Eurostat, the statistical office of the European Union

Unit G6: Trade in services; Globalisation

European Commission, Eurostat
​​​​​​​L-2920 Luxembourg

Foreign Direct Investment (FDI) encompasses all kind of cross-border investment made by an entity resident in one economy (direct investor) to acquire a lasting interest in an enterprise operating in another economy (direct investment enterprise). FDI is one of the five main functional categories of investment used in international accounts to classify either the Internal Investment Positions (IIP) or the Balance of Payment (BOP) statements of a given economy (vis-à-vis the rest of the world).

Foreign Direct Investment positions at a point in time (generally, end of a reference year) show the value of financial direct investment assets of residents of an economy on non-residents, and financial direct investment liabilities of residents of an economy to non-resident. The net FDI position is the difference between assets and liabilities, which is also equivalent (under the directional principle presentation) to the difference between FDI positions abroad and in the reporting economy. The net FDI position represents either a net FDI claim or a net FDI liability to the rest of the world.       

Foreign direct investment transactions summarize all economic direct investment interactions between the residents and the non-residents during a given period. Two types of FDI transactions can be identified (within the BOP framework) according to the economic meaning they convey:

• FDI income is a distributive transaction showing amounts payable and receivable between resident and non-resident entities in return for providing financial direct investment assets to the rest of the world, or incurring direct investment liabilities vis-à-vis the rest of the world.
• FDI flows refer to financial transactions showing the net acquisition or disposal of financial assets and liabilities involved in direct investment relationships.

FDI positions, FDI income and FDI flows are disseminated by Eurostat together with estimated EU FDI aggregates (directly produced by Eurostat). Other FDI changes that are not transaction changes, such as volume, value or prices changes, are not treated by Eurostat under the scope of annual FDI statistics.

Annual FDI data are disseminated by Eurostat according to the directional principle (see sub section 3.4 below).

The geographical allocation is made according to the economic residence of the immediate direct investor or immediate direct investment company (immediate counterparts). FDI data classified according to ultimate investor is also available (see 12.1).

International Guides recommend the classification of FDI data both according to the activity of the direct investor and the activity of the direct investment enterprise. In practice, it is very difficult for national compilers to have both classifications. In that case, the recommended classification by activity is that of the direct investment enterprise. On the outward side, national compilers are not always able to classify their FDI data according to the activity of the direct investment enterprise. In that case, the classification used as a proxy is the activity of the direct investor. 

Alongside with International Trade in Services Statistics (ITSS) and Foreign Affiliates Statistics (FATS), FDI data are relevant to monitor the overall effectiveness and competitiveness of different economies in the globalised world.

Member States and Eurostat uses as a reference for the compilation of FDI annual statistics the OECD Benchmark Definition of Foreign Direct Investment Fourth Edition (BD4), a detailed operational definition consistent with the IMF Balance of Payments Manual, Sixth Edition (BPM6).

These two International Organisations (IOs), in their respective Manuals, have developed a new methodology for the compilation of FDI data, which resulted in major changes in the definition, content and treatment of FDI data. Therefore Eurostat's data series from 2013 are no longer comparable with the data up to 2012. The IMF has presented a conversion matrix establishing a correspondence between new and old methodology, as shown in the annex below.

As a consequence of new FDI methodological standards adopted at world level, a new environment has been created in the Eurostat Website to host the annual FDI series compiled according to the BPM6/BD4 methodology, which contains:

• Three databases for FDI positions, FDI flows (financial transactions) and FDI income data combining various breakdowns by type of entity (with/without SPEs), by partner country, by activity, by financial instrument and by functional category (with/without fellow enterprises).
• One FDI database gathering FDI flows, income and positions net totals with only a breakdown by partner country.
• One table presenting the main analytical FDI ratio such as impact indicators or rate of return on direct investment. 

The country code list used for the allocation of FDI statistics by partner follows the "ISO 3166-1 alpha-2" classification and is a "cross-domain" code list also used by National Accounts and other International Institutions. 

The classification of FDI data by activity follows the "NACE Rev.2" statistical classification of economic activities in the European Community. 

FDI statistics are compiled and reported for the total economy (resident sector) vis-a-vis rest of the world.

