(1)

Article 34(8) of Commission Implementing Regulation (EU) No 908/2014 (2) provides for the rules on the deduction from Union financing of expenditure which does not comply with Union rules. It also provides for a derogation from those rules which allows the Member States to request the application of such deductions in instalments.

(2)

Where a Member State may experience severe financial difficulties, the Commission should have the possibility, in addition to authorising the deductions in three annual instalments, to defer such deductions for a period of no more than 24 months, if the Member State concerned so requests.

(3)

This deferral should only be granted to Member States which are subject to financial assistance in accordance with Council Regulation (EC) No 332/2002 (3), Council Regulation (EU) No 407/2010 (4) and the Treaty establishing the European Stability Mechanism signed on 2 February 2012.

(4)

Experience has shown that specifying a fixed period for the deferral of deductions can result in an accumulation of debt which may then fall due when the Member State concerned remains in severe financial difficulty and is not in a position to make the required reimbursements. Therefore, the Commission should have the possibility, taking into account the specific conditions of the financial assistance, to extend the length of the deferral period for a period of no more than 12 months.

(5)

In addition, experience has also shown that requiring the reimbursement of the total deferred amount in three annual instalments may lead to undue hardship for Member States which remain in financial difficulty after the deferral period has expired. Therefore, future decisions authorising the reimbursement in instalments should allow for a higher number of instalments in cases where the amounts concerned represent a high proportion of the Member State's Gross Domestic Product.

(6)

The Member State benefitting from a deferral decision should ensure that the deficiencies which have been the reasons for the deductions and which persist at the time of that decision are being remedied on the basis of an action plan, established in consultation with the Commission, with clear progress indicators. If a Member State benefitting from such a deferral fails to remedy the deficiencies in accordance with the action plan and, thus, exposes the Union budget to additional financial risks, the Commission should be able to amend or repeal its decision deferring the date for the application of the deductions, taking into account the principle of proportionality.

(7)

Implementing Regulation (EU) No 908/2014 should therefore be amended accordingly.

(8)

The measures provided for in this Regulation are in accordance with the opinion of the Committee on the Agricultural Funds,