Definition: Direct investment income

Category: Balance of Payments, Eurostat

Direct investment income, namely income on equity and income on debt, covers income accruing to a direct investor resident in one economy from ownership of direct investment capital in an enterprise in another economy. Income on direct investment is presented on a net basis for both direct investment abroad and in the reporting economy (i.e. receipts of income on equity and income on debt less payments on income on equity and income on debt for each). Income on equity is subdivided into (i) distributed income (dividends and distributed branch profits), and (ii) reinvested earnings and undistributed branch profits. Income on debt consists of interest payable, on intercompany debt, to/from direct investors from/to associated enterprises abroad. Income on non-participating preference shares is treated as interest income, rather than dividend income, and is included in income on debt. http://eur-lex.europa.eu/LexUriServ/site/en/oj/2005/l_035/l_03520050208en00230055.pdf