Finnish enterprises: documentation of statistics

Activities of multinational enterprises. Measures describing the activity and role of multinational enterprises in general, irrespective of whether it is financed by a foreign investor or not (cf. direct investment).

A period of time, usually a calendar year, from the bookkeeping of which an enterprise's financial statements are compiled. As of the statistical year 2001, the data for a statistical year are formed in the Register of Enterprises and Establishments from the accounting period that ends during the statistical year under review.

An ancillary establishment is located separately from the actual production activity of an enterprise and only produces services (not goods) for the enterprise itself. Examples of ancillary establishments include head offices, warehouses or repair shops for the enterprise's own vehicles. An ancillary establishment does not have turnover or has very little of it relative to its personnel.

This legal form is used if a bankrupt's estate requests and is given a Business ID. Otherwise the legal form of an enterprise does not change in connection with a bankruptcy.

Public corporations comprise state agencies subject to special law (e.g. the Social Insurance Institution of Finland, Bank of Finland and the University of Helsinki) and other legal persons subject to public law.

A business enterprise is an economic unit that covers its expenditure fully or at least mainly with income from sales, interests, dividends or insurance premiums. The principal objective of a business enterprise is to produce goods or services for sales on the market at prices that cover their production costs or to serve business enterprises engaged in such activity.

Cessation form describes how the activity of an enterprise has finished. Cessation forms include death, change of legal form, merger and division.

A community engaged in economic activity to benefit its members, whose number of members and capital are varying. The members participate in the activity by exploiting the services of the community. The founders of a co-operative society must number at least one. A co-operative society is entered into the Trade Register. A co-operative bank is a co-operative society engaged in banking activity.

Control means the ability to determine the general policy of an enterprise by choosing appropriate directors as needed. Enterprise A is deemed to be controlled by institutional unit B when B controls - directly or indirectly - more than half of its shareholders' voting power or more than half of its shares.

Country of location is the country of registration of an institutional unit. The country of location is often, but not always, the same as the nationality of an institutional unit.

A decedent's estate refers to the assets and liabilities of a deceased person prior to the division of the estate. Heirs, meaning parties to the estate, belong to the same legal form.

A community whose purpose is acquisition of profit or other direct economic benefit to its members or whose purpose or type of activity is otherwise mainly economic. The Associations Act does not apply to the activities of these associations but their activities are based on the operating principles agreed at the time of their establishment or on separate legislation. Such associations include associations of forest owners or mortgage associations.

Employees refer to wage and salary earners and self-employed persons. Employees are converted to annual full-time employees (FTEs) so that, for example, an employees working half-time represents one half of a person and two employees working half-time for one year represent one annual full-time employee.

With regard to self-employed persons, the labour input of a self-employed person is the input the owner of an enterprise or his/her family member has made into the enterprise without actual remuneration.

For enterprises not included in the surveys of the Register of Enterprises and Establishments, numbers of employees are estimated from data on wages and salaries.

A natural or legal person who uses outside labour against financial compensation. An employer is entered into the register of employers maintained by the Tax Administration.

The largest enterprise groups operating in Finland are entered into the Enterprise Group Register. Data on an enterprise groups' turnover, balance sheet total and number of employees are entered annually into the Enterprise Group Register. In addition, information is recorded about the structure of the enterprise group: its group head, subsidiary companies, joint venture companies, associate companies and their Business IDs, group head's shares of ownership and votes in group companies, start and finish dates of group relationships and type of group membership. Municipal enterprise groups are also entered into the Register. Since 2003, the Enterprise Group Register has also contained sub-groups.

An enterprise group is an economic entity formed by two or more enterprises, in which the group head has either alone or together with other enterprises belonging to the same group the right of control in one or several other enterprises (subsidiary companies). Individual enterprises operating in Finland whose group head is located abroad are also treated as enterprise groups.

Thus, all main enterprise groups producing group financial accounts and having a group structure are included in enterprise groups. Sub-groups are not recorded separately in statistics but are included in main groups.

Cf. Enterprise group.

The definition of an enterprise group is based on an EU regulation concerning statistical units (EEC 1993/696).

An enterprise group is an economic entity formed by two or more enterprises, in which the group head has either alone or together with other enterprises belonging to the same group the right of control in one or several other enterprises (subsidiary companies).

Cf. group of enterprises.

An enterprise whose exports threshold value is EUR 12,000 and has trading transactions in at least two months per year or the value of trading exceeds EUR 120,000 (in which case one trading transaction is sufficient in the year concerned). The data are obtained from the National Board of Customs.

Foreign control means that the controlling institutional unit is resident in a different country from the one where the institutional unit over which it has control is resident.
Control means the ability to determine the general policy of an enterprise by choosing appropriate directors as needed.

