1993R0696 — EN — 20.11.2003 — 002.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILREGULATION(EEC)No696/93
of15March1993
on the statistical units for the observation and analysis of the production system in the Commu-
nity
(OJ L 76, 30.3.1993, p. 1)
Amended by:
Official Journal
No page date
►M1Regulation (EC) No 1882/2003 of the European Parliament and of the
Council of 29 September 2003L 284 1 31.10.2003
Amended by:
►A1Act of Accession of Austria, Sweden and Finland C241 21 29.8.1994
(adapted by Council Decision 95/1/EC, Euratom, ECSC) L 1 1 1.1.1995
▼B
COUNCILREGULATION(EEC)No696/93
of15March1993
on the statistical units for the observation and analysis of the
productionsystemintheCommunity
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European EconomicCommunity, and in particular Article 100a thereof,
Having regard to the proposal from the Commission (
1),
In cooperation withth e European Parliament (2),
Having regard to the opinion of the Economic and Social
Committee (3),
Whereas the functioning of the internal market requires statistical stan-
dards applicable to the identification of units and the collection,
transmission and publication of national and Community statistics in
order to make reliable and comparable information available to enter-prises, financial institutions, governments and all other operators inthe internal market;
Whereas statistical information on the production system will be neces-
sary to enterprises for assessing their competitiveness and be useful tothe Community institutions in the prevention of distortion of competi-tion;
Whereas in accordance with the principle of subsidiarity the creation of
common statistical norms that permit the production of harmonizeddata is an action which can only be undertaken efficiently at Commu-nity level and whereas those norms will be applied in each Member
State under the authority of the bodies and institutions in charge of
compiling official statistics;
Whereas only if the Member States use common definitions of statis-
tical units will it be possible to provide integrated statistical
information withth e reliability, speed, flexibility and degree of detailrequired for the management of the internal market;
Whereas provision should be made for the Member States to be able, in
order to meet specific requirements, to retain or introduce other statis-
tical units in their national nomenclatures for the observation andanalysis of the production system;
Whereas the choice of statistical units to be used in particular enquiries
or analyses will be determined in specific texts;
Whereas utilization of the statistical classification of economic activ-
ities in the European Communities hereafter referred to as NACE
Rev. 1 provided for in Regulation (EEC) No 3037/90(
4) and applica-
tion of the European System of Integrated Economic Accounts (ESA)require standard definitions of statistical units for registers, surveysand the presentation and analysis of statistics;
Whereas the Committee set up by Regulation (EEC) No 3037/90 is
competent for the ‘elaboration of guidelines for classifying statisticalunits in accordance withNACE Rev. 1’ but th e units must be definedelsewhere;
Whereas it is vital that the statistical units classified according to the
NACE Rev. 1 be defined in the same way in all Member States inorder to ensure comparability between the corresponding national andCommunity statistics;1993R0696 — EN — 20.11.2003 — 002.001 — 2
(1) OJ No C 267, 16. 10. 1992, p. 3.
(2) OJ No C 337, 21. 12. 1992; and Decision of 10 February 1993 (not yet
published in the Official Journal).
(3) OJ No C 19, 25. 1. 1993, p. 60.
(4) OJ No L 293, 24. 10. 1990, p. 1.
▼B
Whereas it is desirable to limit the number of statistical units used for
the production system;
Whereas the international comparability of economic statistics requires
that the Member States and the Community institutions use statisticalunits which are directly linked to the descriptions given in the introduc-tion to the United Nations International Standard Industrial
Classification (ISIC REV 3) and the United Nations System of
National Accounts documents;
Whereas the production system is made up of all entities involved in
production and all economic and financial operations carried out by
those entities;
Whereas the introduction of strict application of these units throughout
the Community requires a transitional period,
HAS ADOPTED THIS REGULATION:
Article 1
A list of statistical units (hereinafter referred to as ‘statistical units of
the production system’) as set out in the Annex hereto together with
the criteria used, the definitions of the units and explanatory notes is
hereby established.
Article 2
The definitions of the statistical units of the production system shall be
used by the Member States and the Commission to identify the unitswitha view to collecting, transmitting, publish ing and analysing statis-tical data on the production system, particularly those connected with
NACE Rev. 1.
