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Introduction:
Everyone wants to be compensated for their work, and influencers are no exception. Whether you are about to embark on your influencer journey or seek to refine your content strategies, these are the 10 need-to-know steps of getting paid as an influencer in Germany.
Step 1: Check your activity
Before seeking payment as an influencer, you must verify if the activity you are receiving payment for requires you to register as a sole trader.
In Germany, individuals may provide services called “Hobbies”. An activity may be considered a hobby if the person is not working as an influencer regularly. If you are working as an influencer regularly, the German tax office will most likely assume that you are generating income from a business activity, as the activity is done repeatedly to generate profit. The intention to make a profit is described, by the German Federal Ministry of Finance, as the intent to generate income that is higher than the influencer’s expenses (income minus expenses = profit = income from business operations). As the thresholds for reporting income are quite low, most influencers will have to report their income to the tax authorities, pay taxes on the income, and register as sole traders.
The Bundesfinanzministerium has drafted an FAQ on exactly this topic. We recommend you read “Ich bin Influencer. Muss ich Steuern zahlen?” to learn more about your responsibilities.
Step 2: Understand German Influencer Marketing Regulations
We recommend you familiarize yourself with German regulations governing influencer marketing before starting your marketing activities on social media. It's essential to be transparent with your audience about sponsored content. In Germany, the State Institute for Media drafted a guide in May 2023, on Advertising labeling on social media.
In short, the advertising labeling shall be clear and easily visible to their audience. The audience should not have any difficulty distinguishing editorial content from advertising content. The guidelines come with a detailed “labeling matrix” dedicated to helping influencers to advertise correctly. This included guidelines on how and where to advertise in videos, audio, images, and written text. For example, in videos, discount codes should be labeled as follows: audible/readable “advertisement” in the immediate temporal/spatial proximity of the discount code.
In addition to that, the German Bundestag also published a legal framework for influencers in March 2023, defining the influencers’ obligations according to German competition law, copyright, and trademark laws.
Step 3: Verify if you need to register at the KSK
The Künstlersozialkasse (KSK), is a unique institution in Germany that is in charge of the financial and social security for freelancers, particularly in the artistic and journalistic sectors. Initiated in 1983, the KSK aims to align the social security benefits of freelancers, including influencers and creators, with those of regular employees. You may read more on this in our blog post.
The costs for insurance according to the Artists' Social Insurance Act (KSVG) depend on various factors (e.g. the respective income, the contribution rates of the various insurance branches, parental status, etc.). Here is an information sheet that provides you with some calculation examples.
Artists' social insurance is compulsory. The time from which this compulsory insurance begins depends on the date on which self-employment begins and the date of registration with the Artists' Social Insurance Fund (KSK). If you are already self-employed at the time of reporting, the insurance obligation generally begins at the earliest on the day of reporting to the KSK. If you have already requested the registration documents before starting work, the day on which you start self-employment is the earliest possible start of insurance.
Step 4: Find Collaborations and Partnerships
Look for brands and businesses that align with your content and values. It's important to note that there are topics that are usually more strongly regulated within influencer marketing. This is why it may be good to be aware of which products and brands you would like to endorse on your social media channels. You may need to be extra careful if:
- Your followers are children and minors;
- You would like to market e.g. alcohol, adult content, tobacco, cosmetic procedures, and gambling products.
Step 5: Negotiate Compensation Structure
When a brand expresses interest, negotiate collaboration terms. Be clear about deliverables, timelines, and compensation. Consider factors such as your audience size, engagement rates, and the effort required for the collaboration. Also, discuss the preferred payment method with the brand. In Germany, bank transfers (Überweisung) are a common method. Confirm whether payments will be made in Euros or another currency, and consider potential currency conversion fees. Also, it may be a good idea to negotiate whether you will receive free products and/or will receive monetary compensation. You may read more on this topic on our blog.
Step 6: Sign a Contract
Always formalize your agreements with a written contract. Clearly define the scope of work, details related to intellectual property, image rights, deliverables, and any other relevant details. This step helps protect both parties and ensures a clear understanding of expectations. If the contract sent out by the brand does not fit your expectations, don’t forget that you can negotiate the terms in the agreement!
You may find more information on influencer partnership agreements in our E-book “Unlocking the Power of Influencer Partnerships” and our blog.
Step 7: Onboarding
Before completing the agreed-upon work, you may be required to onboard on the brand's platform or a third-party platform such as Gigapay. The reason is that the brand needs to request your status (individual or company) along with the information necessary for tax reporting and identification purposes. Most companies are required to report the compensation paid to the tax authorities.
This is why information such as e.g. full name, address, TIN, country of work, nationality(ies), VAT number (if relevant), date of birth, and your bank account number may be requested before the compensation can be paid. If you are a sole trader, you may also issue invoices addressed to the brand you collaborated with or a third party they are partnering with.
Step 8: Comply with Tax Regulations
To understand the tax obligations related to influencer income in Germany, it's advisable to consult with a tax professional to ensure compliance with German tax laws and to take advantage of any available deductions. We strongly recommend you read “Ich bin Influencer. Muss ich Steuern zahlen?” to understand your responsibilities better.
In the case you are required to register as a sole trader “Einzelunternehmen”, you may find additional information on these links:
By using Gigapay, you are considered an independent self-employed person who is responsible for paying your taxes, subscribing to your insurance(s), and ensuring you acknowledge and comply with applicable laws and regulations. You may read more about this in our terms and conditions and our FAQ.
Step 9: Check your responsibilities when receiving free products or services from brands
As a general rule, gifts are considered to be a form of compensation, and influencers should therefore always report the value of gifts, free travel, and vouchers to their tax authorities. The taxable value is usually based on the commercial value of the gift, travel, or voucher.
You may read more about this topic in a German context in “Muss ich Gratisprodukte oder Geschenke versteuern?”, in the FAQ drafted by the Bundesfinanzministeriumpage.
Step 10: Track and Report Income
Keep records of your influencer income for tax purposes. In Germany, influencers may be required to report their earnings, so maintain accurate records of all transactions, invoices, and expenses related to your influencer activities. You may find more information in “Ich bin Influencer. Muss ich Steuern zahlen?”.
To help with the reporting, you may request a payout summary by contacting Gigapay support.
Conclusion:
Embarking on your journey as an influencer in Germany can be both thrilling and challenging. By following these 10 essential steps, you'll be well-equipped to navigate the complexities of the industry with confidence. Remember, being informed about your responsibilities, especially regarding tax and legal regulations, is key to building a sustainable and successful career. Stay diligent in tracking your income, reporting earnings, and understanding the nuances of working with brands. With the right approach and mindset, you can transform your passion into a rewarding profession.
