Since the company was founded in 2016 Only Fans has created a new avenue primarily for adult content creators, putting the content creator back in control of their audience.
There are many content creators based in Ireland and people considering giving Only Fans a go, but do you know how this income is taxed in Ireland? In this blog post, I will give you a run down of everything you need to know on the topic.
What Only Fans income is considered taxable?
When a fan signs up for a monthly subscription to your content not all of the income will make it to you. There may be VAT charged on the transaction which is collected by Only Fans and handed over to the Irish Revenue Commissioner if you are not registered for VAT.
Secondly, Only Fans will take their 20% cut. Therefore, even though a fan might be paying a €12 subscription, you will expect to receive approximately €8 from the sale.
Your income for tax purposes will be 80% of the Fans payment excluding VAT and also less any allowable business expenses.
Here are a few examples of what could be considered an allowable expense:
- fees paid to an accountant
- bank charges
- business travel expenses
- advertising costs
Just be careful around these, the expenses must have been wholly and exclusively for the purpose of the business. Your accountant will be able to inform you on what is an allowable expense and what isn’t.
Small time creators with income less than €5,000
Not everyone will be lucky enough to be in the top 10% of creators, many of you will likely be working a normal 9-5 job alongside doing Only Fans.
If your income outside of your 9-5 jobs is €5,000 or less you will declare this income to Revenue annually through a Form 12 (online version available through your ‘my account’ on revenue.ie).
The deadline for submitting a Form 12 is always October 31st of the year following when the income is earned. (For example, the deadline for income earned in 2022 is 31 October 2023).
Sole Trader (Income more than €5,000 p/a)
If you have made more than €5,000 per annum from a non-PAYE source of income such as Only Fans then you are required to register for income tax. This essentially means you will be operating as a sole trader.
The taxes you will be charged will be Income taxes of PAYE, USC and PRSI and the amount taxed will depend on your income level.
For example income tax will be 20% up to a level of €36,800 and 40% on any income thereafter (less your personal and sole trader tax credits). A good place to estimate how much tax you will be paying overall is the Deloitte Tax Calculator.
I have a full video here that goes through the steps you need to take to register as a sole trader in Ireland.
Another alternative is to register a private limited company for your Only Fans business. The corporation tax rates in Ireland at present are 12.5% which are much lower than personal income tax rates.
However, when you try and take profits from the business either as a salary or a dividend you will have to pay the same income tax rates rates of PAYE USC and PRSI on this income.
Operating a company requires significant more work in terms of preparing accounts, and following extensive rules set out by the Company Acts as set out in Ireland.
The advantage of setting up a company for your Only Fans business is that if you want to build an empire and reinvest your income to build out other businesses it would be much more tax efficient to do this through a limited company.
Your own specific situation will dictate whether it is better for you to set up as a sole trader or a limited company. It is advisable to discuss this in dept with your accountant before you start.
If you are looking to set up a private limited company in Ireland then you can follow these steps:
What about VAT?
Businesses that provide a service are required to register for VAT once their annual turnover will exceed €37,500.
If you are below this level don’t worry Only Fans will sort out any VAT due in other countries. If you are a Creator resident in Ireland, OnlyFans will also collect the required VAT on sales to the Irish/EU-based Fans and pass this directly on, to the relevant tax authorities.
And if you are registered for EU VAT – for your purposes of VAT, please state that you sell your content to OnlyFans and there is zero (0%) VAT on this.https://onlyfans.com/help/3/120/129
There will be an extra layer of admin when you are registered for VAT as you will have to provide proof of VAT returns submitted to Only Fans before you can invoice them for the VAT element of your revenue.
Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.