10 Government Finance Statistics Manual 2014
and intends to continue engaging, either indefi nitely
or over a fi nite but long period of time, in economic
activities and transactions on a signifi cant scale. Th e
location need not be fi xed so long as it remains within
the economic territory. Actual or intended location
for one year or more is used as an operational defi ni-
tion; while the choice of one year as a specifi c period
is somewhat arbitrary, it is adopted to avoid uncer-
tainty and facilitate international consistency.
2.13 A notional resident unit is a unit identifi ed
for statistical purposes to be the resident owner of
immovable assets legally owned by nonresidents.
Immovable assets, such as land, other natural re-
sources, buildings, and structures, are always treated
as being owned by resident units. If the legal owner
of these types of assets is a nonresident, a notional
resident unit is created. Th e notional resident unit is
recorded as owning the asset and receiving the rent
or rentals that accrue to the asset. Th e legal owner
is deemed to hold equivalent equity in the notional
resident unit and then receives income from the no-
tional resident unit in the form of property income
paid abroad. If a building or structure is owned in
part by a resident unit and in part by one or sev-
eral nonresidents, there is one notional resident unit
established. Each of the owners has a proportion-
ate share of the equity of the notional resident unit.
Land and buildings in extraterritorial enclaves of
foreign governments (such as embassies, consulates,
and military bases) that are subject to the laws of the
home territory and not those of the territory where
they are physically situated are part of the economic
territory of the home economy (home territory).
2.14 On the basis of the defi nition of residence, all
general government units are considered to be resi-
dents in their own country regardless of their physical
location. Public corporations, however, are considered
to be residents of the economies in whose territories
they operate. Th us, a general government unit resi-
dent in one country can own a corporation resident in
a second country. Corporations subject to the control
of a government that is resident in a diff erent econ-
omy are not classifi ed as public corporations; these are
classifi ed as private corporations in the economy in
which they are resident. Th is is because they are not
public corporations related to the government of their
economy of residence.2.15 Th e case of “special purpose entities” (SPEs),
“brass plate companies,” or “shell companies” requires
particular consideration. Th ese entities may have lit-
tle or no physical presence in the economy in which
they are legally constituted or legally domiciled (e.g.,
registered or licensed), and any substantive work of
the entity may be conducted in another economy.
In such circumstances, residence is attributed to the
economy in which the entity is legally constituted, or
in the absence of legal incorporation, is legally do-
miciled. However, the fi scal activities of nonresident
government-controlled SPEs should be refl ected in
GFS (see paragraphs 2.136–2.139).
2.16 Th e economic territory of an international orga-
nization that has all the essential attributes of an institu-
tional unit (see paragraph 2.22) consists of the territorial
enclaves over which it has jurisdiction. International
organizations have the following special characteristics:- Th e members of an international organization
are either national states or other international
organizations whose members are national states;
they thus derive their authority either directly
from the national states that are their members
or indirectly from them through other interna-
tional organizations. - Th ey are entities established by formal political
agreements between their members that have the
status of international treaties; their existence is
recognized by law in their member countries. - Because they are established by international
agreement, they are accorded sovereign status—
that is, international organizations are not sub-
ject to the laws or regulations of the country, or
countries, in which they are located. - Th ey are created for various purposes, such as
international fi nancial organizations (e.g., the
International Monetary Fund, World Bank, and
Bank for International Settlements) or to provide
nonmarket services of a collective nature for the
benefi t of their member states (e.g., peacekeep-
ing, health, and governing certain aspects of the
economic relationships or integration processes
among the region’s economies).
As a result, international organizations are not con-
sidered residents of any national economy, including
the country in which they are located or conduct their
aff airs.