Article 3
From 1 January 1994, for the objectives referred to in Article 2,
Member States shall use the definitions referred to in Article 1 forstatistics relating to situations subsequent to that date.
Article 4
1. During a transitional period running from 1 January 1994 to 31
December 1995, a Member State may, for statistics relating to thatperiod, use statistical units of the production system other than those
provided for in Article 1. In suchcases th e statistical data to be sent
to the Commission during the transitional period shall be adapted andtransmitted to conform as closely as possible to the Annex.
2. The Commission may, in exceptional circumstances, at the
request of a Member State and for duly substantiated technical or prac-tical reasons, extend the transitional period until no later than 31December 1997.
Article 5
After the end of the transitional period referred to in Article 4 the
Commission may, pursuant to the prodcedure laid down in Article 6,authorize a Member State to use other statistical units of the production
system.
Article 6
Measures for implementing this Regulation, including those for adapta-
tion to economic and technical developments concerning in particularthe statistical units of the production system, the criteria used and thedefinitions specified in the Annex, shall be determined in accordancewithth e procedure laid down in Article 7.1993R0696 — EN — 20.11.2003 — 002.001 — 3
▼M1
Article 7
1. The Commission shall be assisted by the Statistical Programme
Committee set up by Decision 89/382/EEC, Euratom, hereinafter
referred to as ‘the Committee’.
2. Where reference is made to this Article, Articles 4 and 7 of Deci-
sion 1999/468/EC (1) shall apply, having regard to the provisions of
Article 8 thereof.
The period laid down in Article 4(3) of Decision 1999/468/EC shall be
set at three months.
3. The Committee shall adopt its rules of procedure.
Article 8
The statistical units of the production system referred to in a Commu-
nity act governing Community statistics shall be interpreted in
accordance with the concepts and terminology of this Regulation.
Article 9
This Regulation shall enter into force on the 20th day following its
publication in the Official Journal of the European Communities .
This Regulation shall be binding in its entirety and directly applicable
in all Member States.1993R0696 — EN — 20.11.2003 — 002.001 — 4
(1) Council Decision 1999/468/EC of 28 June 1999 laying down the procedures
for the exercise of implementing powers conferred on the Commission (OJ
L 184, 17.7.1999, p. 23).▼B
▼B
ANNEX
STATISTICAL UNITS OF THE PRODUCTION SYSTEM IN THE
COMMUNITY
SECTION I
Listofunits
The list of statistical units of the production system is as follows:
A. the enterprise;
B. the institutional unit;C. the enterprise group;
D. the kind-of-activity unit (KAU);
E. the unit of homogeneous production (UHP);
F. the local unit;
G. the local kind-of-activity unit (local KAU);
H. the local unit of homogeneous production (local UHP).
SECTION II
Criteriaused
The statistial units in this Regulation are defined on the basis of three criteria.
The relative importance of these criteria depends on the type of unit concerned.
A.Legal, accounting or organizational criteria
1. In order to define units that are recognizable and identifiable in the
economy, legal or institutional criteria must be applied. In some cases,
legally separate units must be grouped together as they are not suffi-
ciently autonomous in their organization. In order to define some types
of unit, accounting or financial criteria also have to be applied.
2. To constitute the enterprise unit, use is made of legal units that exercise,
wholly or partially, a productive activity.
3. Legal units include:
— legal persons whose existence is recognized by law independently of
the individuals or institutions which may own them or are members of
them,
— natural persons who are engaged in an economic activity in their own
right.
4. The legal unit always forms, either by itself or sometimes in combination
with other legal units, the legal basis for the statistical unit known as the
‘enterprise’.
B.Geographical critera
1. A unit can be geographically identified. A distinction is made between
local, regional, national, Community and worldwide areas.
2. The local level here means the territory corresponding to the ‘smallest
administrative area’: the ‘commune/gemeente’ in Belgium; the
‘kommune’ in Denmark; the ‘Gemeinde’ in Germany; the ‘demos’ or
‘koinotis’ in Greece; the ‘municipio’ in Spain; the ‘commune’ in France;
the ‘DED/ward’ in Ireland; the ‘comune’ in Italy; the ‘commune’ in
Luxembourg; the ‘gemeente’ in the Netherlands; ►
A1the ‘Gemeinde’
in Austria; the ‘concelho’ in Portugal; the ‘kunta — kommun’ in Finland;
the ‘primärkommun’ in Sweden and the ‘ward’ in the United King-
dom.◄
3. The regional levels are defined by the nomenclature of territorial units for
statistics (NUTS), which distinguishes three levels (I, II, III).
