OnlyFans and taxes – the overview

In recent years, OnlyFans has risen to become a popular platform on which primarily sexual content is offered. The model is advantageous for both creators and consumers: no one has to enter into personal negotiations, make a personal appearance, or enforce their prices. The platform takes care of all this automatically. Another revolutionary feature is the subscription model, which allows users to follow specific channels or profiles for a fixed monthly fee. Many prominent examples show that the creator activity at OnlyFans is worthwhile. But some annoying questions remain. For example, many creators ask themselves whether taxes have to be paid for income from OnlyFans – and if so, how. We reveal the many tax details that need to be considered when operating via OnlyFans!

Registering a business for OnlyFans

First of all, it should be noted that activity via OnlyFans is usually a commercial activity. Anyone who offers sexual content via OnlyFans is engaged in commercial activity – and must therefore register a trade. A freelance activity only exists if the content is of an artistic or educational nature. Those who are among the few exceptions who offer yoga or fitness classes in a subscription model via OnlyFans can therefore register a freelance activity instead of a trade – which is associated with numerous bureaucratic simplifications. Meanwhile, whether the creation of sexual content is possibly an artistic activity must be decided on a case-by-case basis. However, it tends to be assumed that it is a commercial activity. At the latest when the possibility offered by OnlyFans to sell merchandise is used, there is no more leeway to get a freelance activity recognized.

For the business registration the municipality is responsible. Here usually trade offices or trade departments are operated, which provide forms for business registration. Freelancers do not have to make such a registration. In both cases, the questionnaire for tax registration must also be completed and sent to the relevant tax office. This questionnaire is available via the ELSTER tax portal.

After registering your business and registering with the tax office, you will receive a tax number for your business. You should keep this well, because you will need it frequently in the future.

Tax liability and small business regulation

However, registering your business is not the end of the story. The bulk of the work is still ahead of you. First, there is the question of whether you want to take advantage of the so-called small business regulation. This is regulated in §19 of the Value Added Tax Act and offers all self-employed persons with a turnover of less than 22,000 euros per year the possibility of being exempted from the obligation to pay value added tax. This means that you do not have to (and are not allowed to) charge sales tax on your services if you take advantage of this regulation. This usually results in a double advantage: you can offer end customers lower prices than the competition and the bureaucratic effort of constant VAT declarations is eliminated. However, the regulation also has a decisive disadvantage: if you take advantage of it, you cannot reclaim sales tax paid on business expenses from the tax office. This means that if you buy a professional camera for your OnlyFans business, for example, you will have to pay the full amount, while people who do not take advantage of the regulation will get 19 percent of the price refunded by the tax office. Whether the small business regulation is worthwhile for you is therefore primarily dependent on how high your business expenses will be.

OnlyFans also has a special feature when it comes to sales tax: The company behind OnlyFans pays the tax itself. This means that you cannot collect sales tax there and later declare it in sales tax returns. Instead, OnlyFans asks you to enter the sales tax rate that applies to you when you register. If you make use of the small business regulation, this is 0 percent. Otherwise you have to declare 19 percent. Since this procedure is unusual in Germany, it is worth informing the tax office of how to proceed before filing your first VAT return. A consultation with a tax advisor may also be useful in this regard.

Business tax liability in Germany

For income via OnlyFans, you may also have to pay taxes to the municipality in which you carry out your activity. This is the case if you run a business, i.e. if you do not work as a freelancer. In this case, the so-called trade tax is due, which benefits the municipality. It is levied from an annual turnover of 24,501 euros. If you stay below this amount, no business tax is due. However, this does not exempt you from having to submit an annual business tax return. Here, too, it is worth consulting a tax advisor.

The amount of business tax you will have to pay depends on the municipality in which you operate your business. Each municipality has the option of adding an individually determined assessment rate to the basic trade tax rate. This leads to the fact that in some municipalities significantly more business tax must be paid than in others.

Income tax liability in Germany

In addition to taxes directly related to your business or freelance activity, individual taxes are also due: Your income will eventually be taxed by the tax office. This is done via the income tax return, which you must submit in any case. From January 1 to July 31 of each year, you have time to disclose your income from the previous year to the tax office. Your OnlyFans income is income from self-employment/commercial activity. You have to declare it in Annex S (for freelance activities) or Annex G (for commercial activities) of your income tax return. It is important that you only have to declare your profit, not the turnover! Otherwise the tax burden will be unjustifiably high.

There is also an exemption amount for income tax, which is 10,908 euros in 2023. If your total income is below this amount, you do not have to pay income tax. However, this does not exempt you from filing an income tax return.

Conclusion: OnlyFans and taxes

In conclusion, taxes are levied on income via OnlyFans – as they are for income via other online platforms such as Twitch. The following three types of taxes should be noted:

• Sales tax
• Business tax
• Income tax

Sales tax is only incurred if you do not use the small business regulation, business tax only if you are engaged in a commercial activity, income tax in any case. It is worth consulting a tax advisor to determine the best model for you and to comply with all formalities. A tax advisor can also take care of the bookkeeping, which is obligatory for self-employment.