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NAICS vs NACE: How the Two Industry Codes Differ

Matt Baskovc25 Oct 202611 min read

Paired geometric structures represent industry classification systems

NAICS is the industry classification used by the United States, Canada and Mexico. NACE is the one used across the European Union. Both sort businesses by what they do, but they are built on different structures, so a NAICS code never converts cleanly into a NACE code. If you sell on both sides of the Atlantic, pick each code from the target region’s own system, based on your principal activity, and use crosswalk tables only as a starting point.

This guide covers how each system works, where they diverge, how to choose your code, and why the choice matters when you apply for grants and tenders.

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TL;DR

NAICS (North America) and NACE (EU) both classify economic activity, and both descend from the UN’s ISIC. They are separate systems with different structures and levels of detail.
There is no 1-to-1 mapping. One code in one system can point to several codes in the other, so a crosswalk is a hint, not an answer.
Choose the code that describes your principal activity, the one that adds the most value, in the system the buyer or funder uses.
In EU tenders, CPV codes describe what is being bought, and they often matter more than your NACE code.
A wrong code rarely brings legal penalties, but it can quietly cost you eligibility for funding or a tender.

NAICS and NACE side by side
What NAICS is and how the code is built
What NACE is and how the code is built
Why NAICS does not convert cleanly to NACE
How to choose your NAICS code
How to find your NACE code
NACE is not the code that matters most in EU tenders
What happens if you get the code wrong
Our view: treat codes as a filter, not an identity
Where Better Presence fits
FAQ
Sources

NAICS and NACE side by side

	NAICS	NACE
Full name	North American Industry Classification System	Statistical classification of economic activities in the European Community (from the French Nomenclature statistique des activités économiques dans la Communauté européenne)
Region	United States, Canada, Mexico	European Union
Current version	NAICS 2022	NACE Rev. 2.1
Structure	Six digits, 20 sectors	Hierarchical, four levels from broad sections to specific classes
Based on	Production processes	Economic activities
Parent standard	Related to the UN’s ISIC	Derived from the UN’s ISIC
Typical users	Federal agencies, lenders, insurers, private databases	National statistical offices, EU institutions, business registers

The facts behind the table come from the NAICS 2022 manual and Eurostat’s NACE overview. Both are worth bookmarking, because every other guide, including this one, rests on them.

What NAICS is and how the code is built

The North American Industry Classification System is the standard federal statistical agencies use to classify business establishments. It was developed jointly by the U.S. Office of Management and Budget, Statistics Canada and Mexico’s INEGI, so the same framework lets the three countries compare data.

The codes run up to six digits. The first two digits give the economic sector, and each added digit narrows the activity. According to the 2022 manual, NAICS 2022 has 20 sectors, and the 6-digit structure goes down to national industries. The sixth digit is where the three countries are allowed to differ.

A practical example: 541511 is Custom Computer Programming Services. The “54” tells you the sector (professional, scientific and technical services), and the remaining digits narrow down to the specific kind of software work.

NAICS is revised every five years, in years ending in 2 and 7. The Census Bureau says it plans to move most of its NAICS-based programs from the 2017 to the 2022 vintage by the end of 2027. In practice, databases and agencies adopt a new vintage at different speeds, so you may see two versions in circulation at the same time.

NAICS is not only a statistics tool. Private databases and lenders also use it, for example to define who qualifies for a loan product or an insurance class. That is why it often turns up in supplier registration forms and government vendor profiles.

What NAICS is and how the code is built — overview diagram

What NACE is and how the code is built

NACE is the EU’s classification of economic activities. Eurostat explains that the name comes from the French title, and that the system is used to produce comparable statistics across member states.

The current version, NACE Rev. 2.1, was adopted in 2022 and has been used for European statistics since January 1, 2025, replacing NACE Rev. 2. It is hierarchical: broad sections at the top, then divisions, groups and classes. Class codes look like 62.01, with two digits, a dot and two more digits.

NACE is derived from ISIC, the UN’s International Standard Industrial Classification, but it is more detailed at the lower levels to meet EU needs. Member states then build national versions on top of it. Ireland’s Central Statistics Office, for example, uses NACE as its standard classification of industrial activity. Expect your national business register to show a NACE-based code, sometimes with extra national digits.

Why NAICS does not convert cleanly to NACE

Both systems trace back to ISIC, so people assume a lookup should work. It mostly does not, for two reasons.

Different structures. NAICS groups establishments by similar production processes. NACE groups units by similar economic activity. The two systems draw their boundaries in different places, so categories that are tidy in one are split or merged in the other.

Different versions and economies. The classifications reflect the economic priorities of North America and Europe, and they are revised on different cycles.

The result is that concordance tables show one-to-many links in both directions. A NACE-NAICS crosswalk gives a typical case: NACE 62.01 usually lines up with NAICS 541511, but other NACE classes map to several NAICS industries, and the reverse also happens. Statistics Canada publishes a guide on how to read a concordance table between an older NAICS and NACE revision, and the first lesson is that relationships can be one-to-one, one-to-many or many-to-many.

Examples of NAICS and NACE code relationships

The UNECE statistical working paper on classification makes a related point: these are region-specific tools, even though they share a UN parent. For a company expanding across the Atlantic, the cleaner method is to describe your activity again using the target region’s classification, instead of hunting for an equivalent of your old code.

A worked example

Say you are a U.S. company that builds custom software for manufacturers, and you plan to bid in Germany.

