3. Revisions to gross national income (GNI)

GNI has been revised upwards by 48.2 billion euros for the 2021 reporting year and by 46.4 billion euros for the 2022 reporting year. The GNI revisions can be separated into the GDP revisions explained above (15.1 billion euros and 17.4 billion euros, respectively) and revisions to the balance of primary incomes of the Netherlands with the rest of the world.

The revisions to the balance of primary incomes of the Netherlands with the rest of the world are the result of a combination of the use of various additional sources and new insights, in accordance with the usual revision process for the national accounts. This year, however, the revision is much more significant than usual. The main reasons for the revision to primary incomes are set out below.

The estimate of gross national income (GNI)

Along with GDP, GNI is one of the most widely used macroeconomic variables in the national accounts system. GDP refers to earnings from the production of goods and services within the Netherlands’ national borders, while GNI refers to the income of Dutch residents (companies and individuals). This can also include income that was earned outside the borders of the Netherlands, for example in the form of interest and dividends, or income from ownership of foreign parent companies or subsidiaries. Conversely, income earned in the Netherlands by foreign residents does not count towards the Netherlands’ GNI. GNI is the primary basis for the determination of member states’ annual contributions to the European Union.

GNI is determined based on the sector accounts. These accounts divide the various money flows within the Dutch economy into the main sectors of households, businesses, government and other countries. CBS and De Nederlandsche Bank (DNB) work closely together to compile the sector accounts. Within that collaboration, DNB is responsible for the figures on the financial institutions sector while CBS deals with the figures on non-financial institutions, government, households and non-profit organisations for households. Together, CBS and DNB estimate the Netherlands’ financial relationship with other countries, which harmonises CBS’ national accounts with DNB’s balance of payments and international investment position.

Breakdown of revisions to the balance of primary incomes of the Netherlands with other countries in billions of euros
	2021	2022
Total revision to the balance of primary incomes of the Netherlands with other countries	33.1	29.0
of which
‐ listed financial holding companies	22.9	29.5
‐ dividends paid out by financial holding companies	5.9
‐ profits paid out by non-financial corporations	5.8
‐ other revisions to primary incomes for other countries	-1.5	-0.5

New information leads to major revision to profits of listed multinationals

The revision is largely due to new information on the profits of a specific group of listed multinationals in the captive financial institutions sector, focusing in detail on the impact of registered office relocations on the balance of payments. The revision to this group’s profits was 22.9 billion euros for the 2021 reporting year and 29.5 billion euros for the 2022 reporting year.

The captive financial institutions sector is part of the financial institutions sector, which includes Netherlands-based financial holding companies associated with large foreign multinationals. Many of these holding companies conduct no productive activities in the Netherlands on their own account; these activities are located in foreign components of the multinational.

If these financial holding companies have a foreign parent with a significant interest (more than 10 percent), the earnings are imputed to the foreign country. However, several financial holding companies in the Netherlands are listed on a stock exchange and therefore have few, if any, foreign owners with a share in the holding company of more than 10 percent. In line with European directives, profits in these holdings must be imputed to the Netherlands. The revision to GNI primarily relates to the latter category.

Retained profits on foreign direct investment

The ‘retained profits on foreign direct investment’ of foreign subsidiaries must be imputed to the Dutch holding company in accordance with European directives for compiling national accounts. Retained profits are profits made by foreign subsidiaries that are not paid out (in the form of dividends) but are instead used for purposes such as strengthening equity capital or financing investments.

When Dutch holding companies have a foreign parent, retained profits also flow back to the holding company’s foreign parent company. However, in the case of a listed holding company, there is no foreign parent; the shares are distributed between many different shareholders. Retained profits do not flow to a foreign parent, because there is no foreign parent to receive those profits. In that case, there is only an incoming flow of foreign profits; insofar as they are not paid out as dividends, these profits are included in the Netherlands’ GNI.

In a few cases, certain shareholders own more than 10 percent of the listed shares. However, outgoing retained profits are recorded for these specific shareholders.

The statistical concept of ‘retained profits on foreign direct investment’ (see inset) that CBS must register according to European directives does not fit well with the accounts the Dutch holding company must prepare. This means that enterprises find it difficult to correctly report the retained profits of foreign subsidiaries to DNB and CBS. This is especially the case for multinationals where the multinational is legally domiciled in the Netherlands but otherwise has limited activities in the Netherlands, and where the company is even headquartered abroad.

For this reason, additional public information on the annual report for the entire multinational around the world is used for the annual estimates to determine retained profits for the financial holdings of the largest multinationals, in line with European rules. Analysis of that annual report information showed that some listed multinationals made much higher profits in 2021 and 2022 than had previously been estimated. As a result, the GNI for both reporting years has been substantially revised upwards. As an indication, fewer than 10 financial holding companies accounted for 95 percent of the profits caused by the revision.

In the future, where this information is available in good time, CBS and DNB will use the annual report information in earlier estimates, allowing potential revisions to be incorporated into the figures at an earlier stage. The information from the available annual reports has already been incorporated into the figures for the provisional estimate for 2022, so we expect there to be far fewer revisions on this point in the next estimate. We will continue to use this method in the future. Quarterly statistics, however, are usually published before this information becomes available. In the near future, we will also explore whether this information could be better identified at the earlier stage of companies’ own reports to DNB (and CBS).

Further analysis of dividends

Another cause of the revision to the balance of primary incomes for the 2021 reporting year is further analysis of dividends paid out abroad by financial holding companies. The analysis showed that dividends paid to other countries were 5.9 billion euros lower than previously estimated. As a result, the GNI for the 2021 reporting year has been revised upwards by 5.9 billion euros. There are no revisions for dividends for the 2022 reporting year.

Further analysis of non-financial companies’ profits paid

The remainder of the revisions to primary incomes is largely the result of a new comprehensive analysis of the profits paid out in subsectors within non-financial companies. This analysis showed that the share of non-financial companies’ income that is earned by foreign-owned companies is lower than previously estimated. As these profits flow to the foreign parent as primary income, this outflow has been revised downwards by 5.8 billion euros for the 2021 reporting year. This has caused the GNI has to be revised upwards by 5.8 billion euros.

Revisions to other macroeconomic indicators

The above reasons for the GNI revisions also lead to upward revisions of the same order of magnitude in disposable national income, national savings, the national balance of receivables and the current account balance. DNB is also publishing its revisions to the balance of payments and international investment position today.

Revisions to other macroeconomic indicators in billions of euros
As of 23 June 2023	2021	2022
Gross national income	884.5	949.1
Gross national disposable income	877.8	943.2
National savings (gross)	292.9	291.9
National balance of receivables	106.1	194.5
Current account balance	105.5	88.3
Previous
Gross national income	836.3	902.8
Gross national disposable income	829.6	893.2
National savings (gross)	245.9	242.7
National balance of receivables	62.7	140.3
Current account balance	62.2	41.0
Revision as of 23 June 2023
Gross national income	48.2	46.4
Gross national disposable income	48.2	50.0
National savings (gross)	47.0	49.2
National balance of receivables	43.4	54.2
Current account balance	43.3	47.4