Close to 3,000 businesses will have to modify their applications to the EU’s agriculture and rural development operative program due to changes in the way VAT payments are calculated. This is the second modification since the program started.

In August, the Agriculture and Rural Development Ministry amended rules so that companies can count VAT – which is not reimbursable in the case of EU funding – among their operative expenses. Now the authorities have requested applicants to include VAT of their own contribution into the calculations of the requested funding.

While the latter change does not affect the overall sum the applicants can receive, their applications can suffer serious delays due the new rules. Consultants say this is a big enough problem for farmers, because due to the nature of the agri-business it matters much for them by when they can receive funding for equipment such as a sowing machine or a harvester.

In the meantime, the unexpectedly high number of applications is cited as a reason behind delays in the approval of grant applications for the five operative programs co-financed by the EU. In only ten months, demand for funding exceeded the total amount of funds available between 2004 and 2006.

Out of 15,000 applications for the five programs, 13,000 have passed initial approval, applying for a total of HUF 722.8 billion, as against HUF 675 billion that was allocated. At the same time, only 3,000 applicants have received their requested funding to date.

According to authorities, the reason behind the delay in payments is that the first contracts will be sealed in an official ceremony, which will be timed according to political needs.