Brussels (EFE).- The Court of Justice of the European Union (CJEU) confirmed this Tuesday that the owner of Only Fans -an online platform that connects creators with “fans” who pay for their content- can be considered a service provider for VAT purposes.
For this reason, you must pay this tax for the entire amount charged to your followers and not just for the fee you charge creators on their income.
Specifically, the European court considered that the Council of the EU did not exceed its functions with the regulation that serves as the basis for determining that the company Fenix International, manager of Only Fans, is the service provider, contrary to what was alleged. by the platform in its appeal to the UK courts.
Fenix International provides, in addition to the Only Fans social networking platform, the device that allows creators to charge users and distribute the payments made by them.
Fenix receives 20% of the amount of all payments made in favor of each creator, to which it issues an invoice applying a VAT rate of 20%.
The United Kingdom Tax Administration claimed VAT from Fenix for the 2017-2020 period, understanding that Fenix was acting on its own behalf and therefore had to pay VAT on the total amount received from a follower and not just on 20% of said amount that it received as remuneration.
The company then appealed to the British courts, questioning the validity of the Council regulation -whose function is to specify the application of the European Directive on VAT- and the British court requested an opinion from the CJEU, which has been able to rule on the matter since it was submitted before Brexit was formalized.
EU regulations
In the ruling, the Luxembourg-based court argues that, according to Union regulations, when the VAT taxpayer (the one who must settle the tax before the Administration) mediates a provision of services electronically, it will be presumed that he is acting in their own name, but on behalf of the provider of said services.
And that, therefore, it is the service provider if it authorizes the charge to the client or the provision of those same services, or if it establishes the general terms and conditions of the provision in question.
In this sense, the CJEU deepens, when a taxpayer who mediates the provision of the service electronically can authorize the provision of the service, charge the client or set the general terms of the provision, it is understood that he has the possibility of unilaterally define essential elements of the benefit, such as the moment in which it takes place, the payable consideration or the general rules by which it is governed.
Therefore, taking into account the “underlying economic and commercial reality”, it considers that in this case the taxpayer should be considered to be the provider of the services for VAT purposes.
It is now up to the UK courts to rule on the case taking into account the European ruling.