Learn to calculate the CIF

The CIF means Tax Identification Code and it is an administrative identification element used by companies and organizations to identify the percentages and tax regimes to which each type of company belongs.

Origin of the merchandise and explanation of nomenclature

To begin, we must identify and classify the tariff nomenclature of the TARIC system , that is, the customs system used in the European Union. The tariff item has the function of indicating the percentage of tariff and VAT that must be applied in each case, as well as the requirements that must be met, for example, the need to present licenses and other credentials that identify the legal origin of the imported merchandise. .

The tariff heading is normally provided by the shipper, but we always recommend importers review the information with their customs agent to avoid any future problems.

The CIF Code consists of 9 alphanumeric digits, always following the following structure:

T P P 0 0 0 0 0 C

Where:

• T: It is the Organization type letter, which can be any of these: A, B, C, D, E, F, G, H, J, K, L, M, N, P, Q, R, S , U V W.
• P : Provincial code.
• 0: Sequential numbering that corresponds within the province.
• C : Check digit, a number or letter

The first digit T is a letter that indicates the type of company we are working with and can be any of the following:

• A – Public Limited Company.
• B – Limited liability company.
• C – Collective partnership.
• D – Limited partnership.
• E – Community of existing assets and inheritances.
• F – Cooperative society.
• G – Associations.
• H – Community of owners under horizontal property regime.
• J – Civil Companies, with or without legal personality.
• K – Old format, deprecated.
• L – Old format, deprecated.
• M – Old format, deprecated.
• N – Foreign entities.
• P – Local corporation.
• Q – Public body.
• R – Congregations and Religious Institutions.
• S – Bodies of the State Administration and Autonomous Communities.
• U – Temporary Business Unions.
• V – Other types of companies that are not defined in the rest of the keys.
• W – Permanent establishments of non-resident entities in Spain.

The modifications that were introduced can be summarized as follows:

The letter key G, which was assigned to “associations and other undefined type”, is converted into 4 subcategories.

G: This includes unions, political parties, consumer and user associations, as well as sports federations. They also include non-profit foundations and Savings Banks.

The next part of the key is the provincial identification which consists of the first two digits which are P and the next 5 digits which are 0 , in the CIF example, of which the first two correspond to the identifier of the province in which it is located. locates the organization and the next 5 digits are sequential or correlative numbering in the same province.

• 01 – Álava.
• 02 – Albacete.
• 03, 53, 54 – Alicante.
• 04 – Almeria.
• 05 – Avila.
• 06 – Badajoz.
• 07, 57 – Balearic Islands.
• 08, 58, 59, 60, 61, 62, 63, 64 – Barcelona.
• 09 – Burgos.
• 10 – Cáceres.
• 11, 72 – Cadiz.
• 12 – Castellón.
• 13 – Ciudad Real.
• 14, 56 – Córdoba.
• 15, 70 – A Coruña.
• 16 – Cuenca.
• 17, 55 – Girona.
• 18 – Granada.
• 19 – Guadalajara.
• 20, 71 – Guipúzcoa.
• 21 – Huelva.
• 22 – Huesca.
• 23 – Jaén.
• 24 – Leon.
• 25 – Lleida.
• 26 – La Rioja.
• 27 – Lugo.
• 28, 78, 79, 80, 81, 82, 83, 84, 85 – Madrid.
• 29, 92, 93 – Malaga.
• 30, 73 – Murcia.
• 31 – Navarre.
• 32 – Ourense.
• 33, 74 – Asturias.
• 34 – Palencia.
• 35, 76 – Las Palmas.
• 36, 94 – Pontevedra.
• 37 – Salamanca.
• 38, 75 – Santa Cruz de Tenerife.
• 39 – Cantabria.
• 40 – Segovia.
• 41, 91 – Sevilla.
• 42 – Soria.
• 43, 77 – Tarragona.
• 44 – Teruel.
• 45 – Toledo.
• 46, 96, 97, 98 – Valencia.
• 47 – Valladolid.
• 48, 95 – Vizcaya.
• 49 – Zamora.
• 50, 99 – Zaragoza.
• 51 – Ceuta.
• 52 – Melilla.

To finish understanding a CIF Code you have to identify the last digit marked with a C , where you will put a number or a letter as the case may be:

Letter Legal Nature Character that must be included in the CIF:

• A Public limited companies Number
• B Limited liability companies Number
• C Partnerships Number
• D Limited partnerships Number
• E Communities of assets and recumbent inheritances Number
• F Cooperative societies Number
• G Associations Number
• H Owner communities Number
• J Civil companies, with or without legal personality Number
• N Foreign entities Letter
• P Local Corporations Letter
• Q Public bodies Lyrics
• R Congregations and religious institutions Letter
• S Bodies of the State Administration Letter
• U Temporary Unions of Companies Number
• V Other types not defined in the rest of the keys Number
• W Establishments of non-resident entities in Spain Letter

CIF company

All merchandise that arrives to the European Union from other parts of the world must be properly cleared so that they can enter legally and be officially approved, although there are some exceptions depending on the purpose of the import, or rather, the regime that It must be applied according to the various cases that may arise: for example, active or passive processing, temporary importation, among others.

As a result of this process of legalizing the merchandise, the importer will have to pay taxes: VAT and customs clearance fee. How are these taxes determined then?

Customs value or CIF value of the merchandise

Once we know the origin and destination of the merchandise, we then determine its CIF value. To do so, we apply the tariff percentage to obtain the cost of the Import Tariff.

Then based on these amounts we can calculate the VAT base, which is made up of the sum of the following concepts:

• Customs value
• Import tariff
• Port fees that are identified with the code (T3)
• Download and manipulation known as the code (THC)
• Once we have the VAT base, we can apply said percentage
• Calculate VAT and Tariff on imports

To make the concept a little clearer, we will show you an example of calculating taxes on an import:

TAX CALCULATION ON A FCL MARINE IMPORT FROM CHINA

Let’s assume a maritime import from China, where the following particular expenses have been incurred:

In China:

450 USD: freight from the supplier’s warehouse to the loading of the container on the ship
1000 USD: Sea freight

Expenses in Spain:

170 EUR: Unloading and handling
50 EUR: Port fees
200 EUR: Transport from the ship to the importer’s warehouse
150 EUR: Rest of expenses such as documentation and paperwork.

More information:

7,500 USD, value of the merchandise.

Merchandise: jeans

The customs agent tells us that the tariff item that must be applied is 6103.4200/00, which has an associated tariff of 12% in the case of coming from China, and a VAT of 21%.

First you must convert to EUR, and for this the official exchange rate provided by Customs is applied on a monthly basis. For the examples we will take as the exchange price 1 USD is equal to 0.72 EUR.

It can be said then that the taxes on this import would then be: 736.34 Euros of Tariff, and 1,489.43 Euros of VAT.

If you can see in detail, this procedure is an equation with two unknowns, in which we must be very clear about the original concepts and the information collected based on reading the CIF Code, to correctly calculate the tariffs that you will have to pay.

For importing any type of merchandise, it will be enough to know its CIF to apply the knowledge you have read here, try to base yourself on the example and the tables to start practicing, you do not need to be a mathematical expert, the equations thing is another way Simple to solve but you need to familiarize yourself with the basic concepts needed first.

Source: economiafinanzas