuance of theEuropean Employment Strategy within the framework of the nationalreform programmes and national action plans for social inclusion,

— a description of how the ESF actions contribute to implementation ofthe employment recommendations and of the employment relatedobjectives of the Community in the field of social inclusion,education and training (Article 4(1) of Regulation (EC)No 1081/2006).

5. ERDF/CF PROGRAMMES: MAJOR PROJECTS (IF APPLICABLE)

For ongoing major projects:

— Progress in the implementation of different stages of major projects asdefined in the timetable laid down in point D.1 of Annexes XXIand XXII.

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— Progress in the financing of major projects based on the informationprovided in point H.2.2 of Annexes XXI and XXII (the informationmust be provided cumulatively).

For completed major projects:

— List of completed major projects, including the date of completion,total final investment costs using the template provided in point H.2.2of Annexes XXI and XXII and key output and result indicators,including, where relevant, the core indicators, laid down in theCommission decision on the major project.

— Significant problems encountered in implementing major projects andmeasures taken to overcome them.

— Any change in the indicative list of major projects in the operationalprogramme.

6. TECHNICAL ASSISTANCE

— Explanation of the use made of technical assistance.

— Percentage of the amount of the Structural Funds contributionallocated to the operational programme spent under technicalassistance.

7. INFORMATION AND PUBLICITY

— Information in accordance with Article 4(2) of this Regulation,including achievements, examples of good practice and significantevents.

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ANNEX XIXVERIFICATION OF ADDITIONALITY FOR 2007 to 2013 CONVERGENCE

OBJECTIVE – EX ANTE VERIFICATION Summary financial table of public or other equivalent structural expenditure

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ANNEX

XIX

VERIFIC

ATIO

NOF

ADDIT

IONALIT

YFOR

2007

to20

13CONVERGENCE

OBJE

CTIV

E–EX

ANTE

VERIFIC

ATIO

N

Summaryfinan

cial

table

ofpublic

orother

equivalentstructuralexpenditure

inconvergence

objectiveregion

s(inEUR

millions,

2006

prices)(1)

Ann

ualaverageforecast

in20

07to

2013

NSRF(exante)

Actualannu

alaverage20

00to

2005

(2)

Total

Ofwhich

public

companies

Nationalstrategic

referencefram

ework

(NSRF)

Outside

NSRF

Total

Total

Ofwhich

public

companies

Com

munity

support

fram

ework(CSF

)/single

programmingdocument(SP

D)

Outside

CSF/SPD

Total

Nat.+EU

Nat.+EU

EU

Nat.

Nat.

Nat.

Nat.+EU

Nat.+EU

EU

Nat

Nat.

Nat.

(1)

(2)=(4)+(5)

+(6)

(3)

(4)

(5)

(6)

(7)=(5)+(6)

=(2)-(4)

(8)=(10)

+(11)+(12)

(9)

(10)

(11)

(12)

(13)=(11)

+(12)=(8)-

(10)

Basic

infrastructure

Transpo

rt

Telecom

mun

ications

andinform

ationsociety

Energy

Env

iron

mentandwater

Health

Hum

anresources

Edu

catio

n

Training

RTD

Produ

ctiveenvironm

ent

Indu

stry

Services

Tou

rism

Others

Total

(1)

For

Mem

berStateswho

securrency

isno

ttheeuro,theannu

alaverageexchange

rate

of20

05is

tobe

used.

(2)

2004

-200

5forthe10

Mem

berStateswho

accededin

2004

,plus

Rom

ania

andBulgaria.

162

ANNEX XXMAJOR PROJECT STRUCTURED DATA TO BE ENCODED

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ANNEX XX

MAJOR PROJECT STRUCTURED DATA TO BE ENCODED

Major project key detailsInfrastructure

application form

Productiveinvestment appli-

cation formType of data

Project name B.1.1 B.1.1 Text

Name of company n.a. B.1.2 Text

SME n.a. B.1.3 Y/N

Priority theme dimension B.2.1 B.2.1 Code(s)

Form of finance dimension B.2.2 B.2.2 Code

Territorial dimension B.2.3 B.2.3 Code

Economic activity dimension B.2.4 B.2.4 Code(s)

NACE code B.2.4.1 B.2.4.1 Code(s)

Nature of the investment n.a. B.2.4.2 Code

Location dimension B.2.5 B.2.5 Code(s)

Fund B.3.4 B.3.3 ERDF/CF

Priority Axis B.3.4 B.3.4 Text

PPP B.4.2.d n.a. Y/N

Construction phase — Start date D.1.8A D.1.5A Date

Construction phase — Completion date D.1.8B D.1.5B Date

Reference period E.1.2.1 E.1.2.1 Years

Financial discount rate E.1.2.2 E.1.2.2 %

Total investment cost E.1.2.3 E.1.2.3 EUR

Total investment cost (present value) E.1.2.4 n.a. EUR

Residual value E.1.2.5 n.a. EUR

Residual value (present value) E.1.2.6 n.a. EUR

Revenues (present value) E.1.2.7 n.a. EUR

Operating cost (present value) E.1.2.8 n.a. EUR

Net revenue (present value) E.1.2.9 n.a. EUR

Eligible expenditure (present value) E.1.2.10 n.a. EUR

Estimated increase in annual turnover n.a. E.1.2.4 EUR

% change in turnover per person employed n.a. E.1.2.5 %

Financial rate of return (without Communitygrant)

