Ireland is facing a fine of between €90m and €180m from the EU for over-claims in area-based CAP schemes dating back to 2008.
The Department of Agriculture has confirmed to the Farming Independent that a "flat rate financial correction" on close to €9bn in EU payments for the period 2008-2012 will be imposed on Ireland by the Commission.
While the exact rate of the fine was not outlined by the Department, Commission fines usually range between 1pc and 2pc. This would equate to a massive clawback of between €90m and €180m.
However, the Minister for Agriculture, Simon Coveney, has challenged the imposition of the correction and insisted that the Commission's finding will be appealed.
How Ireland would pay the fines, if the appeals are unsuccessful, will be hugely divisive and problematic for Minister Coveney and the Government.
With the Coalition parties already preparing the public for another austerity Budget, the likelihood of the Exchequer picking up the tab is negligible.
However, farm organisations will also oppose any attempt to foist the bill on either the farmers who over-claimed or on the rest of the 130,000 Single Farm Payment (SFP) applicants.
"Most of those farmers tied up in the land parcel review are on marginal land and would not be able to carry the level of clawbacks that this fine could entail," one farmer representative said.
He also pointed out that a fine of €90m, if imposed across all SFP applicants, would result in a 7.5pc cut in payments, while a €180m fine would necessitate a 15pc clawback.
"For a farmer with a single farm payment of €20,000 that would mean an additional cut of between €1,500 and €3,000. That is not a runner," he said.
The fines relate to over-claims in schemes such as the SFP, Disadvantaged Area Scheme (DAS) and REPS.
The difficulties stem mainly from the inclusion of areas of scrub and rock in applications, but there were also instances where roadways and house sites were also included.
These areas were deemed 'ineligible' when satellite mapping techniques were employed to audit the schemes and a total review of the eligible areas for the schemes was sought in 2012.
This hugely controversial process involved checking 950,000 land parcel maps and 20,000 farmer applications. The Department subsequently imposed clawbacks of between 20pc and 50pc in total payments for 7,500 farmers.
Minister Coveney claimed that in light of this extensive review, the flat rate correction imposed on Ireland by the Commission was "not justified".
"A detailed case is being prepared for the EU Conciliation Body (which mediates on these corrections), which will argue strongly from both a legal and technical viewpoint that a flat rate correction is not justified," the Department stated.
"No final decision is expected until late in the year and in the meantime every effort will be made to keep any correction to an absolute minimum, recognising the vast amount of work which has been carried out to date by the Department to address land eligibility," the statement added.
However, Ireland could struggle to make a case. The Commission has already imposed huge fines on France, Britain and Italy for infringements of direct payments regulations. France was fined €260m, Britain €100m and Italy €180m.
Speaking at the AGM of the ICMSA last November, Minister Coveney accepted that where payments had been made on ineligible land, the Commission was entitled to its money back.
"This is public money and we have to pay it back," Minister Coveney told farmers at the conference.
"If we don't sort out this problem ourselves, Brussels will come in and solve it for us," he predicted.