Legal persons and entities

Background

The now repealed Royal Decree 338/1990, indicated that the NIF of legal persons and entities without legal personality would be the Identification Code ( CI ), regulated in Decree 2423/1975.

Decree 2423/1975 determined that the composition of the CI would be different depending on whether they were Spanish legal persons or entities or foreign entities.

In both cases, the IQ was composed of nine digits. For Spanish entities, the first digit was a letter intended to indicate the legal form or type of entity, and the rest were two digits intended to contain an indicator of the province of the entity's registered office at the time of its incorporation, five digits intended to contain a sequential number within each province and, finally, a control digit.

In the case of foreign entities, Decree 2423/1975 indicated that the first digit of the ID was intended to indicate the legal form or type of entity in question, the next three would contain an indicator of the nation of its registered office, the next four a sequential number within each territory and the last would be a control digit.

Therefore, the 1975 Decree initially took into account exclusively the criterion of nationality to determine the CI that corresponded in each case.

In fact, until the amendment to the Decree in 1998, both for Spanish and foreign entities the same annex of keys was used to express the legal form and type of entity:

• A for public limited companies
• B for limited liability companies
• C for general partnerships
• D for limited partnerships
• And for communities of property
• F for cooperative societies
• G for associations and other undefined type
• H for communities of owners under a horizontal property regime
• P for Local Corporations
• Q for Autonomous and similar organizations and religious congregations and institutions and
• S for bodies of the State Administration and the Autonomous Communities

Subsequently, in 1998, it was considered appropriate to introduce the criterion of residence to differentiate entities not resident in Spain with a specific code.

To this end, by Order of the Ministry of the Presidency of July 3, 1998, the annex of keys was modified to express the legal form and type of entity of the 1975 Decree and a new letter, N, was introduced for non-resident entities, maintaining the rest of the composition of the Code. In the second section of this Order it was expressly provided that non-resident entities that already had a NIF assigned upon its entry into force would retain it in accordance with the composition in force when it was assigned to them.

Current Regulation

Article 22 of the RGAT establishes the bases for the regulation of the NIF of legal entities, entrusting its development to the Minister of Economy and Finance. In section 1, it states:

“The Tax Authority will assign legal persons and entities without legal personality a tax identification number that identifies them, and which will remain unchanged regardless of any changes they may experience, unless they change their legal form or nationality.”

The fact that the NIF of legal entities is assigned in all cases by the tax authorities eliminates the incidents that may arise when, as we saw in the case of natural persons, the jurisdiction is shared with another public body.

The aforementioned article 22.1 of the RGAT continues to determine the composition of the NIF of legal entities. The composition of the NIF will include:

• Information on the legal form, if it is a Spanish entity, or, where applicable, the status of a foreign entity or permanent establishment of an entity not resident in Spain
• A random number
• A character of control

The development of the terms of the composition of the NIF has been carried out by Order EHA /451/2008, of February 20, which regulates the composition of the tax identification number of legal persons and entities without legal personality, in force since July 1, 2008, which in its article 2 states that it will be composed of nine characters, with the following composition:

• A letter, which will provide information on the legal form, whether it is a Spanish entity, or, where applicable, the nature of a foreign entity, or the permanent establishment of an entity not resident in Spain.
• A random seven digit number
• A character of control

Article 3 of the aforementioned Order determines that the NIF for Spanish entities will begin with a letter, which will include information on its legal form according to the following keys:

For foreign entities, the NIF will begin with the letter N (article 4 of Order 451/2008), that is, for legal persons and entities without legal personality that do not have Spanish nationality.

Another issue related to the NIF of foreign entities is the one related to the NIF that, where applicable, must be assigned to permanent establishments of non-resident entities that carry out economic activities in Spain through those entities.

Article 22.2 of the RGAT states:

“2. When a non-resident legal person or entity operates in Spanish territory through permanent establishments that carry out clearly differentiated activities and whose management is carried out separately, each permanent establishment must request a NIF different from the one assigned, where applicable, to the non-resident person or entity.

Article 5 of the aforementioned Order 451/2008 establishes that:

1. When a non-resident legal person or entity operates in Spanish territory through one or more permanent establishments that carry out clearly differentiated activities and whose management is carried out separately, in accordance with the provisions of the consolidated text of the Non-Resident Income Tax Law approved by Royal Legislative Decree 5/2004, of March 5, each permanent establishment must request a tax identification number different from that assigned, where applicable, to the non-resident person or entity.
2. For permanent establishments of entities not resident in Spanish territory, the tax identification number will begin with the letter W, which will indicate its status as a permanent establishment of an entity not resident in Spanish territory.

In relation to the diversity of permanent establishments, Article 2 of the Non-Resident Income Tax Regulations establishes the following:

"When a taxpayer has several activity centres in Spanish territory, which in accordance with the provisions of section 1 of article 17 of the Tax Law, constitute different permanent establishments, he must adopt a different name for each of them.

In the case of taxpayers who are legal entities, they must also obtain a different tax identification number for each permanent establishment.”

Section 1 of Article 17 of the Non-Resident Income Tax Law establishes the following:

"1. When a taxpayer has several centres of activity in Spanish territory, these will be considered to constitute different permanent establishments, and will be taxed separately accordingly, when the following circumstances occur:

1. That they carry out clearly distinguishable activities
2. That the management of these is carried out separately”

When a non-resident person or entity operates in Spanish territory through one or more permanent establishments that carry out clearly different activities and whose management is carried out separately in accordance with the provisions of article 17 of the consolidated text of the Non-Resident Income Tax Law, approved by Royal Legislative Decree 5/2004, of March 5, each establishment must be registered individually in the Census of Businessmen, Professionals and Withholders and must also identify the non-resident person or entity on which they depend and request a NIF different from the one assigned, where appropriate, to the non-resident person or entity, as provided for in section 2 of article 8 of the RGAT.

When a non-resident person or entity operates in Spanish territory by itself and through one or more permanent establishments, the inclusion in the Census of Businessmen, Professionals and Withholders must be carried out by both the non-resident person or entity and its permanent establishments, as established in section 3 of article 8 of the RGAT.

Attached below is a summary table of the NIF of legal persons and entities without legal personality, according to the entity code and legal form, as well as the competent body that assigns it.