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Value added at basic prices is calculated from the production value plus subsidies on products less the purchases of goods and services (other than those purchased for resale in the same condition) plus or minus the change in stocks of raw materials and consumables less other taxes on products which are linked to turnover but not deductible. It represents the value added by the various factor inputs in the operating activities of the unit concerned.

Income and expenditure classified as financial or extra-ordinary in company accounts is excluded from value added.

Value added at basic prices is calculated "gross" because value adjustments (such as depreciation) are not subtracted.

Operating subsidies can be separated into two groups:

i) Subsidies on products are subsidies payable per unit of a good or service. The subsidy may be a specific amount of money per unit of a good or service or it may be calculated ad valorem as a specified percentage of the price per unit. A subsidy on a product usually becomes payable when the good or service is produced, sold or imported, but it may also be payable in other circumstances such as when a good is transferred, leased, delivered or used for own consumption or own capital formation.

ii) Subsidies linked to production are subsidies received by a unit which are not linked to the quantity or the value of goods produced or sold. Notably these subsidies include subsidies on the payroll and workforce, subsidies for environmental protection and grants for interest relief.

Investment subsidies are excluded. Specific calculation methods are needed for NACE Rev. 1 classes 66.01 and 66.03.

Note: Indirect taxes can be separated into three groups:

i) The first comprises VAT and other deductible taxes directly linked to turnover which are excluded from turnover. These taxes are collected in stages by the enterprise and fully borne by the final purchaser.

ii) The second group concerns all other taxes and duties linked to products which are either 1) linked to turnover and not deductible or 2) taxes on products not linked to turnover. Included here are taxes and duties on imports and taxes on the production, export, sale, transfer, leasing or delivery of goods and services or as a result of their use for own consumption or own capital formation.

iii) The third group concerns taxes and duties linked to production. These 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.

Source Publication:
Definitions of Structural Business Statistics Regulation (Commission Regulation (EC) No. 2700/98 of 17 December 1998) variables (12 14 0)

Cross References:
Value added - basic prices – SNA

Version Indicator: Eurostat

Statistical Theme: National accounts

Created on Tuesday, September 25, 2001

Last updated on Sunday, March 17, 2002