1. Sector S.11 Non-financial corporations
Sector Accounts
19 November 2012
Sector S.11 Non-financial corporations
Alan Sebo (S.11)
and Maria Piszczek (SPE)
Statistics Netherlands, National accounts in practice

2. Contents 1. Introduction and definition 2. Survey and survey-method
Sector Accounts
19 November 2012
Contents
1. Introduction and definition
2. Survey and survey-method
Areas of attention
Headoffice and topholding
Multinationals and Special purpose entity (SPE)
Summary S.11 .
Statistics Netherlands, National accounts in practice

3. Introduction S.11 Non-financial corporations
Sector Accounts
19 November 2012
Introduction
S.11 Non-financial corporations
S.12 Financial corporations
S.13 Government
S.14 Households
S.15 Non-profit institutions serving households
S. 2 Rest of the world .
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4. Definition ● Non-financial corporations: main activity
Sector Accounts
19 November 2012
Definition
● Non-financial corporations: main activity
Production of goods and non-financial services
● Legal separation between ownership and management
● Marketproducer
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5. Definition Private corporations, of which headoffices and holdings
Sector Accounts
19 November 2012
Definition
Private corporations, of which headoffices and holdings
Co-operatives and partnerships recognised as independant legal entities
Non-profit institutions or associations serving non-financial corporations
Private and public quasi-corporations
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6. Definition Public non-financial corporations
Sector Accounts
19 November 2012
Definition
Public non-financial corporations
National private non-financial corporations
Foreign controlled non-financial corporations
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7. Definition Sectoraccounts: annual Sectoraccounts: quarterly
19 November 2012
Definition
Sectoraccounts: annual
Sectoraccounts: quarterly
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8. Survey on annual base Survey of large corporations
Sector Accounts
19 November 2012
Survey on annual base
Survey of large corporations
Survey of small corporations
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9. Survey: quarterly base
Sector Accounts
19 November 2012
Survey: quarterly base
Statistic Finance of non-financial corporations on quarterly base (kSFO)
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10. Survey: quarterly base
Sector Accounts
19 November 2012
Survey: quarterly base
In near future: starting at first quarter of 2017
- One survey composed by Statistics Netherlands and The Dutch Central Bank: Kwartaalkubus
Achieving full consistency between BOP and the ROW account
Avoiding differences caused by using different sometimes inconsistent sources
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11. Sector Accounts
19 November 2012
Areas of attention
Conversion from national (fiscal and commercial) data to ESA-standards
Coördination of statistical survey
Measuring of certain entities (SPEs)
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12. Conversion of national data to ESA-data
Sector Accounts
19 November 2012
Conversion of national data to ESA-data
● Annual and quarterly financial reports are based on international of national accounting standards:
IFRS, Dutch GAAP, US GAAP
● ESA/SNA transactions do not always match the accounting standards
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13. Coördination of statistical survey
Sector Accounts
19 November 2012
Coördination of statistical survey
Which kind of unit?
Exhaustiveness
Valuation
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14. Sector Accounts
19 November 2012
Headoffices
Deconsolidation of holding corporations of enterprise groups into head offices, engaged in the management of the nfc- subsidiaries, and more narrowly defined holding companies
For example: Royal Dutch Shell, deconsolidation into three parts: See diagram
Dutch NA practice:
Although ES95 also demands the deconsolidation of the HO and HC from the group
During ESA95 no deconsolidation was made of headoffice and holdings. The level of the Dutch consolidation of an nfc was too high. I will explain it by showing you the RDS diagram
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15. Multinationals and SPEs
Multinational is an enterprise with activities world wide
No borders
Different countries = different tax and legal regimes
What kind of entities are in the structure of a multinational:
Working companies
Support activities
Financing
Different types of holdings companies

16. Multinationals: entities
Sector Accounts
19 November 2012
Multinationals: entities
What is their roll in an enterprise?
Production
Support
Other
What is the role of NACE class 6420 entity?
This class includes the activities of holding companies, i.e. units that hold the assets (owning controlling-levels of equity) of a group of subsidiary corporations and whose principal activity is owning the group. The holding companies in this class do not provide any other service to the businesses in which the equity is held, i.e. they do not administer or manage other units.”
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17. Mutinationals: Special purpose entity
Sector Accounts
19 November 2012
Mutinationals: Special purpose entity
Holding company is an example of Special purpose entity
“A special purpose entity (SPE) or vehicle (SPV) is usually a limited company or, a limited partnership, created to fulfill narrow, specific or temporary objectives, to isolate a financial risk, a specific taxation or a regulatory risk.
There is no common definition of an SPE”
If there is no common definition of SPE how do we recognize them?
And why do we want to recognize SPEs?
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18. SPEs: characteristics
Sector Accounts
19 November 2012
SPEs: characteristics
Have no employees
No non-financial assets
May have little physical presence in their place of registration
They are always related to another corporation (subsidiary)
Are often resident in a territory other than the territory of residence of the related corporations (foreign parent is not a must!)
Are commonly managed by employees of another corporation which may or may not be a related one.
The unit pays fees for services rendered to it and in turn charges its parent or other related corporation a fee to cover these costs.
Netherlands: SPE is a part of the structure of a non-financial corporation and without further action it will be recognised as such!
This is the only production the unit is involved in though it will often incur liabilities on behalf of its owner and will usually receive investment income and holding gains on the assets it holds.
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19. Sector Accounts
19 November 2012
SPEs: types and sector
They do not belong to one particular sector but may appear in all domestic sectors.
Based on activities we recognize SPEs like:
Royalty and licence company
Operational or financial lease company
Invoicing company
Holding companies (financial, NACE Rev )
All SPEs that are in the structure of a non-financial corporation have to be separately analyzed and allocated to the appropriate sector
Statistics Netherlands, National accounts in practice

20. SPEs in multinational enterprise
Sector Accounts
19 November 2012
SPEs in multinational enterprise
Netherlands:
SPEs of Dutch multinationals like holding companies
SPEs of other multinationals
The part of multinational enterprise that is located in the Netherlands will be profiled and enterprises (institutional units) will be located in the appropriate sector of the economy. Based on their activities (NACE).
Exception: all holdings companies NACE class 6420 ale S.127 (captive financial institutions and money lenders)
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21. SPEs in multinational enterprise
Royal Dutch Shell:
Under the old guidelines Shell was one enterprise: S.11
New guidelines ‘cut’ Shell in at least three enterprises: -
Head office S.11
Oil production S.11
Holding company S.127
Result: shift between the sectors
BMW/Vodafone/Siemens/HSBC:
Are all foreign multinationals with different activities in the Netherlands
SPEs are part of their activities here

22. SPEs in National Accounts
In the Netherlands all SPEs are allocated to the financial sector S.127
Gross >80% are holding companies
Balances of the SPEs are 1,5 times the balances of non-financial corporations

23. S127 Captive Financial Institutions and money lenders
Assets
%S2
Liabilities
AF5 (Equity and investment fund shares or units)
97%
99%
AF4 (loans)
AF3 (debt securities)
65.916
100%
Total
S11 Non-financial corporations
% S2
57%
63%
91%
30%

24. SPE: the way forward
Carrying on with implementation definition holding company CFI
Separating different types of SPEs in the sectors where they belong
Introduction other methods to measure the production of the SPEs

25. Summary Survey and survey-method 2. Areas of attention
Sector Accounts
19 November 2012
Summary
Survey and survey-method
2. Areas of attention
Headoffices and topholdings
4. Summary S.11
Multinationals and Special purpose entity (SPE)
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26. Exercise Sector Accounts 19 November 2012
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