BUSINESS OPERATIONS OF FOREIGN-CONTROLLED ENTERPRISES
NOTES ON METHODOLOGY
In this survey, due to a lack of relevant sources for the period from 2008 to 2015 for the detection of UCI, a substitution criterion has been determined based on the headquarters of the first foreign majority owner. Starting with the 2016 reference year, UCI has been taken over from the EuroGroups Register (EGR), while, concerning all enterprises not recorded in the EGR, UCI is still determined by a substitution criterion based on the headquarters of the first foreign majority owner and is taken over from the Statistical Business Register (SBR).
The purpose of iFATS survey is to collect information on the role and impact of foreign affiliates within business economy of the Republic of Croatia.
The iFATS survey is carried out in full accordance with European standards of business statistics (Regulation (EU) 2019/2152 of the European Parliament and of the Council of 27 November 2019 on European business statistics, repealing 10 legal acts in the field of business statistics).
Legal framework
REGULATION (EU) 2019/2152 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 on European business statistics, repealing 10 legal acts in the field of business statistics (Text with EEA relevance)
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32019R2152
COMMISSION IMPLEMENTING REGULATION (EU) 2020/1197 of 30 July 2020 laying down technical specifications and arrangements pursuant to Regulation (EU) 2019/2152 of the European Parliament and of the Council on European business statistics, repealing 10 legal acts in the field of business statistics (Text with EEA relevance)
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R1197
COUNCIL REGULATION (EEC) No. 696 /93 of 15 March 1993 on the statistical units for the observation and analysis of the production system in the Community
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:31993R0696
COMMISSION IMPLEMENTING REGULATION (EU) 2020/1470 of 12 October 2020 on the nomenclature of countries and territories for the European statistics on international trade in goods and on the geographical breakdown for other business statistics (Text with EEA relevance)
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R1470
Other methodological materials
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R0137
European business statistics compilers’ manual for foreign affiliates statistics - 2024 edition
https://ec.europa.eu/eurostat/documents/3859598/18622388/KS-GQ-23-018-EN-N.pdf/bfcf28ea-1430-e089-d971-76f85800623a?version=3.0&t=1709546836946
Sources and methods of data collection
Data on iFATS have been taken over from the annual processing of the structural business statistics (SBS) for the inward foreign affiliates statistics. The SBS compilation data as well as those used in the calculation of SBS indicators are collected entirely from existing administrative and statistical sources.
The principal data source in sections B – J, L – N and P – S is the Annual Financial Report of Entrepreneurs (GFI-POD form) taken over from the Financial Agency, while data in section K are obtained from the Croatian National Bank and the Croatian Financial Services Supervisory Agency. Additional data sources are other financial reports, records of the Tax Administration Office (profit and income taxes) and own survey of the Croatian Bureau of Statistics ‒ the Annual Report on Gross Investment in Fixed Assets (INV-P form), in accordance with the relevant methodology.
Observation units
The main observation unit used in the iFATS is an enterprise – a business entity that makes an organisational unit engaged in producing goods and/or services, benefits from a certain degree of autonomy and operates on the territory of the Republic of Croatia under foreign control, in accordance with Council Regulation (EEC) No. 696/93 on the statistical units for the observation and analysis of the production system in the Community. Depending on the business and organisational situation, it may correspond to either one legal unit or a group of several legal units. In addition to legal units, enterprises also include free lances and crafts.
Each enterprise as a whole is assigned a code number of its principal activity according to the National Classification of Activities, 2007 version. The principal activity is determined and updated by the SBR of the Croatian Bureau of Statistics. The criterion for determining the principal activity is the largest share in the total value added of an enterprise. If it is not possible to obtain accurate information on the value added, the activity classification has to be determined by using substitute criteria such as income and/or the number of employed persons. For enterprises classified in section K – Financial and insurance activities, observation units are still legal entities or natural persons, which are used as proxies for enterprises.
Units according to UCI have been taken over from the EuroGroups Register (EGR), while, concerning all enterprises not recorded in the EGR, UCI is determined by a substitution criterion based on the headquarters of the first foreign majority owner and is taken over from the Statistical Business Register (SBR).
Coverage
Data are presented by sections and divisions of the National Classification of Activities, 2007 version (NKD 2007), combined with the geographical breakdown.
