A financial administration's plan to stop tax evasion among influencers
In the bustling world of social media, the North Rhine-Westphalia (NRW) tax authority has taken a proactive approach to ensure that influencers are meeting their tax obligations. The authority has launched a special initiative aimed at preventing tax evasion in the industry, following investigations that suggest a potential tax loss of around €300 million due to influencers.
The initiative includes the creation of a comprehensive website that provides practical guidelines on all tax-relevant topics for influencers. This centralised platform offers easy-to-understand information on income tax, trade tax, VAT, sponsorships, product placements, merchandise sales, and prize money. The site is designed to be accessible to both beginners and those already active in the influencer industry, with the goal of informing, educating, and being a partner for influencers building their professional future.
Recent investigations have revealed that more than half of the affected influencers are said to have no German tax number. This underscores the importance of the initiative, as the tax office closely monitors influencers' lifestyles and income, using data from social media platforms to detect undeclared earnings.
The NRW Minister of Finance, Marcus Optendrenk (CDU), emphasised the importance of the initiative, stating that its purpose is to support the influencer industry, create legal certainty, and accompany a successful career path. The minister also highlighted that influencers are a growing and important industry.
To avoid tax evasion, the tax office advises influencers to declare all income transparently. This includes payments in cash and in-kind benefits derived from influencer activities, as these count toward taxable income. Influencers should also understand that their work usually qualifies as self-employment, which has consequences for income tax and social security. If revenue from influencer services exceeds certain thresholds, VAT registration and compliance may be required.
In addition, it is crucial for influencers to keep contracts and records. Documenting agreements and contracts related to influencer work can help prevent the tax office from estimating income based on follower count or contract value if data is inconsistent. The tax office may also apply valuation methods to assess income from the influencer’s audience or small business intrinsic value, especially if activities occur abroad but have ties to Germany.
In conclusion, the NRW tax authority's initiative underscores the importance of proactive tax management for influencers. By declaring all earnings, understanding their tax status, and maintaining meticulous records, influencers can prevent suspicion or accusations of evasion. The new website, a key part of the initiative, aims to support the influencer industry, create legal certainty, and accompany a successful career path.
- The comprehensive website launched by the NRW tax authority, targeted at influencers, provides detailed information on various aspects of their employment policy, including income tax, trade tax, VAT, sponsorships, product placements, merchandise sales, and prize money.
- To ensure transparency and comply with the community policy, influencers should declare all income, including cash payments and in-kind benefits, and maintain accurate records of their contracts and agreements, as these are crucial in preventing suspicion or accusations of tax evasion.
