Influencers and Taxes: Business, PR Samples, Platform Payments

At what point does a channel become a business?

As long as the activity is carried out independently, on a sustained basis, and with the intent to make a profit, and constitutes participation in general economic activity (Section 15(2) of the Income Tax Act). Anyone who regularly publishes content and is paid for it meets these criteria. The intent to make a profit may also be merely a secondary purpose.

The law doesn't specify how much you have to earn. A channel that generates €300 in revenue per year can be considered a business, whereas a hobby channel with no intention of making a profit is not. The difference lies in the intention and the sustainability, not in the amount.

Initial losses do not make the business a hobby. The intent to make a profit is the pursuit of a net profit: The goal must be a positive result between the establishment and termination of the business, based on an activity designed to generate positive results over a significant number of years. The pursuit of profit is assessed based on external characteristics. These include not only success but also the nature of the business activity geared toward achieving that success. The benchmark, therefore, is the lifetime of the business, not a single year.

If it involves only a one-time activity—such as promoting a single product in exchange for a one-time payment—it is considered miscellaneous income and does not constitute a business operation. It lacks the element of continuity. In that case, you do not need to register a business, no business tax is due, and the profit does not need to be reported on Schedule G.

Whether an influencer derives income from a business or from self-employment must always be determined on a case-by-case basis. As a general rule, the activity will be classified as income from a business. It counts as an artistic activity only if three criteria are met: The works are, in their overall presentation, original creations. They achieve a certain level of artistic expression that goes beyond mere technical mastery. And you exercise the decisive creative influence over all activities necessary for its production. This could apply if the advertised product is presented in an artistic manner. The article on business or freelance work explores this in more depth.

You must report the start of a commercial business using an official form submitted to the municipality, which will then notify the tax office (Section 138(1) of the German Fiscal Code (AO)). The business registration itself must be filed at the same time as the business commences (Section 14(1) of the German Trade Regulation Act (GewO)). The tax office will then request additional information via a questionnaire; these reports are due within one month of the event (Section 138(4) of the German Fiscal Code (AO)). The questionnaire for tax registration must be submitted within one month of the start of your business activities, and it must be submitted electronically. The tax office uses this questionnaire to determine how and under which tax categories you should be registered for tax purposes; it then assigns you a tax identification number. The articles on the questionnaire and the business registration explain the process.

What types of income count?

All income related to the business. Individuals who are not required to keep accounting records and do not do so calculate their profit as the excess of operating income over operating expenses (Section 4(3), first sentence, of the Income Tax Act (EStG)). The overview lists the types of income included in this calculation.

Voluntary payments from viewers—donations, tips—are considered business income for income tax purposes because they are generated by your work.

From a VAT perspective, it is debatable whether they constitute payment for a service. The tax authorities assume they do. If you’re dealing with larger amounts, it’s worth having this reviewed.

The cash basis accounting method isn’t always sufficient. You may be required to keep books in one of two ways. Under commercial law: A merchant is anyone who operates a commercial business. A business is not considered a commercial enterprise if, by its nature or scope, it does not require a commercially organized business operation. For an influencer, this criterion is generally not met because the business is small-scale, has no employees, and does not require an extensive organizational structure. The situation is different if you are voluntarily registered in the commercial register; anyone operating on a large scale may be considered a merchant. Regarding tax law: There are two thresholds: total revenue exceeding €800,000 in a calendar year or profit from business operations exceeding €80,000 in a fiscal year (Section 141 of the German Fiscal Code [AO]).

The accounting requirement does not take effect automatically. The tax office determines when the threshold has been exceeded and notifies you; you are then required to keep accounting records starting with the following fiscal year. Until then, you may continue to use the net income method. The obligation does not end immediately when revenue declines again, but rather at the end of the fiscal year following the fiscal year in which the tax office determines that the requirements are no longer met.

The total revenue against which the €800,000 threshold is measured is defined in the same way as under the small business exemption: only taxable revenue, based on payments received, excluding fixed assets. Those who primarily provide services to a platform in another EU country therefore remain further from this threshold than the total payment amount alone would suggest.

Are PR samples and free products subject to tax?

