Creating a company or starting a professional activity on its own or self-employed in Spain requires resolving a number of previous issues to comply with current regulations.
Throughout our experience as tax
advisors we
have seen how common doubts arise around basic concepts such as what is the IAE, the CNAE,its characteristics and the main differences between them.
At this point, finding
an IAE to CNAE
converter can also help us in providing us with this national code or codes of economic activity.
Differences between IAE and CNAE
But before explaining how an IAE to CNAE converter can help you, we need to make it clear what both headings mean and when we should use one and when.
But before explaining how an IAE to CNAE converter can help you, we need to make it clear what both headings mean and when we should use one and when.
What is IAE?
The Economic Activity Tax or IAE is a tax that taxes economic activity of any kind and is part of the Spanish tax system. It is managed by the town halls.
Another important point is that it directly taxes the performance of any type of economicactivity, both to natural and legal persons.
Its amount, unlike other taxes, is constant regardless of the balance sheet of the activity.
Your IAE will determine the business or professional activity you’re going to develop and mark your future tax obligations, such as the tax regime you’ll be included in, how you pay your taxes (VAT and IRPF), and mandatory ledgers.
Are all companies required to pay for the IAE?
No. There are some exceptions. The companies exempt from this payment are listed in article 35.4 of Law 58/2003 General Tax Law, and are:
- Companies with a turnover of less than one million euros.
- Taxpayers or natural persons subject to the Income Tax of non-residents operating in Spain with a permanent establishment and not exceeding one million euros.
- Taxable persons who start the exercise of their activity in Spain during the first two tax periods are also exempt from paying the IAE.
However, all persons and entities included in the census of employers, professionals and retainers must declare the economic activities they carry out, as well as the establishments and premises in which they are carried out.
To en altae on the IAE can be done in two ways. On the one hand, online if we have a digital certificate; or by going to the nearest treasury delegation to complete the process.
What is CNAE?
The CNAE,for its part, refers to the national classification of economic activities that can be carried out by both companies and self-employed persons.
This is a four-digit code that is obtained by breaking down the different established groups.
With the CNAE we divide companies or companies according to their characteristics. It is a code that only has value for statistical purposes.
Are all companies required to have a CNAE?
Yes. And not only companies, but also all kinds of companies and financial institutions to be able to track data.
With this classification we divide companies or companies, according to their characteristics, therefore, this code only has value for statistical purposes over companies in general.
If, at any time, the economic activity of the company changes it will also be necessary to obtain a new code,which must be validated before a notary and with public deed in the Commercial Register.
So what is the difference between CNAE and IAE? CNAE is not a tax while the IAE is. It’s just a code used in the business life of the organization. It is usually reflected in Social Security documents,while the IAE is used in the Tax Agency.
IAE to CNAE Converter
Sometimes, when we know our IAE, we may have trouble finding the CNAE code we need for our company. And vice versa.
One solution to this drawback may be to use an IAE to CNAE converter or a CNAE to IAE converter.
These systems perform the conversion from the codes of the heading provided to them, provided that they are valid in Spain. However, it is essential to clarify whether we carry out a professional or business activity.
To know the CNAE corresponding to the IAE that we have, these converters that we can find for free on the Internet can be very useful and make the task easier.
Because it is important to clarify that, once we register with the Treasury with the corresponding IAE, the next step will be to know the CNAE to register as an autonomous in Social Security.
Finder to get CNAE and IAE
If we do not know the IAE and the CNAE that corresponds to our professional or business activity, the Spanish Tax Agency offers a service on its website within the section ‘Virtual VAT and Census Assistance Tools’.
This particular service is a search engine that offers the AEAT itself to obtain the CNAE code and heading IAE. The free tool in question is called‘Economic Activity Finder’.
The application indicates the headings of the Fees for the Business Tax and the equivalent activity code or CNAE corresponding to each activity.
In addition, it is very easy to use. Just enter a keyword that refers to the activity to be developed and we can narrow the search with one more word.
Conclusions on IAE to CNAE converter
Although sometimes determining the CNAE code applicable to an activity or knowing the corresponding IAE heading can be an adventure, there are tools at your disposal to get to know them quickly, such
as the AI to CNAE
converter or the AEAT search engine.
What is clear is that both codes are two fundamental elements within any business activity.
We must know their differences and learn how to use them well so as not to have problems in liquidating our taxes or not failing in the company’s accounting.
