As reported by Euractiv, the European Commission will assess whether it is necessary to encourage EU countries to shorten the time for recovering irregular payments, a spokesperson said after the European Court of Auditors (ECA) highlighted the lengthy process of returning improper payments to the EU budget.

2.4 billion euros

In a recently published report, the ECA warned that recovering misspent EU funds can take years and the process may even slow down further.

This is particularly risky for expenditure corrections in direct aid to farmers, according to the ECA. The main reason is that the Common Agricultural Policy (CAP), which runs until 2027, no longer incorporates the 2006 principle requiring member states to bear part of the unrecovered amount if the process takes too long.

According to the ECA's estimates, the application of this rule led to the reimbursement of 234 million euros between 2015 and 2022.

For the CAP's European Agricultural Guarantee Fund (consisting mostly of direct subsidies to farmers), the ECA detected 2.4 billion euros in irregular expenditures from 2007 to 2022, of which 52% had been recovered by the end of 2022, 9% were canceled, and 39% were still in exceptional situations.

Thus, the ECA recommended that the Commission evaluate adding new "incentives" in the next CAP cycle for "recovering irregular expenditures [...] in a more timely manner and improving recovery rates."

"The Commission agrees" on this point, a Commission spokesperson said in an email comment. "The Commission will make this assessment to the extent that it is observed that the recovery rate is deteriorating." In the evaluation, the Commission will consider "additional incentives" for member states "to improve recovery rates in agriculture."

Different situations

France, Italy, Spain, and Poland reported the highest amounts out of the 2.4 billion euros in irregular expenditures in direct CAP payments from 2007 to 2022. Recovery rates were highest in Austria (92%) and lowest in Poland (17%). The proportion of exemptions varied between 0% in Austria and 48% in the Netherlands.

The situation is different for the European Rural Development Fund, co-financed by national authorities. Estimating the average recovery rate for 2015-21 for the direct support fund and the rural development fund, auditors found that the former was significantly lower at 49% compared to 78% for the latter.

This discrepancy, the ECA highlighted, is mainly due to the fact that the financial contribution of member states acts as an incentive for faster recovery of misspent funds.

Without similar incentives in the direct payment fund, the auditors warned, "there is a risk" that the recovery rate "in agriculture will deteriorate."

"The Commission considers that [...] the overall debt management system is fit for purpose," the spokesperson said, adding that the EU executive "agrees with [the recommendation] [...] to assess the need for additional incentives for member states to improve recovery rates in agriculture."