Court of Justice of the European Communities (including Court of First Instance Decisions)

Provisional text

JUDGMENT OF THE COURT (First Chamber)

8 July 2021 (*)

(Reference for a preliminary ruling - Agriculture - European Agricultural Fund for Rural Development (EAFRD) - Regulation (EU) No 1305/2013 - Delegated Regulation (EU) No 807/2014 - Young farmers setting up - Farm development - Business start-up aid for young farmers - Conditions of access - Equivalence - Not setting up as sole head of the holding - Upper thresholds - Fixing - Criteria - Standard output of the agricultural holding)

In Case C-830/19,

REQUEST for a preliminary ruling under Article 267 TFEU from the tribunal de première instance de Namur (Court of First Instance, Namur) (Belgium), made by decision of 6 November 2019, received at the Court on 15 November 2019, in the proceedings

C.J.

v

Région wallonne,

THE COURT (First Chamber),

composed of J.-C. Bonichot, President of the Chamber, L. Bay Larsen (Rapporteur), C. Toader, M. Safjan and N. Jääskinen, Judges,

Advocate General: M. Campos Sánchez-Bordona,

Registrar: V. Giacobbo, Administrator,

having regard to the written procedure and further to the hearing on 25 November 2020,

after considering the observations submitted on behalf of:

- C.J., by A. Grégoire, avocat,

- the Région wallonne, by X. Drion, advocaat,

- the European Commission, by X. Lewis and M. Kaduczak, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 4 February 2021,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation of Articles 2, 5 and 19 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005 (OJ 2013 L 347, p. 487, and corrigendum OJ 2016 L 130, p. 1), read in conjunction with Article 2 of Commission Delegated Regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 1305/2013 of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and introducing transitional provisions (OJ 2014 L 227, p. 1).

2 The request has been made in proceedings between C.J. and the Région wallonne (Walloon Region, Belgium) concerning the Walloon Region’s refusal to pay start-up aid as provided for in Article 19 of Regulation No 1305/2013 for young farmers.

Legal context

EU law

Regulation No 1305/2013

3 Recital 17 of that regulation states:

‘… A farm and business development measure should facilitate the initial establishment of young farmers and the structural adjustment of their agricultural holding after the initial setting up … The development of small farms, which are potentially economically viable should also be encouraged … Support for a business start up should cover only the initial period of the life of such a business and should not become an operating aid …’

4 Under Article 2(1)(n) of Regulation No 1305/2013:

‘For the purposes of this Regulation … the following definitions shall apply:

…

(n) “young farmer” means a person who is no more than 40 years of age at the moment of submitting the application, possesses adequate occupational skills and competence and is setting up for the first time in an agricultural holding as head of that holding;’

5 Article 5 of that regulation provides:

‘The achievement of the objectives of rural development, which contribute to the Europe 2020 strategy for smart, sustainable and inclusive growth, shall be pursued through the following six Union priorities for rural development, which reflect the relevant Thematic Objectives of the [Common Strategic Framework]:

…

(2) enhancing farm viability and competitiveness of all types of agriculture in all regions and promoting innovative farm technologies and the sustainable management of forests, with a focus on the following areas:

…

(b) facilitating the entry of adequately skilled farmers into the agricultural sector and, in particular, generational renewal.

…’

6 Article 19 of Regulation No 1305/2013 provided:

‘1. Support under this measure shall cover:

(a) business start-up aid for:

(i) young farmers;

…

2. Support under point (a)(i) of paragraph 1 shall be granted to young farmers.

…

4. …

Member States shall define upper and lower thresholds for allowing agricultural holdings access to support under points (a)(i) and (a)(iii) of paragraph 1 … Support shall be limited to holdings coming under the definition of micro and small enterprises.

…

8. In order to ensure the efficient and effective use of EAFRD resources, the Commission shall be empowered to adopt delegated acts in accordance with Article 83 laying down the minimum content of business plans and the criteria to be used by Member States for setting the thresholds referred to in paragraph 4 of this Article.’

Delegated Regulation No 807/2014

7 Recitals 2 and 5 of Delegated Regulation No 807/2014 state:

‘(2) Member States should establish and apply specific conditions for access to support for young farmers in case they are not setting up as a sole head of the holding. In order to ensure equal treatment of beneficiaries irrespective of the legal form under which they choose to set up in an agricultural holding, it should be provided that the conditions under which a legal person or other form of partnership may be considered to be a “young farmer” should be equivalent to those of a natural person. A grace period, sufficiently long to allow young farmers to acquire the needed qualifications, should be provided for.

