OnlyFans loses £11m tax court case over VAT payments
OnlyFans loses £11m tax court case after British X-rated site was accused of paying too little VAT – meaning its 188m users could face higher subscription fees
- OnlyFans has lost an £11million tax court case about the amount of VAT it paid
- The X-rated site was accused of not paying enough VAT between 2017 and 2020
- It had only paid VAT on money earnt from content creators, not its subscribers
OnlyFans has lost an £11million tax court case after the British X-rated site was accused of paying too little VAT – meaning that its 188million users could face higher subscription fees.
The European Court of Justice was in favour of HM Revenue & Customs, which accused the company of not paying enough VAT between 2017 and 2020.
It had only handed over the tax from money it earnt from celebrity content creators including Denise Richards and Carmen Electra – not from subscribers.
Fenix, which owns OnlyFans, was founded in 2016 by businessman Tim Stokely, 39, and his father, Guy, 78.
The company claimed that only the site’s stars were liable for VAT because they were the ones who created the platform’s content.
OnlyFans has lost an £11million tax court case. Pictured, Bella Thorne, a former Disney star, earns $11 million a month through the site
It also argued that OnlyFans is only an online platform, and does not sell anything itself.
The European Court of Justice’s advocate-general, Athanasios Rantos, said that OnlyFans delivers a service and should pay tax on all its revenue, The Times reported.
This could mean that users need to pay more for the site, if the company does not absorb the cost.
However OnlyFans said that fees would not rise, adding that it had already paid the £11 million VAT bill.
It also said it began levying VAT on subscribers in July 2020.
‘As a UK company, OnlyFans has paid more than £72 million in VAT and £132 million in corporation taxes since inception in 2016,’ a company spokesperson said.
Mr Rantos said that a 2013 EU directive stated: ‘An online intermediary platform is, in principle, liable to pay VAT.’
‘No category of services is excluded from the substantive scope of that provision,’ he added.
In the 12 months to September 2021, the company saw record profits of $432 million – a rise of 615 per cent – with people spending $4.8 billion on the site.
Content creators on the site include sex workers and adult performers, who charge site users to view the material.
The cheapest subscription sits at £5 per month, with £41 being the most expensive. However many people tip creators hundreds of pounds and pay more for ‘premium’ content.
Bella Thorne, a former Disney star, earns $11 million a month through the site.
Stokely flaunts his luxury life on social media, posting his cars, watches, suits and superyachts
Last year, a BBC investigation found that the company was failing to stop under 18s from appearing in explicit videos.
The site argued that it quickly responded, removing the videos in question.
In 2018, Tim Stokely sold his 75 per cent share of the business to US-based Ukrainian adult entertainment baron Leonid Radvinsky, 40.
Last year, Stokely stepped down as chief executive, being replaced by Indian-born American businesswoman Amrapali Gan.
Stokely lives in a Hertfordshire mansion which he bought for £2.43 million in cash in 2019.
He flaunts his luxury life on social media, posting his cars, watches, suits and superyachts.
A confirmatory verdict will be made when the case returns to the UK courts, however nearly all tribunals which requested EU guidance on VAT follow it.
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