(Main definitions and concepts derived from either IMF BPM6 or OECD BD4 Manuals )

Direct Investment arises when an investor resident in one economy makes an investment that gives control or a significant degree of influence on the management of an enterprise that is resident in another economy. Direct Investment is one of the five main functional categories of investment used in international accounts to classify financial transactions, positions and primary income. Therefore, this category encompasses all kind of cross-border investment made by an entity resident in one economy (direct investor) to acquire a lasting interest in an enterprise operating in another economy (direct investment enterprise). In practise, the lasting interest is deemed to exist through either immediate or indirect relationships. Once a direct investment relationship is established, most flows and positions between the entities, including loans and trade credit, are classified as direct investment. The only financial flows and positions excluded from FDI statistics are:

• Debt between selected affiliated financial corporations.
• Financial derivatives.

Immediate direct investment relationship arises when a direct investor directly owns at least 10% of the voting power in a direct investment enterprise.

Indirect direct investment relationships arise when a direct investor indirectly owns a direct investment enterprise either through a chain of control (i.e. ownership > 50% at each stage), or a chain of control ending with an influence of at least 10% of the voting power of the direct investment enterprise. Said differently, an affiliate of a subsidiary (see definitions below) is considered to be in a direct investment relationship with the direct investor whilst an affiliate of an affiliate is not considered as being a direct investment relationship.

A direct investor is an entity or group of related entities that is able to exercise control or a significant degree of influence over another entity that is resident of a different economy. A direct investor can be an individual, a group of related individuals, an enterprise (incorporated or unincorporated, private or public), a group of related enterprises, a government body, an estate, trust or other societal organisations, or any of the combination above.

A direct investment enterprise is an entity subject to control or a significant degree of influence by a direct investor.  A direct investment enterprise may be an incorporated enterprise (subsidiary or associate) or an unincorporated enterprise (branch).

A subsidiary is a direct investment enterprise over which the direct investor is able to exercise control (ownership > 50%).

An associate is a direct investment enterprise over which the direct investor is able to exercise a significant degree of influence (ownership > 10%) but not control (ownership ≤ 50%).

Fellow enterprises are enterprises which do not have enough (any) voting power in each other to establish a significant degree of influence but have a common parent. An enterprise is a fellow enterprise of another if the two enterprises have the same immediate or indirect direct investor, but neither is an immediate or indirect direct investor in the other.

The Framework for direct investment relationships (FDIR) reflects the general approach (suggested by international guidelines) for identifying and determining the direct investment relationships and, therefore, allows compilers to determine the population of direct investor and direct investment enterprises to be included in their FDI statistics.

Affiliates of an enterprise consist of its immediate or indirect direct investor(s), its immediate or indirect direct investment enterprise(s) (subsidiaries, associates, subsidiaries of associates) and its fellow enterprise(s).

Reverse investment arises when a direct investment enterprise acquires equity in its immediate or indirect direct investor provided that it does not own more that 10% of the voting power in the direct investor (otherwise the direct investment enterprise will also become a direct investor), or when a direct investment enterprise lends funds to its immediate or indirect direct investor. Under the directional principle presentation (see below), a reverse investment relates to either a liability under direct investment abroad or an asset under direct investment in the reporting economy, thus always seen as a withdrawal of the FDI capital initially invested by the direct investor in its direct investment enterprise.

(Two different presentations of FDI statistics:  asset / liability versus directional principle)

As a reminder, direct investment statistics embody three distinct statistical accounts, namely FDI positions recorded in the international investment positions (i.i.p) statements, FDI flows recorded in the financial section of the Balance of Payments accounts, and FDI income being part of the primary income of the Balance of Payments accounts. Direct investment flows and positions data can be presented either according to the asset/liability or directional principle.

Asset/liability principle: Allocates the BOP/IIP data according to whether the investment relates to an asset or a liability. This is the official standard presentation recommended by the IMF for all the Balance of Payments (BOP) and International Investment Position (IIP) financial account statements, and by both IMF BPM6 and OECD BD4 Manuals regarding the specific compilation of FDI statistics. This presentation is appropriate for macroeconomic analyses combining the five functional categories of investment used in the international accounts to classify international investment (direct investment, portfolio investment, other investment, financial derivatives and reserve assets).

