EN Official Journal of the European Union L 174/1

REGULATION (EU) No 549/2013 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 21 May 2013

on the European system of national and regional accounts in the European Union

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 338(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Central Bank (1),

Acting in accordance with the ordinary legislative procedure (2),

Whereas:

(1) Policymaking in the Union and monitoring of the economies of the Member States and of the economic and monetary union (EMU) require comparable, up-to-date and reliable information on the structure of the economy and the development of the economic situation of each Member State or region.

(2) The Commission should play a part in the monitoring of the economies of the Member States and of the EMU and, in particular, report regularly to the Council on the progress made by Member States in fulfilling their obligations relating to the EMU.

(3) Citizens of the Union need economic accounts as a basic tool for analysing the economic situation of a Member State or region. For the sake of comparability, such accounts should be drawn up on the basis of a single set of principles that are not open to differing interpretations. The information provided should be as precise, complete and timely as possible in order to ensure maximum transparency for all sectors.

(4) The Commission should use aggregates of national and regional accounts for Union administrative purposes and, in particular, budgetary calculations.

(5) In 1970 an administrative document entitled ‘European System of Integrated Economic Accounts(ESA)’ was published, covering the field governed by this Regulation. That document was drawn up solely by the Statistical Office of the European Communities on its responsibility alone and was the outcome of several years’ work, by that office together with Member States’ national statistical institutes, aimed at devising a system of national accounts to meet the requirements of the European Communities’ economic and social policy. It constituted the Community version of the United Nations System of National Accounts which had been used by the Communities up to that time. In order to update the original text a second edition of the document was published in 1979 (3).

(6) Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community (4) set up a system of national accounts to meet the requirements of the economic, social and regional policy of the Community. That system was broadly consistent with the then new System of National Accounts, which was adopted by the United Nations Statistical Commission in February 1993 (1993 SNA), so that the results in all member countries of the United Nations would be internationally comparable.

(7) The 1993 SNA was updated in the form of a new System of National Accounts (2008 SNA) adopted by the United Nations Statistical Commission in February 2009 in order to bring national accounts more into line with the new economic environment, advances in methodological research, and the needs of users.

(8) There is a need to revise the European System of Accounts set up by Regulation (EC) No 2223/96 (the ESA 95) in order to take into account the developments in the SNA so that the revised European System of Accounts, as established by this Regulation, constitutes a version of the 2008 SNA that is adapted to the structures of the Member States’ economies, and so that the data of the Union are comparable with those compiled by its main international partners.

(9) For the purpose of setting up environmental economic accounts as satellite accounts to the revised European System of Accounts, Regulation (EU) No 691/2011 of the European Parliament and of the Council of 6 July 2011 on European environmental economic accounts (5) established a common framework for the collection, compilation, transmission and evaluation of European environmental economic accounts.

(10) In the case of environmental and social accounts, the Communication from the Commission to the Council and the European Parliament of 20 August 2009, entitled ‘GDP and beyond — Measuring progress in a changing world’, should also be fully taken into account. There is a need to vigorously pursue methodological studies and data tests in particular on issues related to ‘GDP and beyond’ and the Europe 2020 strategy with the aim of developing a more comprehensive measurement approach for wellbeing and progress in order to support the promotion of smart, sustainable and inclusive growth. In this context, the issues of environmental externalities and social inequalities should be addressed. The issue of productivity changes should also be taken into account. This should allow data that complement GDP aggregates to be made available as soon as possible. The Commission should present in 2013, to the European Parliament and to the Council, a follow-up Communication on ‘GDP and beyond’ and, if appropriate, legislative proposals in 2014. Data on national and regional accounts should be seen as one means of pursuing those aims.

(11) The possible use of new, automated and real-time collection methods should be explored.

(12) The revised European System of Accounts set up by this Regulation (ESA 2010) includes a methodology, and a transmission programme which defines the accounts and tables that are to be provided by all Member States according to specified deadlines. The Commission should make those accounts and tables available to users on specific dates and, where relevant, according to a pre-announced release calendar, particularly with regard to monitoring economic convergence and achieving close coordination of the Member States’ economic policies.

(13) A user-oriented approach to publishing data should be adopted, thus providing accessible and useful information to Union citizens and other stakeholders.

(14) The ESA 2010 is gradually to replace all other systems as a reference framework of common standards, definitions, classifications and accounting rules for drawing up the accounts of the Member States for the purposes of the Union, so that results that are comparable between the Member States can be obtained.

(15) In accordance with Regulation (EC) No 1059/2003 of the European Parliament and of the Council of 26 May 2003 on the establishment of a common classification of territorial units for statistics (NUTS) (6), all Member States’ statistics that are transmitted to the Commission and that are to be broken down by territorial units should use the NUTS classification. Consequently, in order to establish comparable regional statistics, the territorial units should be defined in accordance with the NUTS classification.

(16) The transmission of data by the Member States, including the transmission of confidential data, is governed by the rules set out in Regulation (EC) No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics (7). Accordingly, measures that are taken in accordance with this Regulation should, therefore, also ensure the protection of confidential data and that no unlawful disclosure or non-statistical use occurs when European statistics are produced and disseminated.

(17) A task force has been set up to further examine the issue of the treatment of financial intermediation services indirectly measured (FISIM) in national accounts, including the examination of a risk-adjusted method that excludes risk from FISIM calculations in order to reflect the expected future cost of realised risk. Taking into consideration the findings of the task force, it may be necessary to amend the methodology for the calculation and allocation of FISIM, by means of a delegated act, in order to provide improved results.

(18) Research and development expenditure constitutes investment and should therefore be recorded as gross fixed capital formation. However, it is necessary to specify, by means of a delegated act, the format of the research and development expenditure data to be recorded as gross fixed capital formation when a sufficient level of confidence in the reliability and comparability of the data is reached through a test exercise based on the development of supplementary tables.

(19) Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States (8) requires publication of relevant information on contingent liabilities with potentially large impacts on public budgets, including government guarantees, non-performing loans, and liabilities stemming from the operation of public corporations including the extent thereof. Those requirements necessitate additional publication to that required under this Regulation.

(20) In June 2012, the Commission (Eurostat) established a Task Force on the implications of Directive 2011/85/EU for the collection and dissemination of fiscal data, which focused on the implementation of the requirements related to contingent liabilities and other relevant information which may indicate potentially large impacts on public budgets, including government guarantees, liabilities of public corporations, Public-Private Partnerships (PPPs), non-performing loans, and government participation in the capital of corporations. Fully implementing the work of that Task Force would contribute to the proper analysis of the underlying economic relationships of PPP contracts, including construction, availability and demand risks, as appropriate, and capture of implicit debts of off balance sheet PPPs, thereby fostering increased transparency and reliable debt statistics.

(21) The Economic Policy Committee set up by Council Decision 74/122/EEC (9) (EPC) has been carrying out work in relation to the sustainability of pensions and pension reforms. The work of statisticians on the one hand and of experts on ageing populations working under the auspices of the EPC on the other hand should be closely coordinated, at both national and European levels, with respect to macroeconomic assumptions and other actuarial parameters in order to ensure consistency and cross-country comparability of the results as well as efficient communication to users and stakeholders of the data and information related to pensions. It should also be made clear that accrued-to-date pension entitlements in social insurance are not as such a measure of the sustainability of public finances.

(22) Data and information on Member States’ contingent liabilities are provided in the context of the work related to the multilateral surveillance procedure in the Stability and Growth Pact. By July 2018, the Commission should issue a report evaluating whether those data should be made available in the context of the ESA 2010.

(23) It is important to underline the significance of Member States’ regional accounts for the regional, economic and social cohesion policies of the Union as well as the analysis of economic interdependencies. Moreover, the need to increase the transparency of accounts at a regional level, including government accounts, is recognised. The Commission (Eurostat) should pay particular attention to the fiscal data of regions where Member States have autonomous regions or governments.

(24) In order to amend Annex A of this Regulation with a view to ensuring its harmonised interpretation or international comparability, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU) should be delegated to the Commission. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including with the European Statistical System Committee established under Regulation (EC) No 223/2009. Moreover, pursuant to Articles 127(4) and 282(5) TFEU, it is of importance that the Commission carry out during its preparatory work, where relevant, consultations with the European Central Bank in its fields of competence. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(25) Most statistical aggregates used in the economic governance framework of the Union, in particular the excessive deficit and the macroeconomic imbalances procedures, are defined by reference to the ESA. When providing data and reports under those procedures, the Commission should give appropriate information about the impact on the relevant aggregates of the ESA 2010 methodological changes introduced by delegated acts in accordance with the provisions of this Regulation.

(26) The Commission will carry out an evaluation as to whether the data on Research and Development have reached a sufficient level of quality both in current prices and in volume terms for national accounts purposes before the end of May 2013, in close cooperation with the Member States, with a view to ensuring the reliability and comparability of the ESA Research and Development data.

(27) Since the implementation of this Regulation will require major adaptations in the national statistical systems, derogations will be granted by the Commission to Member States. In particular, the transmission programme of national accounts data should take into consideration the fundamental political and statistical changes that have occurred in some Member States during the reference periods of the programme. The derogations granted by the Commission should be temporary and subject to review. The Commission should provide support to the Member States concerned in their efforts to ensure the required adaptations to their statistical systems so that those derogations can be discontinued as soon as possible.

(28) Reducing transmission deadlines could add significant pressure and costs for respondents and national statistical institutes in the Union, with the risk of a lower quality of data being produced. A balance of advantages and disadvantages should, therefore, be considered when setting the data transmission deadlines.

(29) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (10).

(30) Since the objective of this Regulation, namely the establishment of a revised European System of Accounts, cannot be sufficiently achieved by the Member States and can be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.

(31) The European Statistical System Committee has been consulted.

