Influencer in the tax authorities´ focus

In times of increasing social media presence, the activity of influencers is now regularly regarded as a profession. They can exchange or share opinions, experiences and information across various social platforms and use their network to market, for example, their own products or those of advertising partners. Interested parties — so-called followers — follow the regularly posted content and base their consumption behaviour on it. As a result, influencers increasingly generate income, e.g. as advertising partners or from commissions.

Various German state ministries of finance have been informing about influencers´ basic tax obligations and the underlying principles since 2020 with simple and generally understandable leaflets, among other things.

Specifically on taxation, and as far as appears for the first time, the Ministry of Finance Schleswig-Holstein issued a short information in July 2024 on the income tax treatment of influencers. Further administrative instructions are to be expected, not least because of measures to combat tax evasion in the area of social media actors — such those published since 2025 by the state tax authorities in Hamburg, North Rhine-Westphalia and Thuringia. Against this background, we set out the basic principles of the income tax and VAT assessment of influencers and possible dispute topics with the tax authorities.

I. Income tax assessment of influencers

1. Tax liability

Influencers resident in Germany are subject to unlimited income tax liability in Germany on their worldwide income. Influencers resident abroad are subject to limited income tax liability in Germany only on income earned in Germany.

2. Type of income

According to the above-mentioned short information on income tax from the Ministry of Finance Schleswig-Holstein, influencers generate either income from trade within the meaning of Section 15 of the German Income Tax Act (Einkommensteuergesetz; EStG) — e.g. from advertising income — or income from self-employment within the meaning of Section 18 EStG, if the influencer practises a profession listed there on the basis of his or her training or demonstrates a comparable qualification. Explicitly mentioned are (originally creative) literary and artistic activities.

For a one-off activity as an influencer, other income within the meaning of Section 22 no. 3 EStG arises, which remains tax-free up to an exemption threshold of EUR 256.

Of these types of income, only trade income is generally subject to both chamber of industry and commerce (IHK) contributions and trade tax, insofar as the profit exceeds the allowance of EUR 24,500. This can lead to liquidity and/or income disadvantages compared with income from self-employment.

If an influencer pursues several activities, a differentiation must be made for their tax assessment: they are to be separated if this is possible according to common perception, i.e. if there is no factual and economic connection between the activities. A natural person can be active both commercially and as a freelancer and can earn trade income and income from self-employment side by side. Conversely, a unified recording of the entire activity is required where the activities are mutually dependent and so interwoven that, according to common perception, a unified activity is to be assumed. Each influencer activity should therefore be carefully assessed as to whether trade income and/or income from self-employment exist. The Ministry of Finance Schleswig-Holstein has listed initial delimitation examples in its aforementioned short information on income tax. Nevertheless, in the absence of relevant case law and comprehensive (further) administrative instructions, a certain potential for conflict between taxpayers and the tax authorities remains regarding the concrete qualification of income.

3. Determination of income

Influencers usually determine their income from trade and self-employment by an income-expenditure statement in accordance with Section 4 (3) EStG.

3.1 Business receipts

Business receipts are all inflows in money or money’s worth that are caused by the business (and are not contributions).

3.1.1 Advertising income

Influencers can earn “classic advertising income” by placing advertisements before, between or during their content communicated via the various channels.

In addition, revenue shares from so-called affiliate or partner links form a significant part of income. If followers or other customers purchase the products shown, promoted or tested by the influencer on their own website, in video contributions or otherwise on social media channels via the embedded links, the influencers receive previously agreed commissions. These must be recorded as business receipts.

3.1.2 (Gratuitous) benefits in kind and services

Also, (gratuitous) benefits in kind provided to influencers, such as trips, products or services, generally lead to business receipts if they are business-related.

However, the asset value granted in this way has no profit effect if the expenses saved by it are themselves business-related. In that case there is a business expense in the form of an operating consumption of value, and the value of the benefit offsets the operating expenses saved. If the benefits in kind must be returned or are of very low value, no business receipts arise either.

Furthermore, Section 37b EStG allows the granting company to assume and remit income tax on benefits in kind to influencers at a flat rate of 30 %. Such a benefit is then not considered in the influencer’s income determination.

