Tax Returns For YouTubers, Bloggers And Other Social Media Influencers

Nowadays, there are many ways to earn your money and use it to finance your life. One of them traditionally does it with a trade or as a coach and consultant, the other deals with topics that are not known to everyone. These include, for example, the Influencer. With just a few collaborations, for example, via the social media platform Instagram, they can earn what others work in throughout the year. However, it is often forgotten that influencers and bloggers also have to pay their taxes to be accurately determined, and the must Influencer submits a tax return – every year.

Influencers also have to pay tax on their income

For many, it may start as fun or be a hobby. From the moment you start earning money with your influencer activity, which may become your actual job, you have to pay taxes for it, like everyone else who receives income. From a legal point of view, this is regulated by individual tax laws. Suppose you, as an influencer, can generate profits with your activity either from a commercial enterprise according to § 15 EStG or from self-employed work according to § 18 EStG. In that case, you have to pay taxes on these as usual. The only thing that needs to be clarified is whether you, as an influencer, have a commercial activity or work as a freelancer. The same applies to you if you earn your money as a blogger or get a monetary benefit.

What is the difference between blogger and Influencer?

Bloggers and influencers are often mistakenly confused with one another, or both are lumped together. But there is an apparent difference between the two, even if today’s world, especially in the field of marketing, can no longer be imagined without them.

• Blogger: Bloggers usually have their platform and write on a wide variety of topics. Travel bloggers and food bloggers, for example, are very well known. In principle, a blogger aims at a smaller target group, which is very clearly defined. A blogger needs to be able to keep his independence. As a rule, he always writes from a first-person perspective and also expresses his personal opinion in his blogs.
• Influencer: Both a prominent person and a healthy-known person can act as influencers. As a rule, influencers use existing platforms such as Instagram, YouTube or Facebook and do not have their blog. The current definition for the term influencer was coined in 2007. In most cases, he has a very high reputation and is very present on the aforementioned social media. For this reason, the Influencer is very interesting for many companies for advertising and marketing.

In addition, there is the so-called micro-influencer. As is the case with bloggers, they generally also have a smaller but also particular target group. As a rule, a specific topic is critical to them. Companies like to use their high credibility for their marketing purposes. The credibility arises because they write relatively little to earn money or achieve a monetary benefit.

Do I have to register a business as an influencer or blogger?

As an influencer or blogger, you are not necessarily forced to register a business. That depends entirely on the type of work you do. For example, suppose this is classified as more of a journalistic or artistic occupation. In that case, German case law states that this is not a commercial activity, but you are working as a freelancer. As a blogger, you can pursue a journalistic activity; as an influencer, you can take great photos or shoot artistic videos.

Relevant tax types for influencer tax returns

If the responsible tax office classifies your activity as an influencer or blogger for you and runs a business, you also have to submit a tax return. The following tax types are relevant for this tax return:

• The income tax
• The sales tax
• The business tax

You can find out more about the different types of taxes below:

Income tax

You have to register your trade with the trade office responsible for your place of residence. All income that you generate from your business is generally subject to income tax. This is regulated in Section 2, Paragraph 1, No. 2 of the Income Tax Act. From a purely legal perspective, even taking up an activity to make a profit counts as an income tax offence. However, that does not mean that you have to pay income tax when you register your business.

Basic income tax allowance

The basic allowance is according to § 56 of the Income Tax for the year 2020 at a sum amounting to 9,408 euros. However, if you receive income from non-self-employed work, this exemption limit is only 410 euros. To be read in Section 46 (2) No. 1 EStG.

value-added tax

All income generated by you as an influencer or blogger is subject to sales tax. Unlike the income tax, you are already then the sales tax payment obligation, if you have the intention, have profits to achieve. This means that you have to submit an annual sales tax return and have to make monthly sales tax returns. This only does not apply if the small business regulation applies to them. For the year 2020, you have to note that due to the corona pandemic and December 2020Reduced tax rates still apply to sales.

Limits for sales tax liability

The limit for VAT liability is an annual turnover of 22,000 euros in the year of establishment and a maximum of 50,000 euros in the second year of your activity. In this case, you make use of the small business regulation.

Business tax

Like any other business person, you, as an influencer or blogger, are obliged to pay business tax. However, this is only the case if the intended exemption limit of 24,500 euros is exceeded. If you only work as a part-time influencer or blogger, trade tax will probably not be an issue for you. But no matter how high your profit is, you have to submit a trade tax return at the end of the year.

Trade income

When determining the amount of trade tax, the trade income is decisive. The profit determined from the commercial operation is understood as business income. The tax index in Germany is always 3.5% and is multiplied by the trade tax multiplier of the responsible municipality.

Exemplary trade tax invoice

How high your possible business tax is can not be said in general terms. This means that even if your business income is above the exemption limit of 24,500 euros, there are regional differences. The amount of business tax is also influenced by the applicable rate of assessment of the municipality in which you registered your business. The following calculation is made here.

• You work as an influencer in Dresden and have made a profit of 26,500 euros with your activity.
• You have to deduct the allowance of 24,500 euros from your winnings of 26,500 euros.
• The result: a reduced trade income of 2,000 euros.
• To determine the measurement amount, your reduced trade income is multiplied by a factor of 3.5%.
• That means 2,000 x 0.035 = 70 euros
• This tax assessment amount of 70 euros is now multiplied by the tax rate of the municipality of Dresden in the amount of 450% . The result of this calculation is your trade tax, which you have to pay.
• 70 euros x 4.5 = 315 euros

So you have to pay € 315 business tax.

Why a tax advisor is important for influencers!

Most successful influencers rely on paid partnerships, that is, on advertising. For this purpose, contracts are concluded in which this advertising and the finances, i.e. income, are regulated for you. But some influencers do not recognize an advertising message at first glance and can get into quite a bit of trouble with the tax office. For example, you stay in a great hotel with a fabulous panorama and an exclusive breakfast buffet, and all you have to do is take a few lovely photos.

You don’t get any money for it, but the hotel stay with all the trimmings is free. Have you ever thought about what a monetary benefit is? And did you know that you have to pay sales tax for this overnight stay? Maybe not you, but your tax advisor. For this reason, as a successful influencer or blogger, you should by no means do without their services them. Makes you your VAT returns and keeps you in all tax issues to back free.

Conclusion

For many influencers or bloggers, their activity began as a hobby. It was fun and on the subject of taxes and tax returns to have few ideas for frolicking in social media. Once the money flows into the cash register and this activity becomes a professional activity, then the subject of taxes becomes an issue, and you can no longer avoid it. The control for Influencer designed primarily in terms of the benefit derived as very complex, so the help of a tax adviser can only be recommended. This is the only way to ensure that there are also non-tax or criminal consequences for influencers.