Taxing promotional merchandise in exchange for product reviews?
June 19, 2018 | 30,00 EUR | answered by Steuerberater Bernd Thomas
Hello,
Over the years, I have landed in the rank of Top Product Reviewer on Amazon.
This has led to manufacturers contacting me since April and offering me products to buy and review on Amazon.
I then receive the money for the product via Paypal. It works quite well, although since April I have received over 1500 euros back (which I have also invested!)
Usually, I receive back the amount I paid, but I can also have a loss or profit per product ranging from 0.01 cents to 2 euros - because manufacturers manage to account for the Paypal fees.
For example:
On 03.04.18, I ordered office chair casters for 11.88 euros on Amazon.
On 03.04, I received 12.92 euros from the manufacturer via Paypal into my Paypal account.
After deducting the Paypal fee, I received 11.90 euros.
Now, my question is, do I need to report these earnings? If so, is it enough to do this through the annual tax return? Or do I need to report this monthly or even register a business?
Thank you in advance for your efforts.
Dear inquirer,
I am happy to answer your inquiry based on the information you provided in the context of an initial consultation on frag-einen.com. The response is made in accordance with the information you provided. Missing or incorrect information can affect the legal outcome.
In my assessment, these are other income within the meaning of § 22 No. 3 EStG.
Generally, the presence of such income is described in the income tax guidelines as follows:
A performance within the meaning of § 22 No. 3 EStG is any action, tolerance, or omission that can be the subject of a paid contract and triggers a consideration (→ Federal Fiscal Court (BFH) from September 21, 2004 - Federal Tax Gazette 2005 II p. 44 and from May 8, 2008 - Federal Tax Gazette II p. 868), unless it involves sales transactions or sales-like transactions in the private sector, where consideration is paid for the final abandonment of an asset in its substance (→ BFH from November 28, 1984 - Federal Tax Gazette 1985 II p. 264 and from September 10, 2003 - Federal Tax Gazette 2004 II p. 218).
For the existence of a performance within the meaning of § 22 No. 3 EStG, it is crucial whether the consideration (the fee) is triggered by the behavior of the taxpayer. However, § 22 No. 3 EStG, like the other types of income, requires the general characteristics of income generation. However, the provider does not have to expect consideration at the time of providing their performance. It is sufficient for taxability that they accept consideration granted in connection with their actions, tolerances, or omissions as such.
In my opinion, this is fulfilled here.
Therefore, the income would be taxable. You would need to declare the profits from this activity in the income tax return in annex SO.
There is no business activity as such.
For VAT purposes, you can take advantage of the small business regulation if turnover was less than €17,500 in the previous year and is expected to be less than €50,000 in the current year. Other entrepreneurial turnover would need to be taken into account in this case.
Kind regards,
Bernd Thomas
Tax Advisor
Dipl.-Kaufmann (FH) Bernd Thomas, Tax Advisor, Neustadtswall 85, 28199 Bremen, VAT ID No. DE316948369, Member of the Hanseatic Chamber of Tax Advisors Bremen, Registration number 111705, Professional liability insurance with R+V Allgemeine Versicherung AG, Mittlerer Pfad 24, 70499 Stuttgart, Insurance sum: 250,000 euros for each individual claim; Annual maximum benefit: 1,000,000 euros (for all damages in an insurance year)