…

(5) … In order to ensure equal treatment among beneficiaries across the Union and to facilitate monitoring, the criterion to be used for setting the thresholds referred to in Article 19(4) of [Regulation No 1305/2013] should be production potential of the agricultural holding.’

8 Article 2(1) of that delegated regulation provided:

‘Member States shall establish and apply specific conditions for access to support where a young farmer as defined in Article 2(1)(n) of Regulation (EU) No 1305/2013 is not setting up as a sole head of the holding, irrespective of its legal form. These conditions shall be equivalent to those required for a young farmer setting up as sole head of a holding. In all cases, control over the holding shall be held by young farmers.’

9 Article 5(2) of Delegated Regulation No 807/2014 provides:

‘Member States shall define the thresholds referred to in the third subparagraph of Article 19(4) of Regulation (EU) No 1305/2013 in terms of production potential of the agricultural holding, measured in standard output, as defined in Article 5 of Commission Regulation (EC) No 1242/2008 [of 8 December 2008 establishing a Community typology for agricultural holdings (OJ 2008 L 335, p. 3)], or an equivalent.’

Regulation No 1242/2008

10 Article 5(1) of Regulation No 1242/2008 provided:

‘For the purposes of this Regulation, “standard output” shall mean the standard value of gross production.

…’

Belgian law

The Walloon Government Decree

11 Article 25 of the arrêté du gouvernement wallon du 10 septembre 2015 relatif aux aides au développement et à l’investissement dans le secteur agricole (Decree of the Walloon Government of 10 September 2015 on support for development and investment in the agricultural sector; ‘the Walloon Government Decree’) provides, as regards the grant of support:

‘The holding taken over or set up shall fulfil the following conditions:

…

6° Its standard gross output within the meaning of Article 5 of … Regulation No 1242/2008 … shall fall within a lower threshold and an upper threshold defined by the Minister.

…’

The Ministerial Decree

12 The second subparagraph of Article 7(2) of the arrêté ministériel du 10 septembre 2015 exécutant l’arrêté du gouvernement wallon (Ministerial Decree of 10 September 2015 implementing the Walloon Government Decree; ‘the Ministerial Decree’), in the version applicable to the case in the main proceedings, states:

‘The upper threshold referred to in the first subparagraph of Article 25(6) of the [Walloon Government Decree] shall be EUR 1 000 000 in the case the person setting up in business is a young farmer and EUR 1 500 000 in the case where two or more young farmers are setting up in business at the same time.’

The dispute in the main proceedings and the question referred for a preliminary ruling

13 The applicant in the main proceedings is a young farmer set up in Belgium. Through a farm takeover agreement, he took over a third of his parents’ farm to continue the family farm business. The applicant farms as part of a de facto association with his father, who also owns a third of the holding, the last third belonging to the applicant’s mother.

14 On 27 January 2016, the applicant in the main proceedings filed an application with the Walloon Region for start-up aid.

15 On 28 October 2016, the Walloon Region dismissed that application on the ground that the standard gross output (‘SGO’) value of the holding taken over exceeded the upper threshold laid down by regional legislation, which is fixed at EUR 1 million.

16 The applicant in the main proceedings lodged a complaint against that rejection decision with the paying agency, requesting that, when calculating the SGO, account should be taken of the fact that the applicant was not setting up as sole head of the holding.

17 By decision of 17 February 2016, the paying agency rejected that complaint and upheld its first decision, taking the view that the SGO value to be taken into account was that of the farm as a whole which, at EUR 1 976 980.45, exceeded the upper threshold laid down by the national legislation.

18 On 12 October 2017, the applicant in the main proceedings challenged that decision before the referring court.

19 That court expresses doubts as to the interpretation of the conditions for obtaining the start-up aid for young farmers who are not setting up as sole head of the holding, as provided for in Article 2 of Delegated Regulation No 807/2014.

20 In those circumstances the Tribunal de première instance de Namur (Court of First Instance, Namur, Belgium) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Do Articles 2, 5 and 19 of [Regulation No 1305/2013], read in conjunction with Article 2 of [Delegated Regulation No 807/2014], preclude, in the implementation of those provisions, Member States from taking account of the entire holding and not only the share of the young farmer in it and/or of work units in order to determine the upper and lower thresholds where the agricultural holding is operated in the form of an association in which the young farmer acquires an undivided share and exercises joint control over the holding?’

Consideration of the question referred

21 By its question, the referring court asks, in essence, whether Articles 2, 5 and 19 of Regulation No 1305/2013, read in conjunction with Articles 2 and 5 of Delegated Regulation No 807/2014, must be interpreted as precluding national legislation under which the criterion for determining the upper threshold for enabling a young farmer, who is not setting up as sole head of the holding, to access business start-up aid, is the SGO of the entire agricultural holding, and not simply that young farmer’s share in that holding.