(32) The Committee on Monetary, Financial and Balance of Payments Statistics set up by Council Decision 2006/856/EC of 13 November 2006 establishing a Committee on monetary, financial and balance of payments statistics (11) and the Gross National Income Committee (GNI Committee) set up by Council Regulation (EC, Euratom) No 1287/2003 of 15 July 2003 on the harmonisation of gross national income at market prices (GNI Regulation) (12) have been consulted,

HAVE ADOPTED THIS REGULATION:

Article 1

Subject matter

1. This Regulation sets up the European System of Accounts 2010 (‘the ESA 2010’ or ‘the ESA’).

2. The ESA 2010 provides for:

(a) a methodology (Annex A) on common standards, definitions, classifications and accounting rules that shall be used for compiling accounts and tables on comparable bases for the purposes of the Union, together with results as required under Article 3;

(b) a programme (Annex B) setting out the time limits by which Member States shall transmit to the Commission (Eurostat) the accounts and tables to be compiled in accordance with the methodology referred to in point (a).

3. Without prejudice to Articles 5 and 10, this Regulation shall apply to all Union acts that refer to the ESA or its definitions.

4. This Regulation does not oblige any Member State to use the ESA 2010 in compiling accounts for its own purposes.

Article 2

Methodology

1. The methodology of the ESA 2010 referred to in point (a) of Article 1(2) is set out in Annex A.

2. The Commission shall be empowered to adopt delegated acts in accordance with Article 7, concerning amendments to the ESA 2010 methodology in order to specify and improve its content for the purpose of ensuring a harmonised interpretation or to ensure international comparability provided that they do not change its underlying concepts, do not require additional resources for producers within the European Statistical System for their implementation, and do not cause a change in own resources.

3. In the event of doubt regarding the correct implementation of the ESA 2010 accounting rules, the Member State concerned shall request clarification from the Commission (Eurostat). The Commission (Eurostat) shall act promptly both in examining the request and in communicating its advice on the requested clarification to the Member State concerned and all other Member States.

4. Member States shall carry out the calculation and allocation of financial intermediation services indirectly measured (FISIM) in national accounts in accordance with the methodology described in Annex A. The Commission shall be empowered to adopt before 17 September 2013 delegated acts in accordance with Article 7 laying down a revised methodology for the calculation and allocation of FISIM. In exercising its power pursuant to this paragraph, the Commission shall ensure that such delegated acts do not impose a significant additional administrative burden on the Member States or on the respondent units.

5. Research and development expenditure shall be recorded, by Member States, as gross fixed capital formation. The Commission shall be empowered to adopt delegated acts in accordance with Article 7 to ensure the reliability and comparability of the ESA 2010 data of the Member States on research and development. In exercising its power pursuant to this paragraph, the Commission shall ensure that such delegated acts do not impose a significant additional administrative burden on the Member States or on the respondent units.

Article 3

Transmission of data to the Commission

1. The Member States shall transmit to the Commission (Eurostat) the accounts and tables set out in Annex B within the time limits specified therein for each table.

2. Member States shall transmit to the Commission the data and metadata required by this Regulation in accordance with a specified interchange standard and other practical arrangements.

The data shall be transmitted or uploaded by electronic means to the single entry point for data at the Commission. The interchange standard and other practical arrangements for the transmission of the data shall be defined by the Commission by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 8(2).

Article 4

Quality assessment

1. For the purpose of this Regulation, the quality criteria set out in Article 12(1) of Regulation (EC) No 223/2009 shall apply to the data to be transmitted in accordance with Article 3 of this Regulation.

2. Member States shall provide the Commission (Eurostat) with a report on the quality of the data to be transmitted in accordance with Article 3.

3. In applying the quality criteria referred to in paragraph 1 to the data covered by this Regulation, the modalities, structure, periodicity and assessment indicators of the quality reports shall be defined by the Commission by means of implementing acts. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 8(2).

4. The Commission (Eurostat) shall assess the quality of the data transmitted.

Article 5

Date of application and of first transmission of data

1. The ESA 2010 shall be applied for the first time to data established in accordance with Annex B to be transmitted from 1 September 2014.

2. The data shall be transmitted to the Commission (Eurostat) in accordance with the time limits laid down in Annex B.

3. In accordance with paragraph 1, until the first transmission of data based on the ESA 2010, Member States shall continue to send to the Commission (Eurostat) the accounts and tables established by applying the ESA 95.

4. Without prejudice to Article 19 of Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 implementing Decision 2007/436/EC, Euratom on the system of the European Communities own resources (13), the Commission and the Member State concerned shall check that this Regulation is being applied correctly and shall submit the outcome of those checks to the Committee referred to in Article 8(1) of this Regulation.

Article 6

Derogations

1. In so far as a national statistical system necessitates major adaptations for the application of this Regulation, the Commission shall grant temporary derogations to Member States by means of implementing acts. Those derogations shall expire not later than 1 January 2020. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 8(2).

2. The Commission shall grant a derogation pursuant to paragraph 1 only for a period sufficient to allow the Member State concerned to adapt its statistical system. The proportion of the Member State’s GDP within the Union or within the euro area shall not constitute in itself a justification for granting a derogation. Where appropriate, the Commission shall provide support to the Member States concerned in their efforts to ensure the required adaptations to their statistical system.

3. For the purposes set out in paragraphs 1 and 2, the Member State concerned shall present a duly justified request to the Commission not later than 17 October 2013.

The Commission, after consulting the European Statistical System Committee, shall report to the European Parliament and the Council not later than 1 July 2018 on the application of the granted derogations in order to verify whether they are still justified.

Article 7

Exercise of the delegation

1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article.

2. The power to adopt delegated acts referred to in Article 2(2) and (5) shall be conferred on the Commission for a period of five years, from 16 July 2013. The power to adopt delegated acts referred to in Article 2(4) shall be conferred on the Commission for a period of two months from 16 July 2013. The Commission shall draw up a report in respect of the delegation of power not later than nine months before the end of the five-year period. The delegation of power shall be tacitly extended for periods of an identical duration, unless the European Parliament or the Council opposes such extension not later than three months before the end of each period.

3. The delegation of power referred to in Article 2(2), (4) and (5) may be revoked at any time by the European Parliament or by the Council.

A decision to revoke shall put an end to the delegation of power specified in that Decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.

4. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council.

5. A delegated act adopted pursuant to Article 2(2), (4) and (5) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by three months at the initiative of the European Parliament or of the Council.

Article 8

Committee

1. The Commission shall be assisted by the European Statistical System Committee established by Regulation (EC) No 223/2009. That committee is a committee within the meaning of Regulation (EU) No 182/2011.

2. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply.

Article 9

Cooperation with other committees

1. On all matters falling within the competence of the Committee on Monetary, Financial and Balance of Payments Statistics established by Decision 2006/856/EC, the Commission shall request the opinion of that Committee in accordance with Article 2 of that Decision.

2. The Commission shall communicate to the Gross National Income Committee (‘GNI Committee’) established by Regulation (EC, Euratom) No 1287/2003 any information concerning the implementation of this Regulation which is necessary for the performance of the GNI Committee’s duties.

Article 10

Transitional provisions

1. For budgetary and own resources purposes, the European System of Accounts as referred to in Article 1(1) of Regulation (EC, Euratom) No 1287/2003 and the legal acts relating thereto, in particular Regulation (EC, Euratom) No 1150/2000 and Council Regulation (EEC, Euratom) No 1553/89 of 29 May 1989 on the definitive uniform arrangements for the collection of own resources accruing from value added tax (14), shall continue to be the ESA 95 while Council Decision 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities’ own resources (15) remains in force.

2. For the purpose of determination of the VAT-based own resource, and by way of exception to paragraph 1, the Member States may use data based on the ESA 2010 while Decision 2007/436/EC, Euratom remains in force, where the required detailed ESA 95 data are not available.

Article 11

Reporting on implicit liabilities

By 2014, the Commission shall submit a report to the European Parliament and to the Council containing existing information on PPPs and other implicit liabilities, including contingent liabilities, outside government.

By 2018, the Commission shall submit a further report to the European Parliament and to the Council assessing the extent to which the information on liabilities published by the Commission (Eurostat) represents the entirety of the implicit liabilities, including contingent liabilities, outside government.

Article 12

Review

By 1 July 2018 and every five years thereafter, the Commission shall submit a report on the application of this Regulation to the European Parliament and the Council.

The report shall evaluate, inter alia:

(a) the quality of data on national and regional accounts;

(b) the effectiveness of this Regulation and the monitoring process applied to the ESA 2010; and

(c) the progress on contingent liabilities data and on the availability of ESA 2010 data.

Article 13

Entry into force

This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Strasbourg, 21 May 2013. For the European Parliament The President M. SCHULZ For the Council The President L. CREIGHTON

(1) OJ C 203, 9.7.2011, p. 3.

(2) Position of the European Parliament of 13 March 2013 (not yet published in the Official Journal) and decision of the Council of 22 April 2013.

(3) Commission (Eurostat), European System of Integrated Economic Accounts (ESA), second edition, Statistical Office of the European Communities, Luxembourg, 1979.

(4) OJ L 310, 30.11.1996, p. 1.

(5) OJ L 192, 22.7.2011, p. 1.

(6) OJ L 154, 21.6.2003, p. 1.

(7) OJ L 87, 31.3.2009, p. 164.

(8) OJ L 306, 23.11.2011, p. 41.

(9) Council Decision 74/122/EEC of 18 February 1974 setting up an Economic Policy Committee (OJ L 63, 5.3.1974, p. 21).

(10) OJ L 55, 28.2.2011, p. 13.

(11) OJ L 332, 30.11.2006, p. 21.

(12) OJ L 181, 19.7.2003, p. 1.

(13) OJ L 130, 31.5.2000, p. 1.

(14) OJ L 155, 7.6.1989, p. 9.

