What's the difference between legal classifications and fiscal classifications?

Every legal classification is associated with a legal entity. This legal entity gives it a legal status in a country and also guides the tax determination process.

Fiscal classifications tell you when taxes apply to a party, how much tax applies, and what percentage of the tax is recoverable. Trading Community Model defines both legal and fiscal classifications.

In some countries, legal classifications are defined by:

• Business activity type

• Business activity code

• Business activity description

You can use legal classifications for fiscal classification purposes. This makes legal classification just another party fiscal classification for tax purposes.