Influencers are omnipresent in our media-driven world. An essential feature of influencers is that they act as advertisers for a wide variety of products. Of course they earn money with it, money that they also have to tax. But without a tax design for influencers, the tax can be very high. Therefore, some influencers have emigrated to Dubai in the past. But how it could be otherwise, we reveal in our contribution.

1. Tax Design for Influencers – Introduction

Influencers represent a new professional category. Born out of a hobby based on the need for communication of individuals, the activity of influencers has now become a worldwide social phenomenon that encompasses all walks of life. As a side effect, the marketing industry jumped on this trend. She realized early on that with the popularity of influencers you can also achieve reach for your own products. And if it is even about products for which the generation from which the respective influencers are particularly interested, then the credibility of such advertising campaigns is also true; A perfect match.

As a result, influencers have become ideal advertising carriers in our digital new media world. But just like music, film and sports stars, they earn and tax their income quite regularly. But if you simply start working as an influencer without worrying about the complex topic of taxes, you will quickly find out how high the top tax rate is in Germany. Under certain circumstances, this knowledge even arises via the detour of tax evasion. So tax design for influencers is a must when it comes to saving taxes. However, this is subject to certain conditions. In part, these can only be implemented if you already implement them at the start. Which tax arrangements for influencers come into question and how they can save taxes in this way, we want to discuss in this article.

2. What distinguish influencers?

Let’s first consider which special characteristics characterize influencers. Because these have quite an influence on the way influencers win their revenue. This in turn affects their taxation. Consequently, we need this information to develop a suitable tax design for influencers.

Influencers are people who fascinate many other people through their personality. As a result, they achieve awareness on social media, which they can measure, among other things, by the number of their followers. Thus, awareness is related to the personal attributes of influencers. These can be summarized as personality traits. In fact, such characteristics can also be defined as personal rights and treated in the same way as all other rights. More on that later.

The awareness of influencers is, as already mentioned, interesting for various product providers. They often approach certain influencers who they believe best represent and market their products. So they are all about influencers promoting their products on the Internet. Often, marketing partners and influencers conclude so-called influencer contracts that define the scope of the respective services and considerations. This can include, among other things, that influencers receive product samples, test them and can show them on the Internet and then even keep them for private use. The latter circumstance alone can already be taxable.

3. Tax design for influencers: the wrong start

Since at first no one can reliably predict whether you will be successful as an influencer, they usually start their activity as a pure hobby. They simply use the Internet as a communication medium. But with increasing awareness, sooner or later the first inquiries from advertising partners come to them. If you now accept a first order and it is financially lucrative, it is already taxable. More specifically, from that date onwards, this advertising activity is a commercial sole proprietorship. As a sole proprietorship, the income of influencers is regularly subject to income tax.

And so it is already too late to think about a tax design for influencers. Although they could now choose to change from the legal form of the sole proprietorship to another, for another reason they may not have hoped for tax advantages. This is due to the extent of their awareness, because this gives their personal rights a certain value. After all, personality-driven awareness of influencers is crucial for advertising partners. However, this value cannot be used separately in a single company, because it is an integral part of the company due to the close, personal connection to the influencer.

4. Tax design for influencers: the ideal start

Tax Design for Influencers: Establishment of an Influencer GmbH

So if the individual company is the wrong start, what is the ideal solution? Not surprisingly, it is a GmbH. Because if you start a GmbH as a prospective influencer, then this is an independent, legal person. It allows influencers to retain their personal rights, because unlike a sole proprietorship, you can distinguish two different legal entities here.

4.2. Attention: Division of operations!

However, the founding of the GmbH by influencers carries a special risk. Because the later valuable personal rights as well as the own social media channels trigger a division of operations if you leave them to the GmbH for payment or free of charge instead of bringing them in. Therefore, we recommend that you set up the GmbH together with another person, dividing the company shares in equal parts. As a result, the influencer as a GmbH shareholder has no opportunity to dominate the GmbH alone. And if no mastery by the influencer is possible, then there is also no so-called uniform will to act. From a tax point of view, this eliminates an important criterion for the assumption of a business split. Otherwise, in the event of a business split, the transfer of personality rights would take place at the level of the GmbH, because it is then assumed that there has never been a tax-relevant separation between the GmbH and the personality rights. It would then be practically the same situation as with an individual company.

With our tax design for influencers, we can eliminate this tax disadvantage right from the start. As a co-partner in the GmbH, by the way, close relatives are particularly suitable, who are trusted without restriction. With our tax design for influencers, a later sale of the intangible assets from the private assets is therefore still possible without a taxation at the level of the GmbH and thus the dissolution of the division of operations.

Sale of the intangible assets to the GmbH

After the foundation of the GmbH, you take up the activity as an influencer and gain both experience and awareness. Over the next few years, the awareness should grow steadily and then at some point you will have reached a point where you will realize that the awareness hardly increases further. At this point, social media channels and personal rights are likely to have reached their zenith and be especially valuable. If you now sell these intangible assets to the GmbH, then these annual depreciation can be made on them. Finally, one can now assume that their value is gradually wearing out. At the same time, however, the GmbH continues to earn profits with the activity of the influencer. Instead of distributing these profits to the shareholders via a profit distribution, the GmbH uses them to pay the purchase price demand of the influencer.

The tax advantage is that this is tax-free. After all, only one liability is compensated, which logically does not have to pay taxes in Germany. Under ideal circumstances, this can even lead to influencers with our design not having to pay taxes for up to ten years.

5. Tax Design for Influencers – Conclusion

Influencers have the opportunity to make a significant impact on the amount of their taxes. However, this is only the case if the tax design for influencers is established from the beginning. As soon as a sole proprietorship is available, the design possibilities are severely limited. Although you can still pursue one or the other approach, influencers can actually achieve the greatest profit with our ideal solution presented here.