(15) OJ L 163, 23.6.2007, p. 17.

ANNEX A CHAPTER 1 GENERAL FEATURES AND BASIC PRINCIPLES GENERAL FEATURES Globalisation USES OF THE ESA 2010 Framework for analysis and policy Characteristics of the ESA 2010 concepts Classification by sector Satellite accounts The ESA 2010 and the 2008 SNA The ESA 2010 and the ESA 95 BASIC PRINCIPLES OF THE ESA 2010 AS A SYSTEM Statistical units and their groupings Institutional units and sectors Local KAUs and industries Resident and non-resident units; total economy and rest of the world Flows and stocks Flows Transactions Properties of transactions Interactions versus intra-unit transactions Monetary versus non-monetary transactions Transactions with and without counterparts Rearranged transactions Rerouting Partitioning Recognising the principal party to a transaction Borderline cases Other changes in assets Other changes in the volume of assets and liabilities Holding gains and losses Stocks The system of accounts and the aggregates Rules of accounting Terminology for the two sides of the accounts Double entry/quadruple entry Valuation Special valuations concerning products Valuation at constant prices Time of recording Consolidation and netting Consolidation Netting Accounts, balancing items and aggregates The sequence of accounts The goods and services account The rest of the world account Balancing items Aggregates GDP: a key aggregate The input-output framework Supply and use tables Symmetric input-output tables CHAPTER 2 UNITS AND GROUPINGS OF UNITS THE LIMITS OF THE NATIONAL ECONOMY THE INSTITUTIONAL UNITS Head offices and holding companies Groups of corporations Special purpose entities Captive financial institutions Artificial subsidiaries Special purpose units of general government THE INSTITUTIONAL SECTORS Non-financial corporations (S.11) Public non-financial corporations (S.11001) National private non-financial corporations (S.11002) Foreign controlled non-financial corporations (S.11003) Financial corporations (S.12) Financial intermediaries Financial auxiliaries Financial corporations other than financial intermediaries and financial auxiliaries Institutional units included in the financial corporations sector Subsectors of financial corporations Combining subsectors of financial corporations Subdividing subsectors of financial corporations into public, national private and foreign controlled financial corporations Central bank (S.121) Deposit-taking corporations except the central bank (S.122) MMF (S.123) Non-MMF investment funds (S.124) Other financial intermediaries, except insurance corporations and pension funds (S.125) Financial vehicle corporations engaged in securitisation transactions (FVC) Security and derivative dealers, financial corporations engaged in lending and specialised financial corporations Financial auxiliaries (S.126) Captive financial institutions and money lenders (S.127) Insurance corporations (S.128) Pension funds (S.129) General government (S.13) Central government (excluding social security funds) (S.1311) State government (excluding social security funds) (S.1312) Local government (excluding social security funds) (S.1313) Social security funds (S.1314) Households (S.14) Employers and own-account workers (S.141 and S.142) Employees (S.143) Recipients of property income (S.1441) Recipients of pensions (S.1442) Recipients of other transfers (S.1443) Non-profit institutions serving households (S.15) Rest of the world (S.2) Sector classification of producer units for main standard legal forms of ownership LOCAL KIND-OF-ACTIVITY UNITS AND INDUSTRIES The local kind-of-activity unit Industries Classification of industries UNITS OF HOMOGENEOUS PRODUCTION AND HOMOGENEOUS BRANCHES The unit of homogeneous production The homogeneous branch CHAPTER 3 TRANSACTIONS IN PRODUCTS AND NON-PRODUCED ASSETS TRANSACTIONS IN PRODUCTS IN GENERAL PRODUCTION AND OUTPUT Principal, secondary and ancillary activities Output (P.1) Institutional units: distinction between market, for own final use and non-market Time of recording and valuation of output Products of agriculture, forestry and fishing (Section A) Manufactured products (Section C); construction work (Section F) Wholesale and retail trade services; repair services of motor vehicles and motorcycles (Section G) Transportation and storage (Section H) Accommodation and food services (Section I) Financial and insurance services (Section K): output of the central bank Financial and insurance services (Section K): financial services in general Financial services provided for direct payment Financial services paid for through loading interest charges Financial services consisting of acquiring and disposing of financial assets and liabilities in financial markets Financial services provided in insurance and pension schemes, where activity is financed by loading insurance contributions and from the income return on savings Real estate services (Section L) Professional, scientific and technical services (Section M); administrative and support services (Section N) Public administration and defence services, compulsory social security services (Section O) Education services (Section P); human health and social work services (Section Q) Arts, entertainment and recreation services (Section R); Other services (Section S) Private households as employers (Section T) INTERMEDIATE CONSUMPTION (P.2) Time of recording and valuation of intermediate consumption FINAL CONSUMPTION (P.3, P.4) Final consumption expenditure (P.3) Actual final consumption (P.4) Time of recording and valuation of final consumption expenditure Time of recording and valuation of actual final consumption GROSS CAPITAL FORMATION (P.5) Gross fixed capital formation (P.51g) Time of recording and valuation of gross fixed capital formation Consumption of fixed capital (P.51c) Changes in inventories (P.52) Time of recording and valuation of changes in inventories Acquisitions less disposals of valuables (P.53) EXPORTS AND IMPORTS OF GOODS AND SERVICES (P.6 AND P.7) Exports and imports of goods (P.61 and P.71) Exports and imports of services (P.62 and P.72) TRANSACTIONS IN EXISTING GOODS ACQUISITIONS LESS DISPOSALS OF NON-PRODUCED ASSETS (NP) CHAPTER 4 DISTRIBUTIVE TRANSACTIONS COMPENSATION OF EMPLOYEES (D.1) Wages and salaries (D.11) Wages and salaries in cash Wages and salaries in kind Employers' social contributions (D.12) Employers' actual social contributions (D.121) Employers' imputed social contributions (D.122) TAXES ON PRODUCTION AND IMPORTS (D.2) Taxes on products (D.21) Value added type taxes (VAT) (D.211) Taxes and duties on imports excluding VAT (D.212) Taxes on products, except VAT and import taxes (D.214) Other taxes on production (D.29) Taxes on production and imports paid to the institutions of the European Union Taxes on production and imports: time of recording and amounts to be recorded SUBSIDIES (D.3) Subsidies on products (D.31) Import subsidies (D.311) Other subsidies on products (D.319) Other subsidies on production (D.39) PROPERTY INCOME (D.4) Interest (D.41) Interest on deposits and loans Interest on debt securities Interest on bills and similar short-term instruments Interest on bonds and debentures Interest rate swaps and forward rate agreements Interest on financial leases Other interest Time of recording Distributed income of corporations (D.42) Dividends (D.421) Withdrawals from the income of quasi-corporations (D.422) Reinvested earnings on foreign direct investment (D.43) Other investment income (D.44) Investment income attributable to insurance policy holders (D.441) Investment income payable on pension entitlements (D.442) Investment income attributable to collective investment fund shareholders (D.443) Rent (D.45) Rent on land Rents on subsoil assets CURRENT TAXES ON INCOME, WEALTH, ETC. (D.5) Taxes on income (D.51) Other current taxes (D.59) SOCIAL CONTRIBUTIONS AND BENEFITS (D.6) Net social contributions (D.61) Employers' actual social contributions (D.611) Employers' imputed social contributions (D.612) Households' actual social contributions (D.613) Households' social contribution supplements (D.614) Social benefits other than social transfers in kind (D.62) Social security benefits in cash (D.621) Other social insurance benefits (D.622) Social assistance benefits in cash (D.623) Social transfers in kind (D.63) Social transfers in kind — general government and NPISHs non-market production (D.631) Social transfers in kind — market production purchased by general government and NPISHs (D.632) OTHER CURRENT TRANSFERS (D.7) Net non-life insurance premiums (D.71) Non-life insurance claims (D.72) Current transfers within general government (D.73) Current international cooperation (D.74) Miscellaneous current transfers (D.75) Current transfers to NPISHs (D.751) Current transfers between households (D.752) Other miscellaneous current transfers (D.759) Fines and penalties Lotteries and gambling Payments of compensation VAT- and GNI-based EU own resources (D.76) ADJUSTMENT FOR THE CHANGE IN PENSION ENTITLEMENTS (D.8) CAPITAL TRANSFERS (D.9) Capital taxes (D.91) Investment grants (D.92) Other capital transfers (D.99) EMPLOYEE STOCK OPTIONS (ESOs) CHAPTER 5 FINANCIAL TRANSACTIONS GENERAL FEATURES OF FINANCIAL TRANSACTIONS Financial assets, financial claims, and liabilities Contingent assets and contingent liabilities Categories of financial assets and liabilities Balance sheets, financial account, and other flows Valuation Net and gross recording Consolidation Netting Accounting rules for financial transactions A financial transaction with a current or a capital transfer as counterpart A financial transaction with property income as counterpart Time of recording A from-whom-to-whom financial account CLASSIFICATION OF FINANCIAL TRANSACTIONS BY CATEGORIES IN DETAIL Monetary gold and special drawing rights (F.1) Monetary gold (F.11) SDRs (F.12) Currency and deposits (F.2) Currency (F.21) Deposits (F.22 and F.29) Transferable deposits (F.22) Other deposits (F.29) Debt securities (F.3) Main features of debt securities Classification by original maturity and currency Classification by type of interest rate Fixed interest rate debt securities Variable interest rate debt securities Mixed interest rate debt securities Private placements Securitisation Covered bonds Loans (F.4) Main features of loans Classification of loans by original maturity, currency, and purpose of lending Distinction between transactions in loans and transactions in deposits Distinction between transactions in loans and transactions in debt securities Distinction between transactions in loans, trade credit and trade bills Securities lending and repurchase agreements Financial leases Other types of loans Financial assets excluded from the category of loans Equity and investment fund shares or units (F.5) Equity (F.51) Depository receipts Listed shares (F.511) Unlisted shares (F.512) Initial public offering, listing, de-listing, and share buy back Financial assets excluded from equity securities Other equity (F.519) Valuation of transactions in equity Investment fund shares or units (F.52) MMF shares or units (F.521) Non-MMF investment fund shares/units (F.522) Valuation of transactions in investment fund shares or units Insurance, pension and standardised guarantee schemes (F.6) Non-life insurance technical reserves (F.61) Life insurance and annuity entitlements (F.62) Pension entitlements (F.63) Contingent pension entitlements Claims of pension funds on pension managers (F.64) Entitlements to non-pension benefits (F.65) Provisions for calls under standardised guarantees (F.66) Standardised guarantees and one-off guarantees Financial derivatives and employee stock options (F.7) Financial derivatives (F.71) Options Forwards Options vis-à-vis forwards Swaps Forward rate