OnlyFans should fork out more UK VAT for its subscribers, EU advises

OnlyFans has been told by EU court advisors that it may need to fork out VAT on the full amount paid by subscribers, not just a discounted sum.

OnlyFans’ parent firm Fenix took an initial grievance about VAT to a UK tribunal after HRMC ordered the UK based firm to pay VAT on all the money paid by fans and not just the amount minus 80 per cent paid to creators.

The alleged unpaid VAT bill from Her Majesty’s Revenue and Customs (HMRC) covers almost four years, and courts documents published in December 2020 suggested the company would be set to cough up to £11m in unpaid taxes.

An OnlyFans spokesperson told City A.M.: “In 2020 OnlyFans paid,  in full, all taxes claimed by HMRC in this case and no further tax payments are due to HMRC in respect of these issues.”

The tribunal had sought advice from the Court of Justice of the European Union (CJEU) in a request that was made before Brexit was finalised.

In a non-binding opinion handed down today, CJEU Advocate General Athanasios Rantos said the court should confirm that the EU VAT rules apply to OnlyFans.

“The relevant provision of the VAT Directive does not contain any restrictions as to its scope or its extent. Accordingly, no category of services is excluded from the substantive scope of that provision,” he said.

The news comes just weeks after the adult video platform posted its largest yearly growth to date, stating that its creators earned almost $4bn last year.

The tech firm’s pre-tax profits also swelled to $433m, with OnlyFans CEO Amrapali Gan stating: “We are empowering creators to monetise their content and have real control over it. Our unwavering commitment to our creators has powered our success over the last 12 months.”

Founded in 2016, the company has experienced momentous growth in the depths of lockdown, shifting from 17m fans to over 100m in 2020.

In an exclusive interview with City A.M., Gan made explicit efforts to make it known the company had reached a major milestone, having forked out £100m in UK corporation tax to date, regarding the firm as a “UK success story”.

Ultimately, the opinion handed down provides a legal opinion on the case, which may be influential, but not binding on the court decision, which will be handed down in the coming months.

An OnlyFans spokesperson told City A.M. that it was aware of the opinion, and would await and review the full decision of the CJEU once published.

An HMRC spokesperson told City A.M.: “We note the Advocate General’s Opinion is in-line with the UK’s arguments and we await the judgement of the Court.”