From likes to tax files: Why influencers are increasingly coming under scrutiny from tax investigators

The world of influencers is booming. With millions of followers and lucrative advertising deals, influencers have become a significant economic force. But with growing success, tax obligations and potential misconduct are also coming under the scrutiny of the authorities. Tax investigators in North Rhine-Westphalia (NRW) are currently making headlines as initial investigations into tax evasion by influencers have been launched. But what is behind this and what tax pitfalls should influencers be aware of?

With millions of followers and lucrative Why are influencers being targeted by tax investigators?

The activities of influencers are complex from a tax perspective. There is often a lack of tax awareness, and income is not declared in full or at all due to ignorance or a lack of advice. The following applies: monetary benefits – such as free products, travel or hotel stays – are also taxable. The digital nature of the business models, coupled with international connections and a lack of accounting structure, makes it difficult – but not impossible – for the tax authorities to uncover tax-relevant transactions.

Since 1 January 2023, digital platforms such as Instagram, YouTube and Etsy have been required to report the total turnover of their users, their addresses and tax ID numbers to the Federal Central Tax Office (BZSt) once a year. The first data was received by the authorities in February 2025. This reporting obligation under the EU DAC7 Directive increases transparency and facilitates verification. DAC8 will also come into force in the future and will, among other things, impose obligations on crypto exchanges.

Ongoing investigations by the North Rhine-Westphalia tax investigation department show that influencers’ activities are not a legal grey area. The authorities now also use publicly available information from social networks and work digitally and in a networked manner. In addition, tax evasion generally only becomes statute-barred after ten years – in particularly serious cases, sometimes even later. This gives the tax authorities sufficient time to take action retroactively. At the same time, they are constantly developing new digital tools to detect incorrect or omitted information provided today more effectively in the future.

Typical tax pitfalls for influencers

1. Undeclared income

Influencers earn income in a variety of ways – from traditional advertising posts to shares in product sales. There is often uncertainty about what exactly is taxable – but there is a clear principle when it comes to tax: all income, regardless of its form, must be fully disclosed in your tax return.

Typical sources of income include:

• Monetised collaborations with companies, e.g. payment for stories, articles or videos
• Affiliate income, i.e. commissions on sales via personalised links
• Product test kits and gifts, e.g. clothing, technology, hotel stays, flights or events
• Own product lines, such as merchandise, e-books or apps
• Platform remuneration, e.g. through YouTube or TikTok partner programmes
• Donations or support payments, e.g. via Patreon, Twitch or other platforms
• Sale of advertising in your own podcast, newsletter or blog

Important: Even products, services or invitations received free of charge must be treated as income for tax purposes if they are related to your influencer activity. The decisive factor here is the market value (fair market value) of the benefit in kind received – not the purchase value for the company or a symbolic amount.

Even if no money changes hands, taxation is necessary as soon as the service is provided within the scope of business activities – regardless of whether the product is retained or returned.

Anyone who believes that free products are harder for the tax authorities to detect than money is mistaken: companies deduct such product gifts as operating expenses. If the tax authorities identify them, they specifically check whether influencers have declared the corresponding income.

2. Missing or incomplete accounting records

Like all entrepreneurs, influencers must also keep track of their income and expenses. Bookkeeping is not always mandatory (rule of thumb: turnover below £800,000 and profit below £80,000). However, poor documentation makes it difficult for the tax office and risks problems during an audit.

Tips for practice:

• Every income – whether money or benefits in kind – must be recorded and documented promptly (e.g. through invoices, cooperation agreements, screenshots, emails).
• In the case of benefits in kind, the fair market value should be researched and documented (e.g. through RRP, comparison prices on the internet).
• Discounts and vouchers paid in lieu of money must also be valued and taxed if necessary.

3. Special VAT considerations

Anyone who works across borders as an influencer or cooperates with foreign companies should be fully aware of the rules governing VAT.

a) Place of performance for other services (Section 3a UStG)

Customer type	Customer’s place of business	Place of performance	VAT in Germany	Reverse charge?
Company (B2B)	Germany	Germany	Yes	No
Company (B2B)	Other EU countries	Foreign country	No	Yes (recipient owes VAT)
Company (B2B)	Third country	Foreign country	No	No (local regulations may apply)
Private individual (B2C)	Germany	Germany	Yes	No
Private individual (B2C)	Other EU countries	Germany (up to 10,000 €)	Yes	No
Private individual (B2C)	Other EU countries	Customer’s country (>10.000 €)	No	No – report via OSS

In this context, reverse charge means that the recipient of the service is liable for VAT. If applicable, you must include a corresponding note on your invoices.

Basic rule:

• B2B → Place of performance = customer’s registered office
• B2C → Place of performance = influencer’s registered office (exception: OSS rule)

Attention B2C: If you are staying abroad for a longer period of time or have a permanent location there (e.g. office, studio, residence), the place of performance may shift abroad.

b) Special case: OSS procedure & €10,000 limit (Section 18j UStG)

For digital services provided to private individuals in the EU (e.g. coaching, downloads, e-learning):

EU-wide annual turnover < €10,000 net:

→ Place of performance remains Germany

→ German VAT will be charged

EU-wide annual turnover > €10,000 net:

→ Place of performance shifts to the customer’s country

→ Registration of foreign VAT via the OSS portal in Germany

c) Barter deals (exchange-like transactions)

Influencers often receive tangible assets (e.g. products, hotel stays) in exchange for advertising services. Even if no money changes hands, this constitutes taxable turnover.