agreements (FRAs) Credit derivatives Credit default swaps Financial instruments not included in financial derivatives Employee stock options (F.72) Valuation of transactions in financial derivatives and employee stock options Other accounts receivable/payable (F.8) Trade credits and advances (F.81) Other accounts receivable/payable, excluding trade credits and advances (F.89) ANNEX 5.1 — CLASSIFICATION OF FINANCIAL TRANSACTIONS Classification of financial transactions by category Classification of financial transactions by negotiability Structured securities Classification of financial transactions by type of income Classification of financial transactions by type of interest rate Classification of financial transactions by maturity Short-term and long-term maturity Original maturity and remaining maturity Classification of financial transactions by currency Measures of money CHAPTER 6 OTHER FLOWS INTRODUCTION OTHER CHANGES IN ASSETS AND LIABILITIES Other changes in the volume of assets and liabilities (K.1 to K.6) Economic appearance of assets (K.1) Economic disappearance of non-produced assets (K.2) Catastrophic losses (K.3) Uncompensated seizures (K.4) Other changes in volume not elsewhere classified (K.5) Changes in classification (K.6) Changes in sector classification and institutional unit structure (K.61) Changes in classification of assets and liabilities (K.62) Nominal holding gains and losses (K.7) Neutral holding gains and losses (K.71) Real holding gains and losses (K.72) Holding gains and losses by types of financial asset and liability Monetary gold and SDRs (AF.1) Currency and deposits (AF.2) Debt securities (AF.3) Loans (AF.4) Equity and investment fund shares (AF.5) Insurance, pension and standardised guarantee schemes (AF.6) Financial derivatives and employee stock options (AF.7) Other accounts receivable/payable (AF.8) Assets denominated in foreign currency CHAPTER 7 BALANCE SHEETS TYPES OF ASSETS AND LIABILITIES Definition of an asset EXCLUSIONS FROM THE ASSET AND LIABILITY BOUNDARY CATEGORIES OF ASSETS AND LIABILITIES Produced non-financial assets (AN.1) Non-produced non-financial assets (AN.2) Financial assets and liabilities (AF) VALUATION OF ENTRIES IN THE BALANCE SHEETS General valuation principles NON-FINANCIAL ASSETS (AN) Produced non-financial assets (AN.1) Fixed assets (AN.11) Intellectual property products (AN.117) Costs of ownership transfer on non-produced assets (AN.116) Inventories (AN.12) Valuables (AN.13) Non-produced non-financial assets (AN.2) Natural resources (AN.21) Land (AN.211) Mineral and energy reserves (AN.212) Other natural assets (AN.213, AN.214 and AN.215) Contracts, leases and licences (AN.22) Purchases less sales of goodwill and marketing assets (AN.23) FINANCIAL ASSETS AND LIABILITIES (AF) Monetary gold and SDRs (AF.1) Currency and deposits (AF.2) Debt securities (AF.3) Loans (AF.4) Equity and investment fund shares/units (AF.5) Insurance, pension and standardised guarantee schemes (AF.6) Financial derivatives and employee stock options (AF.7) Other accounts receivable/payable (AF.8) FINANCIAL BALANCE SHEETS MEMORANDUM ITEMS Consumer durables (AN.m) Foreign direct investment (AF.m1) Non-performing loans (AF.m2) Recording of non-performing loans ANNEX 7.1 SUMMARY OF EACH ASSET CATEGORY ANNEX 7.2 A MAP OF ENTRIES FROM OPENING BALANCE SHEET TO CLOSING BALANCE SHEET CHAPTER 8 THE SEQUENCE OF ACCOUNTS INTRODUCTION The sequence of accounts SEQUENCE OF ACCOUNTS Current accounts Production account (I) Distribution and use of income accounts (II) Primary distribution of income accounts (II.1) Generation of income account (II.1.1) Allocation of primary income account (II.1.2) Entrepreneurial income account (II.1.2.1) Allocation of other primary income account (II.1.2.2) Secondary distribution of income account (II.2) Redistribution of income in kind account (II.3) Use of income account (II.4) Use of disposable income account (II.4.1) Use of adjusted disposable income account (II.4.2) Accumulation accounts (III) Capital account (III.1) Change in net worth due to saving and capital transfers account (III.1.1) Acquisitions of non-financial assets account (III.1.2) Financial account (III.2) Other changes in assets account (III.3) Other changes in volume of assets account (III.3.1) Revaluation account (III.3.2) Neutral holding gains and losses account (III.3.2.1) Real holding gains and losses account (III.3.2.2) Balance sheets (IV) Opening balance sheet (IV.1) Changes in balance sheet (IV.2) Closing balance sheet (IV.3) REST OF THE WORLD ACCOUNTS (V) Current accounts External account of goods and services (V.I) External account of primary incomes and current transfers (V.II) External accumulation accounts (V.III) Capital account (V.III.1) Financial account (V.III.2) Other changes in assets account (V.III.3) Balance sheets (V.IV) GOODS AND SERVICES ACCOUNT (0) INTEGRATED ECONOMIC ACCOUNTS AGGREGATES Gross domestic product at market prices (GDP) Operating surplus of the total economy Mixed income of the total economy Entrepreneurial income of the total economy National income (at market prices) National disposable income Saving Current external balance Net lending (+) or borrowing (-) of the total economy Net worth of the total economy General government expenditure and revenue CHAPTER 9 SUPPLY AND USE TABLES AND THE INPUT-OUTPUT FRAMEWORK INTRODUCTION DESCRIPTION STATISTICAL TOOL TOOL FOR ANALYSIS SUPPLY AND USE TABLES IN MORE DETAIL Classifications Valuation principles Trade and transport margins Taxes less subsidies on production and imports Other basic concepts Supplementary information DATA SOURCES AND BALANCING TOOL FOR ANALYSIS AND EXTENSIONS CHAPTER 10 PRICE AND VOLUME MEASURES SCOPE OF PRICE AND VOLUME INDICES IN THE NATIONAL ACCOUNTS The integrated system of price and volume indices Other price and volume indices GENERAL PRINCIPLES OF MEASURING PRICE AND VOLUME INDICES Definition of prices and volumes of market products Quality, price and homogeneous products Prices and volume New products Principles for non-market services Principles for value added and GDP SPECIFIC PROBLEMS IN THE APPLICATION OF THE PRINCIPLES Taxes and subsidies on products and imports Other taxes and subsidies on production Consumption of fixed capital Compensation of employees Stocks of produced fixed assets and inventories MEASURES OF REAL INCOME FOR THE TOTAL ECONOMY INTERSPATIAL PRICE AND VOLUME INDICES CHAPTER 11 POPULATION AND LABOUR INPUTS TOTAL POPULATION ECONOMICALLY ACTIVE POPULATION EMPLOYMENT Employees Self-employed persons Employment and residence UNEMPLOYMENT JOBS Jobs and residence THE NON-OBSERVED ECONOMY TOTAL HOURS WORKED Specifying hours actually worked FULL-TIME EQUIVALENCE EMPLOYEE LABOUR INPUT AT CONSTANT COMPENSATION PRODUCTIVITY MEASURES CHAPTER 12 QUARTERLY NATIONAL ACCOUNTS INTRODUCTION SPECIFIC FEATURES OF QUARTERLY NATIONAL ACCOUNTS Time of recording Work-in-progress Activities concentrated in specific periods within a year Low-frequency payments Flash estimates Balancing and benchmarking of quarterly national accounts Balancing Consistency between quarterly and annual accounts — benchmarking Chain-linked measures of price and volume changes Seasonal and calendar adjustments Sequence of compilation of seasonally adjusted chain-linked volume measures CHAPTER 13 REGIONAL ACCOUNTS INTRODUCTION REGIONAL TERRITORY UNITS AND REGIONAL ACCOUNTS Institutional units Local kind-of-activity units and regional production activities by industry METHODS OF REGIONALISATION AGGREGATES FOR PRODUCTION ACTIVITIES Gross value added and gross domestic product by region The allocation of FISIM to user industries Employment Compensation of employees Transition from regional GVA to regional GDP Volume growth rates of regional GVA REGIONAL HOUSEHOLD INCOME ACCOUNTS CHAPTER 14 FINANCIAL INTERMEDIATION SERVICES INDIRECTLY MEASURED (FISIM) THE CONCEPT OF FISIM AND THE IMPACT OF THEIR USER ALLOCATION ON MAIN AGGREGATES CALCULATION OF FISIM OUTPUT BY SECTORS S.122 AND S.125 Statistical data required Reference rates Internal reference rate External reference rates Detailed breakdown of FISIM by institutional sector Breakdown into intermediate and final consumption of FISIM allocated to households CALCULATION OF IMPORTS OF FISIM FISIM IN VOLUME TERMS CALCULATION OF FISIM BY INDUSTRY THE OUTPUT OF THE CENTRAL BANK CHAPTER 15 CONTRACTS, LEASES AND LICENCES INTRODUCTION THE DISTINCTION BETWEEN OPERATING LEASES, RESOURCE LEASES AND FINANCIAL LEASES Operating leases Financial leases Resource leases Permits to use a natural resource Permits to undertake specific activities Public-private partnerships (PPPs) Service concession contracts Marketable operating leases (AN.221) Entitlements to future goods and services on an exclusive basis (AN.224) CHAPTER 16 INSURANCE INTRODUCTION Direct insurance Reinsurance The units involved OUTPUT OF DIRECT INSURANCE Premiums earned Premium supplements Adjusted claims incurred and benefits due Non-life insurance adjusted claims incurred Life insurance benefits due Insurance technical reserves Defining insurance output Non-life insurance Life insurance Reinsurance TRANSACTIONS ASSOCIATED WITH NON-LIFE INSURANCE Allocation of insurance output among users Insurance services provided to and from the rest of the world The accounting entries TRANSACTIONS OF LIFE INSURANCE TRANSACTIONS ASSOCIATED WITH REINSURANCE TRANSACTIONS ASSOCIATED WITH INSURANCE AUXILIARIES ANNUITIES RECORDING NON-LIFE INSURANCE CLAIMS Treatment of adjusted claims Treatment of catastrophic losses CHAPTER 17 SOCIAL INSURANCE INCLUDING PENSIONS INTRODUCTION Social insurance schemes, social assistance and individual insurance policies Social benefits Social benefits provided by general government Social benefits provided by other institutional units Pensions and other forms of benefit SOCIAL INSURANCE BENEFITS OTHER THAN PENSIONS Social security schemes other than pension schemes Other employment-related social insurance schemes Recording of stocks and flows by type of non-pension social insurance scheme Social security schemes Other employment-related non-pension social insurance schemes PENSIONS Types of pension schemes Social security pension schemes Other employment-related pension schemes Defined contribution schemes Defined benefit schemes Notional defined contribution schemes and hybrid schemes Defined benefit schemes as compared to defined contribution schemes Pension administrator, pension manager, pension fund and multi-employer pension scheme Recording of stocks and flows by type of pension scheme in social insurance Transactions for social security pension schemes Transactions for other employment-related pension schemes Transactions for defined contribution pension schemes Other flows related to defined contribution pension schemes Transactions for defined benefit pension schemes SUPPLEMENTARY TABLE FOR ACCRUED-TO-DATE PENSION ENTITLEMENTS IN SOCIAL INSURANCE Design of the supplementary table The columns of the table The rows of the table Opening and closing balance sheets Changes in pension entitlements due to transactions Changes to pension entitlements due to other economic flows Related indicators Actuarial assumptions Accrued-to-date entitlements Discount rate Wage growth Demographic assumptions CHAPTER 18 REST OF THE WORLD ACCOUNTS INTRODUCTION ECONOMIC TERRITORY Residence INSTITUTIONAL UNITS BRANCHES AS A TERM USED IN THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS NOTIONAL RESIDENT UNITS MULTI-TERRITORY ENTERPRISES GEOGRAPHICAL BREAKDOWN THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS BALANCING ITEMS IN THE CURRENT ACCOUNTS OF THE INTERNATIONAL ACCOUNTS THE ACCOUNTS FOR THE REST OF THE WORLD SECTOR AND THEIR RELATIONSHIP WITH THE INTERNATIONAL ACCOUNTS OF THE BALANCE OF