Directional principle: Organises the FDI data according to the direction of the direct investment relationship (or according to the status of the resident entity), either abroad or in the reporting economy. FDI data are classified under:

• Direct investment abroad (DIA) when the resident entity is the direct investor and the non-resident entity is the direct investment enterprise.

• Direct investment in the reporting economy (DIRE) when the resident entity is the direct investment enterprise and the non-resident entity is the direct investor.

The directional principle has been extended to FDI data between fellows depending on whether the residence of the "Ultimate Controlling Parent (UCP)" is located in the compiling economy or not. FDI data between two resident/non-resident fellow enterprises will be classify under DIA if the UCP is also resident in the compiling economy, and  FDI data between two resident/non-resident fellow enterprises will be classify under DIRE if the UCP is not resident in the compiling economy. In case the UCP is unknown, the IMF recommends to classify the FDI assets between fellows under DIA and the FDI liabilities between fellows under DIRE.

The directional principle is more appropriate for studying the nature and motivations of foreign direct investment, for identifying the "origin" of direct investment made in a specific country, or for assessing the access of FDI capital to specific markets. The specific treatment of reverse transactions (see below) avoids an over-estimation of FDI totals, therefore provides a more realistic view of  the intensity of the DI-DIE links between two economies. For this reason, the directional principle is widely used for analytical purposes and international comparison.  Both IMF and OECD recommend this presentation when presenting detailed FDI statistics by country or by activity.

Eurostat uses the directional principle for the compilation and dissemination of EU FDI aggregates. Differences between the two presentations arise from differences in the treatment of reverse investments and fellow enterprises. Under the directional principle:

• Reverse investments are treated as withdrawals of capital initially invested, therefore deducted from the net outward or net inward totals.
• Transactions or positions involving fellow enterprises are classified according to the location of their common UCP.

The following table shows the classification of the different type of FDI data for each presentation:

It should be pointed out that, regardless of the selected presentation, the "net assets – net liabilities" total equals the "net outward – net inward" one.

Special Purpose Entities (SPEs) relate to flexible corporate structures with little or no physical presence and impact in the resident (host) economy. There is no internationally standard definition for these legal structures created by their (non-resident) parent enterprises but also acting as direct investor. The OECD Benchmark Definition (Box 6.2 p 102) offers 5 general criteria to assist national compilers to identify SPEs: A SPE is a 1) a legal entity, 2) ultimately controlled by a non-resident parent, 3) having no or few employees, little or no production in the host economy and little or no physical presence, 4) managing mainly external assets or liabilities and 5) acting mainly as a group financing, a conduit or a holding company. SPEs, holding companies or financial institutions serving other non-financial affiliates are particularly involved with the so-called "Funds in transit". Incorporation of SPEs is often associated with off-shore financial centres but they may also be found in other jurisdictions. The EU FDI regulation foresees the delivery of separate SPEs' FDI by (concerned) EU compilers, which are disseminated by Eurostat if not confidential together with an overall EU estimate.

Funds in transit (or pass-through funds) relate to funds that pass-through an enterprise resident in an economy to an affiliate in another economy without staying in the economy of that enterprise. If not corresponding to debt between selected affiliated financial corporations and even if they have little impact on the resident economy, they must be included in direct investment statistics (to promote symmetry and consistency among economies and keep coherence between FDI flows and positions aggregates). Compilers in economies that have large values of pass-through funds are encouraged to compile supplementary data. 

(FDI positions components)

FDI positions provide information on the total stock of investment (abroad and in the reporting economy) for a given reference date which is generally the end of the year. FDI positions data are useful for structural analysis of investment in the host economy, or investment in the investing (home) country, especially to establish the relative "FDI" importance/presence of an economy in another one. FDI positions data can be broken down by type of instrument, either equity or debt.

Equity positions cover all components of shareholders' funds, proportionate to the percentage of shares held. They include equity, contributed surplus, reinvestment of earnings, revaluations as well as any reserve accounts. Reinvestment of earnings apply only between a direct investor and a direct investment enterprise, therefore fellow enterprises are not concerned by this type of instrument. The recommended principle for the valuation of equity positions is the market valuation. Listed equity provides a good basis for the valuation of equity positions at market prices. For unlisted equity an approximation to market prices will be necessary and the international guidelines (OECD BD4 and IMF BPM6) offer some flexibility for national compilers in the choice of the valuation method, most widespread ones being the "Own fund at book value", "Recent transaction price" or "Net asset value" methods. The latter is recommended especially for the valuation of equity in branches (unincorporated DIE).

