European profiling Profiling allows a view KS-03-13-411-EN-C

sees the whole elephant of the actual economic activity KS-03-13-411-EN-C Compact guides Like blind men in the old Indian fable, confronted for the first With profiling the National Statistical Institutes will correctly esti- time with an elephant and unable to agree on their perceptions, mate turnover. each only touching a different part, multinational enterprise Without profiling, e.g., four activities are observed in country 1 and groups cannot be explained by a purely national view based on the total turnover is 900. This includes turnover generated by intra- legal units. European profiling relies on the groups’ own under- group activities (Segments N3, N4 and parts of N1, N2). standing of their economic and organisational structures, allowing After profiling, in the example, 2 activities ‘disappear’ because they in- NSIs through direct contacts with the groups to define enterprises ternally serve the group (N3, N4). Intra-group turnover is eliminated. in a more relevant and consistent manner. This approach is not restricted to Europe as it includes all parts of a European group, Without profiling Total turnover within and outside Europe. of the group in country 1: 900 • European-Statistical-System-wide gains NACE N1 Turnover: 400 NACE N2 NACE N3 NACE N4 –– The country of the headquarter profiles for all the countries Turnover: 250 (wholesale) involved (transport) Turnover: 150 Turnover: 100 –– Enterprises of one group are defined consistently for all Euro-

pean business statistics With profiling Total turnover –– Centrally defined enterprises made available for all national of the group statistics NACE N1 in country 1: 500 Turnover: 300 NACE N2 • Benefits for respondents Turnover: 200 N3 and N4: intra-group –– Profilers and the group talk the same language activities disappear –– NSIs offer the group a central contact point –– Profiling decreases the response burden for a group Profiling also improves the description of activities through NACE code and their harmonisation across countries. A better implementation of the definition of enterprises 100 allows for a more realistic percentage of large enterprises internal activities The European System 80 80

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KS-03-13-411-EN-The European SystemC 40 % of EU employment manufacture of textiles An ESS.VIP project rises 30 renting of clothing of interoperable 20 rp

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A mutually beneficial network of 10 0 % before profiling after profiling 0 Source: European Profiling 2011 <2020-99 100-249250-499 500-9991000-4999 5000+

number of employees For more information, please contact: [email protected] current enterprises future enterprises (estimated) ISBN 978-92-79-31466-7 Source: EuroGroups Register 2011 doi:10.2785/28633 © European Union, 2013 Cover photo: © Peter Rohleder (homo_sapiens), ISSN 978-92-79-31466-7www.flickr.com doi:10.2785/28633 © European Union, 2013 Cover photo: © Peter Rohleder (homo_sapiens), www.flickr.com Since 2008, the second EU Register Regulation has been defining Context the steps towards a common framework for statistical business reg- A uniform implementation In 2009, Eurostat issued a ‘Communication to the European Parlia- isters and includes the EuroGroups Register, managed by Eurostat. of the statistical unit ‘enterprise’ ment and the Council on the production method of EU statistics: a It provides national statistical registers with the information they vision for the next decade’(1). The main goal of the ‘Vision’ is to trans- lack on multinational enterprise groups, thus linking the national increases the relevance form the production of European statistics from a traditional ‘stove- with the European level. Based on the cooperation between Euro- pipe’ approach to an integrated, more flexible model. This means that stat and the statistical authorities of the Member States and EFTA and consistency of statistics the European Statistical System (ESS) should move towards more countries, the EuroGroups Register covers more than 10 thousand multinational enterprise groups active in Europe. The enterprise is the main statistical unit on which business statis- common solutions and shared services and environment. tics are built. The ESBRs project contributes to a uniform imple- In order to implement the ‘Vision’, the ESS has adopted a set of pro- mentation of definition of enterprises across Europe. European pro- jects (ESS Vision Infrastructure Projects) which together constitute filing forms part of this project and is used to define enterprises in the ESS.VIP Programme. The ESS.VIP ESBRs is one of these projects ... to an efficient European system large multinational groups. working towards a mutually beneficial network of business registers. From an economic point of view the enterprise’s autonomy in of statistical business registers decision-making is fundamental from the conceptual perspec- tive. In practice, enterprise structures coincide with legal and ad- From disconnected statistical The next generation: interoperable ministrative concepts in the vast majority of cases (93 %). Thus, system of registers NSIs regularly use the legal unit as a proxy for the statistical unit business registers … ‘enterprise’. Statistical business registers are important infrastructures, provid- NSIs However, enterprise groups organise themselves more and more in- ing the statistical units on which business statistics are built. Sys- SBR dependently from legal structures, so that statistics based solely on tematically applied, they represent the backbone of business statis- legal units do not properly reflect economic reality. tics, enabling the linking of statistical information on businesses. With European economic integration and globalisation having substantially increased the importance of such complex enterprise The first generation: isolated national groups, this reality gap has widened over the last decades as NSIs statistical registers have not yet aligned their approaches. SBR SBR Work is underway in the European Statistical System to correctly Based on a first EU Regulation in 1993 National Statistical Institutes (NSIs) EGR implement the statistical units with a focus on enterprise groups, launched the development of statistical business registers to underpin based on an updated definition, a uniform data model and opera- European business statistics. Notwithstanding efforts to harmonise defi- tional rules. nitions and methodologies, business register developments have mainly reflected national circumstances and needs. This has led to differences in European profiling: treat 2 % of legal units to have better terms of sources used, content, frequency of updating, methodology, etc. Eurostat SBR data on 28 % of employment The second generation: large and complex groups: links via the EuroGroups Register In 2013, the European Statistical System took steps towards creating 28 % to be profiled a genuine system of statistical business registers and launched the Eurostat — EuroGroups Register (EGR) ESBRs project with the following goals: 72 nt small or simple groups: • Strengthen and rationalise national SBRs me to be treated automatically oy

–– Integration into an interoperable system pl 46 2 % –– Serving national and EU statistical production em of independent legal units: –– Efficiency and quality gains for the whole system % treatment as usual • Improve the EuroGroups Register (heart of the system) –– Improved quality of information on multinationals –– NSIs on-line access, facilitating interaction with EGR –– Dedicated interfaces for FATS and FDI statisticians 93 98 –– Integration of profiling information into the EGR % of legal units • Share statistical services Source: EuroGroups Register 2011 and Business Register annual inquiry 2011 NSIs – national Statistical Business Registers (SBRs) –– NSIs access shared services for register management (1) COM (2009) 404, European Commission –– Services certified by Eurostat against ESS standards