E.1.3.1A E.1.3.1A %

Financial rate of return (with Communitygrant)

E.1.3.1B E.1.3.1B %

Financial net present value (withoutCommunity grant)

E.1.3.2A E.1.3.2A EUR

Financial net present value (with Communitygrant)

E.1.3.2B E.1.3.2B EUR

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Major project key detailsInfrastructure

application form

Productiveinvestment appli-

cation formType of data

Eligible costs H.1.12C H.1.10C EUR

Decision amount H.2.1.3 H.2.1.1 EUR

Community grant H.2.1.5 H.2.1.3 EUR

Expenditure alreadycertified

Amount in EUR: H.2.3 H.2.3 EUR

Economic costs and benefits E.2.2 E.2.2 Text/EUR

Social discount rate E.2.3.1 E.2.3.1 %

Economic rate of return E.2.3.2 E.2.3.2 %

Economic net present value E.2.3.3 E.2.3.3 EUR

Benefit/Cost ratio E.2.3.4 E.2.3.4 Number

Number of jobs directly created duringimplementation phase

E.2.4.1A E.2.4 a) 1A Number

Average duration of jobs directly createdduring implementation phase

E.2.4.1B E.2.4 a) 1B Months/per-manent

Number of jobs directly created duringoperational phase

E.2.4.2A E.2.4 a) 2A Number

Average duration of jobs directly createdduring operational phase

E.2.4.2B E.2.4 a) 2B Months/per-manent

Number of jobs indirectly created duringoperational phase

n.a. E.2.4 a) 4A Number

Inter regional employment impact n.a. E.2.4 c) Neg/Neut/Pos

EIA class of development F.3.2.1 F.3.2.1 I/II/Not covered

EIA carried out if class II F.3.2.3 F.3.2.3 Y/N

% of cost to compensate for negative envir-onmental impacts

F.6 F.6 %

Other Community sources (EIB/EIF) I.1.3 I.1.3 Y/N

Involvement of Jaspers I.4.1 I.4.1 Y/N

Core indicators (please choose relevant coreindicator from a drop down list available inthe electronic system):

B.4.2B n.a. Number

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ANNEX XXIMAJOR PROJECT REQUEST FOR CONFIRMATION OF ASSISTANCE UNDER

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ANNEX XXIIMAJOR PROJECT REQUEST FOR CONFIRMATION OF ASSISTANCE UNDER

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NUMBER OF PARTICIPANTS PER YEAR

(people entering, those leaving, carry-over from one year to the next)

BREAKDOWN OF PARTICIPANTS BY GENDER

BREAKDOWN OF PARTICIPANTS ACCORDING TO STATUS IN THE LABOUR MARKET

– Employed (total number of employed, including self-employed)

– Self-employed– Unemployed (total number of unemployed

including long-term unemployed)– Long-term unemployed– Inactive persons (total number of inactive

persons, including those in education, training or retirement, those having given up business, the perma nently disabled, those fulfilling domestic tasks or other)

– Inactive persons in education or training

BREAKDOWN OF PARTICIPANTS BY AGE

– Young people (15-24 years)– Older workers (55-64 years)

BREAKDOWN OF PARTICIPANTS BY VULNER-ABLE GROUPS, IN ACCORDANCE WITH NATIONAL RULES

– Minorities– Migrants– Disabled– Other disadvantaged people

BREAKDOWN OF PARTICIPANTS BY EDUCA-TIONAL ATTAINMENT

– Primary or lower secondary education (ISCED 1 and 2)

– Upper secondary education (ISCED 3)– Post-secondary non-tertiary education (ISCED 4)– Tertiary education (ISCED 5 and 6)

ANNEX XXIIIDATA ON PARTICIPANTS IN ESF OPERATIONS BY PRIORITY

European Commission

ESF LEGAL PAPERS - Consolidated Structural Funds Regulations for the programming period 2007 – 2013 - (EC) 1083/2006, (EC) 1081/2006, (EC) 1828/2006

Luxembourg: Publications Office of the European Union2012 — 192 pp. — 21 × 29.7 cm

ISBN 978-92-79-22524-6doi: 10.2767/51118

The European Commission has produced consolidated versions of EU legislation governing the application of structural funds so as to support Member State authorities in managing related measures. This publication contains legal papers related to the European Social Fund (ESF) and subsequent legislative amendments. They set out the overall remit of the ESF, lay down general provisions for use of funds and establish rules for implementation of ESF-funded actions.

The publication is available in printed format in English and French.

How to obtain EU publicationsFree publications:• viaEUBookshop(http://bookshop.europa.eu);• attheEuropeanCommission’srepresentationsordelegations.Youcanobtaintheircontact details on the Internet (http://ec.europa.eu) or by sending a fax to +352 2929-42758.

Priced publications:• viaEUBookshop(http://bookshop.europa.eu).

Priced subscriptions (e.g. annual series of the Official Journal of the European Union and re-ports of cases before the Court of Justice of the European Union):• viaoneofthesalesagentsofthePublicationsOfficeoftheEuropeanUnion (http://publications.europa.eu/others/agents/index_en.htm).

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