Classification for income tax purposes
Operating, as an influencer, autonomously and in a sustained manner in general commerce with the aim of generating a profit will result in income from trading activities. In that case, it is not only the cash income (e.g. such as that from affiliate marketing) that has to be reported as revenues or operating income but also, if applicable, payments in kind or non-cash benefits (e.g. “gifts” for which reviews have to be submitted or free trips).
Then again, business-related expenses (e.g. travel costs) are generally deductible as operating costs, although expenses related to the acquisition/production of any items that can be used for a long time (e.g. computers) have to be spread over the period of their useful lives (depreciation). The resulting net amount from revenues minus expenses or operating income minus costs forms the basis for the income from trading activities (“profit from commercial operations“).
Income tax and trade tax
Generally, the total income that an influencer generates minus certain deductions such as, for example, some personal pension insurance expenditures, will amount to his/her taxable income. If this is more than the basic taxfree allowance (for 2020 this is € 9,408) then this will incur income tax, the solidarity surcharge and, if applicable, church tax. If this amount exceeds € 24,500 then trade tax will become chargeable based on the rounded-down profit from commercial operations adjusted for certain add-ons or reductions.
Value Added Tax
Provided that the influencer wants to generate revenues in a sustained manner and autonomously (in contrast to the income tax perspective, the aim of generating a profit is therefore immaterial here) s/he would be a business owner that has to register for VAT. If the influencer’s revenues plus the respective amounts of value added tax payable thereon were a max. € 22 k in the preceding year (until 2019: € 17.5 k) and, in the current year, were not expected to exceed € 50 k then s/he would be considered a small business owner. If small business owners do not allow themselves to be treated like standard (nonsmall) business owners then VAT will generally not be collected from them; however, likewise they may not charge VAT on their invoices and may not deduct input tax.
If a small business owner opts for the standard VAT regime or if the business exceeds the aforementioned limits then VAT is normally charged on his/her invoices and s/he has to pay VAT to the local tax office; conversely, however, the business owner may generally also claim input tax on the incoming supplies received for the business once s/he has an invoice. In principle, such a business owner has to regularly file advance VAT returns with the local tax office.
More Information: Information about the tax obligations of influencers can be found in the FAQs published (in German) by the Federal Ministry of Finance under the title “Ich bin Influencer. Muss ich Steuern zahlen?“ [I’m an influencer. Do I have to pay tax?] on its website at www.bundesfinanzministerium.de.
Recommendation: Influencers are not always aware of their tax obligations. It is therefore recommended that they get in touch with a tax consultant in order to avoid unpleasant surprises on the part of the local tax office.