PAYMENTS The external account of goods and services Valuation Goods for processing Merchanting Goods under merchanting Imports and exports of FISIM The external account of primary and secondary income The primary income account Direct investment income The secondary income (current transfers) account of the BPM6 The external capital account The external financial account and international investment position (IIP) BALANCE SHEETS FOR THE REST OF THE WORLD SECTOR CHAPTER 19 EUROPEAN ACCOUNTS INTRODUCTION FROM NATIONAL TO EUROPEAN ACCOUNTS Conversion of data in different currencies European institutions The rest of the world account Balancing of transactions Price and volume measures Balance sheets ‧From whom-to-whom‧ matrices ANNEX 19.1. — THE ACCOUNTS OF EUROPEAN INSTITUTIONS Resources Uses Consolidation CHAPTER 20 THE GOVERNMENT ACCOUNTS INTRODUCTION DEFINING THE GENERAL GOVERNMENT SECTOR Identification of units in the government Government units NPIs classified to the general government sector Other units of general government Public control Market/non-market delineation Notion of economically significant prices Criteria of the purchaser of the output of a public producer The output is sold primarily to corporations and households The output is sold only to government The output is sold to government and others The market/non-market test Financial intermediation and the government boundary Borderline cases Public head offices Pension funds Quasi-corporations Restructuring agencies Privatisation agencies Defeasances structures Special purpose entities Joint ventures Market regulatory agencies Supranational authorities The subsectors of general government Central government State government Local government Social security funds THE GOVERNMENT FINANCE PRESENTATION OF STATISTICS Framework Revenue Taxes and social contributions Sales Other revenue Expenditure Compensation of employees and intermediate consumption Social benefits expenditure Interest Other current expenditure Capital expenditure Link with government final consumption expenditure (P.3) Government expenditure by function (COFOG) Balancing items The net lending/net borrowing (B.9) Changes in net worth due to saving and capital transfers (B.101) Financing Transactions in assets Transactions in liabilities Other economic flows Revaluation account Other changes in volume of assets account Balance sheets Consolidation ACCOUNTING ISSUES RELATING TO GENERAL GOVERNMENT Tax revenue Character of tax revenue Tax credits Amounts to record Amounts uncollectible Time of recording Accrual recording Accrual recording of taxes Interest Discounted and zero-coupon bonds Index-linked securities Financial derivatives Court decisions Military expenditure Relations of general government with public corporations Equity investment in public corporations and distribution of earnings Equity investment Capital injections Subsidies and capital injections Rules applicable to particular circumstances Fiscal operations Public corporations distributions Dividends versus withdrawal of equity Taxes versus withdrawal of equity Privatisation and nationalisation Privatisation Indirect privatisations Nationalisation Transactions with the central bank Restructures, mergers, and reclassifications Debt operations Debt assumptions, debt cancellation and debt write-offs Debt assumption and cancellation Debt assumption involving a transfer of non-financial assets Debt write-offs or write-downs Other debt restructuring Purchase of debt above the market value Defeasances and bailouts Debt guarantees Derivatives-type guarantees Standardised guarantees One-off guarantees Securitisation Definition Criteria for sale recognition Recording of flows Other issues Pension obligations Lump sum payments Public-private partnerships Scope of PPPs Economic ownership and allocation of the asset Accounting issues Transactions with international and supranational organisations Development assistance THE PUBLIC SECTOR Public sector control Central banks Public quasi-corporations Special purpose entities and non-residents Joint ventures CHAPTER 21 LINKS BETWEEN BUSINESS ACCOUNTS AND NATIONAL ACCOUNTS AND THE MEASUREMENT OF CORPORATE ACTIVITY SOME SPECIFIC RULES AND METHODS OF BUSINESS ACCOUNTING Time of recording Double entry and quadruple entry accounting Valuation Income statement and balance sheet NATIONAL ACCOUNTS AND BUSINESS ACCOUNTS: PRACTICAL ISSUES THE TRANSITION FROM BUSINESS ACCOUNTS TO NATIONAL ACCOUNTS: THE EXAMPLE OF NON-FINANCIAL ENTERPRISES Conceptual adjustments Adjustments to achieve consistency with the accounts of other sectors Examples of adjustments for exhaustiveness SPECIFIC ISSUES Holding gains/losses Globalisation Mergers and acquisitions CHAPTER 22 SATELLITE ACCOUNTS INTRODUCTION Functional classifications MAJOR CHARACTERISTICS OF SATELLITE ACCOUNTS Functional satellite accounts Special sector accounts Inclusion of non-monetary data Extra detail and supplementary concepts Different basic concepts Use of modelling and inclusion of experimental results Designing and compiling satellite accounts NINE SPECIFIC SATELLITE ACCOUNTS Agricultural accounts Environmental accounts Health accounts Household production accounts Labour accounts and SAM Productivity and growth accounts Research and development accounts Social protection accounts Tourism satellite accounts CHAPTER 23 CLASSIFICATIONS INTRODUCTION CLASSIFICATION OF INSTITUTIONAL SECTORS (S) CLASSIFICATION OF TRANSACTIONS AND OTHER FLOWS Transactions in products (P) Transactions in non-produced non-financial assets (NP codes) Distributive transactions (D) Current transfers in cash and kind (D.5-D.8) Transactions in financial assets and liabilities (F) Other changes in assets (K) CLASSIFICATION OF BALANCING ITEMS AND NET WORTH (B) CLASSIFICATION OF BALANCE SHEET ENTRIES (L) CLASSIFICATION OF ASSETS (A) Non-financial assets (AN) Financial assets (AF) CLASSIFICATION OF SUPPLEMENTARY ITEMS Non-performing loans Capital services Pensions table Consumer durables Foreign direct investment Contingent positions Currency and deposits Classification of debt securities according to outstanding maturity Listed and unlisted debt securities Long-term loans with outstanding maturity of less than one year and long-term loans secured by mortgage Listed and unlisted investment shares Arrears in interest and repayments Personal and total remittances REGROUPING AND CODING OF INDUSTRIES (A) AND PRODUCTS (P) CLASSIFICATION OF THE FUNCTIONS OF THE GOVERNMENT (COFOG) CLASSIFICATION OF INDIVIDUAL CONSUMPTION BY PURPOSE (Coicop) CLASSIFICATION OF THE PURPOSES OF NON-PROFIT INSTITUTIONS SERVING HOUSEHOLDS (COPNI) CLASSIFICATION OF OUTLAYS OF PRODUCERS BY PURPOSE (COPP) CHAPTER 24 THE ACCOUNTS Table 24.1 Account 0: Goods and services account Table 24.2 Full sequence of accounts for the total economy Table 24.3 Full sequence of accounts for non-financial corporations Table 24.4 Full sequence of accounts for financial corporations Table 24.5 Full sequence of accounts for general government Table 24.6 Full sequence of accounts for households Table 24.7 Full sequence of accounts for non-profit institutions serving households CHAPTER 1 GENERAL FEATURES AND BASIC PRINCIPLES GENERAL FEATURES 1.01 The European System of Accounts (hereinafter referred to as ‧the ESA 2010‧ or ‧the ESA‧) is an internationally compatible accounting framework for a systematic and detailed description of a total economy (that is, a region, country or group of countries), its components and its relations with other total economies. 1.02 The predecessor of the ESA 2010, the European System of Accounts 1995 (the ESA 95), was published in 1996 (1). The ESA 2010 methodology as set out in this Annex has the same structure as the ESA 95 publication for the first thirteen chapters, but then has eleven new chapters elaborating aspects of the system which reflect developments in measuring modern economies, or in the use of the ESA 95 in the European Union (the EU). 1.03 The structure of this manual is as follows. Chapter 1 covers the basic features of the system in terms of concepts, and sets out the principles of the ESA and describes the fundamental statistical units and their groupings. It gives an overview of the sequence of accounts, and a brief description of key aggregates and the role of supply and use tables and the input-output framework. Chapter 2 describes the institutional units used in measuring the economy, and how these units are classified into sectors and other groups to allow analysis. Chapter 3 describes all transactions with regard to products (goods and services), as well as non-produced assets, in the system. Chapter 4 describes all the transactions in the economy which distribute and re-distribute income and wealth in the economy. Chapter 5 describes the financial transactions in the economy. Chapter 6 describes the changes that can occur to the value of assets through non-economic events or price changes. Chapter 7 describes balance sheets, and the asset and liability classification scheme. Chapter 8 sets out the sequence of accounts, and the balancing items associated with each account. Chapter 9 describes supply and use tables, and their role in reconciling the measures of income, output and expenditure in the economy. It also describes the input-output tables that can be derived from the supply and use tables. Chapter 10 describes the conceptual basis for the price and volume measures associated with the nominal values found in the accounts. Chapter 11 describes the population and labour market measures which can be used with measures of the national accounts in economic analysis. Chapter 12 gives a brief description of quarterly national accounts, and how they differ in emphasis from the annual accounts. 1.04 Chapter 13 describes the purposes, concepts and compilation issues in drawing up a set of regional accounts. Chapter 14 covers the measurement of financial services provided by financial intermediaries and funded through net interest receipts, and reflects years of research and development by Member States in order to have a measure which is robust and harmonised across Member States. Chapter 15 on contracts, leases and licences is necessary to describe an area of increasing importance in the national accounts. Chapters 16 and 17 on insurance, social insurance and pensions describe how these arrangements are handled in the national accounts, as questions of redistribution become of increasing interest as populations age. Chapter 18 covers the rest of the world accounts, which are the national accounts equivalent to the accounts of the balance of payments measuring system. Chapter 19 on European Accounts is also new, covering aspects of the national accounts where European institutional and trading arrangements raise issues which require a harmonised approach. Chapter 20 describes the accounts for the government sector — an area of special interest as issues of fiscal prudence by Member States continue to be critical in the conduct of economic policy in the EU. Chapter 21 describes the links between business accounts and national accounts, an area of growing interest as multinational corporations become responsible for an increasing share in gross domestic product (GDP) for all countries. Chapter 22 describes the relationship of satellite accounts with the main national accounts. Chapters 23 and 24 are for reference purposes; Chapter 23 sets out the classifications used for sectors, activities and products in the ESA 2010, and Chapter 24 sets out the complete sequence of accounts for every sector. 