22 At the outset, it must be borne in mind that Article 2(1)(n) of Regulation No 1305/2013 defines a ‘young farmer’ as a person who is no more than 40 years of age at the moment of submitting the application, possesses adequate occupational skills and competence and sets up for the first time in an agricultural holding as head of that holding.

23 While, as is apparent from the order for reference, the holding at issue in the main proceedings takes the form of an association without legal personality, which includes, in addition to the applicant in the main proceedings, natural persons who are not young farmers, it must be noted that the wording of that provision does not either prejudge the legal form which such a holding may take (see, to this effect, judgment of 25 October 2012, Ketelä, C-592/11, EU:C:2012:673, paragraph 42) or preclude the possibility of setting up as head of a holding with other farmers.

24 Under Article 19(1)(a) of Regulation No 1305/2013, support for farm and business development covers, inter alia, business start-up aid for young farmers.

25 The third subparagraph of Article 19(4) of that regulation requires that Member States set, inter alia, the upper and lower thresholds for access by agricultural holdings to support for young farmers, under Article 19(1)(a)(i) of that regulation, with that support being limited to holdings defined as micro- and small enterprises.

26 While the wording of those provisions does not expressly address the question of whether Member States may set the thresholds referred to therein based on the farm and not on the young farmer, the third subparagraph of Article 19(4) of Regulation No 1305/2013 should be read in conjunction with Article 5(2) of Delegated Regulation No 807/2014, which supplements Regulation No 1305/2013, as Article 5(2) sets out the criterion to be used by those Member States for the purposes of setting the thresholds referred to in Article 19(4).

27 As is apparent from Article 19(8) of Regulation No 1305/2013, in order to ensure the efficient and effective use of EAFRD resources, the Commission is empowered to adopt delegated acts in particular in setting the thresholds referred to in paragraph 4 of that article.

28 In that regard, it is apparent from Article 5(2) of Delegated Regulation No 807/2014 that Member States must define those thresholds in terms of production potential of the agricultural holding, measured in standard output or an equivalent. Article 5(1) of Regulation No 1242/2008 stated, to that end, that standard output is defined as the ‘standard value of gross production’.

29 In order to determine the scope of the criterion for determining the upper threshold for access to business start-up aid, under the third subparagraph of Article 19(4) of Regulation No 1305/2013, read in conjunction with Article 5(2) of Delegated Regulation No 807/2014, it is necessary to have regard first and foremost to the terms of the provisions interpreted, where necessary, in the light of the context to which they belong and the objectives of Regulation No 1305/2013 (judgment of 25 October 2012, Ketelä, C-592/11, EU:C:2012:673, paragraph 39).

30 As regards the wording of Article 19(1)(a)(i) and the third subparagraph of Article 19(4) of Regulation No 1305/2013, read in conjunction with Article 5(2) of Delegated Regulation No 807/2014, it must be observed that those provisions do not preclude Member States from taking into account the SGO of the entire holding. The use, in Article 5(2) of Delegated Regulation No 807/2014, of the words ‘production potential of the agricultural holding’, which refer to the objective criterion of the ‘holding’, supports that interpretation.

31 As regards the context of those provisions, it should be noted that, as recital 5 of Delegated Regulation No 807/2014 states, the criterion of the production potential of the agricultural holding to be used for setting the thresholds referred to in Article 19(4) of Regulation No 1305/2013 was established by the EU legislature, inter alia, with a view to facilitating monitoring.

32 A reading of that latter provision, whereby the thresholds set for agricultural holdings to access the support may be based on the farm, is - in the light of the various legal forms under which farmers may choose to set up, as well as the rules related to each of those forms in terms, inter alia, of dividing the shares of the holding - likely to facilitate monitoring.

33 The interpretation adopted in the preceding paragraph is also supported by the objective pursued by Regulation No 1305/2013.

34 In that regard, it should be noted that Regulation No 1305/2013 sets out the objectives to which rural development policy is to contribute as well as the corresponding priorities of the European Union, providing for the appropriate measures for implementing that policy. In that context, Article 5 of that regulation cites six priorities for rural development, which include enhancing farm viability and competitiveness of all types of agriculture, by facilitating, inter alia, the entry of adequately qualified farmers into the agricultural sector and by ensuring the objective of ‘generational renewal’.

35 Furthermore, it must be borne in mind that, as is apparent from Article 19(1)(a) and (4) of that regulation, the support in question is intended to encourage business start ups by young farmers. In that regard, recital 17 of that regulation states that support for a business start up should cover only the initial period of the life of such a business and should not become operating aid.

