Influencers in turmoil: Tax liability despite foreign residence

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The tax investigation department in North Rhine-Westphalia has identified evidence of targeted tax evasion by influencers based on extensive social media analysis. The estimated tax loss amounts to around 300 million euros. The focus is on professional influencers who have formally relocated their residence abroad – often to so-called low-tax countries – but continue to earn income from Germany. The apparent aim is to circumvent German income tax liability.

Tax liability in Germany despite residence abroad

Under German tax law (Section 1 of the Income Tax Act (EStG)), natural persons are fully liable for income tax in Germany if they have their domicile or habitual residence in Germany. These terms must be interpreted in a realistic manner: it is the actual circumstances that matter, not formal information. This means that even after officially deregistering their residence or center of life, a person may in fact remain in Germany, which leads to unlimited tax liability, even if a residence abroad is registered—the case of Boris Becker has confirmed this principle in a high-profile manner.

If the person no longer usually resides in Germany and no longer has a residence in Germany, limited income tax liability may apply to domestic income.

Exit taxation when moving your residence abroad

If an influencer deregisters their residence abroad, additional tax regulations apply. The so-called exit tax under Section 6 of the Foreign Tax Act (AStG) may apply if the person was subject to unlimited tax liability in Germany for at least five of the last ten years prior to departure and has a relevant interest in corporations. In this case, a fictitious capital gain is taxed.

Tax evasion and criminal offences

Anyone who intentionally fails to declare taxable income is generally guilty of tax evasion under Section 370 of the German Fiscal Code (AO). This includes concealing income, deliberately misrepresenting one’s place of residence, and deliberately withholding or concealing cash flows and monetary benefits.

Practical example: influencer business model

In practice, influencers often try to evade their tax obligations using the following pattern:

• Deregistration in Germany, registration in countries without income tax (e.g., Dubai)
• Continuation of advertising and social media activities with a focus on German target groups and German advertising customers.
• No tax return or registration in Germany despite significant ongoing income and concealment of other benefits (travel, gifts in kind, etc.).

Such circumvention strategies are highly risky from a tax perspective, especially since the actual center of life and income remain closely linked to Germany. The authorities regularly recognize this and strictly apply the aforementioned regulations.

Typical structuring models and international aspects

• Even structuring does not necessarily help. According to Section 5 AStG (intermediary companies), foreign companies can also be taxed in Germany if the taxpayer continues to operate economically in Germany through these companies.
• Intergovernmental agreements (DTAs) and special tax regulations may provide for different attributions, but they take precedence over general norms.

Consequences & sanctions

Deliberate or negligent disregard of tax obligations may result in additional tax payments and interest and/or criminal and administrative proceedings under Section 370 of the German Fiscal Code (AO). Digital analysis by tax investigators enables increasingly precise allocation and reconstruction of “concealed” income and residence status. Authorities conduct international investigations and data comparisons for this purpose.

Conclusion

The tax obligation to file a tax return and the criminal liability for violations are closely linked to the actual economic and personal circumstances. Simply deregistering formally in Germany is not sufficient; in case of doubt, German taxation rights continue to apply on the basis of the aforementioned provisions. Compliance with German tax obligations remains a high risk and liability issue, especially for influencers and other internationally active entrepreneurs.

Our recommendation is therefore that anyone planning international activities or already operating across borders should have their tax structure reviewed at an early stage to ensure legal compliance.

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