Company classification and data: NACE and register information

The classification of economic activity is not just a technical entry in the register – it is an essential element in the common language between the entrepreneur and the state, as it determines how the company is identified in state systems and the public space. Following this classification, companies are grouped in statistics, assessed in tax administration and included in various support mechanisms.

The classification of economic activities is not just a technical entry in the register –  it is an essential element in the common language between the entrepreneur and the state, as it determines how the company is identified in state systems and the public space. After this classification, companies are grouped in statistics, assessed in tax administration and included in various support mechanisms.

Since 2025, the new  NACE 2.1 classification of economic activities has been in force in Latvia, adapted to the realities of the modern economy. For some entrepreneurs, this means the need to review their data in the registers, but even without changes to the regulation, it is important that the indicated type of activity always corresponds to the actual situation.

In this article, we will look at why the NACE code is important, how it is used in practice, and what correct and up-to-date data in state registers means for an entrepreneur.

The purpose and importance of the NACE classification in business

NACE (Nomenclature statistique des activités économiques dans la Communauté Européenne) is a unified European Union standard for classifying economic activities. This ensures that business data in all Member States are collected and analysed according to the same principles.

The NACE classification is hierarchical and consists of four levels:

• sections, identified by letters of the alphabet (e.g. "C" - manufacturing);
• divisions, identified by a two-digit code;
• groups - identified by a three-digit code;
• classes – denoted by a four-digit code.

Such a structure allows for the analysis of types of business both very generally and very narrowly and precisely. 

The recent transition to the latest version of the classifier, NACE 2.1, is a response to technological developments and the introduction of new types of services into business. The new version restructures several existing positions and introduces new concepts to more accurately reflect the reality of modern business, which has changed significantly since the previous major update in 2006. In Latvia, the maintenance of the classifier is ensured by the Central Statistical Bureau.

How NACE is used in state support, statistics and monitoring processes

The NACE classification determines the affiliation of a company to a specific industry, and this affiliation affects both statistics, support mechanisms and tax supervision.

In statistics, NACE is the basis for compiling official data. It is used to create indicators on the structure of the gross domestic product, employment and productivity, which allow comparing the Latvian economy with other EU countries and making data-based decisions.

In the field of state support, an accurate NACE code is often a prerequisite for a company to qualify for specific programs. Many programs and tax incentives are tied to specific industries, so a discrepancy between the code indicated in the register and actual activity may deny access to support for purely formal reasons.

In turn, in tax administration, industry affiliation affects risk assessment and control approaches. An appropriate code is necessary for the correct application of taxes and helps state authorities analyze industry risks. The State Revenue Service also publishes sectoral statistics (for example, data on average wages or tax debts), thus promoting transparency and fair competition.

Indicating the main and additional economic activities

The classification of the activities of a company or self-employed person is based on the actual revenue structure, separating the main economic activity from additional activities. The main activity is the one that accounts for the largest share of turnover in a given year. Even if a company carries out several types of economic activity, one main code must always be indicated in the registers.

When starting an economic activity, information must be submitted to the Enterprise Register or the State Revenue Service within a month. If the revenue structure changes and another activity begins to dominate, the main activity must be specified. In practice, this happens often - for example, an IT company may switch from programming to consulting, while a manufacturer may start developing e-commerce, which becomes the main source of income. In such situations, the code must be changed so that the registers reflect the actual situation.

The importance of data topicality in public registers

Modern public administration is increasingly based on digital, interoperable data, so the accuracy of the information in the registers is becoming critically important. Information that an entrepreneur submits in one place is also used in other processes.

Accurate data allows for automated decisions, thereby reducing the administrative burden. Inaccurate, erroneous or outdated data, on the other hand, can have direct consequences for the company's operations. If the specified type of main activity does not correspond to reality, the company may not qualify for industry support programs or tax breaks. Public registers are also used by banks and cooperation partners, assessing risks and reliability, so inconsistencies can affect the availability of financing and reputation. In addition, inaccurate information distorts industry statistics and affects policy decisions based on such data.

Consequences if company data is incomplete or inadequate

It should be understood that incorrect information in the registers is not just a technical detail - it can affect the company's operations and opportunities in the market. An inaccurate NACE code will be the reason for additional communication with the authorities, clarifying the information in the registers. If this is not done in a timely manner, discrepancies between actual activity and the registers arise. The financial consequences can be even more noticeable. Access to tax breaks and national or EU support programs often depends on the NACE code. If the industry indicated in the register does not correspond to actual activity, the company may lose funding opportunities for purely formal reasons, even if it would qualify in substance. The reputational aspect is also important. Banks and cooperation partners check public data, assessing the risks and reliability of the company. If the information is contradictory or outdated, it may make it difficult to obtain credit or raise doubts about the company's transparency.

How an entrepreneur can check and update their data

The NACE code can be checked by the State Revenue Service in the Electronic Declaration System (EDS) section "Applications" - "Codes and structures" - "Codes" or in the SRS public database by entering the company name or registration code in the search. If you are not sure about the most appropriate code, the classifier and catalog KLASIS maintained by the Central Statistical Bureau will be useful, where the latest NACE 2.1 codes and their explanations are available. The specially created transition table shows how the previous codes have been reclassified in the new system. For example, the former code “96.02 Hairdressing and beauty services” is now divided into two separate codes – one for hairdressers, the other for beauty care.

If the main activity has changed, a notification about the taxpayer’s main activity must be submitted to the EDS, in the section: “Documents” – “Create a new document” – “Taxpayer registration and data change forms” – “Notification about the taxpayer’s main activity”. In turn, when registering a new company or significantly changing the activity profile, information must also be submitted to the Enterprise Register within a certain period.

In conclusion, it is important to emphasize once again that the NACE code is an essential part of a company’s identity in the economic environment. Not only access to support instruments and financing depends on its accuracy and relevance, but also the company’s representation in statistics, as well as its assessment from the perspective of the tax administration and cooperation partners. Correct data reduces administrative risks and allows the company to operate in a more predictable environment. Therefore, the NACE classification is not just a formality - it is a part of thoughtful company management, and care for data accuracy strengthens the company's stability and competitiveness in the long term.

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