Courts have ruled that Instagram influencers cannot pay taxes through a shell company on the money they make from advertising. As it has already said in cases of YouTubers and journalists, the Superior Court of Justice of Madrid sanctions that an “influencer” specialized in fashion channeled her income from 2017 and 2018 through a company in which she alone worked, paying less taxes than those who she would have paid if she had paid the taxes personally, even if to this day she no longer has debts with the Treasury or controls. The clothing and products that these “influencers” obtain from the brands that hire them to advertise, the judges added, do not constitute a deductible expense.
The contentious-administrative judges studied the case of Marta Carriedo, an “influencer” and businesswoman in the fashion sector who today has nearly 580,000 followers on her Instagram account. An account dedicated at the time, like hundreds of influencers who have millions of followers on this and other social networks, to promoting products after entering into an agreement with brands.
The Treasury put a magnifying glass on the way in which this “influencer” taxed her income in 2017 and 2018. The money from brands and advertising agencies did not go directly into her pocket but into that of her company: 234 000 euros in 2017 and nearly 350,000 in 2018. Subsequently, this individual company paid the “influencer” less than half of this money, with the tax difference that this implies: paying a significant part for the corporate tax, more benevolent, and not for personal income tax, with higher rates and with a higher amount. higher invoice in the tax return.
The tax authorities verified that at that time the company was a business without resources or workers and that the only thing essential to Carriedo’s work was herself, without the entity providing any added value. As material means, he declared a camera, a computer and office equipment and in 2017 he had an assistant. Insufficient, according to the Treasury and the courts, to consider that the company fulfilled a role beyond channeling the fashion expert’s income.
The judges rejected the part of the influencer’s appeal which attacked the settlement tax that the tax authorities had made on her 2017 and 2018 tax returns and her personal income tax for an amount of more than 55,500 euros , including an additional penalty of 17,000 euros. The sentence upholds the part of her appeal which attacked another sanction, of 18,000 euros more, in which the Treasury wrongly accused the businesswoman of not having provided sufficient information on her accounts when requested.
Carriedo’s case has not been definitively judged and, in addition, all possible debts to the Treasury have been settled at that time and it will now be the tax authorities that will have to return the money from the canceled fine. This resolution of the TSJM, to which elDiario.es had access, can still be appealed to the Supreme Court. Furthermore, as the resolution and the allegations of the “influencer” explain, another section of the same court has not yet ruled on the inspections that were carried out in parallel with the very company through which she channeled her income during these two years. Sources close to Carriedo explain that there are no more inspections underway.
“Influencers” against advertising agencies
In her allegations, the fashion expert “influencer”‘s defense claimed that her company had indeed added value to her work, that the process had to wait for the courts to resolve the income tax inspection. companies and, finally, that this criterion left Marta Carriedo at a disadvantage compared to “historical” advertising agencies. The judges are not asking whether this money can be taxed through a company, but rather that, if that company contributes nothing to its work, more than half of the money cannot stay in the company accounts and, therefore, be taxed at a lower rate. rate.
The judges agree with Treasury’s criteria and understand that the company should have paid Carriedo significantly more money, after deducting expenses incurred. But they cite the report of the Tax Agency to explain that the company which used these two years “does not have the appropriate economic structure to carry out the activity in question” and “the sufficient infrastructure to provide value added significantly to the activity carried out personally. the “influencer”. “He does not bring any of his own goods that are relevant to the creative activity he carries out.”
The evidence detected by the Treasury, the judges added, “has not in any way been distorted, supplemented or qualified” by their appeal. “All this leads us to confirm the judgment rendered in this regard by the Administration in the contested sanction act,” they say about its additional sanction of 17,000 euros.
The resolution also explains that products promoted by this type of “influencers” cannot be considered a deductible expense if they were provided by the brands. “These are the brands that provide the products to be presented in the corresponding campaign. Of course, she or her company is not obliged to acquire them personally,” Treasury said.
The decision of the Superior Court of Madrid, which has not yet been declared final, is in line with other similar decisions revealed by elDiario.es which, in recent years, have established that journalists, presenters or YouTubers cannot cannot channel their income through a corporation if it plays no role in their work beyond allowing them to pay corporate income tax and not the highest personal income tax rates. higher. This was established, for example, by the Supreme Court in the case of the journalist Carlos Herrera, and by the same TSJ of Madrid in the case of the YouTuber El Rubius.
