EUROPEAN COMMISSION. State aid / Netherlands SA (2016/N) Subsidy Regulation Nature and Landscape management (SVNL)

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1 EUROPEAN COMMISSION Brussels, C(2016) 5506 final Subject: State aid / Netherlands SA (2016/N) Subsidy Regulation Nature and Landscape management (SVNL) Sir, The European Commission (hereinafter "the Commission") wishes to inform the Netherlands that, having examined the information supplied by your authorities on the State aid scheme referred to above, it has decided not to raise any objections to the relevant scheme as it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union (hereinafter "TFEU"). The Commission has based its decision on the following considerations: 1. PROCEDURE (1) By letter of 1 July 2016, registered by the Commission on the same day, the Netherlands notified, according to Article 108(3) TFEU, the above mentioned aid scheme. The Dutch authorities submitted additional information by letter of 5 July 2016, registered by the Commission on the same date. (2) The aid scheme was notified under Article 4 (2) (a), (b) and (c) of Commission Regulation (EC) No 794/2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty 1 which provides for the simplified notification procedure. 1 OJ L 140, , p. 1. H.E. Mr. Bert KOENDERS Minister of Foreign Affairs Bezuidenhoutseweg 67 Postbus NL EB Den Haag Commission européenne, B-1049 Bruxelles Belgique; Europese Commissie, B-1049 Brussel België

2 2. DESCRIPTION 2.1. Title (3) Subsidy Regulation Nature and Landscape management (SVNL) Objective (4) With the present notification the Dutch authorities wish to amend the aid scheme SA (2016/NN) approved by Commission decision C(2016) 3732 of 21 June 2016, currently in force until 31 October Legal basis (5) The legal basis is the "Provinciewet, the "Subsidieverordening Natuur en Landschapsbeheer" en de "Wet Inkomstenbelasting 2001", Article Description of the aid scheme (6) The aid scheme SA (2016/NN), in force until 31 October 2017, consists of aid towards nature and landscape management activities, including in forest areas. The overall budget approved for the aid scheme was EUR million. (7) The present modification relates to the extension of the scheme until 31 December 2021, a budget increase of EUR million (of which EUR million for the period until and EUR million for the extended period from until ) and a tightening of the criteria with regard to the implementation of the approved aid scheme. The annual budget is estimated at EUR million. (8) In the aid scheme SA (2016/NN) a nature certificate is already obligatory for large land managers with more than 75 hectares. Small nature managers, with less than 75 hectares, can perform their nature activities in accordance with such a certificate, which is obtained on a voluntary basis. Nature certificates are obtained on the basis of a quality manual, which describes in detail how the nature management activities are made and controlled. In this way the nature management performed by certified nature managers results in an improved and fixed quality level of that management, in a more efficient implementation at lower costs and in more co-operation in the area concerned. (9) The Dutch authorities wish to apply the approach of mandatory certification also to small nature managers and thus now notified the modification that a nature certificate will be mandatory for small nature managers with regard to aid for less than 75 hectares of nature area. This modification concerns a tightening of the criteria of the implementation of the approved aid scheme and has been notified pursuant to Article 4 (2) (c) of Commission Regulation (EC) No 794/2004. (10) The Dutch authorities confirmed that there would be no other modifications to the aid scheme SA (2016/NN). 2 The "Provinciewet" and "Wet Inkomstenbelasting 2001" are published on the internet website of the Dutch government: and the "Subsidieverordening Natuur en Landschapsbeheer" on the internet web site of the Dutch provinces: 2

