Influencer ruling: fashion items are not business expenses

Social media platforms are a source of inspiration for many: fashion influencers show how to achieve the perfect look and inspire their followers every day with items of clothing and accessories, some of which are sent to them by companies or purchased by them. Now an influencer wanted to deduct her fashion items as business expenses, which she used for her posts on her blog. However, professional and private use cannot be separated, judged the tax court in Hanover. But is this case law still up to date? We wanted to find out from tax consultant Jürgen Schott. He specializes in tax issues relating to online retail and the influencer business.

A profession like any other

The influencer in question argued that she had to purchase the products in order to be able to present them as part of her work. However, the tax office rejected this argument - all items could also be used privately. In the case of ordinary "bourgeois clothing and fashion accessories", it was not possible to distinguish between private and business use. Furthermore, the court stated that the profession of influencer or blogger should not be assessed differently to other professions.  

"On the basis of the objective net principle and the principle of consistency, the case law now falls short!"

"The current case is seminal, as the influencer and social media sector is growing rapidly," emphasizes tax consultant Jürgen Schott. "In this case, the tax court is of the opinion that it does not matter how the plaintiff actually used the items. The obvious possibility of private use of civil clothing and fashion accessories alone meant that tax consideration was excluded. This is in line with the case law of the Federal Fiscal Court, so that an appeal would probably not be expedient," Schott summarizes the case.

"However, this current case raises the question of whether this case law is still up to date," Schott continues. "In my opinion, 'bourgeois clothing' is antiquated, otherwise suits would have to be deductible. However, these do not constitute bourgeois clothing. On the basis of the objective net principle and the principle of logical consistency, case law now falls short. The law, case law and the tax authorities must also follow the further development of (tax) life."

Legal proceedings with the right arguments could bring about a rethink, Schott continues. For example, the Federal Fiscal Court itself states that a pro rata deduction could be possible if at least ten percent of the expenses are (co-)incurred for business purposes (causality and so-called mixed expenses). For example, a flat-rate taxation of "private co-use" could be considered. Likewise, lump sums could be expedient for all those affected - however, the legislator would have to take action here, explains Schott.