4. The observation and analytical units are defined in such a way as to
permit data first to be determined for eachMember State and th ese data
to be combined to give figures for the Community as a whole or for
larger areas.
5. The rules regarding geographical criteria must be in order to permit
consolidation and avoid double counting and omissions.1993R0696 — EN — 20.11.2003 — 002.001 — 5
▼B
C.Activity critera
1. The economic activity of production — hereinafter referred to as
‘activity’ — can be said to take place when resources such as equipment,
labour, manufacturing techniques, information networks or products are
combined, leading to the creation of specific goods or services. An
activity is characterized by an input of products (goods or services), aproduction process and an output of products.
2. Activities are determined by reference to a specific level of NACE Rev.
1.
3. If a unit carries out more than one activity, all the activities which are not
ancillary activities are ranked according to the gross value added at factor
cost which they generate. A distinction is made between principal activity
and secondary activities.
4. If no value-added figures are available, other criteria must be used, such
as, for example, employment, payroll, turnover and assets, witha view to
obtaining the closest possible approximation of the classification which
would have been obtained on the basis of value added.
5. Units are classified in terms of their activities. If one activity accounts for
over 50 % of the value added this determines the classification of the
unit. In all other cases, classification rules must be observed. Classifica-
tion is carried out in stages from the highest level of aggregation which is
the section (one letter), down to the class (four digits) via the division
(two digits) and the group (three digits). The classification at each level
must be compatible with the previous level. The Statistical Programme
Committee referred to in Article 7 of Regulation (EEC) No 3037/90 has
competence in this field.
6. Principal and secondary activities are backed up by ancillary activities,
suchas, for example, administration, accounts, data processing, process
monitoring, purchasing, sales and marketing, warehousing, repairs, trans-
port and renovation.
These ancillary activities within a unit are carried out in order to permit
or facilitate production by the unit of goods and services for third parties.
The products of ancillary activities are not themselves supplied to third
parties.
7. The notion of ancillary activities is developed in section IV B.
SECTION III
Definitionsofunitsandexplanatorynotesspecifictoeachunit
A.Enterprise
Theenterprise is the smallest combination of legal units that is an organiza-
tional unit producing goods or services, which benefits from a certain degree
of autonomy in decision-making, especially for the allocation of its current
resources. An enterprise carries out one or more activities at one or more
locations. An enterprise may be a sole legal unit.
Explanatory note
The enterprise thus defined is an economic entity which can therefore, under
certain circumstances, correspond to a grouping of several legal units. Some
legal units, in fact, perform activities exclusively for other legal units and
their existence can only be explained by administrative factors (e. g. tax
reasons), without them being of any economic significance. A large propor-
tion of the legal units with no persons employed also belongs to this
category. In many cases, the activities of these legal units should be seen
as ancillary activities of the parent legal unit they serve, to which they
belong and to which they must be attached to form an enterprise used for
economic analysis.
B.Institutional unit
Theinstitutional unit is an elementary economic decision-making centre
characterized by uniformity of behaviour and decision-making autonomy in
the exercise of its principal function. A unit is regarded as constituting an
institutional unit if it has decision-making autonomy in respect of its prin-
cipal function and keeps a complete set of accounts.
— In order to be said to have autonomy of decision in respect of its prin-
cipal function, a unit must be responsible and accountable for the
decisions and actions it takes.1993R0696 — EN — 20.11.2003 — 002.001 — 6
▼B
— In order to be said to keep a complete set of accounts, a unit must keep
accounting records covering all its economic and financial transactions
carried out during the accounting period, as well as a balance sheet of
assets and liabilities.
Explanatory notes
1. In the corporate enterprises sector, the enterprise corresponds to the insti-
tutional unit used in the ESA. Similar institutional units also exist in the
general government and private non-profit institutions sectors. The insti-
tutional unit in the households sector covers all the activities of
households, while the term ‘enterprise’ is reserved exclusively for their
production activities.
