The claimant contests the level of reduction of his single payment in 2014 on the basis of the principle of retroactive application of the more lenient penalty.

In his single application for 2014, he applied for the single payment and the re-distributive payment for an area of 63.11 ha. In the course of an administrative check, the defendant determined an eligible area of only 59.5 ha. Because of the resultant declaration of excess area (over-declaration), the defendant reduced the area determined by twice the difference found (7.22 ha) and calculated the single payment on the basis of 52.28 ha. Furthermore, the defendant reduced the payments because of a breach of a cross compliance obligation.

The Administrative Court (Verwaltungsgericht) upheld the action brought against that decision in as far as it was directed against the reduction due to the cross compliance breach and dismissed the action as regards the area determined and the reduction of the single payment due to over-declaration. The Higher Administrative Court (Oberverwaltungsgericht) dismissed the claimant's appeal on points of fact and law against the Administrative Court's judgment. A correction of the areas applied for on account of an obvious error was out of consideration. The penalty for over-declaration was correctly set at twice the difference found. Application of the principle of retroactive application of the more lenient penalty - the so-called favourability principle - was ruled out. It is true that article 19a of Regulation (EU) No 640/2014, as amended by Regulation (EU) 2016/1393, provides for a reduction of only 1.5 times. However, the reason for this was the development of the integrated administration and control system. According to the Higher Administrative Court, the provision did not constitute a general reform of the administrative penalties for over-declarations since it relates only to certain area-related aid schemes.

The claimant's appeal on points of law did not meet with success.

6 The claimant's appeal on points of law, on which the Senate, with the parties' consent, was able to decide without an oral hearing (section 101 (2) in conjunction with section 141 first sentence and section 125 (1) first sentence of the Code of Administrative Court Procedure (VwGO, Verwaltungsgerichtsordnung)), is unfounded. The contested judgment is in accordance with the law that is subject to an appeal on points of law (section 137 (1) VwGO). The Higher Administrative Court rightly refused to apply to the claimant's over-declaration the more lenient penalty laid down in article 19a (1) of Commission Delegated Regulation (EU) No 640/2014 of 11 March 2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross compliance (OJ L 181 p. 48) as amended by Commission Delegated Regulation (EU) 2016/1393 of 4 May 2016 amending Delegated Regulation (EU) No 640/2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments as well as administrative penalties within the scope of direct payments, rural development support and cross compliance (OJ L 225 p. 41). The Higher Administrative Court rightly assumed that the single payment must be calculated on the basis of the area determined reduced by twice the difference found.

7 1. The single payment entitlement for the 2014 claim year established by the single application is based on Council Regulation (EC) No 73/2009 of 19 January 2009 establishing common rules for direct support schemes for farmers under the common agricultural policy and establishing certain support schemes for farmers, amending Regulations (EC) No 1290/2005, (EC) No 247/2006, (EC) No 378/2007 and repealing Regulation (EC) No 1782/2003 (OJ L 30 p. 16), in the version in force for the claim year. The penalties provided for in article 21(1) of Regulation (EC) No 73/2009 for non-compliance with the eligibility rules are laid down in Commission Regulation (EC) No 1122/2009 of 30 November 2009 laying down detailed rules for the implementation of Council Regulation (EC) No 73/2009 as regards cross-compliance, modulation and the integrated administration and control system, under the direct support schemes for farmers provided for that Regulation, as well as for the implementation of Council Regulation (EC) No 1234/2007 as regards cross-compliance under the support scheme provided for the wine sector (OJ 2009 L 316 p. 65). Relevant in the present case is article 58 (1) of Regulation (EC) No 1122/2009, which has remained unchanged in as far as it is relevant here. Pursuant to this article, the aid is calculated on the basis of the area determined, with the area being reduced by twice the difference found in relation to the area declared for the crop group covered by the single payment scheme if, as in the present case, that difference is more than either 3% or 2 ha, but no more than 20% of the area determined.

8 2. The penalty pursuant to article 19a of Regulation (EU) No. 640/2014, which is more lenient than this penalty, does not apply retroactively to the claimant's over-declaration. It is not covered by the favourability principle. There is no room for reasonable doubt in this respect, which is why a request for a preliminary ruling pursuant to article 267 TFEU is not required (see Court of Justice of the European Union (CJEU, hereinafter Court of Justice), judgment of 6 October 1982 - 283/81 [ECLI:EU:C:1982:335], C.I.L.F.I.T. - para. 21).

