Are you a blogger living in Germany earning an income from your blog? If yes, then you will need to know how to tax your income correctly as a blogger. Read these tax tips for bloggers in Germany.
If you have been blogging for a while, you would know how long it can take until the first $ is earned through a blog.
So if taxes on your blog income have become a relevant topic for you – a BIG congratulations to you! 😉
Whether it’s ad revenue or fees from sponsored posts, or gifts in kind from brands- your blog is now a source of income. In this post, you can read about some tax tips for bloggers in Germany and how to tax your income correctly.
Let’s start right from the beginning.
1. When is Blog Income Considered for Tax Purposes
If you have a full-time job and blogging is your second job, then your blog is considered a secondary source of income (selbstständige Nebentätigkeit). The profit from secondary income is subject to the usual income tax liability in Germany.
Depending on the type of blogging activity, it is will be either a commercial/trade or freelance.
As long as you run a blog as a private person, and it does not lead to any income, business registration is not required.
2. Register Your Business as a Blogger
In Germany, you have to register ANY activity that creates monetary profits for you- that includes blogging.
Even if you only want to cover the costs of running your blog with affiliate links or Google AdSense, you are no longer considered a hobby blogger.
As soon as the pennies start rolling in from your blog, you slowly start inching towards the tax territory. Therefore, it is best you register your blog as a business to avoid unnecessary warnings and expensive penalties from the Finanzamt.
The so-called unofficial trial period is usually 3 months. During this time you can figure out whether your blog really works out financially. If you register your business too late and have been making legit money on the side, you can expect to receive a warning or fines from the local tax authorities.
2.1 Determine Whether You’re a Trader or Freelancer
This is the tricky bit.
Depending on the profession, self-employment is either classified as a trade or a freelance activity. The freelancers include certain professions that are precisely defined in § 18 EStG.
In addition to doctors and lawyers, these include scientific, artistic and literary as well as educational activities. It is therefore important to check whether your blog falls in a freelance category.
For example, if you work as a lecturer and write about the content of your teaching activities on your blog, you can be considered a freelancer.
Bloggers in other niches must register a business. So if you are a lifestyle or an expat blogger, you will most likely fall into a ‘trader’ category.
2.2 Registering Your Blog as a Trade (Gewerbe)
You can register a trade at your local trade office (Gewerbeamt). It costs a fee of 30 to 40 euros. If you have already made money as a blogger, you have three months to register your business. By registering your business, you automatically become a member of the IHK.
After your registration, the tax office will send you a questionnaire for tax registration, in which you indicate, among other things, the expected income.
3. Tax Allowances for Bloggers in Germany
3.1 Small Business Rule (Kleinunternehmerregelung) for Bloggers
As a small business owner, you do not have to pay the VAT (sales tax). You can choose the small business regulation (Kleinunternehmerregelung) if your blog income did not exceed 22,00 euros (the limit has been changed in 2020) in the last calendar year.
If you make a turnover of more than €50,000 in a calendar year, you will be liable to pay VAT immediately from that date.
It is extremely important to follow these regulations right from the start, as this is the only way to avoid expensive additional payments at a later date.
3.2 Tax Thresholds for Blog Income
The tax-relevant threshold for income as a blogger does not differ from other types of incomes. The basic tax-free allowance in Germany is 9,168 euros in 2019. This limit has increased to 9,408 euros in 2020.
3.3 Tax Exemptions for Blog Side Hustles (selbstständige Nebentätigkeit)
As long as your primary income comes from your full-time employment, you will only have to pay tax on your blog income if your monthly profit exceeds 410 Euros. This means your blog earning will be tax-free as long as it is less than €410 per month.
4. Types of Taxes for Bloggers in Germany
4.1 Income tax
The income tax is important from the beginning. There is a tax-free amount of 9,408 euros that does not have to be taxed. If you earn more than 9,408 euros in profit within a calendar year, you must expect a tax rate between 14 and 42%.
Every self-employed person must prepare and submit an annual income tax return. The deadline for submitting the income tax return is usually 31 May of the following year.
4.2 Value-Added Tax (VAT)
Apart from income tax, VAT is the largest tax burden for most self-employed people. As a rule, VAT rates are 19% in Germany. If you have chosen the small business regulation (Kleinunternehmerregelung), you do not have to pay sales tax.
This has its advantages and disadvantages:
Disadvantage: You cannot reclaim VAT on goods and services purchased. This can mean a cost disadvantage if you earn your money with advertising and affiliate marketing. For many advertisers (your customers) it is irrelevant whether you show VAT on the invoice or not.
Advantage: As a small business owner, you save yourself the effort of the VAT advance returns (Umsatzsteuer-Voranmeldungen). Compared to some advertisers (e.g. doctors, insurance companies), it is also an advantage not to have to show VAT, as they themselves cannot deduct input tax.
Value-added tax is a very complex topic, especially where the multinational businesses are involved (as in blogging). Therefore, it is always better to consult a tax advisor before filing your taxes yourself.
4.3 Trade Tax (Gewerbesteuer)
For trade tax (Gewerbesteuer), a tax-free allowance of 24,500 euros applies to sole proprietorships and partnerships. The trade tax is due only when your profit from your blog exceeds the tax-free threshold.
4.4 Taxation of Gifts in Kind (Sachgeschenke)
First off, a gift in kind is only tax-free if its cost does not exceed €10 Euros.
Blog income often includes “monetary benefits”. As a blogger, you can quickly fall into the tax trap here.
It is not unusual for companies to send their products to bloggers for reviews. Maybe a cosmetics company wants you to write about their new cream on your beauty blog. Or a hotel offers a free overnight stay to a travel blogger.
Such gifts are not considered as ‘gifts’ in the tax law sense, as they were not given free of charge. Rather, tax law describes the transfer of objects in expectation of consideration as a “monetary advantage”, or as “acquisition against payment”.
This is because the “gift” is equivalent to the remuneration of a service – and these are therefore taxable in the same way as normal fees.
5. How to Report Your Blog Earnings as a Blogger
Any income exceeding 410 euro per month will oblige you to report your profit or loss to your local Finanzamt.
You must declare this in the statement of income and expenditure. In this statement, you must list all the income from your blogging activity and compare it with your expenses incurred in the course of your blogging activity.
This includes, among others, hosting fees or the technical equipment for running your blog. You then subtract the expenses from your income as a blogger to determine your profit.
As a blogger, you earn income from multiple sources. Over time, bookkeeping and accounting can get quite complicated. The same for the annual income, VAT and trade tax returns and/or the monthly advance VAT reporting and a 100 other tax-related things.
Obviously, there is no obligation to hire a tax consultant, but they can make life so much easier. But hiring a tax consultant in Germany can also cost a leg and an arm especially if you are a baby business.
So what are your alternatives?
6. DIY Tax Tips for Bloggers in Germany
Do it Yourself and Get help from German Taxes!
Wundertax aka germantaxes.de offers an easy to tax taxation platform for expats living in Germany. According to their website, German Taxes helps its clients who are not familiar with German taxation and German.
• The entire website is in English. You can effortlessly compile a tax declaration in compliance with German tax law without knowing any German.
• A vast knowledge base that guides users at every step – and all in English!
• Their tool transfers your tax declaration to the appropriate tax office immediately. You don’t have to go to any tax office or other ELSTER for this.
• This system is fully recognised and approved by German tax offices.
Click here to learn more about German Taxes.de and how you can save hundreds (or thousands) of Euros on your blog income.
Here are my tax tips for bloggers in Germany. Are you a blogger living in Germany earning an income from your blog? If yes, then let us know how do you tax your income correctly as an expat blogger.