2. Applying these rules leads to the following solutions for entities which do
not clearly possess bothch aracteristics of an institutional unit.
(a)Households always enjoy autonomy of decision and must therefore be
institutional units, even though they do not keep a complete set of
accounts.
(b) Entities which do not keep a complete set of accounts are combined
with the institutional units in whose accounts their partial accounts
are integrated.
(c) Entities which, while keeping a complete set of accounts, have no
autonomy of decision in the exercise of their principal function are
combined with the units which control them.
(d) Entities which satisfy the definition of an institutional unit are treated
as such even if they do not publish their accounts.
(e) Entities forming part of a group of enterprises and keeping a
complete set of accounts are deemed to be institutional units even if
they have surrendered, in fact if not in law, part of their autonomy of
decision to the central body (the holding company) responsible for
the group's general management. The holding company itself is
deemed to be an institutional unit distinct from the units which it
controls.
3. The following are deemed to be institutional units:
— units which have a complete set of accounts and autonomy of deci-
sion:
(a) private and public companies, public corporations;
(b) cooperatives or partnerships recognized as independent legal enti-
ties;
(c) public enterprises which by virtue of special legislation are recog-
nized as independent legal entities;
(d) non-profit institutions recognized as independent legal entities;
(e) agencies of general government.
— units which have a complete set of accounts and which, by conven-
tion, are deemed to have autonomy of decision:
(f) quasi-corporate enterprises: sole proprietorships, partnerships and
public enterprises, other than those referred to in points (a), (b)
and (c) in so far as their economic and financial behaviour can
be separated from that of their owners and resembles that of
corporate enterprises;
— units which do not necessarily keep a complete set of accounts, but
which by convention are deemed to have autonomy of decision:
(g) households.
C.Enterprise group
Anenterprise group is an association of enterprises bound together by legal
and/or financial links. A group of enterprises can have more than one deci-
sion-making centre, especially for policy on production, sales and profits. It
may centralize certain aspects of financial management and taxation. It
constitutes an economic entity which is empowered to make choices, parti-
cularly concerning the units which it comprises.
Explanatory notes
1. For certain observations and analyses it is sometimes useful and neces-
sary to study the links between certain enterprises and to group together
those which have strong ties with each other.
A number of exercices are underway but not finished concerning the
concept of the group of enterprises. It is defined here starting from the1993R0696 — EN — 20.11.2003 — 002.001 — 7
▼B
concept of accounting group as given in the Seventh Council Directive
83/349/EEC (OJ No L 193, 18. 7. 1983, p. 1). This Directive came into
force for the first time for consolidated accounts of the financial year
which began in 1990. Directive 90/605/EEC (OJ No L 317, 16. 11.
1990, p. 60) extended the scope of application of the Seventh Directive.
2. Within the meaning of the Seventh Directive, a group is presumed to
exist where 20 % of the capital or voting rights are held or controlled
by another enterprise. Provisions regarding the control of the power to
appoint directors must be taken into account. Behind financial (majority)
control, the aim is to take into account where the control really is.
3. This definition as it stands, is not suitable for statistical analysis because
‘accounting groups’ do not constitute mutually exclusive, additive groups
of enterprises. A statistical unit known as ‘enterprise group’ based on the
‘accounting group’ concept must be defined by applying the following
amendments:
— consider accounting groups at the highest consolidation level (group
head),
— include in enterprise group units whose accounts are entirely inte-
grated in those of the consolidating company,
— add majority-controlled units whose accounts are not included in the
overall consolidating by virtue of application of one of the criteria
allowed by the seventh Directive, i. e. difference in the type of
activity or small realive size,
— discount temporary links of less than a year.
4. An enterprise group is a set of enterprises controlled by the group head.
The group head is a parent legal unit which is not controlled either
directly or indirectly by any other legal unit. The subsidiary enterprises
of a subsidiary enterprise are considered to be subsidiaries of the parent
enterprise. However there are some forms of cooperative or mutual asso-
ciations where the parent enterprise is actually owned by the units of the
group.
5. Enterprise groups are often bound together by various types of links such
as ownership, controlling interest and management. These units are often
linked withunits of th e same family from several different generations.
The enterprise group unit often corresponds to a conglomerate bound
together by a network of complex relationships and frequently covers a
very wide range of activities. Subgroups can be identified within enter-
prise groups.
