ANNEX I

DEFINITIONS OF STATISTICAL CONCEPTS

Consumption by classification of individual consumption by purpose (COICOP)

The consumption by classification of individual consumption by purpose (COICOP) is based on the concept of household final consumption expenditure in European System of Accounts, ESA 2010 (1) as far as applicable to the consumption domain. It refers to expenditure incurred by private households on goods and services for satisfaction of their needs or wants.

Household final consumption expenditure includes the following examples:

(a) services of owner-occupied dwellings (imputed rent);

(b) own consumption;

(c) expenditure on items not treated as intermediate consumption, such as: (1) materials for small repairs to and interior decoration of dwellings of a kind carried out by tenants as well as owners; (2) materials for repairs and maintenance to consumer durables, including vehicles;

(d) expenditure on items not treated as capital formation, in particular consumer durables, that continue to perform their function in several accounting periods; this includes the transfer of ownership of some durables from an enterprise to a household;

(e) financial services directly charged used for final consumption purposes by households (that is, not including FISIM);

(f) insurance services by the amount of the actual service charge;

(g) pension funding services by the amount of the actual service charge;

(h) payments by households for licences, permits, etc. which are regarded as purchases of services;

(i) the purchase of output at not economically significant prices, e.g. entrance fees for a museum.

Household final consumption expenditure excludes the following:

(a) social transfers in kind, such as expenditures initially incurred by households but subsequently reimbursed by social security, e.g. some medical expenses;

(b) expenditure on items treated as intermediate consumption or gross capital formation, such as: (1) expenditures by households owning unincorporated enterprises when incurred for business purposes – e.g. on durable goods such as vehicles, furniture or electrical equipment (gross fixed capital formation), and also on non-durables such as fuel (treated as intermediate consumption); (2) expenditure that an owner-occupier incurs on the decoration, maintenance and repair of the dwelling not typically carried out by tenants (treated as intermediate consumption in producing housing services); (3) the purchase of dwellings (treated as gross fixed capital formation); (4) expenditure on valuables (treated as gross fixed capital formation);

(c) items treated as acquisitions of non-produced assets, in particular the purchase of land;

(d) all those payments by households which are to be regarded as taxes;

(e) voluntary transfers in cash or in kind by households to charities and relief and aid organisations.

The final consumption expenditure of households shall be recorded at purchasers’ prices. This is the price the purchaser actually pays for the products at the time of the purchase.

The purchaser’s price includes the following:

(a) taxes less subsidies on the products (but excluding deductible taxes like VAT on the products);

(b) transport charges paid separately by the purchaser to take delivery at the required time and place;

(c) deductions for any discounts for bulk or off-peak-purchases from standard prices or charges.

The purchaser’s price excludes the following:

(a) interest or services charges added under credit arrangements;

(b) extra charges incurred as a result of late payment, where late payment means failing to pay within the period stated at the time the purchases were made.

Imputed rent

The purchase of the dwelling as such shall be regarded as capital formation (investment) and not consumer expenditure, and consequently shall be excluded from household final consumption expenditure. The ownership of a dwelling however produces a service, a shelter, which is consumed over time by the households, and as a consequence, an estimated price of the shelter, by imputation of a rental, shall be included in the household final consumption expenditure. It shall be part of the non-monetary part of household final consumption expenditure since no monetary transaction is involved.

The imputed rent represents simultaneously a non-monetary source of income, and consequently shall be recorded on the income side as well.

The imputed rent shall be estimated for all households that do not report paying full rent, either because they are owner-occupiers, or because they live in an accommodation rented at a lower price than the market price, or because the accommodation is provided rent-free.

The imputed rent shall be estimated only for those dwellings (and any associated buildings such as a garage) that are used as a main residence by the households.

The value of imputed rent shall be the estimated value of rental that would be paid for a similar accommodation, taking into account factors such as location, neighbourhood amenities, etc., as well as the size and quality of the dwelling itself. This value shall be reduced by any rent actually paid (in the case where the accommodation is rented at a lower price than the market price) and reduced by any ordinary maintenance (gas, electricity, water, etc.), minor repairs or refurbishment expenditure which the owner-occupier households make on the property of the type that would normally be carried out by landlords.

For garages located separately from dwellings, which are used by the owner for final consumption purposes in connection with using the dwelling, a similar imputation shall be made.

To estimate the value of owner-occupied dwelling services, the stratification method based on actual rents (either by direct extrapolation or by means of econometric regression) shall be preferably used.

— The stock of dwellings shall be preferably stratified by location, size and nature of dwelling and other factors that affect the rental. Information about actual rentals from privately-owned rented dwellings shall be used to obtain an estimate of the rental value of the total stock of dwellings. The average actual rental per stratum shall be applied to all dwellings in that particular stratum.

— The rental to be applied to owner-occupied dwellings in the stratification method is defined as the private market rental due for the right to use an unfurnished dwelling. The rentals for unfurnished dwellings from all private market contracts shall be used to determine imputed rentals. Private market rentals that are at a low level due to government regulation are included.

— If the sample size for the observed rentals as defined above is not large enough, observed rentals for furnished dwellings may be used for imputation purposes, provided they are adjusted for the furniture element. Exceptionally, also increased rentals for public-owned dwellings may be used. Low rentals for dwellings let to relatives or to employees should not be used.

In the absence of a sufficiently large rental market, where accommodation is dominated by owner-occupied dwellings, the self-assessment method shall be applied for owner-occupied dwellings. The value of the imputed rent under this method refers to a self-assessed value used as direct estimate of the market price value of the dwelling.