1.05 The structure of the ESA 2010 is consistent with the worldwide guidelines on national accounting set out in the System of National Accounts 2008 (2008 SNA), apart from certain differences in presentation and the higher degree of precision of some of the ESA 2010 concepts which are used for specific EU purposes. Those guidelines were produced under the joint responsibility of the United Nations (UN), the International Monetary Fund (IMF), the Statistical Office of the European Union (Eurostat), the Organisation for Economic Cooperation and Development (OECD) and the World Bank. The ESA 2010 is focused on the circumstances and data needs in the EU. Like the 2008 SNA, the ESA 2010 is harmonised with the concepts and classifications used in many other social and economic statistics (for example, statistics on employment, statistics on manufacturing and statistics on external trade). The ESA 2010 therefore serves as the central framework of reference for the social and economic statistics of the EU and its Member States. 1.06 The ESA framework consists of two main sets of tables: (a) the institutional sector accounts; (b) the input-output framework, and the accounts by industry. 1.07 The sector accounts provide, by institutional sector, a systematic description of the different stages of the economic process: production, generation of income, distribution of income, redistribution of income, use of income and financial and non-financial accumulation. The sector accounts also include balance sheets to describe the stocks of assets, liabilities and net worth at the beginning and the end of the accounting period. 1.08 The input-output framework, through the supply and use tables, sets out in more detail the production process (cost structure, income generated and employment) and the flows of goods and services (output, imports, exports, final consumption, intermediate consumption and capital formation by product group). Two important accounting identities are reflected in this framework: the sum of incomes generated in an industry is equal to the value added produced by that industry; and, for any product or grouping of products, supply is equal to demand. 1.09 The ESA 2010 encompasses concepts of population and employment. Such concepts are relevant for the sector accounts, the accounts by industry and the supply and use framework. 1.10 The ESA 2010 is not restricted to annual national accounting, but applies also to quarterly and shorter or longer period accounts. It also applies to regional accounts. 1.11 The ESA 2010 exists alongside the 2008 SNA because of the uses of national accounts measures in the EU. The Member States are responsible for the collection and presentation of their own national accounts to describe the economic situation of their countries. Member States also compile a set of accounts which are submitted to the Commission (Eurostat) as part of a regulatory data transmission programme, for key social, economic and fiscal policy uses in the Union. Those uses include determination of Member State monetary contributions to the EU budget via the ‧fourth resource‧, aid to regions of the EU through the structural funds programme and surveillance of Member States' economic performance in the framework of the excessive deficit procedure and of the Stability and Growth Pact. 1.12 In order that levies and benefits are distributed according to measures compiled and presented in a strictly consistent manner, the economic statistics used for those purposes shall be compiled according to the same concepts and rules. The ESA 2010 is a regulation setting forth the rules, conventions, definitions and classifications to be applied in producing the national accounts in Member States which are to be part of the data transmission programme as set out in Annex B to this Regulation. 1.13 Given the very large sums of money involved in the contributions and benefits system operated in the EU, it is essential that the measurement system be applied consistently in each Member State. In such circumstances, it is important to adopt a cautious approach to estimates which cannot be observed directly in the market place, avoiding the use of model-based procedures for the estimation of measures in the national accounts. 1.14 The ESA 2010 concepts are in several instances more specific and precise than those of the 2008 SNA in order to ensure as much consistency as possible between Member States measures derived from the national accounts. This over-riding requirement for robust consistent estimates has resulted in the identification of a core set of national accounts in the EU. Where the level of consistency of measurement across Member States is insufficient, the latter estimates are generally included in so-called ‧non-core-accounts‧ covering supplementary tables and satellite accounts. 1.15 An example of where it has been considered necessary to be cautious in the design of the ESA 2010 lies in the field of pension liabilities. The case for measuring these to assist in economic analyses is a strong one, but the critical requirement in the EU to produce accounts which are consistent across time and space has obliged a cautious approach. Globalisation 1.16 The increasingly global nature of economic activity has increased international trade in all its forms, and increased the challenges to countries of recording their domestic economies in the national accounts. Globalisation is the dynamic and multidimensional process whereby national resources become more internationally mobile, while national economies become increasingly interdependent. The feature of globalisation which potentially causes most measurement problems for national accounts is the increasing share of international transactions undertaken by multinational companies, where the transactions across borders are between parents, subsidiaries and affiliates. However other challenges exist, and a more exhaustive list of data issues is as follows: (1) transfer pricing between affiliated corporations (valuation of imports and exports); (2) the increase in toll processing, where goods are traded across international borders with no change in ownership (goods for processing), and merchanting; (3) international trading via the internet, both for corporations and households; (4) the trade and use of intellectual property assets across the world; (5) workers working abroad, and remitting significant amounts to the family in the domestic territory (workers' remittances, as part of personal transfers); (6) multinational corporations organising their business across national boundaries, to maximise production efficiency and minimise the global tax burden. This can give rise to artificial corporation structures which may not reflect the economic reality; (7) the use of off-shore financing vehicles (special purpose entities and other forms) to arrange finance for global activities; (8) re-exports of goods, and in the EU the transport of goods between Member States after entry into the Union (quasi transport); (9) increase in foreign direct investment relationships, and the need to identify and allocate direct investment flows. 1.17 All of these increasingly common aspects of globalisation make the capture and accurate measurement of cross-border flows a growing challenge for national statisticians. Even with a comprehensive and robust collection and measurement system for the entries in the rest of the world sector (and thus also in the international accounts found in the balance of payments), globalisation will increase the need for extra efforts to maintain the quality of national accounts for all economies and groupings of economies. USES OF THE ESA 2010 Framework for analysis and policy 1.18 The ESA framework can be used to analyse and evaluate: (a) the structure of a total economy. Examples of types of measurement used are: (1) value added and employment by industry; (2) value added and employment by region; (3) income distributed by sector; (4) imports and exports by product group; (5) final consumption expenditure by functional heading and product group; (6) fixed capital formation and fixed capital stock by industry; (7) the composition of the stocks and flows of financial assets by type of asset and by sector; (b) specific parts or aspects of an economy. Examples are: (1) banking and finance in the national economy; (2) the role of government and its financial position; (3) the economy of a specific region (in comparison to that of the nation as a whole); (4) household saving and debt levels; (c) the development of an economy over time. Examples are: (1) the analysis of GDP growth rates; (2) the analysis of inflation; (3) the analysis of seasonal patterns in household expenditure on the basis of quarterly accounts; (4) the analysis of the changing importance of particular types of financial instruments over time, e.g. the increased importance of financial derivatives; (5) the comparison of the industrial structures of the national economy over the long term; (d) a total economy in relation to other economies. Examples are: (1) the comparison of the roles and size of government in the Member States of the EU; (2) the analysis of the interdependencies between the economies of the EU, taking into account Member States and their regions; (3) the analysis of the composition and destination of the exports of the EU; (4) the comparison of GDP growth rates or disposable income per capita in the EU and other developed economies. 1.19 For the EU and its Member States, the figures from the ESA framework play a major role in formulating and monitoring their social and economic policies. The following examples demonstrate uses of the ESA framework: (a) monitoring and guiding the euro area macroeconomic and monetary policymaking, and defining criteria of convergence for the economic and monetary union (EMU) in terms of national accounts figures (e.g. GDP growth rates); (b) defining criteria for the excessive deficit procedure: measures of government deficit and debt; (c) granting financial support to regions in the EU: the allocation of expenditure funds to regions uses regional accounts statistics; (d) determining the own resources of the EU budget. The latter depend on national accounts figures in three ways: (1) the total resources for the EU are determined as a percentage of the sum of Member States' gross national incomes (GNI); (2) the third own resource of the EU is the VAT own resource. The contributions by the Member States for this resource are largely determined by national accounts figures, because these figures are used to calculate the average VAT rate; (3) the relative sizes of the contributions by the Member States for the fourth own resource of the EU are based on their gross national income estimates. These estimates are the basis for the majority of Member States' payments. Characteristics of the ESA 2010 concepts 1.20 In order to establish a balance between data needs and data possibilities, the concepts in the ESA 2010 have several important characteristics. The characteristics are that the accounts are: (a) internationally compatible; (b) harmonised with other social and economic statistical systems; (c) consistent; (d) operational, meaning that they can be measured in practice; (e) different from most administrative concepts; (f) well-established and fixed over a long period; (g) focused on describing the economic process in monetary and readily observable terms; (h) capable of applying in different situations and for different purposes. 1.21 The concepts in the ESA 2010 are internationally compatible because: (a) the concepts in the ESA 2010 are consistent with those in the worldwide guidelines on national accounting, i.e. the 2008 SNA; (b) for the Member States, the ESA 2010 is the standard for submitting national accounts data to all international organisations; (c) international compatibility of concepts is essential when comparing statistics for different countries. 