Debt positions cover all payables and receivables between enterprises in a direct investment relationship arising from loans, deposits, debt securities, trade credits, financial leases and non-participating preferred shares. As a reminder, It should be pointed out that:

• Financial derivatives are excluded from direct investment statistics.
• All debts between selected types of affiliated financial corporations are excluded from direct investment statistics.

FDI positions between the beginning and the end of a given year (n) may change either due to transactions that occurred during year n, or due to other valuation changes (exchange rate changes or price valuation changes occurring when trying to value at market prices), or due to other volume changes. A common issue impacting the latter is, for a given economic entity, the reclassification of its portfolio positions (ownership < 10%) to direct investment statistics if, during the year, this entity acquires additional shares "pushing" its ownership above the 10% thresholds.

The reconciliation exercise on annual FDI data is not operated (and not asked) by Eurostat, therefore FDI financial transactions and FDI positions are shown separately without the other valuation changes components.

(FDI flows - financial transactions components)

FDI flows are recorded in the financial account section of the balance of payments and relate to direct investment transaction made during the period in the form of equity capital acquisitions, debt transactions (in most cases loans or trade credits between affiliated enterprises) or reinvestment of earnings.

Equity capital comprises equity in branches, all shares in subsidiaries and associates (except non-participating, preferred shares that are treated as debt securities and are included under other FDI capital).

Reinvestment of earnings consists of the direct investor's share (in proportion to equity participation) of earnings not distributed by the direct investment enterprise. Reinvestment of earnings is an imputed transaction of the financial section of the Balance of Payment recorded simultaneously (same amount) with the reinvested earnings transaction recorded in the primary income section of the Balance of Payment (see below). The logic underlying this simultaneous recording of two fictive transactions is that one describes the allocation of the whole profits in the company's reserves (reinvestment of earnings in the equity capital of the direct investment enterprises), the other one being the remaining part of profits not distributed to shareholders in the form of dividends, and which stays in the accounts of the direct investment enterprise.

Debt transactions cover all transactions between enterprises in a direct investment relationship arising from loans, deposits, debt securities, trade credits, financial leases and non-participating preferred shares. As a reminder, financial derivatives and all debts between selected types of affiliated financial corporations are excluded from direct investment statistics, as are transactions between affiliates in financial assets issued by an unrelated party. The official expression covering all debt transactions between enterprises in a direct investment relationship is "inter-company lending". 

(FDI income components)

FDI income are recorded in the primary income section of the balance of payments and represents the return accruing to direct investors, during a reference year, for the provision of financial assets. FDI income categories are linked to the breakdown of FDI flows and stocks by kind of instrument. It consists of dividends and withdrawals from income of quasi-corporations, reinvested earnings and interests. Investment income on reverse investment – income receivable from claims on direct investors and income payable on liabilities to direct investment enterprises – is (in principle) shown on a gross basis.

Dividends and withdrawals from income of quasi-corporations

Dividends include dividends payable or receivable in the period gross of any withholding taxes. Dividends include payments due on common and preferred shares. The new BPM6 methodology includes the new concept of superdividends which relates to exceptional payments by corporations to their shareholders made out of accumulated reserves, disproportionately large compared to recent level of dividends and earnings. Superdividends are excluded from FDI income statistics because they are considered as withdrawals of equity. Liquidating dividends which arise mainly at the time of the termination of a company are also excluded from the income statistics, therefore also treated as withdrawals of equity. In practice, three dates can be associated with dividends: the date when they are declared, the date when they are excluded from the market price of shares (known as ex-dividend date) and the date when they are paid. Dividends must be recorded at the time the shares go ex-dividend.

Withdrawals from income of quasi-corporations mainly relate to the distributed branch profits. In legal terms, quasi-corporations cannot distribute income in the form of dividends but, in practice, owner(s) of a quasi-corporation may formally distribute part of (or all) their earnings. From an economic point of view, the withdrawal of such income is equivalent to the distribution of corporate income through dividends and is treated in the same way. Withdrawals from income of quasi-corporations are recorded when they actually take place.

