Research and development expenditure

The labour costs of R&D personnel are calculated as the proportion of labour costs of people doing R&D work accounted for by R&D. Labour costs include actual wages, fringe benefits counted under current costs, holiday pay and holiday bonuses. They also include social security payments, contributions to unemployment insurance, compulsory and voluntary pension contributions, and contributions to mutual benefit funds.

Current expenditure on buildings includes the R&D share of, for example, the following items of expenditure: heating, electricity, water, rents, maintenance of premises, cleaning and insurance.

Materials and equipment: materials and equipment needed for R&D activities, which also include the R&D share of the following items of expenditure: books, journals, etc., as well as purchases of machinery, appliances or instruments whose estimated service life is not more than one year.

Services bought in: these are defined as purchases of services relevant to an enterprise's own R&D activities. Whole R&D projects that are contracted out are considered to be contracted research. Services bought in might be construction work, software activities or other planning services, which are not generally considered R&D activities from the point of view of the service provider. However, whole R&D projects that are contracted out are not included.

Other current expenditure: this includes the R&D share in postal and telephone charges, as well as administrative costs (including labour costs of administrative and maintenance personnel that are not counted as research staff labour costs).

Building acquisition costs include the total booked costs of constructing laboratories, production plants and other buildings used for R&D, or the proportion of costs accounted for by R&D activities according to utilisation if the building is also used for other purposes. Acquisition costs essentially also include such things as major improvements that extend service life or enhance capacity.

Other acquisition costs for fixed assets include the total costs of acquiring equipment and machinery that are used exclusively for R&D activities; otherwise the proportion of expenditure accounted for by R&D activities is estimated according to use.

Expenditure is reported minus value-added tax (VAT), and should include costs incurred by activities during the statistical year and items counted as assets on the balance sheet. Depreciation provisions are excluded. In the absence of detailed monitoring, the R&D share of the various expenditures can be calculated for example from the labour costs of research personnel and total labour costs of the unit.