Influencers and taxes

Influencers and streamers also have to pay taxes

As modern as the topic of influencers, social media marketing and streaming is, many creators are often left behind, who have often slid into the field somewhat surprisingly and now have little idea of legal circumstances. Today, I would like to highlight the issue of taxation, which is really very fundamental. However, such an article can only be a very short outline. Tax law is one of the most complex legal issues in Germany.

In principle, therefore, I advise any streamer/Youtuber/influencer who earns money with his activities to work with a decent tax advisor. The work that he takes on in accounting matters and usually also in principle legal issues is worth the costs in any case. Here too, however, as with a lawyer, one should have a certain confidence in an adviser. In addition, the tax advisor should also be a little familiar with the current media, as he will also have experience with the international aspects around the topic.

Tax offices know what Twitch or YouTube is

Basically, the days when you might assume that you can operate as an operator of a YouTube channel, as a Twitch streamer or as an Instagram influencer under the radar are over. That no one would notice that significant revenues were generated and that no one at the tax offices would understand the new world anyway. In principle, the topics of income tax, sales tax and business tax are relevant. All revenues are relevant, be it compensation for advertising activities, affiliate commissions, “donations” from fans, participations in Twitch subscriptions or other cash flows, because according to Section 2 para. 1 No 2 EStG are subject to income tax.

First of all, any relevant activity that is permanently planned must be reported to the Trade Office. As a rule, the competent trade office is the one in its own place of residence. The border is thin. As a rule, any relevant regular income will count as a trade and must therefore be registered. Failure to register may result in a fine. Although in the present cases the profit is in principle calculated as a surplus of operating income over operating expenditure, the existence of actual profit is not a condition for a trade. A trade that initially makes losses, and is due to the purchase of technology and the like, must also be registered with the Trade Office and the Tax Office.

Obligation to file a tax return

For this reason, most influencers and streamers are also likely to have the obligation to file a tax return annually; and, of course, to pay tax when the exemptions are reached ;). This requires proper and reliable accounting, as well as basic knowledge in dealing with tax law issues, such as invoicing, catering coverings and many other questions.

Accounting is also important that the revenue generated is usually subject to VAT. This applies, of course, to invoices which one makes oneself, as well as to income which one receives from third parties, provided that the place of performance for them is the Federal Republic of Germany. In case of doubt, but then it becomes too complicated for this article, VAT obligations may also accrue in other European countries. The most important limit to be observed here is the limit of the so-called small business scheme of EUR 17,500 per year. Within this limit, no vat has to be paid or VAT is paid, unless you voluntarily opt for it. In return, however, you cannot recover VAT; therefore, it is important to consider carefully whether or not to opt. Numerous sales tax questions, especially with a foreign connection, can be quite complicated in case of doubt, which is why I highly recommend an IHK course or similar on the subject, as well as advice from an expert.

Business tax

The third relevant tax is the business tax. This must be paid by anyone who is not a freelancer (i.e. artists, lawyers, architects, doctors and the like). As a pure YouTuber, Twitch streamer or Instagram influencer, one is generally not regarded as a freelancer, as the marketing property of one’s own activity is in the foreground.

The amount of the business tax depends on the rate of increase of the municipality in which the trade is registered. It may be worthwhile to operate its business in another municipality in the event of a relevantly high turnover.

Penalties loom

If all these points are not taken into account, there will be penalties, interest or, in case of doubt, even criminal investigations for tax evasion. These, in turn, could ultimately lead, among other things, to the fact that one may not work independently again in the future. Section 370 Of the AO is aware of a wide range of penalties. Admittedly, at some point there is also the possibility of impunity for self-reporting. However, this possibility is now very limited and no longer available when the tax authorities have already opened an investigation. Moreover, a self-report can only circumvent the criminal consequences, such as the imposition of a prison sentence in case of doubt. The financial consequences, including things such as the repayment of the evaded taxes and their interest rate, cannot of course be prevented. Not to mention legal defense costs.

Timely advice on self-employment, including good organisation, can save a lot of money later on.

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.