Currently, a topic is relevant for clients of mine, which I am convinced also affects numerous other influencers and streamers: the handling of sales tax from the sale of merchandising.
What is it all about?
Many streamers and influencers generate additional income from the sale of t-shirts, hoodies, baseball caps or other printed items and leave this work or the sale to other companies that naturally have more experience in terms of production and distribution.
As a rule, the streamer, influencer or e-sports team receives a certain share from the sales generated, which is often calculated from the sales total minus sales tax. Who now believes: Oh the supplier pays the sales tax, is subject to a fatal error.
This is because the performance relationship between the provider and its own fans is different from the performance relationship between the provider and the streamer under sales tax law. The streamer provides the provider with licensing rights so that the provider may, for example, print the streamer’s photo or artist name on items at all. Additionally, most streamers then promote the merchandise on their social media channels. This results in another service within the meaning of VAT law, on which the streamer must pay VAT. This is NOT to be confused with other income taxes, which are of course additional.
Lack of problem awareness
In my experience, many streamers and e-sports teams are not aware of this issue and quickly run into major tax evasion problems. This applies in particular, since the achievement of such incomes leads naturally also immediately to the obligation of a regular delivery of value added tax declarations, including the possible obligation of the request of a permanent deadline extension (and payment of the so-called 1/11-sum) if one wants to have time for the declaration up to the 10th of the next but one month.
Many reputable providers also pay sales tax on the sales portion and issue a credit note accordingly. For tax purposes, the credit note is in principle the provider’s own invoice to the provider. This credit note should then also show the sales tax, which the provider then recovers from the tax office.
If the streamer is registered for VAT in Germany, the providers will pay out the VAT if they can provide proof of this. If you are registered as an entrepreneur in another EU country, you need a VAT identification number. According to §13b UStG, the tax liability is shifted to the provider and the streamer receives the remuneration without VAT. If the provider is in another EU country and the streamer is in Germany, it is the same.
Unfortunately, however, I often see providers who tend to be dubious, for example, only make a statement of income (if at all…), pay out money but do not issue credit notes and the like. In most cases, the streamer must then take into account that sales tax is nevertheless due on this sum, in most contractual constructions. Failure to declare this income and pay sales tax can lead to major legal problems and even criminal consequences for the streamer, influencer or e-sports team in the future.
Similar in other cases
Similar circumstances are present in many other cases such as participation in advertising revenues, sale of sponsorship and many others. I can only strongly advise here to take legal help and to pay consistent attention to accounting and taxes from the first euro of income. In particular, remember that there is NO allowance for sales tax. The only exception is registration as a small business. However, the vast majority of professional streamers are likely to reach the turnover limits quickly, and after that, every euro of turnover is taxable.
And a few “But….”
There may be constellations in which what has been said here is to be judged differently, e.g. if one distributes the merchandising oneself or as a GbR (one manufactures, the other sells etc.). However, this should not be the case for the vast majority of teams, streamers or influencers. In addition, other problems then arise that would have to be dealt with, from the right of withdrawal to the packaging law.
When I bring up the subject, I quickly hear that you don’t have to pay sales tax if you haven’t issued an invoice. Apart from the fact that a credit note replaces one’s own invoice (even if one is not sent it), even without a credit note it would be the case that sales tax would be incurred in a performance relationship.
You are welcome to contact me for further consultation at any time.