3 (11) The annual reports were regularly submitted. The Dutch authorities also have committed to submit the annual reports on the approved aid scheme SA (2016/NN) in respect of each calendar year during which the extended scheme will be applied. (12) The Dutch authorities committed to adapt the aid scheme at hand, after the expiry of the currently applicable State aid rules, to the future State aid rules once these rules start to apply. 3. ASSESSMENT (13) Regulation (EC) No 794/2004 provides in Article 4 for a simplified notification procedure for certain alterations to existing aid. Such alterations shall mean any change which cannot affect the evaluation of the compatibility of the aid measure with the internal market. The simplified procedure applies in respect of alteration types listed in Article 4 (2) of Regulation (EC) No 794/2004. (14) The present modification relates to the extension of the scheme SA (2016/NN) until 31 December 2021, a budget increase of EUR million and the mandatory certification for small nature managers. Therefore, it falls under Article 4 (2) (a), (b) and (c) of Regulation (EC) No 794/2004, which states that an increase of the financial recourses of an approved aid scheme by more than 20%, the prolongation of an existing authorised aid scheme by up to six years, with or without an increase in the budget, and a tightening of the criteria of an approved aid scheme shall be notified by means of the simplified notification form Existence of aid - Application of Article 107(1) TFEU (15) As already set out in the Commission decision C(2016)3732 of 21 June 2016 in case SA (2016/NN), the scheme constitutes State aid within the meaning of Article 107(1) of the TFEU (16) For Article 107(1) TFEU to apply, the scheme must provide an economic benefit to an undertaking which it would not have received in its normal course of business, the aid must be granted to certain undertakings, the benefit must be granted by a Member State or through State resources and the scheme must be capable of affecting trade between Member States. The scheme in question confers an advantage on its recipients i.e. nature managers and farmers in the Netherlands, which perform certain activities. This advantage is granted through State resources in the form of capital grants and an exemption of income tax with regard to the grants received. The scheme favours the Dutch agricultural and forestry sector, as well as land managers in general and in particular the beneficiaries of the scheme, which are land managers who perform maintenance activities on their land with regard to nature. According to the case law of the Court of Justice, the mere fact that the competitive position of an undertaking is strengthened compared to other competing undertakings, by giving it an economic benefit which it would not otherwise have received in the normal course of its business, points to a possible distortion of competition 3. 3 Judgment of the Court of 17 September 1980 in Case 730/79 Philip Morris Holland BV v Commission of the European Communities, ECLI:EU:C:1980:209. 3

4 (17) Pursuant to the case law of the Court of Justice, aid to an undertaking appears to affect trade between Member States where that undertaking operates in a market open to intra-eu trade 4. The beneficiaries of aid operate in the agricultural and forestry sector where intra- trade takes place 5. The sector concerned is open to competition at EU level and therefore sensitive to any measure in favour of the production in one or more Member States. Therefore, the present scheme is liable to distort competition and to affect trade between Member States. (18) In light of the above, the conditions of Article 107(1) of the TFEU are fulfilled. It can therefore be concluded that the proposed scheme constitutes State aid within the meaning of that Article. The aid may only be considered compatible with the internal market if it can benefit from one of the derogations provided for in the TFEU Compatibility of the aid (19) As regards the assessment of the content of the notified scheme, reference is made to the decision taken on State aid scheme SA (2016/NN), which has been approved under point 103 and chapter VII of the Community Guidelines for State aid in the agricultural and forestry sectors , sections , 2.8.1, and of Part II of the European Union Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2014 to and directly under Article 107(3)(c) TFEU. (20) The Dutch authorities confirmed that, other than the extended duration, the budget increase (recital (7)) and the introduction of an obligatory nature certificate for small nature managers (recital (9)), there are no other alterations to the scheme. The Dutch authorities committed to adapt this aid scheme to the future State aid rules once that these rules start to apply (recital (12)). Therefore, these modifications do not affect the evaluation of the compatibility of the aid scheme with the internal market, as carried out in the Commission decision in case SA (2016/NN). (21) Regulation (EC) No 794/2004 stipulates in Article 4 (3) that the simplified notification procedure should not be used to notify alterations of schemes in respect of which Member States have not submitted the annual reports in accordance with Articles 5 to 7 of this Regulation, or together with the notification. As mentioned in recital (11) above, the Netherlands have complied with the reporting requirements. (22) Based on the above considerations, the notified aid scheme complies with the relevant provisions of the Guidelines and as a result is compatible with the internal market See in particular the judgment of the Court of 13 July 1988 in Case 102/87 French Republic v Commission of the European Communities, ECLI:EU:C:1988:391. In 2014, Dutch trade with all agricultural products with EU countries for exports amounted to EUR million and for imports to EUR million. Source: European Commission, Agricultural Statistics, Member States factsheet-april.2016, Netherlands. Available at: In 2013 in the European Union cubic metres of round wood were produced, out of which around cubic metres were traded between EU Member States. Source: EUROSTAT database, Roundwood production and trade, update from OJ C 319, , p. 1. OJ C 204, , p. 1. 4

5 4. CONCLUSION The Commission has accordingly decided not to raise objections to the prolongation of the notified aid scheme in question on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) TFEU. If any parts of this letter are covered by the obligation of professional secrecy according to the Commission communication on professional secrecy and should not be published, please inform the Commission within fifteen working days of notification of this letter. If the Commission does not receive a reasoned request by that deadline the Netherlands will be deemed to agree to the publication of the full text of this letter. If the Netherlands wishes certain information to be covered by the obligation of professional secrecy please indicate the parts and provide a justification in respect of each part for which nondisclosure is requested. Your request should be sent electronically via the secured system Public Key Infrastructure (PKI) in accordance with Article 3(4) of Commission Regulation (EC) No 794/2004, to the following address: agri-state-aids-notifications@ec.europa.eu. For the Commission Phil HOGAN Member of the Commission 5