1.22 The concepts in the ESA 2010 are harmonised with those in other social and economic statistics because the ESA 2010 employs concepts and classifications (e.g. Statistical classification of economic activities in the European Union ‧NACE rev. 2‧ (2)) that are used for other social and economic statistics of Member States, e.g. in statistics on manufacturing, statistics on external trade and statistics on employment; conceptual differences have been kept to a minimum. Furthermore, the concepts and classifications in the ESA 2010 are harmonised with those of the United Nations. This harmonisation with social and economic statistics helps the linkage to and comparison with these figures, so that the quality of the national accounts figures can be assured. Furthermore, the information contained in these specific statistics can be better related to the general statistics on the national economy. 1.23 The shared concepts used throughout the national accounting framework and the other social and economic statistical systems enable consistent measures to be derived. For example, the following ratios can be calculated: (a) productivity figures, such as value added per hour worked (these figures require consistency between the concepts of value added and hours worked); (b) national disposable income per capita (this ratio requires consistency between the concepts of national disposable income and measures of population); (c) fixed capital formation as a percentage of fixed capital stock (this ratio requires consistency between the definitions of these flows and stocks); (d) government deficit and government debt as percentages of gross domestic product (these figures require consistency between the concepts of government deficit, government debt and gross domestic product). The internal consistency of concepts allows estimates to be derived by residual, e.g. saving can be estimated as the difference between disposable income and final consumption expenditure. 1.24 The concepts in the ESA 2010 are applied with data collection and measurement in mind. The operational character is revealed in several ways in the guidance for drawing up the accounts. (a) Activities or items are only described when significant in size. For example: own-account production of goods by households such as weaving cloth and the production of pottery shall not be recorded as production, because these are insignificant for EU countries. (b) Some concepts are accompanied by guidance on how to estimate them. For example, in defining consumption of fixed capital, reference is made to linear depreciation. For estimating fixed capital stock, the Perpetual Inventory Method is to be applied where direct information on the stock of fixed assets is missing. Another example is the valuation of own-account production: in principle, it is valued at basic prices, but if necessary the basic price valuation may be approximated by adding up the various costs involved. (c) Some conventions have been adopted. For example the collective services provided by government are all classified as final consumption expenditure. 1.25 However, the data needed for national accounts statistics may not be easy to collect directly, as the underlying concepts usually diverge from the concepts underlying administrative data sources. Examples of the administrative sources are business accounts, records for various types of taxes (VAT, personal income tax, import levies, etc.), social security data and data from supervisory boards on banking and insurance. These administrative data serve as inputs for compiling the national accounts. In general, they are transformed in order to comply with the ESA. The concepts in the ESA usually differ from their administrative counterparts in that: (a) administrative concepts differ between countries. As a consequence, international compatibility is not possible using administrative concepts; (b) administrative concepts change over time. As a consequence, comparisons over time are not possible through administrative concepts; (c) the concepts underlying administrative data sources are usually not consistent among different administrative systems. However, linking and comparing data, which is crucial for compiling national accounts figures, is only possible with a consistent set of concepts; (d) the administrative concepts are generally not optimal for economic analysis and the evaluation of economic policy. 1.26 Nevertheless, administrative data sources meet the data needs of national accounts and other statistics very well, because: (a) concepts and classifications originally devised for statistical purposes are also adopted for administrative purposes, e.g. the classification of government expenditure by type; (b) administrative data sources explicitly take account of the (separate) data needs of statistics; this applies, for example, to the Intrastat system for providing information about deliveries of goods between Member States. 1.27 The main concepts in the ESA are well-established and fixed over a long period, because: (a) they have been approved as the international standard for many years; (b) in the successive international guidelines on national accounting, very few of the underlying concepts change. This conceptual continuity reduces the need to recalculate time series. Furthermore, it limits the vulnerability of the concepts to national and international political pressure. For these reasons, the national accounts figures have been able to serve as an objective database for economic policy and analysis. 1.28 The concepts in the ESA 2010 are focused on describing the economic process in monetary and readily observable terms. Stocks and flows that are not readily observable in monetary terms, or that do not have a clear monetary counterpart, are not recorded in the ESA. This principle has not been applied strictly, because account should also be taken of the requirement of consistency and the needs of users. For example, consistency requires that the value of collective services produced by government is recorded as output, because the payment of compensation of employees and the purchase of all kinds of goods and services by government are readily observable in monetary terms. Furthermore, for the purposes of economic analysis and policy, describing the collective services of government in relation to the rest of the national economy increases the usefulness of the national accounts as a whole. 1.29 The scope of the concepts in the ESA can be illustrated by considering some important borderline issues. The following shall be recorded within the production boundary of the ESA (see paragraphs 3.07 to 3.09): (a) production of individual and collective services by government; (b) own-account production of housing services by owner-occupiers; (c) production of goods for own final consumption, e.g. of agricultural products; (d) own-account construction, including that by households; (e) production of services by paid domestic staff; (f) breeding of fish in fish farms; (g) production forbidden by law, as long as all units involved in the transaction enter into it voluntarily; (h) production from which the revenues are not declared in full to the fiscal authorities, e.g. clandestine production of textiles. 1.30 The following fall outside the production boundary, and shall not be recorded in the ESA: (a) domestic and personal services produced and consumed within the same household, e.g. cleaning, the preparation of meals or the care of sick or elderly people; (b) volunteer services that do not lead to the production of goods, e.g. care-taking and cleaning without payment; (c) natural breeding of fish in open seas. 1.31 The ESA records all outputs that result from production within the production boundary. However, the outputs of ancillary activities shall not be recorded. All inputs consumed by an ancillary activity shall be treated as inputs to the activity it supports. If an establishment undertaking only ancillary activities is statistically observable, in that separate accounts for the production it undertakes are readily available, or if it is in a geographically different location from the establishments it serves, it has to be recorded as a separate unit and allocated to the industrial classification corresponding to its principal activity, in both national and regional accounts. In the absence of suitable basic data being available, the output of the ancillary activity may be estimated by summing costs. 1.32 If activities are regarded as production and their output is recorded, then the concomitant income, employment, final consumption, etc. are also recorded. For example, as the own-account production of housing services by owner-occupiers is recorded as production, so the income and final consumption expenditure it generates for these owner-occupiers are also recorded. As there is, by definition, no labour input to the production of the services of owner-occupied dwellings, no employment is recorded. This maintains consistency with the system of labour statistics, where no employment is recorded for ownership of dwellings. The reverse holds when activities are not recorded as production: domestic services produced and consumed within the same household do not generate income and final consumption expenditure and no employment is involved. 1.33 The ESA also lays down conventions, concerning: (a) valuation of government output; (b) valuation of the output of insurance services and financial intermediation services indirectly measured; (c) recording of the collective services provided by government as final consumption expenditure and not as intermediate consumption; Classification by sector 1.34 Sector accounts are created by allocating units to sectors and this enables transactions and balancing items of the accounts to be presented by sector. The presentation by sector reveals many key measures for economic and fiscal policy purposes. The main sectors are households, government, corporations (financial and non-financial), non-profit institutions serving households (NPISHs) and the rest of the world. The distinction between market and non-market activity is an important one. An entity controlled by government, which is shown to be a market corporation, is classified in the corporation sector, outside the general government sector. Thus, the deficit and debt levels of the corporation will not be part of the general government deficit and debt. 1.35 It is important that clear and robust criteria for allocating entities to sectors are set out. The public sector consists of all institutional units resident in the economy that are controlled by government. The private sector consists of all other resident units. Table 1.1 sets out the criteria used to distinguish between public and private sector, and in the public sector between the government sector and public corporations sector, and in the private sector between the NPISH sector and the private corporations sector. Table 1.1 Criteria Controlled by government (public sector) Privately controlled (private sector) Non-market output General government NPISH Market output Public corporations Private corporations 1.36 Control is defined as the ability to determine the general policy or programme of an institutional unit. Further details in relation to the definition of control are given in paragraphs 2.35 to 2.39. 