In particular in the context of this flat-rate taxation option, commissioning and thus granting companies often find themselves in an unfavorable negotiating position in contractual relationships with influencers: since they want and need to involve influencers to attract new target groups for their products, they can hardly avoid the influencers’ conditions — ideally no tax burdens; on the other hand, a flat-rate taxation — in order not to be open to challenge by the tax authorities — means a considerable additional tax burden for them. In the absence of uniform administrative instruction from the tax authorities, affected companies should not conduct contract negotiations related to influencer activity carelessly.

3.2 Business expenses

Business expenses are all expenses caused by the business.

Typical business expenses (of influencers) can include expenses for equipping a studio, an office or electronic equipment, travel, rental and leasing costs, or license fees.

Expenses for food, clothing and health maintenance (of the influencer) are not to be considered business expenses, as they are private living expenses for all taxpayers.

Expenses for the acquisition of an internet domain are neither immediately deductible business expenses nor are they included in income determination via depreciation, since this is a non-depreciable asset of fixed assets. Ongoing usage fees for maintaining the domain (e.g. annual provider/hosting fees) are, however, ongoing business expenses and immediately deductible.

4. Company commencement and cessation

Also decisive for tax purposes is the question from which point the influencer activity transitions from a hobby into a commercial activity and is therefore not to be classified as tax-irrelevant hobby activity. This is relevant beyond income tax also for VAT (see below Section II), in particular for the assertion of input tax amounts, i.e. if and from when input tax is deductible.

Note: The delimitation from tax-irrelevant hobby activity is carried out retrospectively after a business-specific start-up period; during this period income tax is provisionally assessed in accordance with Section 165 (1) of the German Fiscal Code (Abgabenordnung; AO).

Fundamentally, commercial activity begins with the first market activity recognizable externally including all preparatory actions (e.g. examining whether a commercial activity should be commenced at all). However, due to the close interweaving of private and business spheres for influencers, the start of the business is difficult to determine precisely. In the absence of objective signs of evidence such as the opening of an (external) business premises or the purchase of recognizably business-related services, the influencer’s argument for or against commencing a commercial activity at a certain time is decisive.

The mere registration on a social media platform does not constitute the start of a business activity for lack of business operations, even if rights are permanently transferred in doing so.

Clear evidence of a business activity, by contrast, is the monetization of content — through agreements with social media platforms or the conclusion of other (paid) partnerships — and the commercial grant of advertising licenses by contract. The purchase of equipment (e.g. camera, video technology, etc.) is only of indicative value.

According to the aforementioned short information on income tax from the Ministry of Finance Schleswig-Holstein, the permanent move of an influencer abroad constitutes a taxable business cessation (Section 16 (3a) EStG), because Germany’s right to tax then ceases.

5. Foreign influencers

In the case of influencers not resident in Germany, commissioning companies (= domestic payers) must observe possible withholding tax obligations pursuant to Section 50a (1) no. 1 EStG when granting monetary payments and/or providing benefits in kind. A deduction must be made if the influencer activities constitute artistic, sporting, acrobatic, entertaining or similar performances carried out in Germany and income in the form of monetary payments and/or benefits in kind is also derived therefrom.

Note: If the influencer must return the items that were provided to him/her exclusively to perform the contract (= equipment), no income arises for him/her (see above); accordingly, the commissioning company is not required to make a tax deduction pursuant to Section 50a (1) no. 1 EStG.

According to the tax authorities, the scope of a performance is to be interpreted very broadly and applied to all facets of the entertainment business; this should therefore include the role profile of an influencer.

The domestic requirement for the withholding obligation is at least met if the activity is actually carried out in Germany. How this can be determined for influencer activities that are not tied to a location is currently neither conclusively clarified by case law nor by further administrative instructions. Opinions in the literature mainly refer to the place of recording of the advertising photo or video. If there are several recording locations (in Germany and abroad), the invoice is to be apportioned over the total remuneration accordingly. Against this background, it might be advisable for the commissioning company to contractually document the domestic or foreign place of performance of the influencer activities; to what extent such an agreement will withstand a possible tax audit and which evidence will be required in future is currently completely open.

