Usually influencers start their activity as a hobby. But at some point a trade can emerge from it. At this point, influencers must make an assessment of their social media reach as well as their personal rights in order to put them into their business as intangible assets. However, the values of their intangible assets are still relatively low at this time. Because usually you can expect an increasing awareness and reach. Thus, the intangible assets would have a higher value at a later date. Being able to write off these higher values would have the advantage that influencers would have to pay less taxes. Therefore, influencers should found a GmbH together with another person. When participating, the influencer can be 99% in the foreground. He then leases his privately owned social media accounts and personal rights to the GmbH. Only in the case of the voting ratios is a 50% split chosen. This structure avoids a division of operations.

Influencer Taxation: Evaluation of Personal Rights

Designing Taxes for Influencers – Introduction

The profession influencer is still quite new. Many may think that this may just be a hobby. In fact, most influencers fall into this category. But once you have reached a certain reach on social media and the activity is pursued with the intention of making a profit, this is to be considered a trade. Therefore, influencers also have to pay taxes on their commercial company.

Influencers and Taxes – Advantage of Intangible Goods

Our article is about how influencers can optimize their taxes. In particular, the focus is on the recognition of their intangible assets and their depreciation. Because intangible assets, which consist of influencers especially the social media accounts and their personal rights, can have a high value. In this way, they help to reduce the taxes of influencers.

However, these values are still relatively low at the beginning of the activity of the influencers. Only with increasing awareness of influencers, which can also be seen from the number of their subscribers on their social media accounts, the value of these intangible assets increases. However, the time when an influencer from the private hobby creates a trade may start quite early. Therefore, if the value of the intangible assets transferred to the company at that time is still relatively low but shows clear growth potential, it would be tax-advantageous if this time could be shifted further into this future.

We are now pursuing this goal here to help the influencer finally save taxes. For this purpose, we use the advantages of a GmbH, but we must also ensure that social media accounts and personal rights do not lead to a division of operations. Because these require tax disadvantages for the influencers. At the same time, however, it is difficult to correct divisions. Therefore, the approach of avoiding them right from the start is the best.

So if an influencer notices that the hobby is slowly taking on the character of a regular source of income, it is time to seek advice on taxes from an experienced tax consultant. Because now is a big step to take to secure tax advantages in the future. So we recommend the establishment of a GmbH. However, two shareholders should be involved in the GmbH. Although the influencer can retain a participation of up to 99%, the voting rights must be distributed equally among the two shareholders. Why this should be so, we show later.

3.2. Purpose and operation of the GmbH – so influencers pay less tax

In order to optimize his future taxes, the influencer now agrees with the GmbH to transfer his privately owned personal rights and social media accounts. In this way, the GmbH then operates with the intangible assets provided by the influencer against payment. Therefore, the GmbH now receives all income generated by the influencer. So the influencer earns income from renting and leasing as well as from capital income, if a profit distribution by the GmbH takes place. The costs incurred by the GmbH by providing personal rights and social media accounts represent operating expenses that reduce profits.

The actual purpose of the GmbH, through which the influencer should save taxes, is different here. Because the influencer transfers his personal rights and his social media accounts to the GmbH, he avoids that his activity is considered an independent trade. In this way, he can delay the time of valuation of his intangible assets until they reach the highest possible level. Because then the influencer can register his own trade and put his intangible assets, which have grown in value since then, into his own company.

From this point on, the influencer can reduce his taxable profit by the annual depreciation on his intangible assets. That he can reduce a considerable amount of his profit by depreciation on personal rights and social media accounts is therefore very likely. This way, an influencer can save taxes to a considerable extent.

Division of operations at GmbH: strategies for avoidance and tax-neutral dissolution

We explain how to avoid an operating split or dissolve it as cheaply as possible.

Influencers and Taxes: Avoiding a Division of Operations

Finally, we will briefly discuss why the participation structure, especially the voice ratios, are so important in our design model. Because if an influencer would found the GmbH on his own, then he would be involved in both the GmbH and the intangible assets. However, since the intangible assets represent an essential operating basis for the GmbH, and the influencer holds both the rights to the GmbH and the essential operating basis, this situation fulfils the conditions for a division of operations.

Now the division of operations at the time of its creation may not show any tax consequences, at least not serious ones. However, a dissolution of the operating split very well leads to a significant tax for the influencer. Because a division of operations basically creates a sole proprietorship, the content of which is both the participation in the GmbH and its essential operating principles. A removal of one of these components consequently leads to a discovery of the hidden reserves contained therein. And since the hidden reserves are determined according to the Valuation Act by multiplying the annual profit by a certain factor, a very large amount can result as a basis for the tax collection.

That is why it is so important to avoid a possible division of operations from the outset. Because even if there are ways to end an existing business split without incurring a tax for influencers, this is always more complex than the causal avoidance of the business split.