The Tax identification number is a unique code, generally an alphanumeric code, which is used to unmistakably identify any person or company required to submit tax records. In Spain, this identification number is called NIF and it is used to monitor people and businesses and keep a registry for administrative and tax purposes.

The spectacular increase of the tax bases in developed or developing countries during the last years of the XXth century and the implementation of new management tools that have the ability to treat and process big amounts of data, made the tax administration start assigning a number, which is later corrected, to obtain census information and register entities for collecting taxes, special payments, etc… and in short, for sustaining the public expenditure. It is for this reason that modern States have opted for assigning an identification number, for tax purposes, to any and all taxpayers, which generally consists of an alphanumeric code or key in which some of the digits are key figures that verify that the rest of digits are correct.

In February 2008 the new Spanish rules about the composition of the new tax identification number for companies and companies without legal personality appeared; these rules will take effect on July 1, 2008.

The composition of the tax identification number (NIF) of juridical persons and entities without legal personality will include:

a) Information about the legal form: if it is a Spanish company, or, as the case may be, the condition of it being a foreign company or a non resident company with permanent offices in Spain.
b) A random number.
c) A control letter.

As of July 1, 2008, the difference should be made between:

· Key N, for foreign companies.
· Key W, non resident company with permanent offices in Spain.

Delivery of "Information letters about the new NIF"

During June 2008, The Tax Department sent centralized information: "Information letters about the new NIF".

These letters will be sent to a group which can be classified in:

Type 1. Companies not having to change their NIF

It includes those companies whose NIF remains the same under the new rules. In the information letter these companies will be told that their NIF will not change.

Type 2. Companies having to change their NIF

According to the aforementioned information, some companies must change their NIF. The Tax Department will perform the modifications in the NIFs only when the change affects the key but not the number or control letter.

Cards containing the new NIF

On October 1, 2008, the Tax Department will change the appropriate NIFs and will send, on its own accord, the corresponding NIF cards to the legal address of the companies.

These letters are sent in plenty of time so the affected companies can take the necessary measures to introduce their new NIF into their documents, systems, etc. Nevertheless, companies should take into consideration that the new NIFs will be valid as of January 1, 2009, and therefore, they must be used only from that date on.

Consequences of the new NIF

For the companies having to modify their NIF, the following should be considered:

· Beginning January 1, 2009, the new NIF will have to be recorded in all the taxpayer statements of taxes due, communications and documents submitted to the Tax Department, as well as all other documents related to taxes, regardless of if these documents correspond to previous transactions.

· The affected companies must inform third parties such as Public Registries, Banks, suppliers, customers, etc. of their new NIF.

· In case a company has changed its NIF, and if such company has a "Digital certificate" issued by a Certifying Authority, it will have to ask for a NEW one to be used as of January 1, 2009.

The keys for the new companies are:

A. Anonymous companies.
B. Limited liability companies.
C. Collective companies.
D. Limited partnerships.
E. Community properties and unsettled estates.
F. Cooperative companies.
G. Associations.
H. Community of owners under horizontal property system.