1.37 Differentiating between market and non-market, and so, for public sector entities, classifying them into the general government sector or the corporations sector, is decided by the following rule: An activity shall be considered as a market activity when the corresponding goods and services are traded under the following conditions: (1) sellers act to maximise their profits in the long term, and do so by selling goods and services freely on the market to whoever is prepared to pay the asking price; (2) buyers act to maximise their utility given their limited resources, by buying according to which products best meet their needs at the offered price; (3) effective markets exist where sellers and buyers have access to, and information on, the market. An effective market can operate even if these conditions are not met perfectly. 1.38 The detail in the conceptual framework of the ESA offers the opportunity for flexibility: some concepts are not explicitly present in the ESA but can nevertheless easily be derived from it. An example is the creation of new sectors by rearranging the subsectors defined in the ESA. 1.39 Flexibility exists also through the possibility to introduce additional criteria that do not conflict with the logic of the system. For example, these criteria can allow subsector accounts to be drawn up by the scale of employment for producer units or the size of income for households. For employment, subclassification by level of education, age and gender can be introduced. Satellite accounts 1.40 For some data needs, separate satellite accounts should be drawn up. Examples are: (a) social accounting matrices (SAMs); (b) the role of tourism in the national economy; (c) the analysis of the costs and financing of health care; (d) research and development recognised as capital formation of intellectual property; (e) recognition of human capital as assets in the national economy; (f) the analysis of the income and expenditure of households on the basis of micro-oriented concepts of income and expenditure; (g) the interaction between the environment and the economy; (h) production within households; (i) analysis of changes in welfare; (j) analysis of the differences between national accounts and business accounts figures and their influence on stock and exchange markets; (k) estimation of tax revenues. 1.41 Satellite accounts serve such data needs by: (a) showing more detail where necessary and leaving out superfluous detail; (b) enlarging the scope of the accounting framework by adding non-monetary information, e.g. on pollution and environmental assets; (c) changing some basic concepts, e.g. by enlarging the concept of capital formation by including expenditure on education. 1.42 A social accounting matrix (SAM) is a matrix presentation that elaborates the linkages between supply and use tables and the sector accounts. A SAM provides additional information on the level and composition of employment, via a subdivision of compensation of employees by type of person employed. This subdivision applies to both the use of labour by industry, as shown in the use tables, and the supply of labour by socio-economic subgroup, as shown in the allocation of primary income account for subsectors of the sector households. In this way, the supply and use of various categories of labour is shown systematically. 1.43 In satellite accounts, all basic concepts and classifications of the central framework of the ESA 2010 shall be retained. Changes in the concepts shall only be introduced when this is the purpose of the satellite account. In such instances, the satellite account shall also contain a table showing the link between the major aggregates in the satellite account and those in the central framework. In this way, the central framework retains its role as a framework of reference and at the same time more specific needs are addressed. 1.44 In general terms, the central framework does not include measures of stocks and flows that are not readily observable in monetary terms (or without a clear monetary counterpart). By their nature, the analysis of such stocks and flows is usually also well served by compiling statistics in non-monetary terms, e.g.: (a) production within households can be described in terms of hours allocated to the alternative uses; (b) education can be described in terms of type of education, the number of pupils, the average number of years of education before obtaining a diploma, etc.; (c) the effects of pollution can be described in terms of changes in the number of living species, the health of the trees in the forest, the volume of refuse, the amounts of carbon-monoxide and radiation, etc. 1.45 Satellite accounts enable such statistics in non-monetary units to be linked to the national accounts in the central framework. Using the classifications employed in the central framework for such non-monetary statistics enables the link to be made, e.g. the classification by type of household or the classification by industry. In this way, a consistent extended framework is drawn up. This framework can then serve as a database for the analysis and evaluation of interactions between the variables in the central framework and those in the extended part. 1.46 The central framework and its major aggregates do not describe changes in welfare. Extended accounts can be drawn up which include also the imputed monetary values of, for example: (a) domestic and personal services produced and consumed within the same household; (b) changes in leisure time; (c) amenities and disadvantages of urban life; (d) inequalities in the distribution of income over persons. 1.47 The extended accounts can also reclassify the final expenditure on regrettable necessities (e.g. defence) as intermediate consumption, i.e. as not contributing to welfare. Similarly, the damage due to floods and other natural disasters may be classified as intermediate consumption, i.e. as a reduction in (absolute) welfare. In this way, one could try to construct a very rough and very imperfect indicator of changes in welfare. However, welfare has many dimensions, most of which are not best expressed in monetary terms. A better solution for measuring welfare is therefore to use, for each dimension, separate indicators and units of measurement. The indicators could be, for example, infant mortality, life expectancy, adult literacy and national income per capita. These indicators could be incorporated into a satellite account. 1.48 In order to attain a consistent, internationally compatible framework, administrative concepts are not employed in the ESA. However, for all kinds of national purposes, obtaining figures based on administrative concepts can be very useful. For example, for estimating tax revenues, statistics of taxable income are required. Such statistics can be provided by making some modifications to the national accounts statistics. 1.49 A similar approach could be taken for concepts used in national economic policy, e.g. for: (a) the concept of inflation used for increasing pensions, unemployment benefits or compensation of employees for civil servants; (b) the concepts of taxes, social contributions, government and the collective sector used in discussing the optimal size of the collective sector; (c) the concept of ‧strategic‧ sectors/industries used in national economic policy or the economic policy of the EU; (d) the concept of ‧business investments‧ used in national economic policy; (e) a table showing a complete recording of pensions. Satellite accounts or supplementary tables can meet such data needs. The ESA 2010 and the 2008 SNA 1.50 The ESA 2010 is based on the concepts of the 2008 SNA, which provides guidelines on national accounting for all countries throughout the world. Nevertheless, there are several differences between the ESA 2010 and the 2008 SNA: (a) Differences in presentation: (1) In the ESA 2010 there are separate chapters on transactions in products, distributive transactions and financial transactions. In contrast, in the 2008 SNA these transactions are explained in chapters arranged by account, e.g. chapters on the production account, the primary distribution of income account, the capital account and the rest of the world account. (2) The ESA 2010 describes a concept by providing a definition and a listing of what is included and what is excluded. The 2008 SNA describes concepts usually in more general terms and explains the rationale behind the conventions adopted. (b) The ESA 2010 concepts are in several instances more specific and precise than those of the 2008 SNA: (1) The 2008 SNA does not contain specific criteria on the distinction between market, for own final use and non-market categorisation of output. The ESA has therefore introduced more detailed guidance to ensure a uniform approach. (2) The ESA 2010 assumes that several types of household production of goods, such as the weaving of cloth and the making of furniture, are not significant in Member States and therefore need not be recorded. (3) The ESA 2010 makes reference to institutional arrangements in the EU, such as the Intrastat system for recording intra-EU flows of goods and the contributions by the Member States to the EU. (4) The ESA 2010 contains EU-specific classifications, e.g. Classification of products by activity (CPA) (3) for products and NACE Rev. 2 for industries (both are harmonised with the corresponding UN classifications). (5) The ESA 2010 contains an additional classification for all external transactions: they are divided into those between residents of the EU and those with residents from outside the EU. (6) The ESA 2010 contains a rearrangement of the 2008 SNA subsectors for the financial corporations sector, to meet the needs of the European Monetary Union. The ESA 2010 can be more specific than the 2008 SNA, because the ESA 2010 primarily applies to the Member States. For the data needs in the Union, the ESA should also be more specific. The ESA 2010 and the ESA 95 1.51 The ESA 2010 differs in scope as well as in concepts from the ESA 95. Most of the differences correspond to differences between the 1993 SNA and the 2008 SNA. The major differences are: (a) the recognition of research and development as capital formation leading to assets of intellectual property. This change shall be recorded in a satellite account, and included in the core accounts when sufficient robustness and harmonisation of measures is observable amongst Member States; (b) expenditures on weapon systems that meet the general definition of assets have been classified as fixed capital formation, rather than intermediate expenditure; (c) the analytical concept of capital services has been introduced for market production, so that a supplementary table may be produced showing them as a component of value added; (d) the financial assets boundary has been expanded to include a wider coverage of financial derivative contracts; (e) new rules for recording pension entitlements. A supplementary table has been introduced into the accounts, to allow estimates to be recorded for all entitlements in social insurance, whether funded or unfunded. The full range of information required for a comprehensive analysis is provided in this table that shows the entitlements and associated flows for all private and public pension schemes, whether funded or unfunded, and including social security pension schemes; (f) the application of the rules on change of ownership of goods has been made universal, resulting in changes to the recording of merchanting, and goods sent for processing, both abroad and in the domestic economy. This results in goods sent for processing abroad being recorded on a net basis, as opposed to a gross basis in the 1993 SNA and the ESA 95. This change has significant implications for the recording of such activities in the supply and use framework; (g) more guidance is given on financial corporations in general, and special purpose entities (SPEs) in particular. The treatment of government controlled SPEs abroad has been changed to ensure that liabilities incurred by the SPEs are shown in the governm