6. It is useful to recognize all (majority and minority) links between the
group head and the controlled enterprise via the network of subsidiaries
and sub-subsidiaries. This allows the group's entire organization to be
depicted.
7. In view of the implications of the different accounting directives, an
attempt should always be made to distinguish between basic units of the
group that belong to non-financial enterprises and those which must be
classified as financial institutions. In the case of the latter, a distinction
must be drawn between units that are credit institutions and those that
are insurance enterprises. Some enterprise groups span the whole world,
but need to be analysed for the economic territory of the Community and
for that of each Member State.
8. The enterprise group unit is particularly useful for financial analyses and
for studying company strategies, but it is too varied in nature and
unstable to be adopted as the central unit for observation and analysis,
which remains the enterprise. It is used for compiling and presenting
certain information.
D.Kind-of-activity unit (KAU)
Thekind of activity unit (KAU) groups all the parts of an enterprise contri-
buting to the performance of an activity at class level (four digits) of NACE
Rev. 1 and corresponds to one or more operational subdivisions of the enter-
prise. The enterprise's information system must be capable of indicating or
calculating for eachKAU at least th e value of production, intermediate
consumption, manpower costs, the operating surplus and employment and
gross fixed capital formation.
Explanatory notes1. The KAU was devised as an observation unit in order to improve the
homogeneity of the results of statistical surveys by activity and hence
the international comparability of these results, since at the level of the
enterprise different types of horizontal and vertical integration can be1993R0696 — EN — 20.11.2003 — 002.001 — 8
▼B
observed at bothnational and international level. An entity wh ichonly
carries out ancillary activities for the enterprise to which it belongs
cannot be considered as a separate KAU. In fact the KAU corresponds
to the operational definition given in paragraph 96 of the introduction to
ISIC Rev. 3.
2. The KAUs falling within a particular heading in the NACE Rev. 1 classi-
fication system can produce products outside the homogeneous group, on
account of secondary activities connected with them which cannot be
separately identified from available accounting documents. Conversely,
the KAUs classified under a particular heading in the classification
system on the basis of a principal activity do not produce the entire
output of homogeneous groups of specific products because the same
products can be produced in secondary activities of KAUs falling under
some other classification heading.
3. The internal accounts of enterprises (e. g. profit or cost centres) have
often been developed according to criteria that are close: the activity
concept. They enable the supply of data at KAU level, so that these can
be observed.
4. All the costs of ancillary activities of an enterprise must be allocated to
the principal and secondary acitivites and thus to the KAUs observed
within the enterprise.
E.Unit of homogeneous production (UPH)
Theunit of homogeneous production (UHP) is characterized by a single
activity which is identified by its homogeneous inputs, production process
and outputs. The products which constitute the inputs and outputs are them-
selves distinguished by their physical characteristics and the extent to which
they have been processed as well by the production technique used, by refer-
ence to a product classification. The unit of homogeneous production may
correspond to an institutional unit or a part thereof; on the other hand, itcan never belong to two different institutional units.
Explanatory notes
1. For a clear analysis of the production process, the ESA has adopted units
of homogeneous production that enable the technical/economic relation-
ships to be studied. These analytical units are used particularly for
Input-Output tables, and in practice are reconstituted from data collected
for the observation units, since they cannot as a rule be directly observed.
2. Most observation units are engaged in a combination of activities at the
same time. They may be engaged in a principal activity, some secondary
activities — i. e. activities belonging to other branches — and some
ancillary activities such as administration, purchasing, selling to the trade,
storage, repairs, etc. If an observation unit carries out a principal activity
as well as one or more secondary activities, it will be subdivided into the
corresponding number of units of homogeneous production, and the
secondary activities will be reclassified under different headings from
the principal activity. On the other hand, the ancillary activities of the
observation unit are not separated from the principal or secondary activ-
ities they serve.
3. The unit of homogeneous production is defined independently of the
location of the activity. In ISIC Rev. 3, the unit of homogeneous produc-
tion is defined in sucha way as to correspond to th e local UHP.
Paragraph112 of th e introduction to ISIC Rev. 3 is governed by para-
graph104.