(Transfer pricing) If a direct investment enterprise is overinvoiced on a good or service provided by the direct investor, or if a direct investor is underinvoiced on a good and service provided by the direct investment enterprise, then the transfer pricing acts as a hidden dividend and an adjustment to increase the dividends (up to market value) should be made in case of excessive overcharging or under-invoicing. In the opposite situation, the transfer pricing does not act as a dividend but as a hidden investment and, if significant, equity capital acquisitions component should be increased (up to market value).

Reinvested earnings (See also additional comments in the above FDI flows section). Reinvested earnings are the direct investors' share of the retained earnings of the direct investment enterprises and are attributed to direct investors who are in an immediate direct investment relationship with the direct investment enterprises (i.e. immediate 10% participation). The undistributed earnings of branches are also considered to be reinvested earnings. Formally, retained earnings (or net saving) of a resident direct investment enterprise (DIE) is equal to:

Net operating surplus

+ Dividends receivable + Interest receivable + Rent receivable

+ Enterprise's share of reinvested earnings coming from  any other (non-resident) DIE(s)

+ Current transfer receivable

- Dividends payable - Interest payable  - Rent payable

- Taxes and other current transfer payable

Reinvested earnings do not include any realised or unrealised holding gains or losses, therefore adjustments to business accounting records, prior the calculation, might be necessary.

Reinvested earnings can also be negative (i.e. recorded with a negative sign) when a DIE has a loss on its operations or the dividends declared in a period are larger than the net income generated during the same period.

Within a chain of direct investment relationships, reinvested earnings need only be recorded between the direct investor and directly owned direct investment enterprises, therefore there are no reinvested earnings between fellows and indirectly owned direct investment enterprises.

Interests

Interest (Income on debt) is a form of investment income that is receivable by the owners of deposits, debt securities, loans, non-preferred shares and other account receivable. Direct investment interest payables on liabilities, and receivables on assets, are separately recorded. Interest is recorded as accruing continuously over time to the creditor on the amount outstanding. Interest on debt accrues continually over the life of the debt and adds to the principal. Thus, actual payments of the debt (as opposed to accruals) are investment transactions and not income. Therefore, they should be recorded in the FDI transactions account. No direct investment interests are recorded when both parties are related financial intermediaries. In principle, interest receivables or payables on reverse loans is shown separately on a gross basis.

For entities acting as direct investors, all institutional units which means enterprises (incorporated or unincorporated, public or private), individuals or households, investment fund, government, international organisations, an non-profit institution in an enterprise that operates for profit, an estate or a trust, etc.

A direct investment (or fellow) enterprise is always an incorporated (subsidiary or associate) or an unincorporated enterprise (branch, trust etc.). Households or Governments cannot be direct investment enterprises because they cannot be owned by another entity.

The Framework for Direct Investment Relationships (FDIR) provides criteria for determining whether cross-border ownership results in a direct investment relationship based on control (≥ 50%) or significant degree of influence (≥ 10%). Control or influence may be achieved directly or indirectly. The principles for indirect transmission of control and influence through a chain of ownership are as follows:

a)      Control can be passed down a chain of ownership as long as control exists at each stage.

b)      Influence can be generated at any point down a chain of control.

c)      Influence can be passed only through a chain of control but not beyond.

Under the FDIR, the statistical population is defined composed of all direct investors, all direct investment enterprises and all fellow enterprises.

Reporters to Eurostat are the individual EU27 Member States, Iceland, Norway, Switzerland, North Macedonia, Montenegro, Serbia, Turkey, Albania and Kosovo.

EU27 as a whole reporting entity is directly estimated by Eurostat on the basis of FDI data received from the 27 Members.

US FDI data are extracted from the Bureau of Economic Analysis Website. Few adjustments are operated by Eurostat both on geographical and activity breakdowns, then data are converted in millions of euros.

JP FDI data are extracted from the Bank of Japan Website. Few adjustments are operated by Eurostat both on geographical and activity breakdowns, then data are converted in millions of euros.

Prior any dissemination:

• FDI flows and income datasets (year n) that are not transmitted to Eurostat in euros are converted using the yearly average exchange rates (year n) between the euro and corresponding national currencies.

