L 63/22 Official Journal of the European Union 28.2.2004 COMMISSION REGULATION (EC) No 364/2004 of 25 February 2004 amending Regulation (EC) No 70/2001 as regards the extension of its scope to include aid for research and development THE COMMISSION OF THE EUROPEAN COMMUNITIES, (4) It is necessary to lay down provisions for the assessment Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and 93 of the Treaty establishing the European Community to certain categories of horizontal State aid (!) and in particular points (a)(i) and (b) of Article 1(1) thereof, Having published a draft of this Regulation (%), Having consulted the Advisory Committee on State Aid, Whereas: (1) The definition of small and medium-sized enterprises (SMEs) used in Commission Regulation (EC) No 70/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises () is that used in Commission Recommendation  96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises (*). That Recommendation has been replaced by Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium- sized enterprises (°) with effect from 1 January 2005. (2)  The rules should be clarified in cases where an invest- ment takes place in an area eligible for regional aid, but in a sector where regional aid is forbidden. The regional aid ceilings should only apply if both the region where the investment is carried out and the sector to which the beneficiary belongs are eligible for regional aid. The rules requiring notification of large individual grants beyond certain thresholds should be clarified accord- ingly. (3)  Experience has shown that it is desirable to have a unified and simplified reporting system of annual reports adopted pursuant to Article 27 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (°). The specific reporting provisions laid down in Annex III to Regulation (EC) No 70/2001 should there- fore only apply until such time as a general reporting system has been adopted. () OJ L 142, 14.5.1998, p. 1. () O] € 190, 12.8.2003, p. 3. () OJ L 10, 13.1.2001, p. 33. () OJL 107, 30.4.1996, p. 4. () OJ L 124, 20.5.2003, p. 36. () OJ L 83, 27.3.1999, p. 1. Regulation as amended by the 2003 Act of Accession. of the compatibility with the common market of any aid to small and medium-sized enterprises granted without prior authorisation of the Commission before the entry into force of Regulation (EC) No 70/2001. (5)  Aid for research and development can contribute to economic growth, strengthening competitiveness and boosting employment. Aid for research and development for SMEs is of utmost importance, because one of the structural disadvantages of SMEs lies in the difficulty they may experience in gaining access to new technolo- gical developments and to technology transfer. At the same time, the Commission has taken the view in the Community framework for State aid for research and development () that it may be assumed that State aid for research and development will represent an incentive for SMEs to engage in more research and development since SMEs in general only spend a low percentage of their turnover on research and development activities. On the basis of its experience with the application of the Com- munity framework for State aid for research and devel- opment to SMEs, the Commission has therefore decided that it is justified to exempt such aid from prior notifica- tion, taking also into account that such aid only has very limited potential to have a negative effect on competi- tion. This also applies to aid for feasibility studies and aid to cover patenting costs as well as to individual aid which does not exceed certain ceilings. (6)  The scope of Regulation (EC) No 70/2001 should there- fore be extended to cover aid for research and develop- ment granted to SMEs in the widest possible range of sectors. (7)  Certain definitions in Regulation (EC) No 70/2001 should be amended, in order to take account of the particularities of State aid for research and development, and others should be added. In particular, the definitions of the stages of research and development contained in Annex I to the Community framework for State aid for Research and Development should be inserted. The list of eligible costs should correspond to the list in Annex I to the framework, with certain clarifications necessary in order to reflect the fact that a Regulation is directly applicable in the Member States. Beneficiaries should not be able to benefit from double subsidisation of identical research results. () O] C 45, 17.2.1996, p. 5.