Enterprise A is deemed to be controlled by institutional unit B when B controls - directly or indirectly - more than half of the shareholders' voting power or more than half of the shares.

A foreign corporation is a unit which is registered in Finland in order to declare its sales including VAT but which does not have a permanent establishment in Finland. These units are not included in the enterprises of the Business Register. Cf. Branch.

Foreign-owned enterprises are enterprises where more than 50 per cent of equity or voting shares are directly or indirectly held by one foreign party.

A foundation refers to assets set aside for a certain purpose and administered by the board of the foundation. A foundation can be established with a charter of foundation, last will and testament or a deed of donation. A licence to establish a foundation must be applied for from the Board of Patents and Registration, which also ratifies the rules of the foundation. A foundation is entered into the register of foundations maintained by the Board of Patents and Registration.

Funds also belong to this category of legal form.

Person years (full-time equivalent FTE) describe employees’ work input converted into full-time employees. A person that has worked permanently or temporarily for the establishment and whose input has been compensated as earned income is counted as an employee.

An employee who has worked full-time for a year corresponds to one person year. Part-time employees are converted into full-time employees. For example:
*Full-time employment of six months or half-day employment that has lasted for the whole year corresponds to 0.5 person years
*60 per cent employment of eight months corresponds to 0.4 person years (0.6 * 8 months/12 months = 0.4)

For employees who have been laid off or on unpaid leave during the year, the work input is reported for the period for which they have received salary.

A general partnership must have at least two founders who may be either natural or legal persons. Each partner in a general partnership is responsible for the partnership's liabilities to their full extent as if they were their own debt. A general partnership is entered into the Trade Register.

Government authorities comprise the state and its agencies and institutions, municipalities, joint municipal boards and the Region of Åland and its agencies.

This category includes enterprises owned by the state, municipalities, joint municipal boards and the Region of Åland. State-owned enterprises are governed by the Act on State Enterprises (1987/627). The activities and tasks of the enterprises are prescribed in legislation concerning each individual enterprise. State-owned enterprises are defined as enterprises. Enterprises owned by municipalities and joint municipal boards are public corporations and are not included in statistics on enterprises. However, they are entered into the Register of Enterprises and Establishments. Enterprises owned by the Region of Åland are not entered into the Register of Enterprises and Establishments.

The group head of an enterprise group is an enterprise that has at least one subsidiary company and in which no company holds more than 50 per cent of voting rights.

A limited liability company is considered to be a housing company if its purpose is the ownership and possession of one or more buildings in which ( not necessarily) over half of the total floor area is specified in the articles of association as residential apartments in the possession of shareholders; and each share in it confers the right, either alone or together with other shares, to the possession of an apartment or other part of the company's building or real estate in its possession.

An enterprise whose imports threshold value is EUR 12,000 and has trading transactions in at least two months per year or the value of trading exceeds EUR 120,000 (in which case one trading transaction is sufficient in the year concerned). The data are obtained from the National Board of Customs.

Indirect control means that enterprise X has control in enterprise A through another affiliate B which has control over enterprise A.

The institutional unit is an elementary economic decision-making centre. A resident unit is regarded as constituting an institutional unit if it has decision-making autonomy in respect of its principal function and either keeps a complete set of accounts or it would be possible and meaningful, from both an economic and legal viewpoint, to compile a complete set of accounts if they were required. Decision-making autonomy means that institutional units are capable of owning goods and assets, of incurring liabilities and of engaging in economic activities and transactions with other units in their own right.

The following are deemed to be institutional units:

a) units which have a complete set of accounts and autonomy of decision:
(1) private and public corporations
(2) co-operatives or partnerships recognised as independent legal entities
(3) public producers which by virtue of special legislation are recognised as independent legal entities
(4) non-profit institutions recognised as independent legal entities
(5) agencies of general government.

b) units which have a complete set of accounts and which are deemed to have autonomy of decision: quasi-corporations

c) units which do not necessarily keep a complete set of accounts, but which by convention are deemed to have autonomy of decision:
(1) households
(2) notional resident units.

The institutional units are grouped together into five mutually exclusive institutional sectors which together make up the total economy. The sectors (each sector is also divided into sub-sectors) are composed of the following types of units:

a) non-financial corporations
b) financial corporations
c) general government
d) households
e) non-profit institutions serving households.

A kind-of-activity unit is an enterprise or part of an enterprise that mainly operates within one industry. It is not limited to one site but includes all establishments of an enterprise that operate within a certain industry. Each enterprise has one or more kind-of-activity units. The definition of kind-of-activity unit is based on an EU regulation concerning statistical units (EEC 696/93) and on a regulation concerning Business Registers (EC 177/2008).

Legal form identifies the legal status of a legal person. The classification of legal forms is based on the company forms of the Trade Register and on the requirements of taxation legislation. The legal forms of enterprises and corporations are recorded in the Business Information System.

