What is a CIF in Spain and how to obtain it

Doing business in Spain requires a solid understanding of the tax system, especially when it comes to the CIF number (Código de Identificación Fiscal). Whether you plan to work, invest in property, or engage with Spanish companies, familiarising yourself with these details is a necessity. Let's clarify what the CIF number is, its importance for legal entities in Spain, and the steps you need to take to obtain one.

What is the CIF Number?

Historically, the CIF, or Código de Identificación Fiscal, served as the tax identification number for legal entities (such as companies, corporations, and various organisational forms) in Spain. The term CIF has been officially replaced by the NIF (Número de Identificación Fiscal) following a 2008 regulatory change. However, the former designation still continues to be widely used in practice hence it can get confusing in practical terms. The acronym CIF only refers to fiscal entities, not sole traders or freelancers who are trading as individuals. We will now refer to CIF as NIF for the remainder of this article.

If you are a sole trader or a freelancer in Spain, your DNI (Documento Nacional de Identidad) will automatically become your personal NIF. This means you will share the same number for your legal identity as you will for taxation and billing purposes. Essentially, there is no difference between a DNI and a NIF number if you are trading as an individual. However, if you own a company, your company will have a different NIF to represent that entity.

A 'company' NIF number consists of a unique code that combines letters and numbers. Typically, it starts with a letter, ranging from A to W (excluding letters I, O, and U), followed by a sequence of digits. Each letter corresponds to a specific type of legal entity, for instance:

• A: Public corporations: A29268166
• B: Private limited companies: B29268166
• J: Cooperatives: J29268166
• G: Civil partnerships: ESG29268166

The first two characters after the initial letter often indicate the province where the legal entity is incorporated. In the example above 29 would represent Málaga: the first two digits of its postcode. Following European standardisation, the NIF is usually prefixed with the country code 'ES'.

In Spain, unlike some other countries, a separate VAT number is not issued since the NIF serves this purpose as well. Without a NIF you are not able to issue an invoice in Spain. In Spain, all businesses are VAT registered from day one unless your activity is VAT exempt. There are no VAT income thresholds in Spain. All companies must present VAT declarations either quarterly or monthly, irrespective of the income they are generating. To all effects, your NIF is your Spanish VAT number as well.

Who requires a NIF number?

If you're planning to start a company in Spain, whether through regular trade, partnerships or establishing a presence with a branch, you will need a NIF number. It is not just a requirement; it's an essential component that signifies your ability to operate within the Spanish legal and tax frameworks. The NIF enables companies in Spain to employ staff, and carry out business operations effectually such as invoicing, tax returns and tax payments, opening bank accounts and redacting contracts. Without one you can not operate as a business.

How to obtain a NIF number in Spain for your company

Acquiring a NIF number is a process that involves several steps, which can be navigated with due diligence and appropriate guidance:

Step 1: Gather your documentation

Before you head to the Provincial Tax Office, ensure you have all the necessary paperwork in hand. Typically, the required documents include:

• A completed application form, known as "Modelo 036".
• Proof of the legal representative's identity (a valid ID card or passport).
• A Certificate of Good Standing for the company, outlining essential details such as the company's legal name, address, nationality, date of incorporation, legal representative, and activities.
• It's prudent to check for any additional documentation that may be required specific to your business entity or for non-resident companies.

Step 2: Visit the provincial Tax Office

Identify the Provincial Tax Office (Delegación de Hacienda) relevant to the municipality where your business is located or plans to operate. This step involves physical presence, either by a company representative or an authorised tax advisor acting on your behalf.

Step 3: Submit your application

Once at the Tax Office, you will need to submit the gathered documents along with the completed Modelo 036 form. Ensure that the application is accurately filled out to avoid any delays or rejections.

Step 4: Receive your provisional NIF number

Upon successful submission, the Tax Office will issue a provisional NIF number. This allows you to commence your business operations in Spain while the permanent NIF number is being processed.

Step 5: Activation of permanent NIF number

The provisional NIF number will be replaced with a permanent one after the Tax Office has completed its verification process. This usually involves ascertaining the company's legal existence and its eligibility for tax purposes in Spain. The Permanent NIF number indicates your company's full compliance with Spanish tax and legal requirements, allowing for a broader range of business activities and transactions.

Key points to remember

• Accuracy and Completeness: Ensure all submitted documents are accurate and complete to prevent any processing delays.
• Time Frame: The entire process from application to receiving your permanent NIF number may take several weeks, so plan accordingly.
• Professional Help: Considering the complexity of tax laws and language barriers, engaging with a professional tax advisory firm can streamline the process, ensuring compliance and efficiency.

How to obtain a NIF number in Spain as a sole trader

The process of obtaining your Spanish tax identification number as an individual varies depending on your status and needs but it is effectively linked to obtaining your Spanish Identification number:

• Spanish Nationals: If you're a citizen, the DNI is your basic identifier obtained at the nearest police station (appointment required). Upon receiving Spanish citizenship, you'll be issued this ID as part of the citizenship process. Your DNI number will also become your NIF number.
• Residents: For residents without Spanish nationality, the NIE not only serves as your identification but also as your NIF for Spanish tax purposes. Our comprehensive guide details how to secure your NIE. This applies to non-residents with Spanish property or individuals applying for a residency visa.

The Spanish government acknowledges certain situations where acquiring an NIE may be challenging or not possible. In these instances, you can apply for a temporary NIF directly at the Spanish tax agency (AEAT) if you are a foreigner who is unable to obtain an NIE. This would effectively be a non-resident NIF.

Navigating the complexities of a new country's tax system can be daunting. Fortunately, specialised consultancies offer valuable assistance. From guiding you through the NIF application process to advising on setting up a business in Spain, tax advisors can provide the knowledge and support you need for a smooth and compliant entry into the Spanish market. By partnering with experienced tax professionals, you safeguard your business against unforeseen compliance pitfalls and gain clarity in adhering to local laws. Reach out to experienced tax professionals today.