EU – VAT Rules For Social Media Influencers 

The social media economy is thriving. The numbers of the last decade clearly show that this business sector is growing higher than expected. The salaries of social media influencers, also known as content creators, vary significantly across countries, which is commonly dependent on national income levels. However, one parameter remains uniform: the earnings of social media influencers are much higher than average incomes. 

Social media influencers can impact any business sector, subsector, or even a niche commercial arena. Their impact rapidly crosses borders, reaching different audiences with just a click. This is one of the critical reasons why social media influencers are significant: they “guide” their followers to “pay attention” to their point of referral. This could be some physical product, digital good, service, e-service, and the like. 

From the tax perspective, there is a great difference between what is “treated” as a hobby or side hustle, and what is “seen” from the monitoring view of tax authorities as a trading activity that incurs income tax, social contributions, and VAT responsibility. 

In this tax guide, we will share with you more information about the social media influencers business model and related VAT responsibilities that you can expect when you do business with EU customers. 

Tax Provisions and Social Media Influencers

Following the business guides and the vast majority of tax interpretations of social media influencers’ business model, the influencers or content creators are seen as natural persons who produce and distribute content online to engage and “guide” the audience to a “precise” point of interest. 

These individuals develop and share various types of content, including videos, photos, blog posts, and visuals, often leveraging the cross-border nature of digital platforms to reach customers worldwide instantly. There are various types of influencers, including content writers, designers, opinion leaders, brand promoters, celebrities, and many more. 

There are different terms used to describe the activity or work of social media influencers. The terms go from blogger, vlogger, content creator, opinionist, expert, and many more. One thing that all influencers have in common is that based on their work is that they can impact the decision-making process for their “followers”. 

One thing common for social media influencers and content creators is that, considering their business model, they could have an array of income sources. Some of these income sources include: Advertising income, barter payments, and merchandise sales.

Influencers Tax 

One of the questions we most often encounter from our clients concerns the existence and applicability of the customized influencer tax. In most of the EU countries, there is no such thing as an Influencer Tax. In most cases, the ordinary VAT rules apply. The EU VAT rules apply to the distant supply of goods or services. 

Considering the EU VAT rules and the majority of domestic VAT regimes currently in force across the Member States, there are no specific taxation rules exclusively designed for social media influencers and content creators. 

Their tax liability rises and falls, as do those of other taxable persons, within the framework of income tax, social contributions, VAT, and other taxes. 

VAT Registration for Social Media Influencers 

In most EU countries, the standard VAT rules apply to the VAT responsibilities of social media influencers. The ordinary VAT rules state that VAT should be imposed on the supplies of goods and services made by a person that is carrying on a business, and that is held accountable by the applicable tax provisions. 

A taxable person, being domestic or foreign, is responsible for accounting for the VAT when it surpasses the VAT threshold/thresholds applicable to supplies made in the customer’s country. Most jurisdictions provide businesses with the option to register for VAT voluntarily. 

EU VAT Registration for Social Media Influencers 

EU Social Media Influencers 

EU-based social media influencers and content creators, who have customers not only in their home country but also in other Member States, should be aware of the different VAT frameworks. For their domestic business activities, they should focus on the domestic VAT threshold or specific thresholds applicable to their operations. There are Member States (like Ireland), where there are separate thresholds for goods and services. 

When it comes to their EU supplies, there is one threshold of critical importance for social media influencers, and that is a B2C intra-EU threshold of EUR 10,000. When their sales exceed this threshold, the influencers are required to register for VAT in each country where their customers are located. 

When the influencer has EU B2C-based supplies below this threshold, they can choose to apply the domestic VAT rate to that supply. 

However, the EU VAT e-commerce reform and simplified OSS reporting permit EU sellers to register for VAT via the OSS system, and to report their intra-EU supplies of goods and services through one return. 

Non-EU Social Media Influencers 

Social media influencers and content creators, whose place of business is outside the EU, and who don’t have any physical presence in any Member State, are obliged to register for VAT in each EU country where they have customers, from the first sale. However, they can also adhere to the OSS scheme/schemes, which will simplify their EU VAT compliance. 

They can register for the non-EU OSS scheme for their cross-border B2C supplies of services, and the EU OSS or IOSS scheme for supplies of goods. 

Social Media Platforms and Influencers 

VAT Reporting 

A significant number of social media influencers operate through a B2B business model utilizing social media platforms. To simplify the collection of taxes and invoicing procedures, they enter into self-billing procedures with their customers(platform operators). 

These social media platforms are well-established businesses with a high level of automation, which simplifies invoicing and reporting procedures for most of their B2B transactions. The same applies to their business operations with influencers. 

This is one of the sound reasons why the influencer prefers to transfer the invoicing responsibility to the platform. The self-billing procedure transfers to the VAT customer(the platform) the obligation to issue a VAT-compliant invoice. However, if the law or terms and conditions state otherwise, the customer remains responsible for collecting and remitting VAT. 

VAT Compliance services for influencers & creators 

We are well aware that the exponential growth of online business activity hasn’t passed unnoticed by tax authorities. Increasingly, individuals worldwide operate online as content creators, influencers, developers, social media managers, and e-commerce reviewers, reaching large audiences and influencing their consumer behavior. 

These natural persons, who pursue business activities on social media platforms like TikTok, Instagram, YouTube, and similar platforms, have developed highly lucrative business models. These business operations have been out of the scope of the tax authorities. Today, the situation is significantly different. 

Most jurisdictions have introduced tax provisions that make social media influencers accountable for taxes. This begins with the income tax responsibility and proceeds with VAT, as well as CIT (where a legal entity is behind the influencer). 

When the influencer reaches the threshold (if applicable) in the country where VAT is reportable, they are responsible for registering for VAT before they can collect and report it to the tax authorities.

We have gained years of experience in the e-commerce and digital economy sectors. This is the space where we have managed so far thousands of different clients, from self-employed e-commerce vendors or digital service providers, through the SMEs, to digital platforms. We are working successfully with dozens of social media influencers, who are making their supplies cross-border. 

Our array of specifically designated services for social media influencers and content creators covers the following: 

• VAT registration and advisory for online creators 
• VAT advisory for sponsored content & affiliate revenue
• Cross-border influencer VAT consulting services
• Reverse charge VAT consulting for influencer income 
• VAT reclaim and deduction support for creators 

How to stay compliant 

• Review the sales turnover for your sales in all jurisdictions where you have clients 
• Determine what type of transactions your business will handle
• Register when the threshold is reached
• Simplify your EU VAT reporting with OSS schemes
• Submit VAT returns and make VAT payments on time
• Follow the Invoicing and Recording requirements.

Please contact us if you, as a social media influencer, have any questions concerning the VAT compliance requirements for your business operations. Our tax team would be happy to assist you.

Takeaway 

Social media influencers are generating revenue exceeding EUR 35 billion worldwide. They play a significant role in the thriving digital economy. Considering their not only monetary importance, but also their impact on consumer behaviour, tax authorities have introduced applicable tax frameworks. 
Social media influencers should bear in mind that in recent years, the revenue administrations worldwide have been closely monitoring their operations. What kind of behaviour was “previously tolerated” due to the lack of regulations, today is a tax offence, at least. 
Sound VAT compliance is more than being in alignment with the tax provisions in the countries where your clients are; it’s equally a matter of maintaining sound business practices, a good reputation, and, for B2B transactions, a foundation for straightforward reporting.

Author: Aleksandar Delic 
Indirect Tax Manager – E-commerce

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