Social media influencers living in Ireland could owe tax on gifts received throughout the year from brands in exchange for promotion online.
This warning comes as the online deadline for filing a tax return is just days away - Wednesday, November 16.
Tax experts at Taxback.com are warning social media influencers to check they have “declared everything” after noting the most confusion about tax obligations among this cohort.
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They found that there is often “a dearth of knowledge about tax rules and responsibilities amongst online influencers,” according to a recent survey they carried out.
A particular area of confusion surrounds the “gifts” received from brands and businesses by Social Media influencers in return for promotion.
The tax refund specialists report that approximately 70pc of the people they speak to simply do not know that clothes, cosmetics, food, etc they receive can actually become a taxable benefit - once the total value of the gifts received in any one year from an individual brand goes over €3,000.
Although this figure seems high when it comes to clothes, cosmetics, jewellery, and travel it can be reached very quickly.
On a quick poll taken at a recent Taxback.com webinar - for approximately 100 self-assessed taxpayers - 56pc of attendees said the approaching tax file deadline made them confused, while a further 27pc said they felt stressed as a result.
The poll also found that 69pc had not claimed business expenses before and were unsure what to claim, while an additional 25pc said they don’t believe they’re claiming everything they're entitled to.
Marian Ryan, Consumer Tax Manager at Taxback.com explained: “It doesn’t matter if you’re in full-time employment and simply making some extra money in your spare time, or if your full-time job is as an influencer, you need to declare your income.
“And it’s not just cash that the Revenue looks at – if a person receives more than €3,000 worth of gifts from an individual brand in a tax year, then there will be tax owing on the value of those gifts above €3000.
“Failure to declare those gifts – and pay the tax due on them – could see many bloggers hit with significant tax penalties and interest.”
Taxback.com also warned that in Ireland, if you earn over €5000, you need to set yourself up as a sole trader - this registers you for income tax with Revenue.
If your sales are over a certain threshold - €75,000 in 2017 - then you’ll need to register for VAT on this form too.
In addition to completing a TR1 form, you must file a self-assessed tax return each year stating the income earned.
Ms. Ryan advised those involved in the industry to “Declare everything! Any payment a blogger receives from operating a blog counts as income and is thus taxable. This includes payments for sponsored content, banner ads on your blog, and income from any seminars or workshops you may hold.”
The Competition and Consumer Protection Commission monitors blogger and influencer channels to check for instances of product promotion in return for payment through products or ‘non-monetary’ benefits.
Continuing to promote products or services without declaring the nature of the promotion or paying tax on the income from these promotions “could be viewed as tantamount to tax evasion in some cases,” Taxback.com warns.
The Advertising Standards Authority of Ireland also keeps a watchful eye on developments. Revenue has also stated that “confronting non-compliance in respect of online trading, blogging, and digital influencing is a standard element of our compliance framework.”
According to the Advertising Standards Authority of Ireland, sponsored online content "must clearly state that the material is a marketing communication.”
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