3.7 Price concepts

The national accounts use two different price concepts.

The basic price is the amount received by the producer from the purchaser for a unit of a good or service produced. The basic price does not include any taxes payable on the unit as a consequence of its production or sale (taxes on products), but it does include all subsidies received as a consequence of its production or sale (subsidies on products). The basic price only includes those transport costs paid by the purchaser to the producer that are not separately invoiced.

Taxes and subsidies on products are paid on the basis of the value or quantity of the goods or services produced. Examples of taxes on products include VAT, tobacco tax, fuel tax and import duties. Subsidies on products consist mainly of EU and national subsidies to agriculture.

The purchaser's price is the amount actually paid by the purchaser for the product. The purchaser's price excludes any subsidies received by the producer, but it includes all taxes on products except deductible VAT. The purchaser's price paid by the ordinary consumer also includes VAT, but if purchasers are VAT registered, i.e. if they pay VAT to the state on their own production, they may deduct from their VAT payable the amount of VAT they have paid in the prices of products purchased for their own production.

The purchaser's price also includes all trade commissions that are not separately invoiced (so-called trade margins) as well as transport charges paid separately by the purchaser to the producer or the distributor to take delivery of the product at the required time and place (so-called transport margins).

Examples