The personal rights of influencers also represent a relevant value in tax terms. In this case, one enters new territory in the evaluation of personality rights of influencers in a certain respect. After all, the phenomenon of social media influencers has only been around for a few years. But they also earn commercial income, which they have to tax. They receive this income for various aspects. On the one hand, the idea of a product may be a service. On the other hand, influencers also receive a certain share of their revenue for appearing as respected personalities. Thus, the awareness and recognition value of the personality of influencers is associated with the commercial transfer of their personal rights. Therefore, a distinction must be made between the aspect of the service and the Internet reach and personal rights. In doing so, we are in favour of attaching a much higher value to intangible assets.

Influencer Taxation: Evaluation of Personal Rights

1st Assessment of Personality Rights of Influencers – Introduction

Everyone has rights to his own person. For example, you can claim a right to your own name, which means the right to name. But the right to one's own image, for example in the form of reproduction via a visual medium such as a photograph, also constitutes a personal right, namely the image right.

Although the transfer of personal rights is excluded, it can be transferred to other persons. In this context, it is also possible to make a lease available for remuneration. On this basis, influencers earn their money. So their personal rights have a monetary significance. And so they are also tax relevant. In fact, personal rights of commercially active influencers also represent necessary operating assets in the opinion of the Bundesfinanzhof (BFH). Therefore, influencers must also put their personal rights into their company. The question, however, is at what value?

2nd Assessment of Personality Rights of Influencers

2.1. Evaluation of social media accounts

In addition to other intangible assets, which consist in particular in the number of subscribers in the individual social media channels, personal rights also have a value. This value must be used as a partial value when evaluating the personality rights of influencers (§ 10 BewG). However, such a market value of personal rights can only be determined objectively to a limited extent. In terms of subscriber numbers and the associated social media accounts, this is still relatively easy. On the one hand, you can estimate the range of the respective channels on the Internet. And the number of followers of an infuencer is also quantifiable. But to prove the personal right of a person with a value requires more than mere calculation skills.

2.2 Personality rights of influencers can have significant value

In fact, the BFH has stated in a judgment on commercializable personal rights that personal rights may well have a significant value. Anyone who thinks about marketing professional athletes knows that, beyond the actual sporting performance, you can achieve far more commerce with the name or image of an athlete. Yes, even if a top athlete ends his active sports career, he can continue to earn brilliantly on his personal rights.

It is similar for influencers. Even if the number of their subscribers reaches a plateau over the course of their career, the value of their personal rights can continue to rise. This is because the increase in the value of personal rights is linked to the existence of the person and the degree of their awareness. And since influencers have an increasing degree of awareness from a certain point in time even without increasing the number of their subscribers, the value of their personal rights also increases. So if an evaluation of the personality rights of influencers takes place at such a time, then one can certainly assume a high value.

2.3 Foundations for a High Value Approach for the Evaluation of Personal Rights of Influencders

Why do we need these very theoretical considerations, albeit ones derived from everyday practice?

Well, they are meant to help us as a basis for a better understanding of the assessment of personal rights of Infuencers. This is all the more necessary because there is a lack of other empirical methods for evaluating influencers’ personal rights. However, since the evaluation of personal rights has a direct influence on the level of taxes of influencers, it is likely that there will be different ideas among the taxpayers concerned and the tax offices in this regard. We therefore offer two alternative considerations here.

Suppose an influencer receives income from other companies for the presentation of various products. Let us further assume that the annual revenue reaches an amount of EUR 100,000. Apparently this is advertising revenue. However, a certain value in these revenues is also associated with the person of the influencer, thus has a connection to his personal rights. And of course, the reach of the influencer in social media also plays a role, which is why his number of subscribers in his social media accounts are so important. Now, in order to carry out the assessment of influencers’ personal rights, one has to distinguish between the value that the service represents and that related to personal rights.

3.1. Evaluation of an influencer’s service

Our first task, the evaluation of the services that an influencer provides, is very easy: there is no value that could be used here.

3.2. Evaluation of the personal rights of influencers in the event of permanent activity

In contrast, the evaluation of the personal rights of influencers is peppered with some uncertainties for the reasons mentioned. Therefore, we now want to try using the example, whereby we assume a uniform value in the evaluation of social media accounts and the personal rights of influencers. In addition, it is important that the activity of the influencer should be designed in the long term. Why the latter is relevant for the evaluation of the personal rights of influencers, we see immediately.

Furthermore, we want to assume that of the EUR 100,000 that our exemplary influencer earns, only EUR 20,000 can be attributed to his service. After all, we have already tried to show why their personal rights should be given a higher value. Thus, one can associate the remaining EUR 80,000 in revenue with the value of the social media accounts and the personality rights of the influencer.

If you now follow the provisions of the Valuation Act, then we determine the values of the intangible assets (Social MEdia Accounts and Personal Rights) in a permanent activity via a multiplier of 13.75 on the annual profit. So when evaluating the personal rights of our influencer and his social media accounts, you come to a value of EUR 1,100,000.

And on this value, the influencer can now make a depreciation on his personal rights and his social media accounts. Again, the duration of the activity plays a role. Because in such a long-term case, one best assumes the depreciation period, which is also decisive for a company goodwill. So the depreciation period is 15 years. Consequently, the annual value by which the influencer can reduce his profit by depreciation of his intangible asset, namely his personal rights and his social media accounts, is EUR 73,333.

4th Assessment of the Personal Rights of Influencers: Temporary activity

Now we look at the second alternative. This time it is about the view that an influencer operates his activity only temporarily anyway. In our example, we want to assume that the time limit should be ten years. How does the evaluation of social media accounts and the personal rights of influencers take place?

In this case, you have to use another method to evaluate the social media accounts and the personal rights of influencers. In doing so, we are again guided by the valuation law. But the duration of the activity also plays a role here. This is how the profit share, which is related to the social media accounts and the personality rights of the influencer, is set over the entire duration of the activity. However, you also have to make a discount. You then take a factor of 7.745, by which you multiply the annual profit of EUR 80,000. In this way, we come to an evaluation of the social media accounts and the personal rights of influencers of EUR 619,600. Accordingly, we only use EUR 61,960 for the annual depreciation.

5th Conclusion on the Evaluation of Personality Rights of Influencers

As can be seen from the comparison of the two methods for evaluating the personal rights of influencers and their presence on social media, the permanent interpretation of the activity represents a clear advantage over the temporary activity. Because of this, an influencer can deduct a total amount of EUR 100,000 from his profits tax-reducing over a period of ten years.

However, a lot also depends on the perspective of the tax office with regard to the evaluation of social media accounts and the personal rights of influencers. If there are reasons that suggest a temporary activity of an influencer, then the less advantageous evaluation method seems appropriate. On the other hand, we as a tax consultancy firm see sufficient reason to generally assume a permanent activity. That is why we are calling for the procedure to be applied on the assumption that sustainable activity is the priority.