Fiscal law investigations for influencers in Germany: What you need to know
The tax offices are increasingly investigating influencers who have evaded large sums in taxation. Nordrhein-Westphalen takes the lead with its own investigative team just for influencer tax evasion, but the other federal states aren’t far behind. At the moment, investigations are largely focused on the biggest names. But the career path of the influencer is more and more on the radar of the fiscal offices and even smaller influencers who don’t correctly declare their income and sponsor gifts can expect mail from their tax office. In this article I will explain how you as an influencer can correctly declare and tax your income to not risk an investigation at all.
Money-equivalent benefit from sponsors – what gets taxed?
Some influencers don’t just receive money from sponsors, partners and customers in exchange for services such as reviews or advertising. They also gain so-called moneyequivalent benefits: free products, services and opportunities. Clothing sent to you for a review but that you can keep afterwards counts as taxable income, as do free or paid hotel stays, travel, or other services like stylings or massages. To correctly declare these, you need to determine their market value, meaning what others would have to pay for it. That value is then entered into the tax declaration. For that reason, it is important to always document what you received when and from whom, ideally with its value added right away. Income gained through advertising, provisions from affiliate links, merch sales and “donations” and “memberships” on platforms like YouTube, Twitch, Instagram or Patreon also has to be declared.
Professional expenses lower the tax burden
You should also document your expenses, as many expenses such as material costs, travel costs, but also hosting fees for websites or platforms or other necessary expenses can be declared as professional expenses. This lowers your tax burden, which means you pay less in taxes.
Did you know? The costs for tax consulting can also be declared as a professional expense.
How do I declare my income?
For influencers, three types of taxes are generally relevant: income tax, which affects all income regardless of its source; value-added tax, which concerns itself with income from a specific long-term occupation; and potentially business tax, which only applies to businesses and only over a specific yearly income.
Income tax: Income tax has to be paid if all of your income from all sources taken together surpasses the personal exemption. If you for example are employed in addition to your influencer career, both are added together to calculate this. Important: if you have two or more sources of income in one year, you generally are obligated to write an income tax declaration even if you don’t surpass the personal exemption!
Value-added tax: Value-added tax has to be paid if you pursue long-term (so not just a onetime payment) income through an independent occupation, for example through regular sponsorships, through selling your own products, or through memberships. Important: you should mind the small business clause! If you gain less than 25.000 euro a year as an influencer, you can be treated as a small business and don’t have to pay or declare valueadded tax, though you then also can’t subtract input tax.
Business tax: For income from your influencer career over the specific sum of 24.500 yearly you additionally have to pay business tax. Important: A business also has to be registered!
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How do I remove myself from German taxation?
To fully remove yourself from German taxation, you have to give up just about every connection to Germany. That means that you have to meet the requirements of limited taxation in Germany and then can’t have any income that would be taxed by Germany, so no income with a connection to Germany. Then you can’t have income from German companies, can’t rent out anything in Germany, etc. Only then you can free yourself of German taxation.
What happens to influencers with missing or incorrect tax declarations?
If you don’t declare and tax your income completely, a proceeding for tax fraud can be instituted against you. That means that the tax office investigates you to determine whether you have evaded taxes. First you will receive a letter that invites you to comment and explain your financial and tax situation to the tax office. If the investigation finds that you have paid too little taxes, you will have to pay the difference and can additionally expect fines – for large-scale tax evasion you might even have to expect a prison sentence.
What can I do to prevent an investigation? Self-reporting for influencers
You can take initiative to inform the tax office that and how you haven’t paid your taxes or declared too little income. This way you save the tax office the work of investigating you, and you only have to pay the outstanding taxes, but don’t have to fear additional punishments. It’s important that you give complete information and that the tax office has to ask as few additional questions as possible. Ideally you should get the support of a lawyer with experiences in tax law and self-reports. He can tell you exactly what information is needed and can also help you write correct tax declarations.
How long is a self-report possible?
If no investigation has begun against a specific person yet – if no letter has arrived yet – you can still self-report with exemption from punishment. That means that you won’t be punished at all. But even if an investigation has already been opened, a full self-report can still reduce the punishment even in ongoing proceedings. Even then it is not too late to
explain yourself and prevent higher fines that way.
You have questions or need assistance?
Contact me without any obligation.
You have questions around tax law for influencers, have already received a letter from the tax office, or want to self-report? Please feel free to contact me. I will give you a first estimation of your case for free and will gladly support you in your contact with the tax office.
I will gladly advise you!
Book an appointment for a free initial assessment or contact me by phone, e-mail or via my contact form:
Lawyer Christian Janssen from Berlin
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