• FDI positions datasets at end of year n that are not transmitted to Eurostat in euros are converted using the exchange rates between the euro and corresponding national currencies observed at end of year n.

Time series on FDI flows, income and positions are reported according to the directional principle and under the new methodology from 2013 onwards.

Time series on FDI flows, income and positions are reported according to the old "BD3/BPM5" methodology are available up to 2012.

Because of substantial methodological changes, FDI time series prior and after 2013 reference year are no longer comparable (break point in 2013).

Not applicable.

FDI flows, income and position data are presented in millions of Euro.

The table showing impact indicators, rate of return on FDI and FDI as share of GDP is in percentage.

FDI stocks refer to the end of the recording period; flows and income refer to the recording period. All FDI data are annual.

Regulation (EC) No 184/2005 of the European Parliament and of the Council of 12 January 2005 on Community statistics concerning balance of payments, international trade in services and foreign direct investment, became applicable for EU FDI data (and BOP) production as from reference year 2006 onwards.

Commission Regulation (EC) No 555/2012, amending Regulation (EC) No 184/2015 as regards the update of data requirements and definitions.

Regulation (EU) 2016/1013 of the European Parliament and of the Council, amending Regulation (EC) No 184/2015.

For more information on European Union legislative acts, please go to http://eur-lex.europa.eu/

Eurostat makes available all non-confidential and sufficiently reliable statistics on its dissemination website.

Regulation (EC) No 223/2009 on European statistics (recital 24 and Article 20(4)) of 11 March 2009 (OJ L 87, p. 164), stipulates the need to establish common principles and guidelines ensuring the confidentiality of data used for the production of European statistics and the access to those confidential data with due account for technical developments and the requirements of users in a democratic society.

Prior transmitting the FDI dataset(s) to Eurostat, Member States have the option to flag part of their data as confidential.

Eurostat performs a secondary confidentiality treatment whenever primary confidential cells are detected in the original transmission to avoid disclosure of any of these cells. In practice, an internal analysis programme is run to safeguard the confidential cells by hiding data of additional cells. As far as possible, criteria for hiding additional cells are defined with the perspective to minimise the number of additional confidential cells.

Before the dataset releases the secondary confidentiality treatment is agreed with the concerned countries.

Data by counterpart country breakdown are published one year after the end of reference year (T+12).

Data by counterpart country and activity (NACE Rev. 2) are published two years after the end of reference period (T+24).

Please consult the online release calendar on Eurostat website, under "Economy and finance" theme.

In line with the Community legal framework and the European Statistics Code of Practice Eurostat disseminates European statistics on its website (see item 10 - 'Accessibility and clarity') respecting professional independence and in an objective, professional and transparent manner in which all users are treated equitably. The detailed arrangements are governed by the Eurostat protocol on impartial access to Eurostat data for users.

Annual FDI data shall be transmitted by Member States to Eurostat at T+9 months for detailed partner country breakdown (i.e. end September), and T+21 months for detailed partner country and activity breakdowns (as required by the EC Regulation 184/2005).

The current Eurostat's practice is to compile the EU aggregates based on the official FDI annual datasets provided by national compilers, and to disseminate both EU aggregates and Member States annual figures between T+11 and T+12 months (i.e. around mid-December). Processing time is required for validation of the data transmitted and tasks to compile the aggregates including the work to secure the confidential data in the data release.

News article presenting the FDI data for the new reference period is published each year on the date of FDI statistics dissemination in the Eurostat website. 

Balance of payments vademecum

Quality report on balance of payments (BOP), international investment position (IIP), international trade in services (ITS) and foreign direct investment statistics (FDI) - 2023 edition

Statistical themes:

• Globalisation of businesses
• Balance of payments

Statistics Explained articles:

• Foreign direct investment - flows
• Foreign direct investment - stocks
• Foreign direct investment - rates of return
• Foreign direct investment - intensity ratios
• Foreign direct investment positions by ultimate counterpart

Eurostat online database

Not applicable.

Eurostat website.

Globalisation of businesses dedicated section.

The methodological framework followed in the compilation of FDI statistics is that defined in the sixth edition of the International Monetary Fund Balance of Payments Manual (BPM6) and the OECD Benchmark Definition of Foreign Direct Investment Fourth Edition (BD4).

The process of the national data transmition to Eurostat is defined in the BOP vademecum.

