What are IAE Captions?

The IAE epigraphs are the codes that show the economic activity carried out by each economic company or self-employed worker and that are used for the payment of the Tax on Economic Activities. This tax is levied on natural and legal persons according to the professional or business activity they carry out. It is a direct tax of a mandatory nature that must be subscribed by the person or company that carries out some type of economic activity on its own account. This tax is levied on the economic activity of companies in Spain.

How to choose the IAE epigraphs?

The IAE is managed by the municipalities and is used to tax economic activity that exceeds certain limits in terms of income, regardless of whether they are local, regional or national. To go a little deeper into the definition of IAE headings, it is necessary to clarify the meaning of business activity. The Tax Agency considers that it is the one that is developed with a professional or business nature when it implies the management of human resources and means of production, or one of them, with the purpose of influencing the production or distribution of goods . For this reason, these headings allow us to inform the Treasury of what activity we carry out, and for which we must pay taxes.

When we are going to choose the headings we must take into account that there are different types of headings for the different activities:

  • Business activities
  • Professional activities
  • Artistic activities

It should be noted that companies o autonomous, they can choose more than one heading. Furthermore, all the headings to which the activities they carry out belong must be chosen. If a company carries out two totally different activities, it must choose each of the corresponding headings.

However, there are also some tax issues to consider. For example, each of the headings has different VAT rates. The% of personal income tax is also different for business activities or for livestock activities. Another example is the commercial activities that must use the equivalence surcharge out of obligation.

Exempt from the IAE

The Economic Activities Tax (IAE) is of a general nature, although the law contemplates a series of exemptions. Among them are:

  • Individuals while they do not carry out economic activities.
  • Commercial companies and civil companies with a turnover of less than one million euros.
  • Companies and professionals on their own during the first two years of activity.
  • Non-profit associations and foundations for the mentally, physically and sensory handicapped that operate under specific conditions.
  • Non-Resident Income Tax payers, who operate in Spain through a permanent establishment and who present a turnover below one million euros.

How to register with the IAE

Even if you are exempt from paying the IAE, it is necessary to register to know the economic activity that we carry out. To register with the IAE, you must go to the Tax Agency office of the town where the economic activity takes place. This procedure must be done before starting the activity, although it can be presented ten days in advance. In the event of any change in activity or the withdrawal of the company, there is a maximum period of thirty days from the date on which it occurred.

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