They include active enterprises – market producers that are classified into sections B – N, P – R and divisions S95 and S96, according to their principal activity.
Publishing
The final national results of iFATS variables are published within 21 months after the end of the reference (reporting) year. After the publishing of data in the Republic of Croatia, the data are also taken over and published by Eurostat.
Confidentiality
Aggregate data, for which confidentiality must be upheld (because of a small number of units, the dominance rule or secondary confidentiality rule), are treated as such and are not published, in line with the Official Statistics Act (NN, Nos 25/20 and 155/23) and Regulation (EU) 2019/2152 of the European Parliament and of the Council.
Definitions of variables
BUSINESS POPULATION
Variable 210101: Number of active enterprises
(According to previous Regulation Variable 11110: Number of enterprises)
The number of active enterprises is the number of all statistical units which at any time during the reference period were ‘enterprises’, as defined in Council Regulation (EEC) No 696/93, and also active during the same reference period. A statistical unit is considered to have been active during the reference period, if in said period it either realized positive net turnover or produced outputs or had employees or performed investments.
Note: For the size of the enterprise, for statistical purposes, in practice, a breakdown by the number of persons employed is used; micro-sized enterprises: less than 10 persons employed; small enterprises: 10 to 49 persons employed; medium-sized enterprises: 50 to 249 persons employed; large enterprises: 250 and more persons employed. Usually, the heading small and medium-sized enterprises (SME) also imply micro-sized, small and medium-sized enterprises.
Additional official criteria for defining SME are given in the COMMISSION RECOMMENDATION of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (2003/361/EC). There is no single point of entry to register an enterprise as an SME. Depending on the funding programme and the managing authority (European, national, regional) to which one applies, there will be separate registration procedures.
Variable 210301: Number of foreign-controlled enterprises
(According to previous Regulation Variable 11110: Number of enterprises)
In country-level business statistics foreign-controlled enterprise shall mean an enterprise resident in the compiling country over which an ultimate controlling institutional unit not resident in the compiling country has control. Enterprises shall mean active enterprises as defined for variable 210101.
Control shall mean the ability to determine the general policy of an enterprise, for example by choosing appropriate directors, if necessary. In this context, enterprise A is deemed to be controlled by an institutional unit B when B controls, directly or indirectly, more than half of the shareholders’ voting power, or by other means secures the control over A.
Foreign control shall mean that the ultimate controlling institutional unit is resident in a different country from the one where the institutional unit over which it has control is resident.
Branches shall mean local units of foreign enterprises not constituting separate legal entities. They are treated as quasi- corporate enterprises within the meaning of Regulation (EU) No 549/2013 and shall be deemed to be enterprises for the purposes of foreign affiliates statistics.
Ultimate controlling institutional unit of an affiliate shall mean the institutional unit, proceeding up an affiliate’s chain of control, which is not controlled by another institutional unit.
Foreign affiliate shall mean an enterprise resident in the compiling country over which an institutional unit not resident in the compiling country has ultimate control, or an enterprise not resident in the compiling country over which an institutional unit resident in the compiling country has ultimate control.
Country of ultimate control shall mean the country of residence of the ultimate controlling institutional unit, or group of units acting in concert.
Institutional unit and local unit shall each have the same meaning as in Regulation (EEC) No 696/93.
Inward foreign affiliates statistics shall mean statistics describing the activity of foreign affiliates resident in the compiling country.
LABOUR INPUTS
Variable 120101: Number of employees and self-employed persons
(According to previous Regulation Variable 16110: Number of persons employed)
The
number of employees and self-employed persons is the sum of the number of
employees and the number of self
-employed persons. The ‘Number of employees‘ is defined as for variable 220102.
The number of self-employed persons is the average number of persons who were
at some time during the reference period the sole owners or joint owners of the
statistical unit in which they work. Family workers and outworkers whose income
is a function of the value of the outputs of the statistical unit are also
included.
Variable 220102: Number of employees
(According to previous Regulation Variable 16130: Number of employees)
The number of employees represents the average number of persons who were, at some time during the reference period, employees of the statistical unit.