Eurostat prepares shared biannual Quality Reports for BOP, ITSS and FDI domains in accordance with Commission Regulation.

In these reports countries are assessed in terms of completeness, relevance, accuracy, timeliness, punctuality, accessibility, clarity, comparability and coherence of their FDI data.

Quality report on balance of payments (BOP), international investment position (IIP), international trade in services (ITS) and foreign direct investment statistics (FDI) - 2023 edition

Quality is assured by a strict application of concepts as defined in International Guidelines established both by the IMF and the OECD.

In addition, a validation process has been put in place by Eurostat vis-à-vis all EU and non-EU reporters to ensure the quality of the FDI statistics transmitted to Eurostat. This exercise is supported by the BoP Vademecum presenting all the FDI integrity rules used by Eurostat to validate the original datasets received.

Eurostat prepares shared biannual Quality Reports for BOP, ITSS and FDI domains in accordance with Commission Regulation.

In these reports countries are assessed in terms of completeness, relevance, accuracy, timeliness, punctuality, accessibility, clarity, comparability and coherence of their FDI data.

Quality report on balance of payments (BOP), international investment position (IIP), international trade in services (ITS) and foreign direct investment statistics (FDI) - 2023 edition

Annual FDI statistics answer users' needs by offering complete and consistent FDI data for the European Union (as a whole entity), individual EU Member States, the Candidate Countries (Albania, Montenegro, North Macedonia, Serbia and Turkey), three EFTA countries (Iceland, Norway, Switzerland), USA, Japan and Kosovo.

Annual FDI statistics are reported according to the directional principle - outward and inward - which is the most appropriate and widespread approach for economic analysis.

FDI data are reported according to the "immediate counterpart" concept as recommended by the International Guidelines. Therefore, the perception of "real" FDI relationships and related FDI positions and flows could be hampered whenever a FDI transaction is made via a country hosting a lot of resident Special Purpose Entities.

In the longer term and as foreseen in the amending Regulation (EC) No 2016/1013, potential for supplementary FDI statistics classified according to ultimate investor or host economy will be investigated to reinforce the analysis of FDI relationships among EU partners and vis-à-vis main extra-EU partners.

Not available.

Regarding the official FDI data requirements, the level of completeness of original datasets transmitted to Eurostat is high. Thanks to the detailed information provided by Member States, Eurostat is also able to compile relatively detailed EU FDI aggregates with a breakdown by partner's country, activity and type of financial instrument (equity, reinvested earnings, loans). For external Eurostat's users, availability of detailed FDI statistics reported at national level is hampered only by hidden cells due to the confidentiality.

FDI data transmitted to Eurostat are checked for their consistency and plausibility. If any problems (e.g. inconsistencies or omissions) are detected, Eurostat contacts the relevant national compiler to re-validate the figures and/or confirm correction/updates implemented by Eurostat. This is made through the validation procedure established by Eurostat vis-à-vis all individual countries to ensure the quality of the data reported.

Within this procedure integrity rules defined in the FDI section of the Vademecum are applied on all original datasets. Furthermore, consistency with historical data and consistency with values reported at national level are also scrutinised by Eurostat together with the availability of revised information reported to Eurostat.

EU mirror analysis is another way of assessing the accuracy of FDI statistics: values (outward/inward) reported by Member States are compared with those of their partners (inward/outward) within the EU. Theoretically, taking the EU as a whole reporting entity, the sum of intra-EU outward financial flows (or income or positions) should match with the sum of intra-EU inward financial flows (income or positions). In practise, such a situation occurs very rarely and the resulting differences are evaluated in asymmetry analysis. Intra-EU asymmetries are more important on transactions (flows and income) due to their high volatility, by nature, when compared to positions.

There are several reasons that might explain intra-EU asymmetries, like for example wrong geographical data allocation by one or both counterparts, different amounts recorded on both sides, misclassification by functional financial category (direct versus portfolio investment), different accounting support and/or method(s), different framework for direct investment relationship (FDIR), different methods for the valuation of unlisted equities etc.

Eurostat, together with other International Organisations (mainly OECD, ECB and IMF) is actively participating to international working group aiming at reducing the intra-EU and bilateral asymmetries through reinforcing the harmonisation of FDI compilation methods. To this aim, Eurostat is also handling a FDI Network to allow bilateral microdata exchanges both on FDI positions and transactions.

