OnlyFans lost a legal battle meaning it's likely to pay UK sales tax on all the money made by its content creators
OnlyFans lost a battle at Europe's highest court over how much sales tax it should pay.
The court ruled it should pay value-added tax on all revenues, and not just its 20% commission.
The court sided with the UK tax body and the decision will shape a final ruling by a UK tribunal.
OnlyFans should pay tax on the full amount earned by content creators, Europe's highest court has ruled after its owner challenged a decision by Britain's tax body.
Fenix International will likely need to pay sales tax, known as VAT, on all the revenues generated by OnlyFans creators – not just its 20% commission, Reuters reported.
The court agreed with HMRC, the UK's tax authority, which told Fenix in April 2020 to pay VAT on revenue it generated between 2017 and 2020.
In July 2020 OnlyFans appealed the ruling to a UK court, which sought advice from the Court of Justice of the European Union on how EU law applied to the issue.
The Luxembourg-based court then determined on Tuesday that although OnlyFans acts as an intermediary between creators and fans, it is "the supplier of services provided" in tax status under the VAT Directive, the court filing showed. A specialist court called a Tribunal will now make a final ruling in accordance with the European court's judgment.
It was not clear whether the ruling would only affect OnlyFans in the UK, or the European Union as well.
OnlyFans takes a 20% commission on creators' earnings, which neared $4 billion in 2021. Pre-tax profits soared from $61 million in 2020 to $433 million the following year as users flocked to the platform during the pandemic.
Leonid Radvinsky, who controls Fenix, has been paid more than $500 million since 2020. He received dividends amounting to $284 million in 2021 and $233 million after November 2021, the company stated in its annual report.
OnlyFans was founded in 2016 by British businessman Tim Stokely before Radvinsky bought it in 2018 for an undisclosed sum.
While some celebrities such as Cardi B have used the platform, it's mostly known for hosting adult content. Users must be at least 18 to subscribe or upload content.
OnlyFans declined to comment.
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