Influencer Payment Regulations in

Finland

Playbook

The most common payment method used to pay influencers in Finland is PayPal and bank transfers along with MobilePay, and Pivo.

Finnish private traders may invoice clients in Finland and other countries. Sending invoices outside Finland, the influencer will need to register for VAT and issue a VAT invoice.  Please note that the reverse charge system applies if the sole trader invoices a client in another EU country. You may read more about reverse charge here.

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.

It is not uncommon for companies to be legally required to report to tax agencies when they pay out compensation to an influencer. Influencer partnerships are quite different from regular partnerships, compensation may not only include monetary compensation but also free gifts, vouchers, and travel. In some countries, all types of compensation sent for “payment” to the influencer should be reported. Therefore, it may be relevant to verify your reporting responsibilities on that matter.

Income from social media is taxed in the same way as other income: there are no special provisions in taxation or in the tax law for income generated from social media, but the income is taxed and deductions are made according to the general provisions.

In Finland, product gifts are considered taxable income, unless the product is an ordinary promotional gift. The taxability does not depend on whether you had agreed on the product gift with the sender in advance.

The amount of tax collected on product gifts depends on their market value. Market value means the price that you would pay for the product if you bought it yourself. For example, an influencer promotes a product (with €200 market value) and needs to keep the post up for a certain amount of time, and afterward, they get to keep the product. Even though they did not receive compensation for this work, the amount is taxable earned income for them.

However, there are certain gifts that are not taxable and considered ordinary promotional gifts. They are considered as such if:

• they do not exceed €50 including VAT
• the product has an advertising logo or the like on it, and you cannot easily exchange the product for cash, i.e. resell it. In this case, the product may be more than €50 in value.

You can read more about this on the Finnish Tax Authority (vero.fi) here.

DAC7

DAC7 is a directive on cooperation between different EU member states on gathering and reporting data about natural and legal entities and their earnings through digital platforms and marketplaces. Certain digital platforms are responsible for collecting, verifying, updating, and reporting data about the sellers on the platform and their earnings.  Generally, if you are a platform operator, conducting business in the European Union and making available all or part of your platform to sellers, you may have reporting obligations under DAC7. The digital platform has to submit its first report by the 31st of January 2024. Bear in mind that different EU countries may implement the Directive slightly differently.

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Exchange of income statements to other countries.

As mentioned above, it is not uncommon for companies to be legally required to report to tax agencies when they pay out compensation to an influencer. This obligation may also be applicable if you are working with an influencer from another country. Many countries sign bilateral agreements in which they agree to exchange income statements with each other. This allows tax agencies around the world to have a better overview of the compensation paid out to the people conducting business in their country and better control over who should pay taxes or not. The exchange of income statements is especially relevant when paying out compensation to individuals without a registered activity. It is therefore important to verify your reporting obligations in your country.

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Additional responsibilities - social fees, withholding of taxes, more

Before drafting an agreement with an influencer, it is important to consider if the person has a registered activity as an influencer or a company. If the influencer is acting as an individual without any registered activity, it is essential to be aware of applicable rules and regulations, as you may have additional responsibilities towards the individual. It is important to understand what legal obligations are applicable to you. You may for example have withholding responsibilities or be required to pay social costs. It is important to be fully aware of all the responsibilities before drafting any agreement with an influencer as you may be able, depending on the applicable laws and regulations, to put some of the responsibilities onto the influencer if it is clearly stated in the agreement. It is also important to consider any potential liabilities arising from the agreement. As such, the responsibility of each party should be clearly described in the agreement and preferably regulate topics such as the payment of indirect and direct taxes, reporting to tax authorities, or even social costs.  As an influencer, you will declare and pay your own taxes and social security contributions.

In most countries, influencer marketing is already regulated by national laws such as consumer protection and marketing laws or specific guidelines.

Considering influencers can reach consumers globally, examining legal implications in various countries is important. Violating the rules can lead to penalties, fines, and legal fees.

It's important to note that there are topics that are usually more strongly regulated within influencer marketing. These commonly include:

• Children and minors.
• Alcohol, religious beliefs, adult content, tobacco, cosmetic procedures, gambling products, and in certain countries politics.