Own consumption

Own consumption refers to goods and services produced as outputs of unincorporated enterprises owned by households that are retained for consumption by the members of the same household. Examples of products retained for own final consumption include:

(a) agricultural products retained by farmers;

(b) housing (dwelling) services produced by owner-occupiers;

(c) household services produced by employing paid staff.

Domestic and personal services that are produced and consumed within the same household are not counted as production in ESA and as a result shall not be part of own consumption. Examples of domestic services produced by households themselves that shall be excluded are:

(a) cleaning, decoration and maintenance of the dwelling as far as these activities are also common for tenants;

(b) cleaning, servicing and repair of household durables;

(c) preparation and serving of meals;

(d) care, training and instruction of children;

(e) care of sick, infirm or old people; and

(f) transportation of members of the household or their goods.

However, domestic and personal services that are produced by employing paid domestic staff are considered as production, and make part of final consumption expenditure.

Own consumption shall be recorded when the output retained is taken into the household for own final consumption, and shall be valued at the purchaser’s price of similar products (goods or services) sold on the market. Domestic and personal services that are produced by employing paid domestic staff shall be valued by the compensation of employees paid; this shall include any compensation in kind such as food or accommodation.

Cross-border consumption expenditure

Household final consumption expenditure includes consumption expenditure of private resident households, whether the expenditure takes place in the country or abroad. Cross border consumption expenditure refers to the part of the household’s consumption expenditure effected abroad. It covers all direct purchases of goods and services made by residents while travelling abroad for business or personal purposes. Two categories, which require different treatment, shall be distinguished:

(a) all business-related expenditure by business travellers are intermediate consumption, and therefore shall be excluded from household final consumption;

(b) all other expenditure, whether by business travellers or other travellers, shall be household final consumption expenditure.

Only cross-border consumption expenditure made in monetary form shall be registered.

Total annual net income from all sources, including non-monetary components

Household total annual net income from all sources includes monetary annual net income from all sources, income in kind from employment, income in kind from non-salaried activities and imputed rent.

Household total annual net income from all sources should equal the sum for all household members of total personal annual net income from all sources plus all annual net income components at household level.

Monetary annual net income from all sources

Monetary annual net income from all sources includes:

— Cash or near-cash employee income.

— Cash profits or losses from self-employment (including royalties).

— Property income: a. Interest, dividends, profits from capital investment in an unincorporated business; b. Income from rental of a property or land; c. Pensions received from individual private plans (other than those covered under the European system of integrated social protection statistics (ESSPROS)).

— Current transfers received: a. Social benefits: — Family/children-related allowances; — Housing allowances; — Unemployment benefits; — Old-age benefits; — Survivors’ benefits; — Sickness benefits; — Disability benefits; — Education-related allowances; — Social exclusion allowances/benefits not classified elsewhere; b. Regular inter-household cash transfers received.

— Other cash income received.

Income in kind from employment

Income in kind from employment refers to the non-monetary income components which an employer may provide free of charge or at a reduced price to an employee as part of the employment package. (If any goods or services are provided for both private and work use, then private use, as a proportion of total use, must be estimated and applied to the total value).

It includes:

— a company car and associated costs (e.g. free fuel, car insurance, taxes and duties, as applicable) provided either for private use or for both private and work use,

— free or subsidised meals, luncheon vouchers,

— reimbursement or payment of housing-related expenses (e.g. gas, electricity, water, telephone or mobile telephone bills),

— accommodation provided free or at reduced rent to an employee as the household’s main or secondary residence,

— other goods and services provided free or at a reduced price by employers to their employees, if they are a significant component of income at national level or they constitute a significant component of the income of particular groups of households.

The value of goods and services provided free of charge shall be calculated according to their market value. The value of goods and services provided at a reduced price shall be calculated as the difference between the market value and the amount paid by the employee.

It does not include:

— the cost to the employer of providing any of these goods and services if they are necessary to enable employees to do their work,

— accommodation services at a place of work which cannot be used by the households to which the employees belong,

— allowances paid to employees for the purchase of tools, equipment, clothes, etc. needed exclusively or primarily for their work,

— special meals or drinks necessitated by exceptional working conditions,

— any goods or services provided to employees at the place of work or required because of the nature of their work (e.g. a medical examination required for work).

Income in kind from non-salaried activities

Income in kind from non-salaried activities includes output for own final consumption, that is goods and services produced by households that are retained for consumption by the members of the same household.

Income in kind from non-salaried activities does not include imputed rent.

Tax on income and social insurance contributions

Tax on income refers to taxes on income, profits and capital gains. They are assessed on the actual or presumed income of individuals, households or tax units. They include taxes assessed on holdings of property, land or real estate, where these holdings are used as a basis for estimating the income of their owners. Taxes related to pensions received from individual private plans (other than those covered under ESSPROS) should also be taken into account.

Taxes on income include:

— taxes on individual, household or tax-unit income (income from employment, property, entrepreneurship, pensions, etc.), including taxes deducted by employers (pay-as-you-earn taxes), other taxes at source and taxes on the income of owners of unincorporated enterprises paid during the income reference period,

— any tax repayment received during the income reference period relating to tax paid on the income received during the income reference period or previous years. This value should be taken into account as a reduction of taxes paid,

— any interest charged on arrears of taxes due and any fines imposed by taxation authorities.

Taxes on income do not include:

— fees paid for hunting, shooting and fishing rights.

(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 (OJ L 174, 26.6.2013, p. 1).