A rough definition of an influencer would be that an influencer is a person who influences other people and thus can act on their views and perceptions of various things. Influencers have the power to influence the decisions of customers, or people who follow them. They have an impact on their followers and therefore more and more brands and companies approach them to be more visible to as many potential customers as possible. Some influencers have contracts with companies where their main goal is to sell a product or service, and some sponsor only products and services that they use and trust. No matter what type of influencer they are, they all have their tax liabilities.
TAX LIABILITY FOR SERVICES PROVIDED
Many influencers have contracts with companies whose products and services they advertise. They unobtrusively do advertising, that is, they publish situations from everyday life on social networks, through a story, a description of an event, and the like. For example, he can tell this story through an event he attended and along the way advertise a product for a company with which he has a contract. But not every post is related to advertising, but its status should attract followers and make them believe in it, for example by sharing some life views. If an influencer talks about a life event, while consuming a highlighted product of a company, he becomes a taxpayer for advertising revenue received by him on that basis.
Since no clearly defined law applies exclusively to influencers, he may choose to determine the tax liability for advertising services provided as income from self-employment or as other income. If he has chosen to determine income according to the rules of income from self-employment, he is obliged to register in the register of taxpayers, record all receipts received in cash and kind, keep tax books, and also record expenditures directly related to income.
If the influencer is not insured on another basis, he is obliged to insure himself on pension and health insurance as a free profession and pay contributions on a prescribed monthly basis. He is also obliged to file an annual income tax return, and after the first annual return, he is obliged to pay monthly income tax advances calculated based on income earned in the previous tax year.
OBLIGATION OF THE PAYER
If an influencer wishes to opt for a flat-rate income tax payment, he must first register an advertising business with the relevant economic office, with the additional condition that he is not liable for value-added tax. If the influencer does not keep books of income from advertising services, his receipts are taxed as other income.
The domestic payer, on the other hand, is obliged to withhold income tax at the rate of 20%, pension insurance contributions at the rate of 10%, health insurance contribution at the rate of 7.5%, and surtax (if any).
If the influencer is paid a receipt in the form of services received (accommodation, food, products …) it is a receipt in kind, which is also taxed as other income so that the market price of the receipt is valid at the place of supply together with VAT om converted into gross other income. We can also look at this as a set-off where the advertising service is replaced by the service of accommodation, food, products, etc.
IF HEADQUARTERS OF INFLUENCER IS ABROAD
Natural persons can similarly earn money by posting certain content on social networks if their headquarters are abroad. It could be said that the earnings, in this case, depending on the number of views of that content. Based on the number of views, the ISP determines the fee for the published content. For example, for up to 10 thousand views, there is no fee, from 10 thousand to 50 thousand views the fee is a certain amount, from 50 thousand to 100 thousand a certain amount, and so on. The ISP then earns money from advertisements that it places in parallel with the published content, and leaves the part of the earnings to the influencer whose content has attracted visitors.
A natural person who is a Croatian taxpayer, and receives income from a foreign payer who has not withheld income tax, is obliged to pay tax at the rate of 20 %, plus surtax and pension insurance contribution at the rate of 10 %.
If the published content is subject to the author’s part, which should be defined by a written contract, it is reduced by 30 % of flat-rate recognized expenses when calculating the base fee. Pension contributions and income tax should be paid within 30 days of receipt and the JOPPD form submitted to the Tax Administration within the same period. Also, a natural person (in this case an influencer) is obliged to register in the register of taxpayers as an acquirer of foreign income within 8 days of the first receipt.
Tax liabilities can be confusing, especially if you are entering entrepreneurship for the first time. Therefore, contact Confida’s team of experts with confidence, and you dedicate yourself to your primary business.
