The fiscal status of influencers is explained in a parliamentary question (PV No. 146 B. Piedboeuf, dated 14.01.2020).
Influencers are increasingly being used by clothing stores to promote clothing brands via social media. In exchange for the promotional services they provide, influencers are allowed to keep the clothes they advertise.
As this is still a fairly recent phenomenon, a parliamentary question was raised about the social and fiscal status of influencers. The Minister of Finance provided an explanation of the fiscal statute.
The Minister replied that the garments and other articles, products, merchandise, etc. received by influencers within the context of the promotional services they provide to the various businesses, constitute benefits in kind acquired when exercising a professional activity. These advantages are to be regarded by the influencer as income taxable as such on their personal income tax return.
Companies calling upon influencers must draw up a 281.50 form amounting to the cost price or manufacturing price of the allocated goods or products, less any financial contribution made by the beneficiary. This had already been confirmed last year in a parliamentary question (PV 2584 submitted by Mrs Pas dated 20.03.2019).
Influencers provide services to clothing retailers and other businesses, i.e. advertising services. As a result, they are liable for VAT and must, in principle, comply with any relevant formalities such as registering for VAT, charging VAT for their services, issuing invoices, submitting periodic VAT returns, etc.
Influencers with an annual turnover of less than 25,000 euro, can use an alternative VAT regime whereby
- they do not have to register for VAT purposes,
- they do not have to issue invoices, and
- they do not have to submit periodic VAT returns.
In order to determine whether the turnover has reached this limit, the amount stated on sheet(s) 281.50, i.e. the cost price or manufacturing price of the clothing, must be taken into account.
Of course, this also means that influencers are not entitled to deduct VAT. If they decide to use this alternative regime, their client (the clothing store - company) must submit invoices for the services of the influencer and pay the VAT due on the services of the influencer. In order to benefit from this alternative regime, prior individual authorisation must be requested from central administration services (the Procedure and Obligations Service) by the company that uses the services of the influencers. The fact that it is not the influencer, but their client, who has to apply for this permission from the VAT administration is unusual to say the least. Moreover, the question arises as to whether and how this alternative regime can be applied when an influencer advertises on behalf of several clients. Does each client have to apply for approval individually? How can clients be certain that the annual turnover of the influencer does not exceed 25,000 euro?
In view of the fact that this specific alternative VAT regime for influencers is particularly strict and that there are still several questions about its scope, influencers can also opt for the certainty of the existing rules pertaining to exempt small businesses, providing their turnover does not exceed 25,000 euro per annum.
The obligations associated with the small business scheme are slightly more specific, as it requires registration for VAT purposes, the submission of an annual customer list and invoices for the influencers’ services must be issued by the influencers themselves, albeit without charging VAT and marked 'small business exemption scheme'.
The clothing and other products influencers receive from companies are regarded for tax purposes as taxable income for the provision of advertising services. For VAT purposes, influencers are also regarded as liable for tax, but if their income does not exceed 25,000 euro excluding VAT annually, they can benefit from a simplified regime in which their client complies with all the necessary obligations.
With this special VAT status for influencers, the Minister of Finance has added an additional alternative regime to the already existing alternative regimes (including the regulation for doctors and hospitals carrying out clinical trials and the special regulation for lawyers' employees). Moreover, all these alternative regimes have their own specific conditions and obligations.
If you would like further information about the fiscal obligations of influencers, please do not hesitate to contact us.