Do you test products, stay in hotels for free, or get invited to events or entire trips? These are in-kind benefits, and they are subject to both income tax and VAT. This also includes tickets to trade shows or conferences. Promotional gifts, such as goods and services, are also considered income.

Operating revenue includes all revenue in cash or in kind that is generated by the business. For contributions in kind, the fair market value is used: the usual price of the item received, that is, the price a third party would have to pay. The company’s purchase price is not relevant.

This is an exchange, not a gift: Your service is the consideration, and the product is the consideration in return. The German VAT Act expressly regulates this exchange-like transaction. The value of each transaction is considered compensation for the other party (Section 10(2), second sentence, of the UStG).

The first two are the standard cases in which no tax is due.

The data is available and is being analyzed. An investigative team is analyzing a data set from several major platforms: 6,000 data records indicating untaxed profits from advertising and subscriptions, with a tax volume relevant to criminal proceedings of approximately 300 million euros, based on a single federal state. In another federal state, an industry-wide audit is underway involving about 140 audits, while a third has established its own task force.

The investigation is explicitly not focused on young people who have gained a few followers and promoted a few creams or clothes. The authorities are looking for the big cases.

How should platform payouts be treated for VAT purposes?

That depends on the place of supply. If you provide a service to a business headquartered in another EU country, the place of supply is generally the location from which the recipient operates its business (Section 3a(2) of the German Value-Added Tax Act (UStG)). If the service is provided to a business’s permanent establishment, the location of that permanent establishment is decisive instead. In Germany, no VAT is due in such cases.

Whether a payment constitutes compensation for such a service depends on the contract with the platform.

If the payment constitutes compensation for services rendered to the platform operator and the platform is located in another Member State, a specific set of obligations applies. Whether this requirement is met continues to depend on the contract.

It follows that anyone who makes payments to a platform in another EU country under the standard tax regime needs their own VAT identification number.

In addition, there is the summary report. It must be submitted to the Federal Central Tax Office by the 25th day following the end of each calendar quarter—not to the tax office. This is a separate report from the advance tax return, and it is often overlooked because it is submitted to a different agency.

This is good news for small business owners: Anyone making payments to a platform in another EU country does not need to apply for a VAT identification number or file a summary report. However, an invoice must be issued with this note if no credit has been agreed upon.

Does the small business regulation apply to Creator?

Yes, provided the limits are met. Sales by a business based in Germany are exempt from VAT if total sales in the previous year did not exceed €25,000 and do not exceed €100,000 in the current year (Section 19(1) of the UStG, German VAT Act), as amended effective January 1, 2025).

Total revenue includes only taxable revenue, calculated based on payments received—that is, based on the date of receipt rather than the invoice date (Section 19(2) of the UStG). Only domestic revenue is taxable. If the place of supply is at the recipient’s location in another EU country, the revenue counts toward neither the €25,000 nor the €100,000 threshold. Therefore, anyone who primarily supplies goods or services to a platform in another EU country can report revenue well in excess of €25,000 and still remain a small business owner. Sales involving fixed assets are not taken into account: Selling an old camera, for example, does not affect the threshold.

For VAT purposes, you are considered a business owner if you generate income on a self-employed and ongoing basis. Whether you intend to make a profit is irrelevant. While the intent to make a profit is decisive for income tax purposes, it is irrelevant for VAT purposes: Even if you classify your channel as a hobby, you are still considered a business owner for VAT purposes.

Any sustained activity undertaken to generate income is considered commercial or professional, even if there is no intention to make a profit. Therefore, even a hobby classified as such for income tax purposes can trigger entrepreneur status for VAT purposes: Anyone classified as engaging in a hobby for income tax purposes—and who is therefore not allowed to deduct losses—is still considered an entrepreneur for VAT purposes and is subject to invoicing and reporting requirements.

You may waive the exemption until the last day of February of the second year following the year in question. The waiver then takes effect as of the beginning of that year. The declaration cannot be withdrawn; the waiver is binding for at least five calendar years and can only be revoked thereafter, effective as of the beginning of a subsequent calendar year (Section 19(3) of the German Value-Added Tax Act (UStG)). This allows those who made significant purchases in the first year to claim the input tax credit retroactively.

