Concept selected: Value added at factor cost

Definition

The value added at factor cost is the gross income from operating activities after adjusting for operating subsidies and indirect taxes. It can be calculated from turnover, plus capitalised production, plus other operating income (including operating subsidies), plus or minus the changes in stocks, minus the purchases of goods and services, minus other taxes on products which are linked to turnover but not deductible, minus the duties and taxes linked to production. The duties and taxes linked to production are compulsory, unrequited payments, in cash or in kind which are levied by general government, or by the Institutions of the European Union, in respect of the production and importation of goods and services, the employment of labour, the ownership or use of land, buildings or other assets used in production irrespective of the quantity or the value of goods and services produced or sold. Alternatively it can be calculated from gross operating surplus by adding personnel costs. Income and expenditure classified as financial in company accounts according to the 4th Accounting Directive (78/660/EEC) is excluded from value added. Income and expenditure classified as interest income, dividend income, foreign exchange gain from foreign currency borrowings related to interest costs, gains on redemption and extinguishment of debt or finance costs according to Commission Regulation (EC) 1725/2003 are excluded from value added. Value added at factor costs is calculated "gross" as value adjustments (such as depreciation and impairment losses) are not subtracted. For the statistics on activities of NACE rev.2 groups 65.1 and 65.2, the value added at factor costs is defined as production value minus gross value of reinsurance services received minus commissions minus other external expenditure on goods and services. For the statistics on activities defined in Section 3 of Annex VI of Regulation (EC) No 295/2008, the value added at factor costs is defined as production value less total purchases of goods and services. For the statistics on activities defined in Section 3 of Annex VII of Regulation (EC) No 295/2008, the value added at factor costs is defined as production value less total purchases of goods and services. For the enterprises of the NACE Rev.2 class 64.11, the value added at factor costs is defined as production value less total purchases of goods and services.

Source

Commission Regulation (EC) No 250/2009 of 11 March 2009 implementing Regulation (EC) No 295/2008 of the European Parliament and of the Council as regards the definitions of characteristics, the technical format for the transmission of data, the double reporting requirements for NACE Rev.1.1 and NACE Rev.2 and derogations to be granted for structural business statisticsMore information

Topic

Economic accounts

Statistical operations (links to the Inventory of Statistical Operations)

Concepts associated

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