FOREIGN-CONTROLLED ENTERPRISES (iFATS)

NOTES ON METHODOLOGY

Inward foreign affiliates statistics (iFATS) describe the activity of foreign affiliates resident in the compiling economy. According to Eurostat's methodology, a controlling institutional unit should be determined according to the ultimate controlling institutional unit of a foreign affiliate (UCI), which is not controlled by another institutional unit within the foreign affiliate’s chain of command. In this survey, due to a lack of relevant sources for its detection, UCI is determined for the period from 2008 to 2015 by a substitution criterion based on the headquarters of the first foreign 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 owner.

The purpose of the iFATS survey is measuring direct and indirect effects of foreign control on employment, wages and productivity in the Republic of Croatia by NKD sections; for the preparation of economic, competition, enterprise, research, technical development and employment policies in the context of the liberalisation process. The survey is carried out in accordance with the Regulation (EC) No. 716/2007 of the European Parliament and of the Council (EC) of 20 June 2007 on the structure and activity of foreign affiliates – the FATS Regulation. Data have been available since 2008.

Source 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 from existing administrative and statistical sources.

The principal data source in sections B – J and L – N as well as in division 95 of section S is the Annual Financial Report of Entrepreneurs (GFI-POD form) obtained from the Financial Agency. Additional data sources are other financial reports, records of the Tax Administration (profit and income taxes) and own surveys of the Croatian Bureau of Statistics (IDU-OK and INV-P forms) according to the relevant methodology.

Observation units

Observation unit for iFATS is an enterprise – a business entity that makes an organisational unit engaged in producing goods and/or services, holds 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.

Units according to the UCI are taken over from the EGR, while the coverage of business entities that are not registered in the EGR is formed according to the information received from the Croatian National Bank.

Each enterprise as a whole is assigned a code number of its principal activity according to the National Classification of Activities. The principal activity is determined and updated by the Statistical Business Register (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 the 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.

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 that are classified into sections B – J and L – N as well as into division 95 of section S of the NKD 2007., according to their principal activity.

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, No. 25/20) and the Commission Regulation (EC) No. 250/2009.

Definitions of variables

Number of enterprises (EU code 11110) is the number of enterprises under foreign control, registered in the Statistical Business Register that were active during at least a part of the reference period. A statistical unit is considered to be active if it either had employment or realised turnover or investments.

Turnover (EU code 12110) comprises the total accrued incomes from market sales of goods or services to third parties, with the exception of deductible VAT. Incomes classified as financial, other and extraordinary ones are excluded.

Production value (EU code 12120) measures the amount actually produced by the enterprise, based on sales, including changes in stocks and the resale of goods and services.

Value added at factor costs (EU code 12150) is the gross income from operating activities after adjusting for operating subsidies and indirect taxes, calculated gross (depreciation is not subtracted). Income and expenditure classified as financial is excluded from value added.

Total purchases of goods and services (EU code 13110) include the value of all goods and services (with the exception of deductible VAT) purchased during the accounting period, excluding capital goods the consumption of which is registered as consumption of fixed capital. Expenditures classified as financial ones are excluded.

Purchases of goods and services for resale (EU code 13120) include the value of goods and services (with the exception of deductible VAT) purchased for resale to third parties.

Personnel costs (EU code 13310) are remunerations calculated and payable by employers to employees in return for the work done. They are made up of wages and salaries (EU code 13320) and social security costs (EU code 13330).

Gross investments in tangible goods (EU code 15110) include all realised investments in new and existing tangible capital goods during the reference period, having a useful life of more than one year, including non-produced tangible goods such as land.

Number of persons employed (EU code 16110) is defined as the total number of persons who work in an enterprise (including working proprietors, partners working regularly in the unit, unpaid family workers and voluntary workers), as well as persons who work outside the enterprise they belong to but are paid by it.

Offshore financial centres: Andorra, Antigua and Barbuda, Anguilla, Aruba, Barbados, Bahrain, Bermuda, Bahamas, Belize, Cook Islands, Curaçao, Dominica, Grenada, Guernsey, Gibraltar, Hong Kong (China), Isle of Man, Jersey, Saint Kitts and Nevis, Cayman Islands, Lebanon, Saint Lucia, Liechtenstein, Liberia, Marshall Islands, Montserrat, Mauritius, Nauru, Niue, Panama, Philippines, Seychelles, Singapore, Saint Martin (the Netherlands Antilles), 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 EEC EGR EU EU code Eurostat FATS iFATS NKD 2007. NN SBS UCI VAT z ‘000

Croatian Bureau of Statistics European Community European Economic Community EuroGroups Register European Union EU code of variables statistical office of the European Union foreign affiliates statistics inward foreign affiliates statistics National Classification of Activities, 2007 version Narodne novine, official gazette of the Republic of Croatia structural business statistics ultimate controlling institutional unit value added tax data are not published for confidentiality reasons thousand

Symbols

b	break in time series

0,0 value not zero but less than 0.05 of the unit of measure used

- no occurrence

Information

Unit of measure:

number

thousand kuna/thousand euro

Prepared by:

Paula Nimac, Phone: +385 (0) 1 4806-249, E-mail: nimacp@dzs.hr

Lucija Babić, Phone: +385 (0) 1 4806-270, E-mail: babicl@dzs.hr

Ana Bašadur, Phone: +385 (0) 1 4806-204, E-mail: basadura@dzs.hr

This document has been produced with the financial assistance of the European Union. The contents of this document are the sole responsibility of the Croatian Bureau of Statistics and can under no circumstances be regarded as reflecting the position of the European Union.

Source:

Croatian Bureau of Statistics