GEORGIA CHANNI, YANNIS SEITANIDES
The Tax Department in Cyprus is cracking down on undeclared income generated through the digital platform OnlyFans.
OnlyFans, designed primarily for content creators and influencers, has become a popular new revenue stream. However, many users are reportedly failing to declare these earnings to avoid taxation.
The platform, which mainly features adult content, is widely used globally and appears to be increasingly popular in Cyprus as well.
According to sources, around 300 individuals and companies in Cyprus - including foreign residents - have been identified through social media audits by the Tax Department as having undeclared income from OnlyFans.
Most of these individuals do not report their earnings, resulting in lost tax revenue. Investigations revealed one individual earning approximately half a million euros from the platform.
Additionally, some users register as companies to benefit from lower corporate tax rates compared to personal income tax.
Income on such platforms can be earned through various means, including subscriptions, pay-per-view content, tips, and advertising revenue.
Taxi Drivers Also Under Scrutiny
Alongside OnlyFans users, the Tax Department uncovered 50 taxi drivers earning over €100,000 through ride-sharing platforms, with many not declaring their full income.
Further checks revealed cases of individuals operating online shops or providing services via social media platforms, also failing to declare taxable income.
Legal Framework
Since July 2021, a series of amendments to EU VAT directives have impacted cross-border e-commerce transactions from businesses to consumers. These include the 2017 and 2019 directives aimed at VAT on electronically supplied services.
Under these rules, EU-based providers of electronic services must register and charge VAT in the consumer’s member state. They can also opt for a special scheme (OSS) to simplify VAT obligations.
About OnlyFans
OnlyFans is operated by Fenix, a UK-registered company registered for VAT. The platform connects “creators” who upload content and “fans” who pay subscriptions or one-off fees for access, or give tips without expecting content in return.
Fenix collects payments via third-party providers and sets the platform’s terms of use, deducting a 20% commission from creators’ earnings.
Payments from fans and payouts to creators appear on bank statements as transactions with Fenix.
Regarding VAT, Fenix is required to pay VAT on the full amount received from consumers. Initially, the company only paid VAT on its commission.
Following a ruling by the European Court of Justice (Case C-695/20), which found that platforms facilitating such transactions act as suppliers, Fenix was obliged to pay VAT on the entire consumer payment, not just its commission.
Consequently, Fenix has since paid the outstanding VAT to all EU member states.