F.Local unit
Thelocal unit is an enterprise or part thereof (e. g. a workshop, factory,
warehouse, office, mine or depot) situated in a geographically identified
place. At or from this place economic activity is carried out for which —
save for certain exceptions — one or more persons work (even if only part-
time) for one and the same enterprise.
Explanatory notes1. If a person works in more than one place (maintenance or surveillance) or
at home, the local unit is taken to be place from which instructions
emanate or from where the work is organized. It must be possible to
specify the employment attached to any local unit. However, all legal
units that serve as the legal basis for an enterprise or a part thereof must
have a local unit which is the registered office, even if nobody works
there. Moreover, a local unit can comprise only ancillary activities.1993R0696 — EN — 20.11.2003 — 002.001 — 9
▼B
2. A geographically identified place must be interpreted on a strict basis:
two units belonging to the same enterprise at different locations (even
within the smallest administrative unit of the Member State) must be
regarded as two local units. However, a single local unit may be spread
over several adjacent administrative areas, in which case, by convention,
the postal address is the determining factor.
3. The boundaries or the unit are determined by the boundaries of the site,
which means for example that a public highway running through does not
interrupt the continuity of the boundaries. The definition is similar to the
one in paragraph 101 of the introduction to ISIC Rev. 3 in that it
concerns localization in the strict sence of the term, but differs from the
definition in paragraph 102 in that this strict sense may not vary
according to the statistics under consideration. In addition, the criterion
of persons working in the unit is normally applied.
4. The ESA-REG (the regional application of the ESA) uses the same defi-
nition of local unit for regional accounts purposes.
G.Local kind-of-activity unit (local KAU)
Thelocal kind-of-activity unit (local KAU) is the part of a KAU which
corresponds to a local unit.
Explanatory notes
1. Each KAU must have at least one local KAU; however, the KAU can be
made up of a grouping of parts of one or more local units. On the other
hand, a local unit may in certain circumstances comprise solely a group
of ancillary activities. In this instance, a supplementary classification of
the local unit is possible. Furthermore, each enterprise should have at
least one local KAU.
2. The local KAU corresponds to the operational definition of the establish-
ment as given in paragraph106 of th e introduction to ISIC Rev. 3.
H.Local unit of homogeneous production (local UHP)
Thelocal unit of homogeneous production (local UHP) is the part of a unit
of homogeneous production which corresponds to a local unit.
SECTION IV
Additionalexplanatorynotes
A.Government and non-profit bodies
1. In the case of general government bodies, the appropriate statistical unit
for the collection and compilation of statistics is very variable (e. g.
central government, social security administration, or local government
of the region, province, department, county, municipality, metropolitan
area, etc.). These various bodies collectively plan, supervise and admin-
ister the finances of their constituent bodies (which can be ministries,
directorates-general, directorates, bureaus, agencies, offices, etc.) As
regards the type of activity, however, some of these bodies, particularly
local authorities, are likely to be much more heterogeneous than corpo-
rate enterprises.
2. The activities of these bodies often belong to Section L of NACE Rev. 1
‘Public administration and defence: compulsory social security’, although
other bodies carry out activities which basically belong to other Sections,
including ‘Education’ (Section M), ‘Healthand social work’ (Section N)
and ‘Other community, social and personal service activities’ (Section O).
3. When series of data on private-sector entities have to be combined with
data on these general government and private non-profit institutions clas-
sified by type of economic activity, their identification and classification
must be carried out using statistical units corresponding to entities which
are closest to the statistical units defined in the private sector. This is why
all the criteria used in the private sector are — by analogy — applied to
general government bodies. The same applies to private non-profit institu-
tions.
B.Ancillary activities
1. An activity must be regarded as ancillary if it satisfies all the following
conditions:
(a) it serves only the unit referred to: in other words, goods or services
produced must not be sold on the market;1993R0696 — EN — 20.11.2003 — 002.001 — 10
▼B
(b) a comparable activity on a similar scale is performed in similar
production units;
(c) it produces services or, in exceptional cases, non-durable goods
which do not form part of the unit's end product (e. g. small imple-
ments or scaffolding);
(d) it contributes to the current costs of the unit itself, i. e. does not
generate gross fixed capital formation.