Your NAICS code is 541511, custom computer programming services.
A crosswalk suggests NACE 62.01, computer programming activities.
Before you enter it anywhere, read the NACE Rev. 2.1 description of that class and compare it with your actual work. If part of your revenue comes from reselling hardware or running hosted services, another class may describe you better.
Check your fit against the tender itself, not just the code.

The crosswalk gave you a first guess in seconds. The reading in step 3 is what protects you.

How to choose your NAICS code

The NAICS manual’s guidance is to classify by principal activity, meaning the activity that adds the most value. Here is a simple routine.

List your revenue streams. Write down what you sell and what share of revenue each stream brings in.
Identify the principal activity. Pick the stream that adds the most value, not the one you want to grow into.
Search the official NAICS index. Use the Census Bureau’s NAICS pages to search by keyword, then read the full definition, including what is excluded.
Go to the six-digit level. A sector or subsector is too broad for most registrations.
Test your shortlist. Does the description match how you would describe your business to a buyer? If two codes fit, choose the one tied to the larger share of revenue.
Record your reasoning. Keep a one-paragraph note so the same logic is used on every form.

One pitfall comes up often. The code your accountant filed for tax purposes is not automatically the best code for procurement or funding. Those programs often want a code that reflects the activity that generates your revenue. Check the two against each other and ask your accountant before you change anything on a tax filing.

How to find your NACE code

If your company is registered in an EU country, you probably already have one. Look at your national business register or your company registration certificate, since these usually show a NACE-based activity code. Check that it still reflects what you do, especially after the move to Rev. 2.1.

If you do not have one, for example because you are a U.S. company with no EU entity, run the same principal-activity exercise as above using the NACE structure on Eurostat’s NACE pages. Read the class description, not only the title.

Two cautions apply.

Your registered code is not always the one a given funder asks for. Some programs ask you to name the activity the project falls under, which may differ from your company’s main code.
National versions add detail. Follow the national list in the country where you are applying.

NACE is not the code that matters most in EU tenders

If your goal is public contracts, NACE is only half the picture. NACE classifies your whole business. The Common Procurement Vocabulary, or CPV, classifies what a specific tender is buying. The EU’s green public procurement background report shows how NACE sits next to other product-level systems, and that is the right mental model: NACE describes the company, product and service vocabularies describe the purchase.

So a small firm that spends hours perfecting its NACE code but never sets up CPV alerts will miss tenders. Our guide to procurement acronyms such as RFx, CPV codes and SME registrations explains how the pieces fit. After you find a matching tender, a bid/no-bid scorecard helps you decide whether it is worth the effort.

What happens if you get the code wrong

For most businesses, the consequences are practical, not legal. Matchplat’s market analysis notes that a wrong classification does not usually mean penalties, but it can mean missed funding or exclusion from tenders. The reason is that procurement and funding platforms use codes as a filter. If your code does not match the activity a call requires, you may never appear in the results, or you may be screened out at the eligibility stage.

The risk is higher in cross-border bids. Using an automatic conversion without checking it can misstate your type of business. That is a worse problem than a missing match, because it can look like misrepresentation. Always check the official description of the target code, and if a form asks you to certify your classification, certify the one you verified yourself.

Codes are also not a certification of your capabilities. They group similar business units for statistics, and procurement systems often use them as a shortcut. If your real strengths do not fit your code, explain them in the narrative part of the application, not in the code field.

Our view: treat codes as a filter, not an identity

We build for small and medium-sized companies that have no bid, grants or PR team. When they ask about NAICS and NACE, the question behind it is almost always the same: “Will this code stop me from seeing, or winning, the right opportunity?”

Our answer has three parts.

First, a code is a filter that other people apply to you. Your job is to make sure it describes you accurately, because an accurate code gets you matched to calls you can actually win. An inflated code gets you matched to calls you will lose.

Second, do the classification once per region and write it down. Most of the pain we see comes from the same company using four slightly different codes across registrations, each picked in a hurry.

Third, never let a crosswalk make the final decision. It can save you time on the first pass. The final check, reading the official definition against what you do, is a few minutes of human judgment, and it is worth keeping in your hands.

— Matevz

Where Better Presence fits

Matching a classification to each grant, tender or supplier register is exactly the repetitive work that eats an owner’s week. Better Presence is a subscription platform for European SMEs that finds opportunities, checks eligibility, prepares applications and can file them, with you in control of what is submitted. We charge a flat fee and no success fees, so any funds you win stay with you.

The Presence plan is €149 per month or €1,490 per year. Higher tiers add more pipeline capacity, and the Group plan starts at €1,200 per month. You can compare them on our plans page.

FAQ

Can I convert a NAICS code to a NACE code?

You can get a candidate, but not a guaranteed match. Concordance tables often link one code to several in the other system. Use the result as a shortlist, then read the official NACE description and choose the class that fits your principal activity.

Which is better, NAICS or NACE?

Neither is better. They serve different regions, and the right one is the system your buyer, funder or registry uses. U.S. and Canadian programs use NAICS, and EU statistics and registers use NACE.

Do I need both codes?

Only if you work in both regions. A U.S. company bidding in the EU will typically need a NACE-style activity description for EU forms, and an EU company selling to U.S. buyers may be asked for a NAICS code. Pick each independently, using the same principal-activity logic.

What happens if I choose the wrong NAICS code?

Usually there is no fine, but you can lose visibility or eligibility. Platforms and agencies filter on codes, so a mismatch can keep you out of the right opportunities. If you find an error, correct it in each registry where it appears.

How often do the codes change?

NAICS is reviewed every five years, in years ending in 2 and 7. NACE Rev. 2.1 has been in use for European statistics since January 1, 2025. Check the version a form expects before you enter a code.