Work on this is progressing quickly both on a national and a global level. It would therefore be wise to keep yourself updated on new laws and guidelines being issued on the topic.

Authorities are increasingly providing interesting data on the topic. The European Consumer Center France offers a list of influencers' obligations and responsibilities in Europe, providing interesting insights into certain EU countries.

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Influencer marketing regulations in Finland

In accordance with the Consumer Protection Act in Finland, the commercial cooperation between companies and influencers should be communicated to consumers. Influencers are required to clearly inform the consumer of the commercial nature of their marketing.

In 2019, the Finnish Consumer Ombudsman issued a guide for influencer marketing in social media. The guidelines aim to provide instructions for companies and influencers regarding how to transparently communicate commercial collaborations to consumers in influencer marketing, in compliance with the Consumer Protection Act.

Influencer marketing could take the form of videos, audio presentations, photographs, or blog posts published by the influencer on various social media, all centered around the company or its products. The same rules that govern the visibility of advertising also apply to acting as a brand ambassador in the context of influencer marketing.

In exchange for their marketing efforts, the influencer may receive compensation from the company, which could be money or a cash-equivalent benefit like clothing, a gift card, or a trip. It's important to note that even when the compensation is not in monetary form, it still falls under the category of marketing.

The visibility of advertising is regulated by the Consumer Protection Act, ensuring that consumers have the right to be informed when someone is attempting to influence them for commercial purposes. The guidelines are grounded in existing legal frameworks, their preparatory work, legal practices, and oversight decisions made by the Consumer Ombudsman. You can read more about the guidelines here.

Risk of false self-employment

If you are looking to collaborate with independent workers, it is essential to treat them as such. Influencers working independently should be treated differently from employees. It is crucial to provide them with creative and personal freedom, allowing them, for example, to choose and determine their own activities and working hours. To prevent a relationship that could be seen as an employment relationship, it is imperative to draft a clear agreement between the two parties. If the relationship is too close to an employment relationship, it may be viewed as false self-employment. This may come with legal implications for the brand. Without an unambiguous agreement, a clear distinction is not always easy; both influencers and those who use them are often unaware of how the relationship can be viewed by the authorities.

As a rule of thumb, the more instructions you give regarding the services to be performed and the more the person is bound to your organization, the more likely it is that an employment relationship exists. To ensure that your relationship with the influencer is as unambiguous as possible, it is important to make sure that the agreement that is established is fair and offers them the autonomy to choose their own activities and working hours. Also, the relationship should also be independent in facts not only on paper. This should allow for a successful collaboration. In the case of false self-employment, the brand or agency may be responsible for paying employer fees and social costs for the influencer.

An Agreement can take many forms and does not necessarily have to be in writing. However, it’s usually recommended to sign a written Agreement with the digital creator before they start to work on a project. We recommend having a legal professional review the agreement before it's signed, to ensure that it covers all the necessary legal aspects relevant to the relationship at hand. It may be relevant to define the following points in the agreement:

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1. Define Compensation Structure and Amount

Begin by specifying the type and amount of compensation the influencer will receive for their services. This can be a flat fee, commission-based, or a combination of both. Be transparent about the compensation structure and ensure that the influencer understands whether they are considered an employee or an independent contractor, as this has tax implications.

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2. Outline Payment Schedule and Currency

Establish a clear payment schedule that details whether the influencer will receive a one-time payment or multiple installments. Also, specify the currency in which payments will be made, and discuss potential fluctuations in exchange rates to avoid confusion or disagreements.

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3. Specify Payment Terms for Content Creation and Sharing

One important consideration is whether payment should only be made upon delivery of the post or if there should be two separate fees, one for creating the content and another for sharing it upon approval by the Brand. Clearly state these terms in your agreement to ensure both parties understand when and how payments will be made for each aspect of the influencer's work.

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4. Detail Payment Methods and Third-Party Involvement

Outline the method of payment, whether it's PayPal, wire transfer, or through a third party. If you're using a third-party service provider, such as Gigapay, to handle payouts and reporting, include this information in the agreement. This helps set expectations and ensures the influencer knows who will send the payment and when to expect it.

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Want to know more about influencer partnership agreements? Use this guide to ensure your agreements cover all essential aspects and foster long-lasting, mutually beneficial relationships with your influencers.

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