The Single Payment Scheme was implemented in Ireland in 2005 under the provisions of Council Regulation (EC) No 1872/2003. Article 10 of the Council Regulation provided for the application of a modulation deduction of 3% in 2005, 4% in 2006 and 5% from 2005 onwards.
Under the original SPS provisions, the modulation deduction was applied to all payments and was subsequently refunded on the first €5,000 in each payment or up to the amount paid if it was less than €5,000. This was provided for under the provisions of Article 12 of the Council Regulation. After the adoption of the Health Check proposals, the first €5,000 of SPS payments is exempt from the modulation deduction from the 2009 SPS scheme-year onwards. New rates of modulation deductions applied after agreement on the Health Check proposals – 7% in 2009, 8% in 2010, 9% in 2011 and 10% from 2012 onwards. A further 4% deduction applies to payments made in excess of €300,000. This provision only applies to five applicants in Ireland.
Most of the amounts not paid arising from the modulation deduction (90% in 2011) are made available to Ireland for funding Rural Development (Pillar 11) measures. The Commission’s proposals for funding of the Common Agricultural Policy for the period from 2014 to 2020 foresee that the modulated amounts transfer permanently to fund Rural Development (Pillar 11) from the commencement of the new programming period.