The App OnlyFans loses EU court tax battle

The EU Advocate General, in line with what happened with Airbnb, maintains that the digital platform Onlyfans is responsible for collecting taxes from its users, specifically VAT

In this way, the European Justice is inclined for the platform to pay VAT on the total paid by subscribers, not only on their service fee. More than two million creators publish content on the platform. The company enters through the subscriptions of 220 million users to see this content.

The matter stems from the lawsuit between Fenix International Limited, the parent company that operates Onlyfans, with Her Majesty’s Revenue & Customs, the UK tax authority.

The company charges Onlyfans creators 20% of the sums paid by their users as a deduction, and accounts for its VAT based on that 20% deduction, according to the instruction of the Court of Justice of the European Union.

“European Union tax rules require platforms that act as financial intermediaries to pay VAT on the full amount,” says European Union Advocate General Athanasios Rantos in his conclusions. In this way, the instructor bets that companies like Onlyfans must pay VAT on the total income they register.

“The directive does not contain restrictions as to its scope or extension”, indicate the conclusions. However, Onlyfans understands that you only have to pay VAT on your service fee.

This matter was already studied in the Airbnb case by another Advocate General of the European Union. Maciej Szpunar, endorses that European tax authorities force digital platforms to collect and communicate customer data to collect their fees from technology companies.

Specifically, the instructor considers that “the obligations to collect and communicate information to the tax authorities, as well as the obligation to withhold the tax, is in accordance with European regulations.”

The General Advocate considers that the Treasury forces digital platforms to withhold the tax in accordance with European Law. “It is perfectly coherent to impose the obligation to withhold tax on intermediaries involved in the payment of income, since the activity of a significant number of individuals not subject to the obligations incumbent on professionals is, by definition, difficult. to control fiscally,” he says.

The European Justice is inclined for the platform to pay VAT on the total paid by subscribers