Not applicable

Not applicable.

Annual FDI data are released in 11-12 months after the end of the reference period (by mid-December).

Eurostat monitors closely the punctuality of data delivery by the countries. Member States meet the transmission deadline, 9 months after the reference period, generally very well.

The underlying methodological framework, which is defined in BPM6, ensures a high degree of comparability across countries. Regulation (EU) No 555/2012 contains the data requirements, the details on the coding system, the format of the data and the deadlines for transmission. Each country compiles their FDI statistics using the data coming from a number of surveys and administrative sources.

The data comparability over time is restricted. Eurostat began its new FDI annual time series collection from 2013 reference year therefore introducing a break in the data prior and after 2013. For extra EU FDI totals, however, FDI data according to the new methodology and the directional principle presentation can be estimated for reference years prior to 2013 using the quarterly FDI series.

Not applicable.

Internal consistency between annual FDI data (presented in the Eurostat website according to the directional approach) and the sum of quarterly FDI assets and liabilities is done each year by Eurostat. This exercise is part of the biannual Quality reports prepared in accordance with Commission Regulation (EC) No 1227/2010 (see above quality management section).  

Not applicable.

FDI data are revised with updated information transmitted by the Member States, according to the policy specified in the BoP Vademecum (under "timetable and revisions policy" sub-section).

The revision practice effectively corresponds to the revision practice of the domain listed under sub‑concept 17.1 (data revision – policy).

All reported errors (once validated) result in corrections of the disseminated data. Reported errors are corrected in the disseminated data as soon as the correct data have been validated. Data are only published once they are deemed to be sufficiently complete for all data providers contributing to the EU aggregate. Whenever new data are provided and validated, the already disseminated data are updated. EU aggregates are also revised and updated.

Data are usually revised for the last 4 reference years. The entire time series is usually revised. Aggregates and components are revised at the same time. Routine and major revisions are reported by member states in the Balance of payments quality reports and communicated to the users biennially.

Quality report on balance of payments (BOP), international investment position (IIP), international trade in services (ITS) and foreign direct investment statistics (FDI) - 2023 edition

EU FDI data are collected by Member States Balance of Payments compilers through a variety of sources. The main types of sources used are direct surveys addressed to resident statistical units and reports by the central banking systems on international transactions.

Annual

The national statistical institutes and national central banks have for a long time provided part of the information used for the compilation of BOP through the so called "settlements systems" or International Transaction Reporting System (ITRS). Commercial banks had to report, generally to their National Central Bank, all the information related to cross-border settlements they had made on their own behalf or on behalf of their customers.  ITRS in the last years has been losing accuracy, because companies are using new techniques in managing their assets and,  moreover, because a new EU Regulation (Regulation (EC) No 2560/2001, 19 December 2001, on cross-border payments in Europe) introduced an exemption threshold for the banks' reporting on behalf of their customers. To make up for this loss of information, some countries have already introduced new direct reporting systems and new surveys.

In almost all Member States, FDI data collection is based on direct surveys from resident populations of direct investors and/or direct investment enterprises (sampled or not). For more detail on Member States data collection methods see the dedicated websites at national level.

Eurostat submits all data received from the reporting countries to a number of validation checks. These checks verify the plausibility of the data (e.g. the development of time series), their internal consistency (e.g. aggregates match the sum of the sub-items), their correspondence with data already disseminated by the same country on its NSI web-page.

The validation rules concern five distinct levels: the accounting entry, the geographical breakdown, the financial instruments, the functional categories (with/without fellows) and the breakdown by activity. These rules are described in the BOP Vademecum.

If necessary, correspondence with data disseminated in national compiler's webpages is also investigated, as is the overall consistency with quarterly FDI information.

Aggregate data for the European Union are in general obtained as the sum of the respective Member States data. Member States data are in some cases confidential and therefore are not shown in datasets or tables published on Eurostat website. 

Since some of the necessary data are not available with the desired breakdown by partner and/or kind of activity from some Member States, estimations are prepared for the production of detailed EU-level annual data. However, the number of missing values is low given that most Member States make substantial efforts to provide Eurostat with full required information.

Not applicable.