1.

In order to define units that are recognizable and identifiable in the economy, legal or institutional criteria must be applied. In some cases, legally separate units must be grouped together as they are not sufficiently autonomous in their organization. In order to define some types of unit, accounting or financial criteria also have to be applied.

2.

To constitute the enterprise unit, use is made of legal units that exercise, wholly or partially, a productive activity.

3.

Legal units include:

4.

The legal unit always forms, either by itself or sometimes in combination with other legal units, the legal basis for the statistical unit known as the ‘enterprise’.

1.

A unit can be geographically identified. A distinction is made between local, regional, national, Community and worldwide areas.

2.

The local level here means the territory corresponding to the ‘smallest administrative area’: the ‘commune/gemeente’ in Belgium; the ‘kommune’ in Denmark; the ‘Gemeinde’ in Germany; the ‘demos’ or ‘koinotis’ in Greece; the ‘municipio’ in Spain; the ‘commune’ in France; the ‘DED/ward’ in Ireland; the ‘comune’ in Italy; the ‘commune’ in Luxembourg; the ‘gemeente’ in the Netherlands; ►   ►  the ‘Gemeinde’ in Austria; the ‘concelho’ in Portugal; the ‘ kunta — kommun ’ in Finland; the ‘primärkommun’ in Sweden and the ‘ward’ in the United Kingdom. ◄  ◄

3.

The regional levels are defined by the nomenclature of territorial units for statistics (NUTS), which distinguishes three levels (I, II, III).

4.

The observation and analytical units are defined in such a way as to permit data first to be determined for each Member State and these data to be combined to give figures for the Community as a whole or for larger areas.

5.

The rules regarding geographical criteria must be in order to permit consolidation and avoid double counting and omissions.

1.

The economic activity of production — hereinafter referred to as ‘activity’ — can be said to take place when resources such as equipment, labour, manufacturing techniques, information networks or products are combined, leading to the creation of specific goods or services. An activity is characterized by an input of products (goods or services), a production process and an output of products.

2.

Activities are determined by reference to a specific level of NACE Rev. 1.

3.

If a unit carries out more than one activity, all the activities which are not ancillary activities are ranked according to the gross value added at factor cost which they generate. A distinction is made between principal activity and secondary activities.

4.

If no value-added figures are available, other criteria must be used, such as, for example, employment, payroll, turnover and assets, with a view to obtaining the closest possible approximation of the classification which would have been obtained on the basis of value added.

5.

Units are classified in terms of their activities. If one activity accounts for over 50 % of the value added this determines the classification of the unit. In all other cases, classification rules must be observed. Classification is carried out in stages from the highest level of aggregation which is the section (one letter), down to the class (four digits) via the division (two digits) and the group (three digits). The classification at each level must be compatible with the previous level. The Statistical Programme Committee referred to in Article 7 of Regulation (EEC) No 3037/90 has competence in this field.

6.

Principal and secondary activities are backed up by ancillary activities, such as, for example, administration, accounts, data processing, process monitoring, purchasing, sales and marketing, warehousing, repairs, transport and renovation.

These ancillary activities within a unit are carried out in order to permit or facilitate production by the unit of goods and services for third parties. The products of ancillary activities are not themselves supplied to third parties.

7.

The notion of ancillary activities is developed in section IV B.

1.

In the case of general government bodies, the appropriate statistical unit for the collection and compilation of statistics is very variable (e. g. central government, social security administration, or local government of the region, province, department, county, municipality, metropolitan area, etc.). These various bodies collectively plan, supervise and administer the finances of their constituent bodies (which can be ministries, directorates-general, directorates, bureaus, agencies, offices, etc.) As regards the type of activity, however, some of these bodies, particularly local authorities, are likely to be much more heterogeneous than corporate enterprises.

2.

The activities of these bodies often belong to Section L of NACE Rev. 1 ‘Public administration and defence: compulsory social security’, although other bodies carry out activities which basically belong to other Sections, including ‘Education’ (Section M), ‘Health and social work’ (Section N) and ‘Other community, social and personal service activities’ (Section O).

3.

When series of data on private-sector entities have to be combined with data on these general government and private non-profit institutions classified by type of economic activity, their identification and classification must be carried out using statistical units corresponding to entities which are closest to the statistical units defined in the private sector. This is why all the criteria used in the private sector are — by analogy — applied to general government bodies. The same applies to private non-profit institutions.

1.

An activity must be regarded as ancillary if it satisfies all the following conditions:

2.

The distinction between ancillary, principal and secondary activity can be illustrated by a few examples, as follows:

3.

Thus, the general rule is that, since production processes are not usually viable without the support of ancillary activities, these ancillary activities should not be isolated to form distinct entities, even if they are carried out by a distinct legal entity or at a distinct place, and even if separate accounts are kept. Furthermore, the ancillary activity is not taken into account when classifying the activity of the entity by which the ancillary activities are carried out. The best example of an entity carrying out ancillary activities is the central administrative department of registered office.

4.

Having regard to the definition in point 1, the following activities must not be considered as ancillary activities:

In all these cases, if separate data are available for these activities, they should be regarded as distinct activities and subsequently recognized as KAUs.

5.

If ancillary activities are carried out for the benefit of a single entity, these activities and the resources they use will constitute an integral part of the activities and resources of that unit. However, if the activities of the statistical unit and the corresponding ancillary activities are not carried out in the same geographical area (defined in terms of the zones delimited for the purposes of statistical surveys), it may be desirable to collect separate supplementary information on these units for the categories of data which have to be classified in terms of geographical areas, even if the units only carry out ancillary activities.

6.

If ancillary activities are carried out basically for the benefit of two or more kind-of-activity units, the cost of these ancillary activities must be spread over all the kind-of-activity units which they support. If data are available on the proportion of the costs which can be assigned to each of these distinct activities, the costs should be broken down accordingly. However, should no information of this kind be available, the cost of the ancillary activity should be broken down over the principal and secondary activities proportionately to the value of output minus intermediate costs excluding the costs of the ancillary activities themselves. If this method proves too difficult in practice, the cost of the ancillary activity may simply be broken down proportionately to the value of output.

7.

If ancillary activities are organized in such a way as to serve two or more entities of a multi-unit enterprise, they may constitute a group of ancillary activities at a distinct location. In this case, in the same way as it would be desirable to cover certain activities completely even if they are carried out independently or by entities which are engaged exclusively in ancillary activities (such as computer services), it could be useful to allow for supplementary classifications. For this purpose these ancillary entities could then be classified according to their own activities as well as being classified under the activity of the unit to which they belong.

8.

It is possible that an activity starts out as ancillary but subsequently begins to provide services for sale to other entities. An activity of this kind may develop to the point where it ceases to be an ancillary activity and must therefore be regarded as one of the principal or secondary activities of an entity. The only way of deciding whether a given activity should be regarded as an ancillary activity or a principal or secondary activity is to assess the role it plays in the enterprise as a whole.