Statistics Finland's classification of legal forms is based on this system and on the Tax Administration's coding of legal forms. Some of the Tax Administration's categories have been combined in Statistics Finland's classification.

A limited company can be founded by one or more natural or legal persons. The share capital of a private limited company must be at least EUR 2,500 and that of a public limited company EUR 80,000. The shareholders are not personally responsible for the company's liabilities. A limited company is entered into the Trade Register.

A limited partnership has both a liable and a silent partner. There may be one or more of each. Silent partners are only responsible for the partnership's liabilities up to the amount of capital they have invested into the partnership. Liable partners are liable for all debts of the partnership with their entire assets. The sizes of the investments of silent partners and the method for calculating their shares of profits must be recorded in the articles of incorporation of the partnership. A limited partnership is entered into the Trade Register. The name of a limited partnership must disclose its form either as an abbreviation or as an unabbreviated word.

A local kind-of-activity unit is a production unit that is owned by one enterprise, is located on one site and operates within one industry, in other words, produces goods and services of mainly one particular type.

A local-kind-of-activity unit proper engages in the enterprise's normal production activity. Local kind-of-activity units include a factory, a shop, an office or a workshop. In transport and construction, the local kind-of-activity unit is the head or district office from which activities are managed.

An ancillary establishment is located separately from the actual production activity of an enterprise and only produces services (not goods) for the enterprise itself. Examples of ancillary establishments include head offices, warehouses or repair shops for the enterprise's own vehicles.

The definition of a local kind-of-activity unit is based on an EU regulation concerning statistical units (EEC 696/93) and on a regulation concerning Business Registers (EC 177/2008).

Location municipality discloses the municipality in which an enterprise's establishment is geographically located.

A mutual indemnity insurance association is an insurance company based on the mutual responsibility of its shareholders, whose area of operations covers no more than 40 municipalities or which only practises insurance of fishing equipment. The articles of association of the association are ratified by the Ministry of Social Affairs and Health and the association is entered into the Trade Register.

Mutual insurance companies are either life insurance companies or indemnity insurance companies and mainly engage in life insurance activity (including pension insurance) or indemnity insurance activity as their name implies. The activities of insurance companies are supervised by the Insurance Inspection Authority.

Other companies and foreign corporations or their branches in Finland.

A religious community whose purpose is to practice religion publicly and which has been registered in accordance with Section 2 of the Freedom of Religion Act, and congregations of such communities.

Paid employees comprise wage and salary earners.

Employees are converted to annual full-time employees so that, for example, an employee working half-time represents one half of a person and two employees working half-time for one year represent one annual full-time employee.

With regard to self-employed persons, the labour input of a self-employed person is the input the owner of an enterprise or his/her family member has made into the enterprise without actual remuneration. If a self-employed person takes more than half of his/her income as wages, he/she is regarded as a wage and salary earner.

For enterprises not included in the surveys of the Register of Enterprises and Establishments numbers of employees are estimated from data on wages and salaries.

This category also includes insurance and unemployment funds.

A pension foundation is an insurance or pension company set up by an employer for the purpose of provision of statutory or voluntary pensions or comparable benefits for its employees and their beneficiaries.

A pension fund is an industry-specific insurance fund for administering corresponding pensions and benefits.

Besides pension foundations and funds, this category of legal form also includes some other pension companies based on separate employment pension acts. Employment pension insurance companies administering pension schemes of the type of described above (e.g. Ilmarinen, Varma) come under the legal form of mutual insurance company or are limited companies.

Besides pension funds, there are also other insurance funds (previously known as benevolent funds) which grant financial aid or administer other social personal insurance schemes. Examples of these include burial funds and redundancy funds.

An unemployment fund is a corporation operating on the mutual liability principle for the purpose of organising for its members the compensation for loss of earnings referred to in the Unemployment Security Act.

All enterprises and establishments proper are separately assigned an economic activity at the most detailed level of the industrial classification.

In the Business Register, the principal activity of an enterprise is defined according to the value added created at its establishments engaged in different economic activities. Value added corresponds closely to value of secondary processing. The value added for the economic activities of an enterprise is obtained by multiplying the number of employees in each establishment by the average value added it creates in its activity and by proportioning the obtained figure to the duration of its activity in the accounting period within the statistical year. Principal activity is defined in stages from the section level to the most detailed level of the standard industrial classification. The principal activity of an enterprise is usually determined by the industry of the establishment that generates most value added during an accounting period.

The principal activity of an enterprise can change, for example, as a consequence of incorporation, when a significant part of the enterprise becomes independent from the point of total value added.

Public corporations comprise all economic units implementing public administration in Finland: central and local government, administration of joint municipal boards and the Regional administration of Åland.