36 Consequently, as the Advocate General observed in points 73 and 74 of his Opinion, that support is granted not in order to encourage, indiscriminately, the starting up of any agricultural holding, but only that of holdings which meet the conditions relating to the heads of holding, the activities or the sizes of those farms, which enables the Member States to regulate how that support is granted, according to the specific characteristics of the farms which young farmers take over.

37 The eligibility criterion at issue in the main proceedings is specifically intended to meet those objectives, since that criterion, in line with enhancing the viability of agricultural holdings, has the effect of reserving access to agricultural support to young farmers who start farming on holdings whose overall production does not exceed a certain threshold, thereby facilitating the entry of farmers into the agricultural sector. As the Commission and the Walloon Region pointed out in that regard during the hearing before the Court, the application of an eligibility criterion such as that laid down by the national legislation is indeed intended to prevent that support from being granted to young farmers whose holding generates such an SGO that those farmers do not actually need support.

38 Article 2 of Delegated Regulation No 807/2014, which sustains the referring court’s doubts in that regard, cannot call into question the possibility for Member States of setting the upper threshold for access to the support concerned on the basis of the farm, not the beneficiary.

39 In that regard, it must be borne in mind that, under Article 2(1) of that delegated regulation, read in conjunction with recital 2 thereof, Member States are to establish and apply specific conditions for access to support where a young farmer, as defined in Article 2(1)(n) of Regulation No 1305/2013, is not setting up as the sole head of a holding. It also follows from Article 2(1) that those conditions must be equivalent to those required for a young farmer setting up as sole head of a holding and apply irrespective of the legal form in which the beneficiaries decide to set up in an agricultural holding. In all cases, control over the holding must be held by young farmers.

40 Article 2(1) of Delegated Regulation No 807/2014 covers both a young farmer who, like the applicant in the main proceedings, sets up with other natural persons and a young farmer who sets up on his or her own as sole head of the holding. According to that provision, the conditions for access to the agricultural support required of those two categories of farmers must be equivalent.

41 Legislation which makes the award of business start-up aid to a young farmer conditional on the SGO for the entire holding makes the young farmer who sets up on his or her own and the young farmer who sets up with other farmers falling outside that category subject to identical requirements. Consequently, such legislation satisfies a fortiori the requirement of equivalence laid down in Article 2(1) of Delegated Regulation No 807/2014.

42 In order to provide a useful answer to the referring court, it should be noted that the national legislation at issue in the main proceedings sets the upper threshold for the SGO of a farm at EUR 1.5 million where two or more young farmers set up at the same time, instead of EUR 1 million where a young farmer sets up on his or her own or, as in the case in the main proceedings, with other heads of the holding not belonging to that category. However, the resulting increased upper threshold takes account of an objective difference in circumstances. Two or more young farmers who set up together as heads of the holding are in principle able to produce more than one young farmer setting up on his or her own. That is why the requirement of equivalence between the conditions of access to start-up aid between young farmers, whether they set up alone or with other young farmers, is not infringed by such an increased upper threshold being imposed.

43 It is true that that legislation also lays down different conditions of access to start-up aid, depending on whether the young farmer sets up with other young farmers or with other farmers not belonging to that category. However, no provision of Regulation No 1305/2013 nor of Delegated Regulation No 807/2014 requires that the conditions for access to start-up aid for young farmers who are in two distinct situations be equivalent. It is, moreover, consistent with the objective of the start-up aid for young farmers that the conditions for access to that support be more favourable for young farmers setting up together than for a young farmer setting up with farmers who do not fall within that category.

44 In the light of all the foregoing considerations, the answer to the question referred is that Articles 2, 5 and 19 of Regulation No 1305/2013, read in conjunction with Articles 2 and 5 of Delegated Regulation No 807/2014, must be interpreted as not precluding national legislation under which the criterion for determining the upper threshold for enabling a young farmer, who is not setting up as sole head of the holding, to access business start-up aid is the SGO of the entire agricultural holding, and not simply that young farmer’s share in that holding.

Costs

45 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (First Chamber) hereby rules:

Articles 2, 5 and 19 of Regulation (EU) No 1305/2013 of the European Parliament and of the Council of 17 December 2013 on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and repealing Council Regulation (EC) No 1698/2005, read in conjunction with Articles 2 and 5 of Commission Delegated Regulation (EU) No 807/2014 of 11 March 2014 supplementing Regulation (EU) No 1305/2013 of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) and introducing transitional provisions, must be interpreted as not precluding national legislation under which the criterion for determining the upper threshold for enabling a young farmer, who is not setting up as sole head of the holding, to access business start-up aid is the standard gross output of the entire agricultural holding, and not simply that young farmer’s share in that holding.

[Signatures]

* Language of the case: French.