A German Federal Finance Ministry (BMF) circular published in 2019 provides clarity regarding the withholding obligation for payments to foreign platform operators and internet service providers. However, this only concerns part of online advertising measures; influencers themselves are unlikely to be classified as platform operators or internet service providers.

Conclusion: A further clarification regarding the taxation of influencer activities would therefore be desirable for legal certainty, particularly for commissioning companies; the domestic criterion for generally location-independent activities should also be specified.

II. VAT assessment of influencers

1. Tax liability / small business owners

Influencers are regularly active as entrepreneurs with their activities and are therefore, under the general rules, generally subject to VAT and obliged to submit monthly or quarterly VAT advance returns and an annual VAT return (Section 18 (2) of the German VAT Act; Umsatzsteuergesetz; UStG).

A significant exception is formed by the so-called small business owners (Section 19 UStG): after a fundamental systematic change, their turnovers have been tax-exempt since 2025. Consequently, input tax deduction on incoming invoices is not possible (and remains effectively unchanged). Especially advantageous since the system change is that small business owners no longer have to file advance returns or declarations, unless requested to do so by the tax authority.

Note: The prerequisite for the simplifications of the so-called small business regulation is that the total turnover of the business in the previous calendar year did not exceed EUR 25,000 and does not exceed EUR 100,000 in the current calendar year. 

This threshold is a real guillotine: the moment it is exceeded by a payment receipt, the entrepreneur is immediately treated as a standard taxable person for VAT. That turnover is already subject to VAT; likewise, services already performed but only collected afterwards fall under standard taxation.

This results primarily in practical risks: the timing of the change in the middle of the year and the different significance of the time of performance and payment receipt make the delimitation difficult. From the change onwards the entrepreneur must suddenly show VAT, which can lead to corrections and additional tax liabilities in the case of incorrect invoices. There is also planning uncertainty because payment receipts can only be controlled to a limited extent and input tax deduction and its allocation to small business or standard taxable sales must be handled correctly. Continuous monitoring of received payments is therefore essential.

Auf die Kleinunternehmerregelung kann der Unternehmer verzichten; an einen Verzicht ist er allerdings fünf Jahre gebunden.

2. Supply or other service as consideration

If influencers receive a supply or other service such as trips or free products as consideration for their (electronically) provided service, they effect a barter-like supply within the meaning of Section 3 (12) sentence 2 UStG, which — like other supplies — is subject to VAT.

In this context, a note on so-called supplies of materials under VAT law is appropriate. If the service recipient, i.e. the commissioning and granting company, provides the influencer as the performing party with certain items or services for the execution of the desired service to be used exclusively in performing the service, these so-called supplies of materials do not trigger a barter-like supply and are therefore not subject to VAT.

In individual cases, the distinction between supplies of materials and barter-like supplies can be difficult. The prerequisite is always a convincing argument that the influencer, as recipient of the potential supply of materials, can really use it exclusively for the performance of the specific agreed service and that any other use, e.g. for private purposes, is excluded due to agreements between the parties and their actual handling.

3. Particularities for services rendered abroad

If influencers provide services to cooperation partners abroad (B2B transactions), this transaction is generally taxable at the place where the partner company is established (destination principle; Section 3a (2) UStG). For contracts with companies from other EU countries (e.g. payments by certain platforms such as “Meta” or “TikTok” via their Irish offices), the reverse charge mechanism usually applies — i.e. the shift of tax liability. The influencer’s invoice must then state 0% VAT, ideally with the note “reverse charge mechanism”. Consequently, the company in the EU country must calculate and remit VAT in its country of establishment. For invoicing to a recipient resident in a third country, it must first be clarified whether the reverse charge mechanism is known and can be applied in the respective third country in the individual case. In these cross-border cases, the small business regulation applicable in Germany does not apply. This must be considered when invoicing in each individual case.

III. Support from BDO

Have you been active as an influencer for some time? Then you should also deal with your tax obligations. Similarly, advertising companies should scrutinize their cooperation with influencers for tax risks. Please contact us in both cases!