How to Properly Tax Income from Foreign Platforms

Anyone who is tax-liable in Germany generally must also pay tax on income from foreign platforms. Initially, it does not make a decisive difference whether the platform is based in the United Kingdom, the USA, Cyprus or another country. What matters is your tax situation, the nature of your activity and complete documentation of all payments.

Accounting for foreign platforms often seems more complicated because payouts, platform fees and exchange rates come together. Additional VAT-related questions may arise. Keeping organized records from the outset is therefore more reliable than having to search through individual bank statements and platform reports shortly before filing your tax return.

Worldwide income principle: The platform’s location is not the only decisive factor

If you have a residence or habitual abode in Germany and are subject to unlimited tax liability here, you generally must account for your worldwide income. This is known as the worldwide income principle. Income is therefore not tax-free merely because it is paid by a company abroad or credited to a foreign payment service account.

It is also important what service you provide and how you work. Income from your own content, live offerings, individual assignments or collaborations may form part of self-employed or commercial activity. You can find a general overview of the basics in the article about self-employment, commercial activity and taxes.

The platform’s location may nevertheless be relevant, for example for VAT, withholding taxes, contractual relationships or reporting obligations. Double taxation agreements may also play a role in certain situations. Whether tax was actually withheld abroad and how it should be taken into account must be checked based on the statement and the country concerned.

Which amounts you should record

For transparent bookkeeping, it is not enough to record only the transfer to your bank account. Platforms often deduct commissions, service fees, payment fees, refunds or other items. You should therefore distinguish between the amount earned, the costs withheld and the actual payout.

• Turnover or revenue: The amount allocated to you for your services under the billing model.
• Platform fees: Withheld commissions or service fees, insofar as they are shown in the statement.
• Refunds: Cancellations, chargebacks or corrections that change the billed amount.
• Payout amount: The amount transferred by the platform to your bank account or a payment service.
• Payment fees: Additional costs for transfers, currency exchange or payment processing.
• Tax withheld: A separately stated tax deduction, if one was actually made.

Which amounts should be treated as business income and which fees as business expenses depends on the specific contractual and billing structure. Therefore, keep not only bank statements but also complete monthly or transaction reports. A net payout alone often cannot adequately explain the individual accounting entries.

Converting foreign currencies into euros transparently

If amounts are billed in US dollars, British pounds or another foreign currency, they must be recorded in euros for German tax records. You need a comprehensible conversion method for this. Which method is suitable in a particular case depends, among other things, on your method of determining profit, the number of transactions and the time at which the transaction is economically recognized.

For example, you can convert amounts using a documented rate for the relevant booking or payment date. For many similar transactions, periodic reference rates may also be practical under certain conditions. The important point is not to switch arbitrarily between rates depending on the result, but to apply one consistent approach and document the source used.

• Save the original amount in the foreign currency.
• Record the date to which the conversion relates.
• Document the exchange rate used and its source.
• Record the euro amount calculated from it.
• Separate any exchange fees from the actual turnover.

The platform’s rate may differ from the rate used by your bank or payment service. This can create differences that should also be recorded transparently. Simply adding up the euro transfers received is particularly insufficient if platform fees or currency conversions were already carried out before the payout.

Consider income tax and VAT separately

For income tax or determining profit, the focus is generally on your business income and deductible expenses. VAT follows its own rules. Therefore, an income tax classification cannot automatically be applied to the VAT treatment.

For a foreign platform, it must be clarified, among other things, who legally receives your service. Depending on the model, your contractual partner may be the platform, a business customer or another party involved. The contractual partner’s country and business status may also be relevant for the place of supply, invoices and possible reverse-charge liability.

The reverse-charge procedure may apply to certain cross-border supplies between businesses. However, it does not apply automatically merely because a platform is based abroad. The article on reverse charge for creators provides more detailed guidance; for practical implementation, the contract and statements should be checked specifically.

The small-business regulation also does not automatically eliminate all record-keeping or filing obligations for foreign transactions. The requirements and current thresholds may change. When starting self-employed activity, the Questionnaire for Tax Registration is also an important organizational step.

DAC7 and reports to tax authorities

DAC7 expanded reporting obligations for certain digital platform operators in the European Union. Platforms may be required to collect and verify information about registered sellers, their identities and the remuneration they earn, and to report it to the competent authorities. Whether a particular platform or activity is covered depends on the applicable requirements.

A registered office outside Germany does not necessarily mean that no report will be made. International platform structures, activities within the EU and the legal operator of the service may all play a role. It is therefore risky to assume that foreign payouts are generally invisible to German tax authorities.

A platform report neither replaces your tax return nor your own bookkeeping. Reported platform figures may also differ from the amounts in your profit calculation, for example because fees, refunds, foreign currencies or different recording periods must be taken into account. You should be able to explain such differences using your records.

Check the tax and identity details in your platform account regularly. This includes, in particular, your name, address, date of birth, tax identification details and, where applicable, business information. Incorrect details can lead to queries, delayed payouts or difficult-to-understand reporting discrepancies.

Keep records and platform reports organized

Useful record-keeping combines platform reports, bank transactions and your own bookkeeping entries. Download statements regularly, because permanent access to an account is not guaranteed. After a suspension, termination or technical change, accessing older documents may become more difficult.

For each reporting period, you should ideally bring together the following documents:

• Monthly statements and individual transaction overviews from the platform,
• Details of turnover, fees, refunds and payouts,
• Bank and payment service records showing the actual receipt of funds,
• Documentation of the foreign currency and exchange rate used,
• Contracts, terms and conditions, and changes to the billing model,
• Invoices for business costs and services provided by third parties,
• Evidence of any foreign tax withheld,
• Notifications from the platform concerning DAC7 or other tax reports.

Clear file names make later checks easier. A structure organized by year, platform and month, supplemented by a continuous reference to your bookkeeping entries, is useful. Digital records should be stored completely and in a permanently readable format; screenshots alone may omit important billing details or metadata.

Regularly reconcile your records with the actual payouts. This allows you to identify missing statements, duplicate entries or unexplained differences at an early stage. If you have to issue invoices yourself, the guide on writing invoices as a performer can also help.

When professional support is advisable

Professional advice is particularly useful if you use several platforms, frequently receive foreign currencies or have contractual partners in different countries. The same applies in cases involving foreign withholding tax, retroactive corrections, substantial refunds or unclear platform statements. An adviser experienced with digital platform models can examine the actual payment and service flows more precisely.

For an appointment, do not prepare only annual totals. Platform contracts, complete statements, a list of the payment services used, details of your services and your previous conversion method are helpful. You can find guidance on choosing an adviser under finding tax advice for the adult entertainment industry.

Do not wait for a report or query from the tax office before addressing open questions. Missing documents can usually be obtained and explained more easily in good time than after several years. The most important basis remains complete, consistent and verifiable recording of your worldwide business income.

Note: This text provides general information and does not replace legal or tax advice.