Influencers generate income in different ways via their Internet presence. A commercial operation of influencers is strongly related to their personality. So their personal rights, which they use to run their business, are an economic asset. Therefore, the question of whether influencers can apply their personal rights in the tax is of tax law significance. Indeed, a new judgment of the BFH on the question of the commercialisation of personal rights generally states that personal rights are of fiscal relevance. Thus, personal rights that serve a commercial purpose are even necessarily to be invested in a commercial enterprise. In addition, they also sometimes have an important value. Accordingly, influencers regularly write off the value of their personal rights when calculating the tax. This can lead to a significant reduction in the tax.

Why do influencers pay less taxes? Current BFH judgment

1st Influencer – Personal Rights and Tax

Like all taxpayers in Germany, influencers also tax their income. However, many influencers have initially started their activity only as a hobby. However, once such an activity is linked to a profit-making intention, it usually constitutes a commercial activity.

It is necessary to clarify with which economic goods an influencer operates his trade. Thus, at least one technical equipment is probably necessary for recording the videos. However, social media accounts also represent economic goods. After all, it is also about the media reach of an influencer on the Internet. This can be read in particular by the number of subscribers on the corresponding channels. In addition, the person himself plays a role. By putting an influencer in front of the camera, he markets himself. For this purpose, he uses his personal rights.

So now let’s consider how the personal rights influence the tax of influencers.

Influencers & Taxes – Personal Rights are Economic Goods

As we stated in the introduction, influencers build their companies on a foundation of tangible as well as intangible assets. The latter category of course includes the social media accounts with their subscribers. But the personal rights of influencers are also part of this. After all, a very large part of the success of an influencer also counts his awareness. And this is inseparable from the name of the influencer. Because the good name has always had an enormous importance in marketing. Furthermore, a name is only important for visual media in connection with the possibility of recognition.

Therefore, at first glance, the personality rights of the name as well as image and sound rights may be understood as a unit. But on the question of how to evaluate these personal rights of influencers with regard to their tax, the answer is another. Name rights, image rights and audio rights are in fact individual assets; Each with its own value.

Like all tangible and intangible assets that belong to the necessary business assets, an influencer puts his personal rights into his company tax-neutrally when he takes up his business. For this purpose, an influencer books the value of the individual assets in the opening balance of his company. But influencers who determine their profit via a surplus income statement can also consider the value of their personal rights in their company when taxing. Although an activation ban applies for intangible assets according to § 5 paragraph 2 EStG. However, because the values of personal rights have already arisen in the private assets of the influencers before the start of business operations, the activation ban is irrelevant here.

This is how the personal rights of influencers come into the opening balance of their companies. There you can also clearly distinguish the value of the name right or the image right. On this basis, it is also possible to follow the future performance of these assets. And that brings us to the next point.

Influence on the tax – influencers write off personal rights

This brings us to the point where the personal rights of influencers affect the level of their tax. Like other assets, personal rights are also subject to ongoing depreciation. The depreciation of the values of the personal rights of influencers reduces in this way their profit and consequently also their tax. The values used to evaluate influencers’ personal rights and the period over which depreciation takes place determine the annual amount with which depreciation reduces taxable profit. And since the personal rights of influencers usually represent their greatest asset, the depreciation on this often reduces the profit considerably.

5th BFH confirmed: Personal rights influence tax of influencers

Finally comes the best point. Even the Bundesfinanzhof (BFH), as the highest jurisdiction, has issued a judgment on tax issues in this regard in 2019 (judgment of 12.06.2019 file number X R 20/17). It is a very advantageous judgment for influencers, if other traders also benefit from it. In fact, BFH generally takes the legally binding view that personal rights which serve a commercial purpose constitute economic goods. In addition, the judges demand in their judgment that entrepreneurs place such personal rights as intangible assets in their company as necessary business assets when starting up. Furthermore, they assume that such personal rights can also be of considerable value. Finally, they also confirm that these intangible assets are subject to depreciation on a regular basis.

Thus, the personal rights with supreme court approval influence the amount of tax that an influencer has to pay on his commercial profit. In addition, the financial administration has now also recognized this BFH judgment. This, of course, also involves implementation in taxation practice. But to what extent influencers can actually set the evaluation of personal rights in their tax, is again a completely different question. It will be even more interesting if influencers in Dubai establish their new residence.