OnlyFans loses tax battle at Europe’s top court

OnlyFans should pay UK value added tax (VAT) on the full amount paid by subscribers to content creators, not only its 20 per cent cut of the fees, Europe’s top court said on Tuesday.

Founded in 2016 and with more than 150 million users, the adult content platform’s popularity soared as creators look to earn money by selling directly to paying subscribers.

OnlyFans operator Fenix clashed with UK tax authorities after they ordered it to pay VAT on all the money paid by fans between 2017 and 2020, not just the 20 per cent it took from creators for services such as collecting and distributing fees.

The company took its grievance to a UK tribunal which then sought advice from the Court of Justice of the European Union (CJEU), Europe’s highest. The request was made before Britain withdrew from the European Union in 2020.

The CJEU said the UK provision implementing EU VAT rules for online platforms is valid and that as the operator of a platform, OnlyFans is the supplier of the services provided and hence has to pay taxes on the entire sum received from a user.

Judges said that presumption can be rebutted “where the provider is explicitly indicated as being the supplier by the taxable person and where that is apparent from the contractual agreements between the parties”.

The CJEU judgment is final and the UK tribunal now has to examine the case in accordance with it and make its final ruling.