Can influencers deduct their clothing from tax?

One professional group that has repeatedly found itself in court in recent years is that of influencers – be it due to unlabelled product placements or even surreptitious advertising, disputes over so-called influencer contracts or media-effective conflicts with colleagues who also work as influencers.

This time, the tax office was in dispute with a fashion blogger who wanted to claim her expenses for clothing and accessories as business expenses (income from business operations) in her tax return.

The claimant operated her blog on various social media channels and via her own website and regularly created photos and stories as part of this.

In addition to various goods that the influencer received from various companies in order to advertise them, she purchased items of clothing and accessories with her own money and also presented these as part of her activities on the platforms she used.

She wanted to recognise the corresponding expenses as business expenses in accordance with Section 4 (4) of the German Income Tax Act (EStG).

Claiming clothing and accessories as business expenses sounds too good to be true? According to the judgement of the Lower Saxony Tax Court of 13 November 2023 (3 K 11195/21), it is:

The 3rd Senate of the Lower Saxony Tax Court essentially followed the reasoning of the defendant tax office.

The problem in this case lies in the provision of Section 12 No. 1 EStG. According to this provision, amounts paid for the taxpayer’s household and for living expenses incurred as a result of the taxpayer’s economic and social position may not be deducted from the taxpayer’s income. This also expressly applies if the expenses are incurred to promote the taxpayer’s profession or activity.

Exactly such a constellation existed in the legal dispute to be decided by the tax court. According to the Senate, it is not possible to separate the business and private spheres in the case of “ordinary civilian clothing and fashion accessories“. Irrespective of the actual use, the obvious possibility of private use of these items of clothing means that they cannot be recognised for tax purposes.

Typical work clothing, for which a business expense deduction is possible, can only be assumed if, according to its objective nature, it is almost exclusively intended and suitable for professional use and is necessary due to the nature of the profession or for which the professional use already follows from its nature either through its distinguishing function or through its protective function.

In other words, construction workers or chimney sweeps are unlikely to wear their work clothing in everyday life simply due to its nature and purpose – it is simply typical work clothing. In such cases, a business expense deduction can certainly be considered. In the case of an influencer who presents and advertises everyday clothing, it cannot be ruled out that this clothing is also used privately.