Explanatory note
While the employment relationship, which qualifies the parties (into employee and employer), is defined in specific legislation or contract, the term ‘employee’ usually means a person hired by the statistical unit to provide services to it on a regular basis, in exchange for benefits and where the services provided are not part of an independent business. For the sake of clarity, apprentices, if hired under such conditions, are considered employees.
The average should be calculated as the arithmetic mean of the number of employees over the shortest time periods of equal length fitting into the reference period, for which regular observations are practicable (e.g. daily, weekly, monthly, quarterly, etc.).
Variable 220301: Employee benefits expense
(According to previous Regulation Variable 13310: Personnel costs)
This variable contains all expenses arising in relation with employee benefits, recognised by the statistical unit during the reference period.
Employee benefits are all forms of consideration given by the statistical unit in exchange for service rendered by employees or for the termination of employment.
Variable 220501: Number of employees and self-employed persons in foreign-controlled enterprises
(According to previous Regulation Variable 16110: Number of persons employed)
The ‘number of employees and self-employed persons’ is defined as for variable 120101 and ‘foreign-controlled enterprises’ as for variable 210301.
Variable 220701: Employee benefits expense in foreign-controlled enterprises
(According to previous Regulation Variable 13310: Personnel costs)
The ‘employee benefits expense’ is defined as for variable 220301 and ‘number of foreign-controlled enterprises’ as for variable 210301.
PURCHASES
Variable 240101: Total purchases of goods and services
(According to previous Regulation Variable 13110: Total purchases of goods and services)
Total purchases of goods and services includes the total amount of goods and services purchased by the statistical unit, recognised in accounting as either current assets or expenses during the reference period.
Included in these purchases of goods, as a non-exhaustive list of examples, are: raw, auxiliary and packaging materials, consumables, fuel, spare parts, seeds and fodder, animals, small inventory items and goods purchased for resale.
Included in the purchases of services, as a non-exhaustive list of examples, are services with electricity, heating, water, maintenance, repairs, royalties, rental, insurance, research (if performed by third parties), agency work, advertising, promotion, transport, communication, banking, legal, accounting and any other service performed by third parties and recognised as an expense during the reference period.
Increases in finished goods and work in progress, as well as any financial assets and non-current assets are not included. As an exception, assets from other classes reclassified to any of the items listed above as included, are also included.
The purchases of goods and services referred to by this definition are valued according to the rules laid down to this effect in the accounting standards based on which the aforementioned assets and expenses were recognised.
Variable 240102: Purchases of goods and services for resale
(According to previous Regulation Variable 13120: Purchases of goods and services purchased for resale in the same condition as received )
Purchases of goods and services purchased for resale in the same condition as received are purchases of goods for resale to third parties without further processing. It also includes purchases of services by ‘invoicing’ service companies, i.e. those whose turnover is composed not only of agency fees charged on a service transaction (as in the case of estate agents) but also the actual amount involved in the service transaction, e.g. transport purchases by travel agents.
Excluded is the value of goods and services which are sold to third parties on a commission basis, since these goods are neither bought nor sold by the agent receiving the commission.
Purchases of goods and services purchased for resale in the same condition as received is part of the variable “Total purchases of goods and services” and used in the calculation of other aggregates and balances.
Variable 240301: Total purchases of goods and services of foreign-controlled enterprises
(According to previous Regulation Variable 13110: Total purchases of goods and services)
The ‘total purchases of goods and services’ is defined as for variable 240101 and ‘foreign-controlled enterprises’ as for variable 210301.
Variable 240302: Purchases of goods and services for resale of foreign-controlled enterprises
(According to previous Regulation Variable 13110: Total purchases of goods and services)
The ‘Purchases of goods and services for resale’ is defined as for variable 240102 and ‘foreign-controlled enterprises’ as for variable 210301.
OUTPUT AND PERFORMANCE
Variable 140301: Net Turnover
(According to previous Regulation Variable 12110: Turnover)
For all activities except for NACE 64, 65 and some activities of NACE 66 net turnover consists of all income arising during the reference period in the course of ordinary activities of the statistical unit, and is presented net of all price reductions, discounts and rebates granted by it.
Income is defined as increases in economic benefits during the reference period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants.
