Do I have to pay tax on income on Twitch?
As soon as streamers have built a fanbase and are quite successfull they asks themselves the big question: Do I have to pay tax on income from streams on Twitch? Also, many people do not know what they have to register where or where else the state could want something from them. In this article we will discuss these and other questions concerning streaming income, taxation and state regulation in more detail.
Note: This article is according to German legislation, it may differ from country to country.
In principle, all income in Germany is taxable. This also includes income from advertising or donations on a Twitch stream. The misleading statement that donations are tax-free is unfortunately only partly correct and only concerns non-profit organisations. However, since you as a streamer are not a non-profit organisation, income from streams must be taxed on Twitch.
How does it work? What to keep in mind when taxing stream income
Don’t worry! There is no reason to delete your Twitch channel immediately after you read the statement above and never stream again. There are a few things you should keep in mind when it comes to the taxation of income from streams, but for most streamers there won’t be much change.
For example, if you convince your tax office that you have no intention of making a profit, it is possible that low profits made from time to time will remain tax-free. However, your profits should only be enough to cover the expenses for the hobby streaming. If you make real profits over a longer period of time, they are taxable. In any case, income must be «declared», i. e. listed in the tax return. The tax office will then decide if the income is taxed or not.
Self-employment and Broadcast license What else do you have to keep in mind when it comes to streaming?
In addition to the simple declaration of your income, to which you are obligated as mentioned above, there are some questions that many streamers ask themselves almost as often. Below, we therefore want to clarify whether a business registration is necessary and if you need a broadcasting licence as a streamer.
Do I have to register self-employment?
Not necessarily. Whether you have to register self-employment for your income on Twitch depends on two factors: Firstly, the amount of your income and secondly, your partner status on Twitch. Let’s start with the partner status: As long as you are only in Twitch’s Affiliate Program (as long as you don’t get a share of Twitch’s advertising revenue) you don’t have to register as self-employed, because streaming is considered an artistic and freelance activity.
As long as you stay below the income limit of 17,500 Euros, the registration of a business only brings you advantages (Purchases for your «hobby» can be set off against tax liability). So you don’t take a risk if you register a small business. The registration is done at the trade office of your home town and usually costs about 20€.
Another factor is the amount of income. If you only stream as a hobby as described above, a business registration is usually not absolutely necessary. To be sure, contact the trade office. Don’t forget to specify your income and expenses in your tax return, even if you don’t have a business, because a cover-up would be tax evasion.
Do I need a broadcast license as streamer?
It depends. Maybe you have heard that the channels of PietSmiet and Gronkh have been classified as broadcasting by the Commission for Admission and Supervision (ZAK) of the media institutions and should therefore purchase a licence. For such a licence you have to pay between 1,000 and 10,000 euros. Because of this incident, PietSmiet is now once again focusing on Youtube and Gronkh and his lawyer are resisting the outdated law. At the moment we don’t know how the legal situation will develop in the next few years.
It is certain, however, that most streamers can continue working without concerns. The persons concerned so far belong to the absolute elite among streamers, whose range most channels will not reach that quickly.
To sum up: The tax office decides whether you have to tax your profits. In any case, you are obliged to declare your income in your tax return. And if you find yourself in the position to make regular profit from your job as a streamer, you should check with your city’s trade office to see if it is necessary to register a business.
It is not necessary to apply for a broadcasting license until further notice, but if you get as famous as Gronkh & Co. the ZAK will contact you automatically. However, most streamers are not affected by this anyway.
Sources and other information:
Twitch donations: Tips or taxable income? (German Article)(https://gameslaw.online/twitch-donations-trinkgeld-oder-steuerpflichtige-einnahmen/)
Twitch: Information on the Partner Program
Twitch: Information on the Affiliate Program
Do I need a broadcasting license for live streaming? The case of PietSmiet, Gronkh & Co. (German Article) (https://www.anwalt.de/rechtstipps/braucht-man-eine-rundfunklizenz-fuers-live-streaming-der-fall-pietsmiet-gronkh-co_109395.html)