OnlyFans should pay UK VAT on full amount paid by subscribers, EU court adviser says

By Foo Yun Chee

BRUSSELS (Reuters) – OnlyFans, an online platform known for adult content, should pay UK value added tax (VAT) on the full amount paid by subscribers to content creators, not just its 20% cut of the fees, an EU court adviser said on Thursday.

Founded in 2016 and with more than 100 million users, OnlyFans flourished during the pandemic as a way for creators to earn money by selling content directly to paying subscribers.

OnlyFans operator Fenix took its grievance to a UK tribunal after UK tax authorities ordered it to pay VAT on all the money paid by fans, not just the 20% it took from creators for services such as collecting and distributing fees.

The tribunal subsequently 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.

CJEU Advocate General Athanasios Rantos said the court should confirm that the UK provision implementing EU VAT rules for online platforms is valid, in effect applicable to OnlyFans.

“The provision of the regulation implementing the VAT Directive providing that an online intermediary platform is, in principle, liable to pay VAT is valid,” he said in a non-binding opinion.

“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 CJEU, which follows such advice in four out of five cases, will rule in the coming months.

The case is C-695/20 Fenix International.

(This story corrects paragraphs 1 and 3 to say OnlyFans paid VAT based on its 20% cut of fees paid to creators, not the amount paid to creators minus 20%)

(Reporting by Foo Yun Chee; Editing by MarkPotter)