A savings bank and a joint-stock savings bank company are deposit banks as referred to in the Act on Credit Institutions (1993/1607), whose specific objective is promotion of saving. The Ministry of Finance grants licences for savings banks, which are entered into the Trade Register.

A shipping company under joint ownership is a corporate form reserved only for merchant shipping activity. A shipping company under joint ownership is born when two or more natural or legal persons join together to practise merchant shipping for hire or reward for mutual benefit with a vessel of which the partners (proprietors) themselves own specified shares.

1. Small and medium sized enterprises, hereafter SMEs, are defined as enterprises,
- with fewer than 250 paid employees
and whose
- annual turnover is either not more than EUR 50 million
- or balance sheet total is not more than EUR 43 million
- and which meet the criterion on independence under section 3 of the definition.

2. When small enterprises must be differentiated from medium sized enterprises
a 'small enterprise' is defined as an enterprise
- with fewer than 50 paid employees
and whose
- annual turnover is either not more than EUR 10 million
- or balance sheet total is not more than EUR 10 million
- and which meets the criterion on independence under section 3 of the definition.

3. Independent enterprises are enterprises of whose equity or voting stock
25 per cent or more are not held by one enterprise
or jointly held by such enterprises to which
either the definition of an SME or of a small enterprise cannot be applied depending on the circumstances.

Starting form describes how the activity of an enterprise has started. Starting forms include birth, change of legal form and continuation of activity.

The Evangelical-Lutheran Church and the Orthodox Church as defined in the Church Code (1993/1954) and in the Act on the Orthodox Church (2006/985). This also includes congregations and chapters of the Evangelical-Lutheran Church and congregations, and monasteries and convents of the Orthodox Church.

Statistical year is the calendar year a set of statistics concerns.

A subsidiary company of a group is an enterprise in which the group head holds direct or indirect over 50 per cent of voting rights.

Turnover is recorded in the Business Register according to profit and loss statement, except in the cane of practitioners of a trade for whom it is formed from proceeds from the trade. Data on turnover are not recorded for enterprises in certain industries. The most important of these is financial intermediation and insurance and pension funding activity.

Turnover is deemed to comprise sales profits from the actual activity of a party with a legal obligation to keep books, after deduction of granted discounts, value added tax and other taxes based direct on sales volume. In addition to the sales adjustment items, income transfer and passage through items are deducted from sales. These are items belonging to another party with a legal obligation to keep books, which only technically go through the books of this other party obliged to keep books. Paid sales freight, commissions and credit losses are not deducted from turnover.

If the length of the accounting period deviates from 12 months, turnover is converted in the Business Register statistics to equal 12 months. As of the statistical year 2001, the turnover for a statistical year in the Register of Enterprises and Establishment concerns the accounting period that ends during the statistical year under review. Prior to this, turnover concerned the accounting period that ended between 1 April of statistical year and 31 March of statistical year +1.

The enterprises and corporations included in the Register of Enterprises and Establishments are divided into the following categories by type of ownership:

Private domestic
State
Municipality
Region of Åland
Foreign-owned
Other type of ownership.

Ultimate beneficial owner. A UBO is an institutional unit controlling a foreign affiliate, i.e. an institutional unit up a foreign affiliate's chain of control, which is not controlled by another institutional unit.

Ultimate controlling institutional unit of a foreign affiliate. An institutional unit that is at the top the ownership chain of a foreign-owned enterprise and is not controlled by any other institutional unit.

An institutional unit that is at the top the ownership chain of a foreign-owned enterprise and is not controlled by any other institutional unit.

A voluntary association is an association founded by at least three private persons intending to join it as members or by an agreement of a corporation or foundation, and entered into the register of associations maintained by the National Board of Patents and Registration, the purpose of which is non-profit making (in other words the purpose may not be acquisition of profit or other financial benefit for the members). A voluntary association may engage in a trade or other gainful activity if an order concerning this is included in the association's by-laws or if such activity relates direct to the realisation of the association's purpose, or if the activity can be regarded as financially insignificant. E.g. sports association, political party, trade union, scout association.

Wages and salaries refer to remunerations for and within an accounting period as well as fringe benefits in accordance with the Preliminary Tax Withholding Act. Wages and salaries also include wages and salaries paid by self-employed persons to themselves. Returns on stock options are not included in wages and salaries.

In some industries, wages and salaries are higher than in reality because a group head may report to the tax authorities the preliminary tax withheld by its subsidiary company. In this case, the wages and salaries of the subsidiary company may become recorded in statistics for the industry of the group head. In insurance activities wages and salaries also include the wages and salaries of agents although agents are not normally included in the number of employees.

Statistics Finland's actual statistics on wages and salaries are compiled with a different method, so they are not comparable with the data in the Register of Enterprises and Establishments.