CNAE: how to choose the right code for your company

The CNAE — the National Classification of Economic Activities — is one of the most technical fields in the company formation process, but also one of the most important. If you still don’t know what type of company to open, check out the complete guide on how to open a company before choosing your CNAE. We also recommend starting with the introduction to the Naprática hub to understand every step before defining the code. The code you choose directly affects taxation, ancillary obligations and the licenses your company will need. Choosing the wrong CNAE can cost you money every month. Vivian Sampaio, an accountant and lawyer with more than 26 years of experience, explains how to make the right choice.

What CNAE is and why it matters

The CNAE is a 7-digit numeric code that classifies a company’s economic activity in Brazil. It is standardized by the IBGE and used by every government body: the Federal Revenue Service (Receita Federal), city halls, commercial registries and licensing agencies.

The importance of the CNAE lies in its practical effects:

Taxation: under Simples Nacional (simplified tax regime), each CNAE is linked to an annex with specific rates. Different CNAEs, different rates.
Licenses: some CNAEs require specific licenses (sanitary, environmental, special permits). The wrong code may force you to obtain unnecessary licenses.
Ancillary obligations: companies in certain CNAEs must file specific returns (SPED, EFD-Contribuições).
Invoices: the CNAE determines which CFOPs and CSTs the company uses on its invoices.

CNAE structure — how to read the code

The CNAE code has 7 digits in the format X.XXX-X/X:

Example: 62.011-5/00

Section (1 digit): a letter (A to U) — the broad economic division. Example: Section J = Information and communication.
Division (2 digits): the first two digits (62) — a grouping of related activities. Example: 62 = Programming, consulting and other activities.
Class (3 digits): the first five digits (62.011) — the specific activity.
Subclass (7 digits): the full code with hyphen (62.011-5) — the detailed activity.
National code (7 digits +00): the subclass code + the 00 suffix.

The subclass (7 digits) is what is used in practice. For company formation, you will choose the most specific subclass that describes your activity. To understand how it fits into the tax regime, check out our guide on how to choose a tax regime.

How to choose the main CNAE

The main CNAE is the one that corresponds to the activity that will generate the company’s largest revenue. The rule is simple:

Main activity = largest revenue = main CNAE.

Don’t choose the CNAE based on the lowest tax. Choose the one that reflects reality. The tax authorities can question a company that earns 80% of its revenue from activity X but lists CNAE Y as its main one.

Step by step to choose

List every activity you intend to carry out — products sold, services rendered, everything.
Identify the activity with the highest expected revenue — this will be the main one.
Look up the CNAE for that activity — use the Federal Revenue Service website or the IBGE CNAE system.
Check whether there are specific requirements — some subclasses have professional council requirements (CREA, CAU, CRM, etc.).
Add secondary CNAEs for the complementary activities.

Main vs. secondary CNAE

A company can have more than one CNAE. The main CNAE defines the predominant activity. The secondary CNAEs represent complementary or secondary activities.

The main CNAE is unique and cannot be removed.
Secondary CNAEs can be added or removed at any time.
All CNAEs must reflect the company’s real activities.

Example: A software development company (CNAE 62.011-5/00) that also sells software licenses as a product (CNAE 62.092-1/00) should list both as secondary. If license sales grow and become the main activity, the main CNAE should be changed.

Common mistakes when choosing

Too generic a CNAE

Choosing a very broad CNAE (“services in general”) may seem convenient, but it causes problems. The tax authorities may conclude that the company’s activity differs from what it declared and demand retroactive obligations or taxes.

Confusing CNAE with the corporate purpose

The corporate purpose (described in the articles of association) and the CNAE are not the same thing. The corporate purpose describes what the company does in words; the CNAE is the code that classifies that activity. Both must be consistent with each other.

Not checking whether a license is required

Some CNAEs require registration with a professional council or a special license. An accountant or lawyer who knows the process spots this right away. Without that check, the company may be opened without the required documentation.

CNAE and taxation — the impact of the choice

Under Simples Nacional, the CNAE determines:

Applicable Simples annex

Each activity (CNAE) is classified into one of the Simples annexes:

Annex I (commerce): general retail, stores
Annex II (industry): processing, production, manufacturing
Annex III (services): service provision (cleaning, installation, maintenance)
Annex IV (services): specific service provision (construction, engineering)
Annex V (services): diversified services, technology, marketing

Each annex has different rates. The difference between being in Annex III or Annex V can mean percentage points of tax more or less.

ISS vs. ICMS

If the company provides services, the CNAE determines whether ISS (the municipal service tax) applies or whether there is overlap with ICMS (for commerce). This directly affects how invoices are issued and how tax is calculated.

How to research the right CNAE

Federal Revenue Service website

The Federal Revenue Service maintains a public search system where you can search by keyword. Visit the Federal Revenue Service website and search for the term of your activity — the system returns the closest CNAEs.

IBGE CNAE 2.3

The IBGE CNAE 2.3 website lets you search by code or description. It is the official source of the classification.

With an accountant

The accountant is the best-suited professional for this choice because they know the pitfalls: which CNAEs require a license, which have lower rates and which can create problems with the tax authorities. Understand why having an accountant during formation is essential.

FAQs

Can I have more than one CNAE?

Yes. A company can have one main CNAE and as many secondary CNAEs as needed. The change is made by the accountant via REDESIM and is free of charge.

Can I change the CNAE after the company is open?

Yes. The CNAE can be changed at any time by the accountant. For the main CNAE, the change is made through a declaration of start of activities. For secondary CNAEs, the change is direct.

Does the company’s CNAE have to match the partners’ CNAE?

No. The CNAE belongs to the company, not to the partners. Each individual can own a company with a CNAE different from their other company or from their activity as an individual.

My activity doesn’t have a specific CNAE. What should I do?

When there is no CNAE that describes the activity exactly, the practice is to choose the closest subclass. Avoid choosing a CNAE for an activity you don’t actually carry out, to prevent future problems.

Does the CNAE appear on the invoice?

Yes. The electronic invoice contains the issuing company’s CNAE and the CFOP (Tax Code for Operations and Provisions), which is derived from the CNAE and the nature of the transaction. That is why the CNAE must be consistent with what is on the invoice.

Still unsure which CNAE to choose? The VMAHUB team can help you identify the correct CNAE for your activity and check whether it requires any special license. Talk to an accountant on WhatsApp.

If you are opening a company and want to understand every step of the process, check out our complete guide to the required documents.

Vivian Sampaio is an accountant, lawyer, author, mentor and speaker with more than 26 years of experience in accounting and law. Founder of VMAHUB.

Tags: CNAE, Company Formation, Classification, Simples Nacional, ISS, ICMS