The inflows referred to are arising from contracts with customers and are realized through the satisfaction by the statistical unit of performance obligations as foreseen in said contracts. Usually, a performance obligation is represented by the sale (transfer) of goods or the rendering of services, however, the gross inflows can also contain revenues obtained as a yield on the use by others of the statistical unit’s assets.
Excluded from net turnover are:
- all taxes, duties or levies linked directly to revenue;
- any amounts collected on behalf of any principal, if the statistical unit is acting as an agent in its relationship with said principal;
- all income not arising in the course of ordinary activities of the statistical unit. Usually, these types of income are classified as ‘Other (operating) income’, ‘Financial income’, ‘Extraordinary income’ or under a similar heading, depending on the respective set of generally accepted accounting standards used to prepare the financial statements.
Infra-annual statistics may not be able to take into account aspects such as annual price reductions, subsidies, rebates and discounts.
For the activities of NACE K6411, K6419 and K649, net turnover is defined as the value of output minus subsidies or government grants.
For the activities of NACE K642 and K643, net turnover can be approximated by the total operating costs, if net turnover is not available in the financial statements.
For the activities of NACE K6511, K6512 and K652, net turnover is defined as gross premiums earned.
For the activities of NACE K653 the net turnover is defined as total pension contributions
For activities of NACE K66 for which net turnover is not available in the financial statements, net turnover is defined as the value of output minus subsidies or government grants. For activities of NACE K66 for which net turnover is available in the financial statements, the standard definition of net turnover applies.
Variable 250301: Value of output
(According to previous Regulation Variable 12120 : Production value)
Value of output represents the value of the total output of the statistical unit, generated during the reference period.
For all activities except for activities of NACE 64, 65 and 66 it is the sum of:
+ net turnover,
± change in stock of finished goods and work in progress,
± change in stock of goods for resale,
+ income from product- or turnover-related subsidies and
+ capitalised output
– purchases of goods and services purchased for resale.
Income from product- or turnover-related subsidies is any income originating from government assistance granted to and recognised as such by the statistical unit during the reference period.
Capitalised output is the total increase of all self-generated long-term assets, recognised as such by the statistical unit during the reference period.
For the activities of NACE K6411, value of output is defined as other administrative expenses than staff costs plus fees and commission expenses plus staff costs plus depreciation of tangible and intangible fixed assets.
For the activities of NACE K6419 and K649, value of output is defined as interest receivable and similar income minus Interest payable and similar charges plus commissions receivable plus income from shares and other variable-yield securities plus net profit or net loss on financial operations plus income from product or turnover related subsidies. For some activities of K6499, value of output is net turnover plus subsidies or government grants or can be approximated by the total operating costs, if net turnover is not available the financial statements.
For the activities of NACE K642 and K643, value of output is net turnover plus subsidies or government grants or can be approximated by the total operating cost, if net turnover is not available in the financial statements.
For the activities of NACE K6511, value of output is defined as gross premiums earned plus investment income minus income from participating interest minus value re-adjustments on investments plus investment income of reinsurers on their share of the gross technical provisions of the enterprise plus unrealised gains on investments plus other technical income, net of reinsurance minus claims paid plus/minus change in the provision for claims (increase needs to be subtracted, decrease needs to be added) plus/minus changes in other technical provisions net of reinsurance (costs need to be subtracted, income should be added) plus/minus (if available) changes in other technical provisions, reinsurers’ share (costs needs to be subtracted, income needs to be added) plus/minus (if available) change in fund for future appropriations (costs should be subtracted, income should be added) minus bonuses and rebates, net of reinsurance minus losses on the realisation of investments minus unrealized loss on investments plus other income.
For the activities of NACE K6512 and K652, value of output is defined as gross premiums earned plus investment income minus Income from participating interests minus value re-adjustments on investments plus investment income of reinsurers on their share of the gross technical provisions of the enterprise plus other technical income, net of reinsurance plus other income minus claims paid plus/minus change in the provision for claims (increase needs to be subtracted, decrease needs to be added) minus losses on the realisation on investments minus bonuses and rebates, net amount plus/minus change in the equalisation provision (costs should be subtracted, income need to be added) plus/minus changes in other technical provisions, not shown under other headings (costs should be subtracted, income should be added).
