CAE - Classification of Economic Activities: What it is, how to choose and why it matters

At Grupo Your, we support Portuguese entrepreneurs daily - from choosing the correct CAE when incorporating a company to changing or adding new CAEs throughout the business lifecycle. A poorly chosen CAE can be costly - in taxes, lost subsidies and tax complications. This article explains everything you need to know.

What is the CAE?

The CAE - Portuguese Classification of Economic Activities - is a numerical code that identifies the main activity and secondary activities of a company or sole trader. It was approved by Decree-Law No. 381/2007 of 14 November and is based on the Statistical Nomenclature of Economic Activities of the European Union (NACE Rev. 2).

Each CAE consists of 5 digits and is organized hierarchically into sections, divisions, groups, classes and subclasses. For example, code 62010 refers to "Computer programming activities" and 47110 to "Retail trade in supermarkets and hypermarkets".

The CAE is assigned when the company is incorporated through the Commercial Registry portal (Empresa na Hora or ePortugal) and is registered with the Commercial Registry, the Tax Authority and the Finance Ministry.

The Hierarchical Structure of the CAE

Understanding the CAE hierarchy helps you choose the most precise code for your activity:

What is the CAE Used For?

The CAE is not just a bureaucratic code. It has practical implications across several dimensions of business life:

1. Taxation

The CAE determines the applicable VAT regime, IRC rates, special taxation regimes and eligibility for tax exemptions. Activities classified under certain CAEs benefit from reduced VAT rates (6% instead of 23%) or simplified taxation regimes.

2. Access to Incentives and Subsidies

Portugal 2030 programmes, the PRR and EU funds define eligibility criteria by CAE. A company with a CAE that doesn't match its actual activity may see applications rejected or have to return funding already received.

3. Social Security and Contribution Rates

The CAE influences the applicable single social rate and may determine special Social Security regimes for certain professions or sectors, such as construction or performing arts.

4. Licences and Permits

Certain activities - catering, construction, healthcare, education, financial services - require permits linked to the CAE. Without the correct CAE, the company may not be able to obtain the necessary authorizations to operate legally.

5. Insurance and Civil Liability

Insurance companies use the CAE to calculate civil liability premiums, multi-risk and workplace accident insurance. An outdated CAE can invalidate coverage in the event of a claim.

6. Statistics and Market Analysis

INE and the Bank of Portugal use the CAE for statistical purposes, producing sectoral studies essential for strategic planning and benchmarking against competitors.

How to Choose the Right CAE?

The CAE choice should reflect the main activity generating the highest turnover. The guiding principles are:

Fundamental rule: the main CAE should correspond to the activity that, at the time of incorporation or the last review, represents - or is expected to represent - the largest share of the company's turnover.

Consult the official CAE list available on the INE portal (ine.pt) or the ePortugal platform.

Analyse the CAEs of your direct competitors to understand the standard classification in the sector.

Don't choose a CAE that's too generic - the more specific, the greater the precision in allocating tax benefits.

A company can have one main CAE and up to 10 secondary CAEs for complementary activities.

Whenever the main activity changes, the CAE should be updated with the Tax Authority and the Commercial Registry.

Most Common CAEs in Portugal

How to Change or Add a CAE?

Throughout a company's life, it's natural for activities to evolve. The process of changing or adding CAEs is done online in a few steps:

Access the ePortugal.gov.pt portal and authenticate with Digital Mobile Key or Citizen Card.

Select "Change company data" and then "Change economic activity".

Also communicate the change to Finance (AT Portal) through the VAT Model 1 - activity change declaration.

If applicable, update Social Security and any sector regulators.

Note: Retroactive CAE changes are not possible. Tax implications and incentives already received are calculated based on the CAE in force during each period. Always consult your certified accountant before making changes.

Common CAE Management Mistakes

CAE and Portugal 2030 Incentives

Portugal 2030 - the main EU funding framework for 2021-2027 - has CAEs as one of the central eligibility criteria. Compete 2030, PRR and Norte 2020 programmes define lists of eligible CAEs for each type of incentive.

Priority sectors with especially benefited CAEs:

Manufacturing and tradable goods (Sections C and D).

Information and communication technologies - Section J CAEs.

Tourism and accommodation - CAEs 55xxx and 56xxx.

Agriculture, agroforestry and aquaculture - Sections A and B.

Health, education and social economy - Sections P, Q and S.

Research and development (R&D) - CAE 72200.

Grupo Your, through the Your Business service, supports companies in identifying the correct CAEs and preparing incentive applications, maximizing approval chances and the value of support obtained.

8 Practical Tips About CAE

Always check the CAE on the company's permanent certificate (certidaopermanente.mj.pt).

The Tax Authority CAE must be identical to the Commercial Registry one - discrepancies can create tax irregularities.

When in doubt, consult the official INE table or your certified accountant.

If you have more than one relevant activity, always register secondary CAEs - there's no associated cost.

Before applying for any public incentive, confirm the CAE is on the eligible list.

The CAE choice can influence Social Security contributions in high-risk sectors.

When taking out business insurance, always inform the insurer of the correct CAE to avoid coverage issues.

For startups in pivot phase, consider registering secondary CAEs that cover possible future strategic directions.

Conclusion

The CAE is much more than an administrative formality - it's a structural element of the fiscal, legal and strategic identity of any company. The correct choice at incorporation and its update throughout the lifecycle are decisions with real impact on access to incentives, tax burden, licence acquisition and insurance coverage.

If you have questions about your company's CAE, are considering changing the main activity or want to ensure the classification is optimized for Portugal 2030 applications, the Grupo Your team is available to help.

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This article is for informational purposes only and does not replace legal advice or advice from a certified accountant.

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