2. The distinction between ancillary, principal and secondary activity can be
illustrated by a few examples, as follows:
— production of small implements for the unit's use is an ancillary
activity (in accordance withall criteria),
— own-account transport is normally an ancillary activity (in accordance
withall criteria),
— sales of own products are an ancillary activity because, as a general
rule, it is not possible to produce without sales. However, if it is
possible to identify a retail sales point within a production enterprise
(direct sales to end-user) which may be, for example, a local unit, this
sales point — exceptionally and for the purposes of certain analyses
— may be regarded as a kind-of-activity unit. This observation unit
then forms the subject of a twofold classification, i. e. in terms of
the (principal or secondary) activity it performs within the enterprise
and in terms of its own activity (retail sale).
3. Thus, the general rule is that, since production processes are not usually
viable without the support of ancillary activities, these ancillary activitiesshould not be isolated to form distinct entities, even if they are carried
out by a distinct legal entity or at a distinct place, and even if separate
accounts are kept. Furthermore, the ancillary activity is not taken into
account when classifying the activity of the entity by which the ancillary
activities are carried out. The best example of an entity carrying out
ancillary activities is the central administrative department of registered
office.
4. Having regard to the definition in point 1, the following activities must
not be considered as ancillary activities:
(a) the production of goods or work carried out which forms part of fixed
capital formation — in particular, construction work for own account.
This is in line with the method used in NACE Rev. 1, where units
carrying out construction work for own account are classified under
the building industry if data are available;
(b) production, a significant part of which is sold commercially, even if
muchis used as consumption in connection withth e principal or
secondary activities;
(c) the production of goods which subsequently become an integral part
of the output of the principal or secondary activity — e. g. production
of boxes, containers, etc. by a department of an enterprise for use in
packing its products;
(d) the production of energy (integrated power station or integrated
coking plant), even where this is consumed in its entirety in the prin-
cipal or secondary activity of the parent unit;
(e) the purchase of goods for resale in unaltered state;
(f) researchand development. Th ese activities are not very widespread
and do not produce services which are used in current production.
In all these cases, if separate data are available for these activities, they
should be regarded as distinct activities and subsequently recognized as
KAUs.
5. If ancillary activities are carried out for the benefit of a single entity,
these activities and the resources they use will constitute an integral part
of the activities and resources of that unit. However, if the activities of
the statistical unit and the corresponding ancillary activities are not
carried out in the same geographical area (defined in terms of the zones
delimited for the purposes of statistical surveys), it may be desirable to
collect separate supplementary information on these units for the cate-
gories of data which have to be classified in terms of geographical
areas, even if the units only carry out ancillary activities.
6. If ancillary activities are carried out basically for the benefit of two or
more kind-of-activity units, the cost of these ancillary activities must be
spread over all the kind-of-activity units which they support. If data are
available on the proportion of the costs which can be assigned to each
of these distinct activities, the costs should be broken down accordingly.
However, should no information of this kind be available, the cost of the1993R0696 — EN — 20.11.2003 — 002.001 — 11
▼B
ancillary activity should be broken down over the principal and secondary
activities proportionately to the value of output minus intermediate costs
excluding the costs of the ancillary activities themselves. If this method
proves too difficult in practice, the cost of the ancillary activity may
simply be broken down proportionately to the value of output.
7. If ancillary activities are organized in sucha way as to serve two or more
entities of a multi-unit enterprise, they may constitute a group of ancillary
activities at a distinct location. In this case, in the same way as it would
be desirable to cover certain activities completely even if they are carried
out independently or by entities which are engaged exclusively in ancil-
lary activities (suchas computer services), it could be useful to allow for
supplementary classifications. For this purpose these ancillary entities
could then be classified according to their own activities as well as being
classified under the activity of the unit to which they belong.
8. It is possible that an activity starts out as ancillary but subsequently
begins to provide services for sale to other entities. An activity of this
kind may develop to the point where it ceases to be an ancillary activity
and must therefore be regarded as one of the principal or secondary activ-
ities of an entity. The only way of deciding whether a given activity
should be regarded as an ancillary activity or a principal or secondary
activity is to assess the role it plays in the enterprise as a whole.
C.Synoptic table by activity and location
One or more activitiesOne or more locations
Enterprise
Institutional unitA single location
Local unit
One single activityKAU
UHPLocal KAU
Local UHP1993R0696 — EN — 20.11.2003 — 002.001 — 12