emails and possible closure for OnlyFans due to unpaid taxes

[NatalieK]

Last weekend, many fans received an email from OF without creators knowledge, I found this information from one of my fans informing me of the email. It was informing the fan there was going to be an increase on monthly subscriptions to cover the taxes now to be paid.

I gave my fan a discount, however, now i´ve come across this article stating OF haven´t paid taxes for a few years and the Inland Revenue tax bill could be enough to see closure of the company.

https://news.sky.com/story/onlyfans-...taxes-12022345

has this effected your sales in the past week and have you more information regarding the OF situation?

[fuzebox]

Where do you see it could be enough to see closure of the company?

The company said: "Our UK and EU customer base is an extremely important part of OnlyFans, however any potential tax obligation arising from the switch of VAT basis would not have an impact on the continued operations of the business."

[Adraco]

Don’t worry, gary was never that good at reading anyway, let alone being able to grasp or understand what was actually read.

[faxxaff]

A lot of other providers are facing the same issue, but aren't even aware of it, yet.

[Markul]

OF is not shutting down lol. Besides. It's mainly a UK thing.

[BigFurry]

The main issue is, as I understand:

An example UK/EU customer paid 100 EUR.
- According to OnlyFans, they pay 80 EUR to the content creator, and keep 20 EUR for themselves.
- VAT applies to the whole price. That means, on the 100 EUR sale, around 20 EUR VAT should have been paid as UK & European tax. (Around 20 EUR, since different European countries have different VAT rates.)

Their real income was 20 EUR to begin with, and they had to pay hosting, programmers, salaries etc from that. Let's say their profit was 15 EUR.



"Sky News understands HMRC is currently reviewing whether the company should have been collecting VAT since its inception."

Now imagine that suddenly they have to pay years of missing VAT taxes retroactively. Let's say 10 EUR out of that 15 EUR.
(Yes, a lot of the transactions are non EU, but on the other hand there's a possible penalty.)

Do they have almost all their profits for the past years saved up as cash on their bank account? Not likely.

Also it's sure as hell they aren't going to get money back from the models saying "Sorry girls, some of the money we've sent you should have been paid as VAT, please wire it back."

But OnlyFans definitely won't close, worst case scenario they'll sell a part of the company for a money injection (or even the whole company).
The tax authority might even allow them to pay missing taxes in yearly installments. (I don't know if that's a thing in the UK.)

It's a lucrative platform, and it will be also lucrative if they pay VAT properly. (Add VAT to the prices and paying it as tax straight away - as opposed to paying it after the fact from their "profits".)

[nikki99]

goverments shud shut down all porn companies outside GFYers

[Sly]

This will have an impact on more industries as time goes on. I believe it was Host Gator that got nailed for millions several years ago. Texas charges sales tax on web hosting for some bizarre reason, but only if the provider and client are both in Texas.

[Tasty1]

Always problems with VAT. What happens if a camgirl is outside of the EU, so the work is done outside the EU. Or do they work inside the EU, as private person or as company. Where is the customer from? If you sell to private customers you pay always the VAT in your country i think. Dutch companies also went to court for years about that when they had to pay millions.

The producers/camgirls have to pay VAT themselves in the country they work from in most cases. In the example above OF pays 20% VAT in the UK on the 20 euro they make.

But all depends, if they mention on the site / bill they collect 20% VAT, than they must pay that 20% VAT on the whole amount.

[BigFurry]

Always problems with VAT. What happens if a camgirl is outside of the EU, so the work is done outside the EU. Or do they work inside the EU, as private person or as company. Where is the customer from? If you sell to private customers you pay always the VAT in your country i think. Dutch companies also went to court for years about that when they had to pay millions.

The producers/camgirls have to pay VAT themselves in the country they work from in most cases. In the example above OF pays 20% VAT in the UK on the 20 euro they make.

But all depends, if they mention on the site / bill they collect 20% VAT, than they must pay that 20% VAT on the whole amount.

As far as I know, this is a digital service.
- On such services, it's the location of the customer that matters for EU VAT %
- It doesn't matter where the seller is. In theory an US or Indian service provider also has to register for VAT in at least one EU country, collect VAT from all EU customers. (Different % depending on the customer's EU country.)
The non-EU service provider will register & pay VAT in a single EU country and provide all the data there, with the VAT amount breakdown by the customers' country (for the EU customers). At the end of the year EU countries distribute these taxes between themselves based on the data.
https://europa.eu/youreurope/busines...e/index_en.htm

It's a different matter that EU can't really enforce this rule on an Indian company. But unfortunately for OnlyFans, they are registered in an EU country.
That said many big U.S. companies do collect EU VAT now, for example hosting companies, domain registrars, etc.



Now whether the platform (OnlyFans) is the service provider, or if it's a split thing between the company & the model, and each party is liable for reporting VAT for their own share, that's a whole lot more interesting.

In theory the models could be VAT exempt entrepreneurs/companies in their country, then they don't have to charge VAT for their part. But unless OnlyFans was adding this information/split to their receipts from the beginning, and informing the girls that they are responsible for reporting and paying VAT on all earnings and giving them all the data so that they're even ABLE to do that (earnings breakdown by country every month), I doubt they'll be able to convince the tax authorities that this has been their setup all along.