Differences Between IAE And CNAE
Social SecurityTax Agency (Hacienda)
When starting your activity as a self-employed in Spain is important to know the differences between IAE and CNAE. These are two of the most used codes for freelancers that can sometimes be difficult to distinguish.
We will see each of them, when we use them and how to know which one corresponds to an activity.
What is the IAE?
The Tax on Economic Activities (Impuesto sobre Actividades Económicas or IAE) is the tax levied on any economic activity that takes place in Spain. With some exceptions, any freelancer or company must pay it.
When a self-employed person registers for this tax, they identify the activity they will carry out with a code from a list we can find at the Tax Agency.
Therefore, we use the IAE code to identify the activity in the Treasury.
The first time we use this code is at the time of registration in the activity using form 036 or 037. That also occurs when “you cause registration in the Tax on Economic Activities”.
But we also use it later to present declarations, settlements and other communications.
What is the CNAE?
CNAE means National Classification of Economic Activities (Clasificación Nacional de Actividades Económicas). It is a code we use to globally identify professional or business activities before Social Security or any administration other than the Treasury.
We use that code when a self-employed worker registers with Social Security in the Special Scheme for Self-Employed Workers (RETA). And also, you will use it in all your relationship with the different organisms necessary in any economic activity.
Essential details of the IAE and the CNAE
Concerning the CNAE, there are some things to take into account and that it is essential to know:
- Know that each IAE has its corresponding CNAE. For example, we identify the professional activity of a translator with IAE 744, and its CNAE is 7430.
- The main differences between IAE and CNAE are in their use. We use the first to identify the activity before the Tax Agency. And the second is for identification before any other agency other than the Treasury, such as Social Security.
- If you must present Form 390 (the Annual VAT Summary) and are subject to “prorrata”, the Treasury will also ask you to report your CNAE and the IAE. It is the only model where you have to include both.
- Suppose you will carry out an activity subject to VAT and another exempt from VAT. In this case, you enter in “prorrata”, and you must identify the CNAE of each activity for the provisional calculation of the “prorrata” (form 036, page 5 of VAT).
Sometimes it is necessary to know which CNAE corresponds to your IAE. When this is the case, it is possible to find it out in 2 ways:
- Looking at the proof of self-employment registration with the Treasury and Social Security. That is, in form 037 or 036 section 4, “Declaration of Economic and Local Activities” and in the Resolution on Acknowledgment of Registration sent by the Social Security Treasury.
- Using an IAE-CNAE converter. It is only necessary to know the IAE or CNAE to find out the other.
IAE to CNAE converter
When a person decides to register a business or professional activity, the first step is to submit form 036 or 037 to the Tax Agency. That is how they record the start of the activity and the registration in the different taxes. As we have already said, we use this form to identify the activity with the IAE.
After registering with the Treasury, the self-employed person must be registered with the RETA. To do so, the easiest way is to look for the IAE used for registration with the Treasury and use a converter to convert the IAE into CNAE and thus be able to include it in the registration form.
Let’s take an example
A computer scientist registers with the Treasury in the IAE P763 – Computer Programmers and Analysts.
The corresponding CNAE will depend on the type of activity carried out and could be:
- CNAE 5829 – Edition of other computer programs
- CNAE 6201 – Computer programming activities
In this way, using the converter, it is elementary to know the CNAE, clearly knowing the activity carried out and the IAE with which we identify the activity in the Tax Agency.
That way, you do not risk entering inaccurate data into Social Security, nor will you have to spend hours looking for the code that identifies a specific business.
To sum up…
The IAE refers to the code we use to identify the activity before the Tax Agency. On the other hand, the CNAE is used to identify the activity, but with Social Security and other agencies other than the Treasury.
To know this second code, you can consult the registration documents or use a converter since the two codes are related.