9 a) Council Regulation (EC, Euratom) No 2988/95 of 18 December 1995 on the protection of the European Communities financial interests (OJ L 312 p. 1) lays down the principle of retroactive application of the more lenient penalty for administrative penalties in case of irregularities. The Regulation establishes a framework for homogenous checks as well as administrative measures and penalties in the event of irregularities, the general rules of which cover all areas of Union policy and must in principle be complied with by all sectoral regulations (see CJEU, judgments of 11 March 2008 - C-420/06 [ECLI:EU:C:2008:152], Jager - para. 61 and of 3 October 2019 - C-378/18 [ECLI:EU:C:2019:832], Westphal - para. 27 with further references). Article 2 (2) second sentence of Regulation (EC, Euratom) No 2988/95 provides that in the event of a subsequent amendment of the provisions which impose administrative penalties and are contained in Community rules, the less severe provisions shall apply retroactively. In the area of administrative penalties, the provision embodies the principle of the retroactive application of the more lenient penalty, which is recognised as a general principle of EU law and has been enshrined as a binding rule in article 49 (1) third sentence of the Charter of Fundamental Rights (GRC) since the entry into force of the Lisbon Treaty (see CJEU, judgment of 14 February 2012 - C-17/10 [ECLI:EU:C:2012:72], Toshiba Corporation et al. - para. 64 with further references).

10 b) The reduction of the single payment due to over-declaration falls within the scope of Regulation (EC, Euratom) No 2988/95. Article 2 (2) second sentence of this Regulation refers to administrative penalties in the event of irregularities. Pursuant to article 1 (2) of Regulation (EC, Euratom) No 2988/95, an irregularity means any infringement of a provision of Community law, which has, or would have, the effect of prejudicing the general budget of the Communities by an unjustified item of expenditure (CJEU, judgment of 11 March 2008 - C-420/06, Jager - para. 63). By declaring non-eligible areas in his single application, the claimant breached the obligation to declare correspondingly eligible areas for each activated payment entitlement (articles 34 and 35 (1) first sentence of Regulation (EC) No 73/2009). He hence failed to comply with the eligibility conditions for the over-declared areas (article 21 (1) of Regulation (EC) No 73/2009). According to the law applicable at the time of the irregularity, this over-declaration - which was no longer called into question in the appeal proceedings on points of law - leads to an administrative penalty, i.e. to the reduction of the aid under article 58 (1) of Regulation (EC) No 1122/2009 (see CJEU, judgment of 4 May 2006 - C-286/05 [ECLI:EU:C:2006:296], Haug - para. 21).

11 c) The application of the favourability principle depends on a subsequent amendment of a provision on administrative penalties contained in EU legislation. In lieu of the penalty provided for at the time of an irregularity, the EU legislature must subsequently have adopted a new, more lenient rule. The change in the nature or severity of the penalty which it entails must reflect a revised assessment which covers the irregularity committed previously (CJEU, judgment of 11 March 2008 - C-420/06, Jager - para. 70). The Court of Justice denied this if the amendment aims at adapting the penalties to a new regulatory context and preserving the coherence of the new system (see above). Accordingly, a new, more lenient penalty does not cover an irregularity committed in the past if it was based on a different regulatory context, so that the reassessment does not relate to it due to a lack of sufficient congruence. This is the situation here.

12 aa) With the 2014 Common Agricultural Policy Reform, which entered into force on 1 January 2015, the course of the European Union's Common Agricultural Policy was continued and focused even more than before on rewarding services to society. The previous single payment scheme was refined by the basic payment and related payments, however, without changing its nature as an area-based aid scheme (see Federal Administrative Court (BVerwG, Bundesverwaltungsgericht), judgment of 1 October 2014 - 3 C 31.13 [ECLI:DE:BVerwG:2014:011014U3C31.13.0] - (...) para. 32). The administrative penalties for over-declarations were regulated in Delegated Regulation (EU) No. 640/2014. In this context, article 19 (1) first subparagraph of Regulation (EU) No 640/2014 updated the reductions in cases of over-declarations as contemplated in article 58 (1) of Regulation (EC) No 1122/2009 initially without any change in substance. A change was implemented by Commission Delegated Regulation (EU) 2016/1393 of 4 May 2016 amending Delegated Regulation (EU) No 640/2014 supplementing Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system and conditions for refusal or withdrawal of payments and administrative penalties applicable to direct payments, rural development support and cross-compliance. With article 1 (7) of that Regulation, the Commission amended Regulation (EU) No 640/2014 by adding article 19a as a new special scheme applicable to certain area-related aid schemes. Its first paragraph provides for a reduction of only 1.5 times the difference found in the case of over-declaration of more than 3% or 2 ha, and its second and third paragraph also contain a probationary provision as a benefit.

