Hanover Tax Court on tax deductibility of clothing for fashion influencers!

Do you know this? You look in your closet, see your work clothes and think: “Wouldn’t it be great if I could write that off against tax?” Well, I had exactly this thought when I stumbled across a ruling that is quite interesting not only for influencers, but also for me as someone who often works with them.

In November 2023, the Lower Saxony Fiscal Court (case no. 3 K 11195/21) ruled that a fashion influencer cannot deduct her expenses for clothing and accessories as business expenses. The situation is clear: she buys clothes, shows them on her channels, but the tax office and the court say “no” to tax deductibility. This is particularly piquant because we all know how important the right outfit is in this business.

Legal deep drilling

The court argued that a clear distinction between professional and private use of the clothing was not possible. An interesting point is that even if the clothing is used almost exclusively for business purposes, a deduction as business expenses is out of the question. The court said verbatim: “An apportionment is also out of the question in the case of the mixed expenses in question here, as neither a basis for estimation nor delimitable inducement contributions are apparent.” This means that even if influencers argue that they mainly use certain items of clothing for their work, this is irrelevant under tax law.

The court went on to state that although the influencer’s purchases may be professionally motivated, “private shared use is always within the bounds of what is possible and customary”. This reflects the view that even high-quality or specific items of clothing and accessories purchased for professional purposes could ultimately also be used in a private context. The court emphasized that private use could not be ruled out and that private and professional activities could not always be completely separated due to the plaintiff’s job description.

It is also interesting to note the court’s reference to § 12 no. 1 EStG, which states that expenses for lifestyle that are associated with economic or social status are not deductible. The court recognized that the plaintiff needed certain products for her work as an influencer in order to generate income, but considered the purchases to be part of her lifestyle and not clearly attributable to her professional activities.

Overall, the ruling shows that the tax court follows a very strict line when it comes to the distinction between professional and private expenses, especially in the context of professions where personal presentation plays a central role. This presents influencers and similar professional groups with the challenge of accurately documenting and justifying their expenses in order to be able to claim them as business expenses.

This ruling, although not a groundbreaking new regulation in itself, could be an important clarification for many influencers. It is a real damper and clearly shows that even in a profession in which appearance is virtually the be-all and end-all, the tax leeway is narrow. This is a tough nut to crack for influencers who invest a significant part of their income in their appearance.

Conclusion: A look into the future

he ruling of the Hanover Fiscal Court was to a certain extent expected and does not necessarily raise many new questions. Rather, it confirms a trend that we are observing in case law in the field of influencer marketing: There are more and more clarified legal issues. This shows that the legal system is increasingly adapting to the realities and challenges of the digital world and creating clear guidelines for new professional fields such as influencers.

For me as a consultant in this dynamic field, this means that I have to keep my clients up to date with these developments and help them to adapt their business models accordingly. It is important that influencers and other digital professions understand that they are not only creative professionals, but also entrepreneurs who must comply with complex tax regulations.

The ruling underlines the need for influencers to carefully plan and document their spending. It also shows that a clear separation between professional and private expenses is essential to prevent tax problems. This could mean that influencers will have to think even more carefully about how they build their brand and business to meet tax requirements in the future.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.