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OnlyFans has lost its dispute with the British tax authorities

OnlyFans has lost its dispute with the British tax authorities regarding the VAT it should pay in the European Court of Justice.

Case description: Fenix International Ltd is a company registered in the United Kingdom which owns an electronic application – a social network known as OnlyFans through which digital content created by persons in the capacity of “creators” is transferred against a sum of money received from individual persons known as fans. Each individual person with the capacity of the author has a dedicated section in which he/she uploads digital content on the electronic platform, such as photographs, video materials, and messages.

Fans can access the content added by the creator by making punctual payments or by paying a monthly subscription. Fans can pay tips or donations without obtaining digital content.

Each creator sets the value of the monthly subscription, but Fenix International Ltd sets the minimum amount for subscriptions or tips.

Fenix International Ltd also provides the device for financial transactions, collecting and distributing payments to content creators, and sets the general terms for using the platform.

Fenix International Ltd charges 20% of any amount received by a creator, an amount which it invoices and which it has collected VAT at the rate provided in the United Kingdom.

The tax authorities in the United Kingdom require Fenix International Ltd to pay VAT on all collections due to content creators for the period from 2017 – 1 January 2020, during which the United Kingdom is a member of the European Union applying Directive No. 112/2006 on the common VAT system.

More specifically, the British tax authorities invoke Article 9a (1) of Regulation EU No. 282/2011 for the application of the VAT Directive in the sense that the tax authority considers that Fenix International Ltd acts in its own name when collecting money from fans and, consequently, has the status of a reseller-merchant and that this situation requires the company to collect VAT on all collections.

In 2020, Fenix International Ltd brought an action before the court in the United Kingdom in the sense that the provision of the Regulation does not apply as authors distribute in their personal name the electronically communicated material and that the contractual obligations entered into between the company and digital content providers have a completely different nature, they being the ones who make any sales of digital content.

Subsequently, this court of justice addressed the European Court of Justice regarding the application of Article 9a of Regulation No. 282/2011 in the present situation.

The court decision can be found here:

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