This paper analyses the impact of the new direct payments (DPs) system introduced by the 2013 CAP reform on EU farming sector. We apply the EU-wide individual farm level model (IFM-CAP) which allows capturing farm specific implementation of DPs and assessing their distributional effects. Simulation results show that although the 2013 CAP reform succeeded to partially harmonize DPs between MS, relatively strong differences in DPs still remain in place. An important result of the 2013 CAP reform is also internal convergence of DPs within MS. The 2013 CAP reform reduced inequality of DPs as measured by the Gini coefficient from 0.581 to 0.561. The farm income decreases by around 1.3% at EU level due to the introduction of the new DPs. Around 60% of farms loose, whereas the remaining 40% of farms gain from the reform in EU-27. Small farms benefit, while large farms lose from the 2013 CAP reform.