13 bb) The retroactive application of article 19a (1) of Regulation (EU) No. 640/2014 is not precluded from the outset: The 2014 Common Agricultural Policy Reform did neither involve a change in the system; the single payment related penalty system of Regulation (EC) No 1122/2009 has not been replaced by a fundamentally different penalty system. The Senate already stated this in its judgment of 1 October 2014 regarding article 19 of Regulation (EU) No. 640/2014 (BVerwG, judgment of 1 October 2014 - 3 C 31.13 - (...) para. 29 et seqq.) Nor does the fact that article 19a of Regulation (EU) No 640/2014 refers only to certain area-related aid schemes preclude its application. This is because the provision applies specifically to the basic payment scheme corresponding to the single payment. In contrast to the situation with the 2003 Common Agricultural Policy Reform, the scope of application of the new regulation is not extended beyond the traditional scope of application of the penalties for over-declaration (see CJEU, judgment of 11 March 2008 - C-420/06, Jager - para. 73). Furthermore, the case-law of the Court of Justice has clarified that the common rules in the regulatory area of the Common Agricultural Policy regarding the entry into force and the date of application do not preclude the application of the favourability principle (CJEU, judgment of 1 July 2004 - C-295/02 [ECLI:EU:C:2004:400], Gerken - para. 53 et seqq.; concerning Regulation No. 640/2014, see also BVerwG, judgment of 1 October 2014 - 3 C 31.13 - (...) para. 26). This also applies to the corresponding provision of article 2 of Regulation (EU) 2016/1393.

14 cc) However, the retroactive application of article 19a of Regulation (EU) No. 640/2014 is ruled out because the EU legislature links the more lenient penalty associated with this provision to effective administrative cross-checks, which the integrated administration and control system has now made possible. The EU legislature stated in recital 7 of Regulation (EU) 2016/1393 that, taking into account the evolution of the integrated administration and control system and for reasons of simplification, it is appropriate to adapt the administrative penalties in respect of the aid schemes or support measures where effective administrative cross-checks with the land parcel identification system can be carried out and where retro-active recovery is possible.

15 The identification system for agricultural parcels in the form created by the 2014 Common Agricultural Policy Reform is laid down in Commission Implementing Regulation (EU) No 809/2014 of 17 July 2014 laying down rules for the application of Regulation (EU) No 1306/2013 of the European Parliament and of the Council with regard to the integrated administration and control system, rural development measures and cross compliance (OJ L 127 p. 69). Article 17 (1) of that Regulation lays down specific requirements pertaining to aid applications for area-related aid schemes. To this end, pre-established forms and graphical material should be provided to beneficiaries by the competent authority through an interface based on the geographical information system (GIS) enabling the processing of the spatial and alphanumerical data of the areas declared. These so-called geo-spatial aid application forms contribute to the prevention of errors by beneficiaries when declaring their agricultural areas and render administrative cross-checks more efficient; more accurate spatial information provide more reliable data available for the purpose monitoring and evaluation (recital 15 of Regulation (EU) No 809/2014). This scheme applied for the first time for the 2016 claim year to a number of beneficiaries covering at least 25% of the areas determined in the previous year, with a quota of 75% in the 2017 claim year and to all beneficiaries from the 2018 claim year onwards (article 17 (2) of Regulation (EU) No 809/2014).

16 The new scheme for penalties for over-declaration pursuant to article 19a of Regulation (EU) No 640/2014 and its regular application from the 2016 claim year (article 2 (2) of Regulation (EC) No 2016/1393) coincides with the first-time application of article 17 (1) of Regulation (EU) No 809/2014 linked to an area quota. Both schemes relate to the effectiveness of administrative cross-checks. In view of this coincidence, there is no doubt that the new penalty scheme is linked to the stage of development achieved with the identification system for agricultural parcels. It is true that an identification system for agricultural parcels already existed before. However, the context does not provide any indication that the new penalty scheme could refer to an earlier stage of development. Instead, this means that the legislature has reassessed the penalty for over-declarations and considered less severe penalties to be sufficient to protect the financial interests of the Union only under the conditions of the effective cross-checks made possible by article 17 (1) of Regulation (EU) No 809/2014 from 2016. This is without prejudice to the assessment of previous cases. Retroactive application of article 19a of Regulation (EU) No. 640/2014 is obviously precluded in view of this clear finding based on the case-law of the Court of Justice.

17 That being said, the probationary provision under article 19a (2) and (3) of Regulation (EU) No 640/2014 does not need to be considered further. It is true that this provision is intended to stimulate correct declarations in the future (recital 8 of Regulation (EU) 2016/1393). This could be interpreted, in line with the defendant's view, as reinforcing evidence that the new penalty regime has no retroactive effect. However, the statement could also refer solely to the effect of the probation. As explained above, this question may be left open because the probation provision - which, by the way, the claimant did not claim - are an element of the new scheme to which no retroactive effect can be attached.