A NACE code is a short numeric label — like 47.11 for a small grocery shop — that tells statistical offices, tax authorities, and business registries exactly what kind of economic activity a company performs. Every registered business in the European Union, and in countries that align their statistics with the EU, gets one. Without it, governments would have no consistent way to compare how many people work in retail versus manufacturing, or to track which sectors are growing, across dozens of countries with different languages and legal systems.

What NACE Is

NACE stands for Nomenclature statistique des activités économiques dans la Communauté européenne — French for the statistical classification of economic activities in the European Community. Eurostat, the EU’s statistical office, has maintained it since the 1970s as the common language for describing what a business actually does.

The system is built in layers, from broad to specific:

  • Sections — 22 categories marked by a single letter, such as G for wholesale and retail trade, or J for information and communication.
  • Divisions — two-digit codes narrowing the section, e.g. 47 for retail trade.
  • Groups — three-digit codes, e.g. 47.1 for retail in non-specialized stores.
  • Classes — four-digit codes, the most specific level, e.g. 47.11 for retail sale in non-specialized stores selling mostly food.

The current version, NACE Rev. 2.1, took effect for EU statistics in 2025 and is aligned with the United Nations’ International Standard Industrial Classification (ISIC) — the global equivalent that NACE, the US’s NAICS, and similar national systems all map back to.

Why Businesses Need a Code

A NACE code isn’t just paperwork. Statistical offices use it to compile GDP, employment, and trade figures by sector — the numbers that show whether construction is booming or agriculture is shrinking. Tax and customs authorities use it to route businesses to the right regulatory regime. Banks, insurers, and investors use it to compare companies within the same industry across borders. And because the classification is standardized, a “47.11” retailer in Germany can be compared directly with one in Poland or Georgia, which has aligned its own national classifier with NACE as part of its statistical cooperation with the EU.

The catch is that picking the right code has always been harder than it sounds. A single business often does several things at once — a bakery that also runs a small café spans two different classes — and the written definitions are dense, legalistic, and easy to misread. Misclassification is common, and it can mean a business ends up compared against the wrong peer group in official statistics, or flagged incorrectly by a regulator.

How AI Is Making Codes Easier to Find

That gap between plain-language business descriptions and formal four-digit codes is exactly the kind of matching problem modern AI is good at. Rather than making someone page through a printed nomenclature, a natural-language search tool can take a sentence like “I roast and sell coffee beans online” and surface the specific class it belongs to, along with the near-miss alternatives to rule out.

Georgia’s National Statistics Office (Geostat) built exactly this kind of assistant, letting business owners describe their activity in plain Georgian or English and get a matched NACE code back, instead of hunting through the classification manual by hand. It’s a small, practical example of how governments are using AI — not for anything dramatic, but to remove friction from a bureaucratic step that every registered business has to get through.

Why It Matters for Georgia

Georgia has adopted its own national classifier of economic activities modeled on NACE, which keeps its business statistics comparable with EU member states — a technical but concrete part of aligning with European statistical standards ahead of eventual EU accession. Geostat’s AI classifier search tool is a direct, practical outcome of that alignment: any Georgian business owner registering a company, filing statistical reports, or seeking a specific NACE code can use the tool directly rather than deciphering the official nomenclature manually.

In the news

Geostat’s launch of an AI-based NACE search portal is a concrete case of a statistics office turning to AI to handle a repetitive classification task — part of a broader pattern of businesses adopting AI tools for administrative work that used to require specialist knowledge.