Important:

• Service ‘advertising’ versus ‘goods’ = barter-like turnover
• Both parties must pay value added tax
• Assessment basis = market value of the service received (Section 10 (2) UStG)
• As with any other service, the place of performance is determined according to B2B/B2C principles
• An invoice with VAT is also required for services in kind

Example:

In exchange for a post, you will receive an iPhone worth €1,000.

→ Subject to VAT: £190 (19%), even if no money changes hands

→ Income tax: €1,000 operating income

Three questions you always need to clarify

• Who is my customer? (Company or private individual?)
• Where is the customer located? (Domestic, EU, third country?)
• How is the service provided? (Digitally, physically, via a platform?)

Errors in this area can quickly lead to substantial additional payments and criminal tax proceedings.

4. Hobby vs. intention to make a profit

In the case of smaller accounts, the question often arises as to whether the activity is carried out with the intention of making a profit. If it is a hobby, losses cannot be claimed for tax purposes – but this does not automatically exempt you from tax liability.

Evidence issues: stories, deleted posts and transient content

A particularly sensitive aspect in tax and criminal tax law practice is the provability of services, especially in the case of so-called perishable content:

• Instagram stories that disappear automatically after 24 hours
• Posts that are actively deleted after the end of an advertising collaboration
• Links and discount codes that are valid for a limited time

From a tax perspective, it is crucial that influencers also provide verifiable documentation of their services. This is because:

• The tax authorities cannot access this content retrospectively if it has not been archived.
• The burden of proof for the actual scope of the services provided or agreed upon lies with the taxpayer – not with the tax office.
• Deleted posts may, under certain circumstances, give rise to suspicion of concealment of taxable transactions, especially if payments or monetary benefits are involved.

It is therefore strongly recommended that story archives, screenshots, contract documents, invoices and communication histories with cooperation partners be stored in a complete and traceable manner. This is the only way to prove, in the event of an audit or investigation, which services were provided – and whether these were offset by tax-relevant remuneration.

‘Relocating your place of residence’ abroad – legal or tax evasion?

From a tax perspective, it is not sufficient to register an address abroad or maintain a residence there. The decisive factor is where the actual centre of life is located – i.e. the place where someone lives, works and has their social and economic interests. Anyone who continues to:

• Receives orders from German companies,
• Targets its content at the German-speaking market,
• Has private or family ties in Germany, or
• Visits Germany regularly.

runs the risk of remaining liable for unlimited taxation in Germany despite registering abroad.

The result: tax reversal of the ‘supposed emigration’ – and, in the worst case, a preliminary investigation for tax evasion.

Tax trap 1: Exit taxation (Section 6 AStG)(§ 6 AStG)

An often underestimated issue is the so-called exit tax – particularly relevant for influencers who hold shares in corporations (e.g. limited liability companies or UGs) or have founded such companies, for example for product marketing, advertising or investments.

What does exit tax mean?

Any natural person who holds at least 1% of the shares in a corporation and moves their place of residence abroad is treated as if they had sold their shares, even if no sale actually takes place.

The result: A fictitious capital gain is taxed – at the time of departure. The tax burden can be considerable, especially if the value of the company has increased.

Is it possible to avoid or defer the tax?

A deferral is generally only possible against security, in which case the tax can be paid in seven equal annual instalments (Section 6 (4) AStG).

For young entrepreneurs or influencers who market merchandise, apps or branded products through their limited liability company, exit taxation can lead to an unexpected tax burden that threatens their livelihood.

Tax trap 2: Unbundling – taxation of business assets upon relocation

Another tax-related issue when relocating abroad concerns the so-called ‘Entstrickung’ (de-linking) under Section 4 (1) sentence 3 of the German Income Tax Act (EStG). This provision applies regardless of any shareholdings in corporations and affects all business assets when these are released from German taxation – typically through a change of residence abroad.

What does disentanglement mean?

If an influencer moves abroad and, for example, runs a sole proprietorship, a commercial activity or is the owner of intangible rights (such as trademarks or reach rights), this may mean that these assets are no longer subject to German taxation.

In this case, the legislator assumes a fictitious transfer of these assets to private assets (Section 4 (1) sentence 3 EStG) and then triggers immediate taxation of the hidden reserves – regardless of whether a sale takes place.

What can be unravelled?

• Digital brand or name rights
• Domains and social media accounts (if used for business purposes)
• Cooperation agreements
• Content databases
• Influencer-specific intangible assets (e.g. reach with monetisation)

What are the consequences of tax evasion?

Anyone who conceals income that is relevant for tax purposes risks not only having to pay additional tax, but also facing criminal proceedings. Tax evasion (Section 370 of the German Fiscal Code (AO)) can be punished with fines or, in serious cases, with imprisonment of up to ten years.

A special feature here is the possibility of a non-punishable voluntary disclosure (Section 371 AO): anyone who comes clean in good time and in full can, under certain conditions, avoid criminal conviction.

Conclusion: Tax compliance is a must – even in the influencer business

The days when digital business models such as influencer marketing were ignored by the tax authorities are finally over. Current investigations in North Rhine-Westphalia clearly show that even seemingly ephemeral content such as Instagram stories or sponsored posts are being targeted by tax investigators – and can have serious consequences if documentation is missing or declarations are incomplete.

Whether it concerns undeclared income, cross-border advertising services, exit taxation in the event of a change of residence or the often overlooked separation of business assets, tax law places high demands on transparency and traceability.

Anyone operating internationally must be aware that simply relocating their place of residence is not sufficient to avoid German tax liability. Even deleting contributions does not protect you from the obligation to provide evidence to the tax office.