What can be claimed as a business expense?

Business expenses are expenses incurred in the course of business operations (Section 4(4) of the Income Tax Act (EStG)). A value limit applies to equipment: Movable, independently usable assets up to €800 net may be fully deducted in the year of purchase (Section 6(2) of the German Income Tax Act (EStG)). For amounts between €250 and €1,000 net, a lump-sum deduction may instead be claimed over five years (Section 6(2a) of the German Income Tax Act (EStG)). More expensive equipment is depreciated over its useful life; the section on low-value assets and lump-sum deductions explains this.

For technology in the narrower sense, there is a simpler approach. For computer hardware, as well as operating systems and application software, a useful life of one year may be assumed, and it is acceptable to claim the full amount of depreciation in the year of purchase. This also applies to peripheral devices. Computers, monitors, microphones, headsets, external storage devices, and editing software can thus be fully deducted in the year of purchase, even if they cost more than €800. This is an optional rule and not an immediate depreciation: You may also deviate from the one-year useful life. For everything else, the €800 limit and the lump-sum deduction apply.

Personal living expenses do not reduce profits, even if they benefit the profession (Section 12(1) of the Income Tax Act). This includes casual clothing, even if it is worn in a video.

When is business tax due?

In general, the activity is subject to trade tax. However, trade tax is only due if the rounded business income exceeds €24,500; in that case, an electronic trade tax return must also be filed. Business income is not the same as profit: it is calculated by taking your profit, adding certain adjustments, and subtracting certain deductions.

Therefore, it is not the trade tax paid that is credited, but four times the assessed tax base. Because trade tax is calculated as the tax base multiplied by the assessment rate, and the credit is calculated as the tax base multiplied by 400%, trade tax does not impose an economic burden on you if the assessment rate is 400% or less. If your municipality’s assessment rate exceeds that, you are responsible for the difference. Furthermore, this credit applies only to the extent that income tax is levied on business income at all.

What thresholds apply to the three types of taxes?

Your income as a creator is generally subject to income tax. However, you only need to file an income tax return if, when combined with any other income during the calendar year, it exceeds the annual basic tax-free allowance. The situation is different if you also have a job as an employee and income tax is withheld from your wages: In that case, you must file a return as soon as the total of your income—excluding payroll tax deductions—exceeds €410 (the threshold applies for amounts over €410; it does not apply for exactly €410.00). This is explained in the article on side businesses alongside your day job.

That’s 410 € in income, not 410 € in revenue: for you, that’s operating revenue minus operating expenses—in other words, profit. Someone who takes in €2,000 and spends €1,800 has €200 in income and is not required to pay taxes on it.

The €410 is not only a tax threshold but also an exemption limit:

Both the basic tax-free allowance and the €410 relate to the reporting requirement, not the tax liability. The basic tax-free allowance applies when there is no earned income subject to withholding tax; the €410 limit applies when such income exists. Exceeding this threshold does not necessarily mean that tax is due: that is determined only after deductible items have been subtracted.

If you are required to file a return, you must submit the return electronically; if you derive income from a business, this requirement applies even outside the assessment periods for employees, and an exemption on the grounds of hardship may be granted upon request. You generally calculate your profit using the net income method; this information goes in Schedule G.

Do platforms report my income to the tax office?

The Platform Tax Transparency Act requires platform operators to report payments made for certain activities to the Federal Central Tax Office. There are exactly four relevant activities, each of which must be performed for compensation: the temporary transfer of the right to use real property, the provision of personal services, the sale of goods, and the temporary transfer of the right to use means of transportation. For creators, only the provision of personal services and the sale of goods are relevant.

A seller is exempt if, on the same platform, they “have sold goods in fewer than 30 instances and, as a result, have received or been credited with a total of less than 2,000 euros in compensation.” Two consequences you might not guess:

Both criteria must be met: fewer than 30 items and less than €2,000. Anyone who sells 29 shirts for €2,500 will be reported.

The exemption applies only to the sale of merchandise. Anyone who also bills for a single commissioned video through the same platform will be reported for it, regardless of how small the merchandise sales were.

This notification is for administrative purposes only and does not replace a tax return. It also does not automatically make you a business owner.