With affiliate marketing, you rely on the simplest business model on the Internet – and it’s also successful. It is also important to keep an eye on the taxes that are incurred as a result of such additional income. In the following article we explain which taxes you have to pay as an affiliate and how you can calculate them. Curious? Then start right away with our free webinar on affiliate marketing and build up another source of income!
Why are taxes due for affiliate marketing?
As already explained, with affiliate marketing you recommend and mediate on a commission basis and this is nothing more than running a business. Your income from commercial activities is therefore taxable in accordance with Section 15 of the Income Tax Act.
An independent, sustainable activity that is undertaken with the intention of making a profit and presents itself as participation in general economic transactions is a commercial enterprise if the activity is neither carried out as an exercise in agriculture and forestry nor as an exercise of a freelance profession nor as another independent work can be seen.
What taxes do I have to pay for affiliate marketing?
There are basically three areas that you should be aware of when it comes to affiliate marketing and taxes:
- Income tax
- Value-added tax
- Possibly trade tax
INCOME TAX ON AFFILIATE MARKETING
You have to tax your affiliate income as commercial income. It should be noted that the income can be discolored. If you have income from self-employment – for example as a musician – this is also considered as such for the time being. However, if your affiliate marketing business generates more than 3 percent of your earnings, all of your earnings are considered commercial. The forms you need for affiliate marketing taxes are Exhibits EÜR and G in the tax return.
SALES TAX: POSSIBLE EXEMPTION AS A SMALL BUSINESS OWNER
As a trader, you are subject to sales tax and must pay it regularly. How often this is the case is determined by the tax office with regard to the amount of your sales. For income outside of Germany and within the EU – such as foreign partner programs – you must also submit a summary report (ZM) to the Federal Central Tax Office. The sales tax for affiliate marketing is as follows for affiliate partners in Germany:
- Net commission: 100 dollars
- 19 percent sales tax: 19 dollars
- Gross commission: 119 dollars
As an affiliate, you have to register and pay the sales tax amount of 19 percent – in the example 19 dollars – to the tax office.
If you cooperate with partners who are based abroad within the EU – for example Amazon in Luxembourg – it is not you, but your partner who owes the VAT. In the advance sales tax return you can claim the sales tax as input tax. In the example it looks like this:
- Net commission paid: 100 dollars
- 19 percent sales tax to the tax office: 19 dollars
- The affiliate’s input tax claim: -19 dollars
- Net commission result: 100 dollars
If you have little income and no expenses, you can make use of the small business regulation. In this form, you are exempt from paying sales tax and consequently save yourself these additional expenses. In order to take advantage of the small business regulation and thus save affiliate marketing taxes, your annual turnover must not exceed EUR 22,000 in the past year and a maximum of EUR 50,000 in the current year.
TRADE TAX: OFTEN NOT NECESSARY AS AN AFFILIATE
There is also potential for trade tax. However, this only applies if your annual profit is over 24,500 dollars. In most cases, however, you can avoid these taxes as an affiliate.
Do I need a tax advisor for my affiliate marketing?
If you want to build up a small extra income online with affiliate programs, you can also declare the affiliate marketing taxes yourself. You note the income in the appropriate appendices, you can pay the sales tax depending on the location of your affiliate partner in the sales tax advance return, so that nothing changes in your net commission.
FAQ About Affiliate Marketing
What is affiliate marketing?
Affiliate marketing is marketing through referrals and partnerships. As an affiliate, you recommend a product online. Through the link to the product that you spread on your website or your social media channels, your cooperation partner can see that the customers were won by you and receive a corresponding commission.
Why do I have to pay taxes on affiliate marketing?
Brokering on a commission basis is nothing more than running a business. Your income from commercial activities is taxable in accordance with Section 15 of the Income Tax Act.
What taxes are due for affiliate marketing?
There are basically three areas that you should be aware of when it comes to affiliate marketing and taxes: income tax, sales tax and, if applicable, trade tax.