For the activities of NACE K653, value of output is defined as net turnover minus insurance premiums payable plus investment income plus other income plus insurance claims receivable minus total expenditure on pensions minus net change in technical provisions (increases in technical provisions are to be subtracted from value of output and decreases added). Alternatively, the value of output can be calculated as sum of costs.
For activities of NACE K66 for which net turnover is not available in the financial statements, value of output is defined as interest receivable and similar income minus interest payable and similar charges plus commissions receivable plus income from shares and other variable-yield securities plus net profit or net loss on financial operations plus income from product or turnover related subsidies.
For the activities of NACE K66 for which net turnover is available in the financial statements, value of output is defined as net turnover plus capitalised output plus income from product or turnover related subsidies.
Variable 250401: Value added
(According to previous Regulation Variable 12150: Value added at factor costs)
Value added is a composite indicator of net operating income, adjusted for depreciation, amortization and employee benefits, all components being recognised as such by the statistical unit during the reference period. Its value is given by the formula:
+ net turnover
+ income from product- or turnover-related subsidies
+ capitalised output
± change in stock of goods
– total purchases of goods and services.
Variable 250601: Net turnover of foreign-controlled enterprises
(According to previous Regulation Variable 12110: Turnover)
The ‘net turnover’ is defined as for variable 140301 and ‘foreign-controlled enterprises’ as for variable 210301.
250701: Value of output of foreign-controlled enterprises
(According to previous Regulation Variable 12120: Production value)
The ‘value of output’ is as defined for variable 250301 and ‘foreign-controlled enterprises’ as for variable 210301.
Variable 250801: Value added of foreign-controlled enterprises
(According to previous Regulation Variable 12150: Value added at factor costs)
The ‘value added’ is as defined for variable 250401 and ‘foreign-controlled enterprises’ as for variable 210301.
INVESTMENTS
Variable 260101: Gross investment in tangible non-current assets
(According to previous Regulation Variable 15110 : Gross investment in tangible goods)
Gross investment in tangible non-current assets includes all additions to tangible non-current assets, recognised as such by the statistical unit during the reference period, except any increases from revaluations or reversals of previously recognised impairment losses and from reclassifications (transfers) of other tangible non-current assets.
The additions include, but are not limited to, acquisitions, finance leases, improvements, alterations, renovations, constructions, self-constructions and any capitalised expenses, as allowed by the applicable accounting standards which define the recognition and valuation criteria.
Variable 260201: Foreign-controlled enterprises’ gross investment in tangible non-current assets
(According to previous Regulation Variable 15110: Gross investment in tangible goods)
The ‘gross investment in tangible non-current assets’ is defined as for variable 260101 and ‘foreign-controlled enterprises’ as for variable 210301.
Offshore financial centres: Andorra, Antigua and Barbuda, Anguilla, Aruba, Barbados, Bahrain, Bermuda, Bahamas, Belize, Cook Islands, Curaçao, Dominica, Grenada, Guernsey, Gibraltar, Hong Kong, Isle of Man, Jersey, St Kitts and Nevis, Cayman Islands, Lebanon, St Lucia, Liechtenstein, Liberia, Marshall Islands, Montserrat, Mauritius, Nauru, Niue, Panama, Philippines, Seychelles, Singapore, Sint Maarten (Dutch part), Turks and Caicos Islands, Saint Vincent and the Grenadines, Virgin Islands, British, Virgin Islands, U.S., Vanuatu and Samoa.
Additional notes
Deviation of sums may occur due to rounding of numbers.
Abbreviations
|
CBS EC EEA EEC EGR EU Eurostat iFATS NACE NKD 2007 NN SBR SBS UCI z ‘000 |
Croatian Bureau of Statistics European Community European Economic Area European Economic Community EuroGroups Register European Union statistical office of the European Union inward foreign affiliates statistics Statistical Classification of Economic Activities in the European Community National Classification of Activities, 2007 version Narodne novine, official gazette of the Republic of Croatia Statistical Business Register structural business statistics ultimate controlling institutional unit data are not published for confidentiality reasons thousand |
Symbols
- no occurrence
Prepared by:
Paula Nimac, phone: (+385 1) 48 06 249, e-mail: nimacp@dzs.hr
Lucia Nordli, phone: (+385 1) 48 06 270, e-mail: nordlil@dzs.hr