Do you plan to make money on Instagram? Whether you’re a self-employed creator, a freelancer, or even employed full-time elsewhere, this guide explains everything you need to know about taxes, legal obligations, and best practices for Instagram influencers. Learn how to avoid penalties, handle free products, and grow your Instagram business confidently.
Why Instagram influencer marketing is so popular
Instagram has grown from a simple photo-sharing app into one of the world’s most popular social media platforms. Millions of users in Germany open the app daily to share and engage with photo or video content. This massive user base gives influencers a great opportunity to earn money on Instagram, regardless of whether they are self-employed, freelancers, or even employees juggling multiple jobs.
Key reasons why influencer marketing is booming on Instagram:
Visual appeal: People love engaging with photos and videos, making Instagram the perfect place to showcase products and services.
Diverse audience: Every niche has a dedicated follower base, from fitness enthusiasts to travel lovers.
Brand partnerships: Companies are eager to collaborate with influencers to promote their products in an authentic, relatable way.
Multiple revenue streams: Affiliates, sponsored posts, paid collaborations, and more.
Instagram is a highly effective way to connect with potential customers, and if you do it right, you can turn it into a profitable side hustle or even a full-time job.
Different ways to earn money on Instagram
Before diving into the specifics of German tax law, let’s explore how you can actually make money on Instagram. Whether you’re a small-scale creator or a major influencer, these methods are common ways to monetize your online presence.
Sponsored posts
Sponsored posts are among the most popular ways to earn money on Instagram. Brands pay you to create content featuring their products or services. Payment can be a set fee, commission, or even free products (which can trigger tax implications in Germany).
Affiliate marketing
With affiliate marketing, you promote a product or service using a unique link or discount code. You earn a commission whenever your followers make a purchase using your link. This is common in niches like fashion, beauty, and tech. It’s an attractive option for smaller influencers, as you don’t need a massive following to start earning.
Selling your products
Some influencers develop and sell physical or digital products (e.g., eBooks, merchandise, or courses). Instagram provides tools like Instagram Shopping to tag products in posts, making it easy for followers to purchase directly.
Services (e.g., consulting, caption writing, or photography)
Plenty of freelancers in Germany use Instagram to market their services. This could be anything from lifestyle photography to social media consulting. You showcase your portfolio on Instagram and land freelance gigs through your profile.
Dropshipping
In the dropshipping model, you sell products online without holding inventory. Your supplier handles the storage and shipping, and you focus on marketing the items on Instagram. Remember that in Germany, if you run a dropshipping business, you generally need a registered trade license (Gewerbeanmeldung) and must adhere to specific tax obligations.
Legal basics for Instagram influencers
For German-based influencers, there are specific laws governing influencer marketing, such as:
Werbekennzeichnung (Advertising Labeling): You must clearly label sponsored content to comply with German advertising regulations.
Data protection (DSGVO/GDPR): If you collect personal data (e.g., emails from giveaways), you must comply with GDPR rules.
Consumer protection: You must be transparent about collaborations, so followers know when you’re advertising or endorsing products.
Failure to comply with these laws can result in fines or legal problems. Therefore, it is important to stay updated on any new regulations affecting influencer marketing in Germany.
Do you need a business registration?
To earn money from Instagram in Germany, you may need to register a business, often called Gewerbeanmeldung. This depends on how you plan to monetize your Instagram activities:
Self-employed or freelancer: If you’re conducting commercial activities for profit, you must register your business.
An employee with a side hustle: Even if you have a main job as an employee, you might still need to register a side business if your Instagram earnings exceed a certain threshold or are more than occasional.
Exceptions: In some cases, if your Instagram activity is purely artistic or within certain creative professions, you might qualify under the Freiberufler (freelancer) category. However, most influencer activities promoting brands or products fall under trade (Gewerbe).
Once you register, the authorities will issue you a tax number. Keep all communication from the local Gewerbeamt (trade office) and your Finanzamt (tax office).
🙃 If you’re unsure whether your Instagram activity needs a trade registration or if you qualify as a Freiberufler, read the following article to get more clarity on the topic. These distinctions can significantly impact your tax obligations.
Key tax obligations: Income tax, trade tax, EÜR and VAT
Germany has specific tax rules that every influencer should know. The central taxes are Income Tax (Einkommensteuer), Trade Tax (Gewerbesteuer), EÜR (Einnahmenüberschussrechnung) and Value Added Tax (Umsatzsteuer) or VAT.
Annual basic allowance: For 2024, the basic tax-free allowance (Grundfreibetrag) is 11,604 EUR. If your total annual income (from both Instagram and other jobs) stays below this amount, you pay no income tax.
Side income threshold: If you only earn a small amount (e.g., a few hundred euros) via Instagram, you might stay under the tax-free allowance. However, if your main job plus your Instagram side income exceeds 11,604 EUR combined, you must declare and potentially pay taxes on your total income.
Tax returns: Even if you think you’re under the threshold, filing a tax return is wise to avoid misunderstandings. The Finanzamt can request additional documents or proof of income at any time.
Trade tax (Gewerbesteuer)
Who pays trade tax? Gewerbesteuer usually applies to those who engage in trade or commercial activity. Most influencers with regular brand deals, affiliate income, or product sales are considered to be running a commercial business.
Trade tax allowance: An annual allowance of 24,500 EUR on profits (not revenue). If your net profits (Gewinn) exceed 24,500 EUR, you’ll have to pay trade tax, which varies depending on the municipal trade tax rate (Hebesatz).
Calculation: You calculate your profits (Einnahmen minus Ausgaben), and if they’re above 24,500 EUR, you pay a percentage based on your local municipality’s trade tax rate.
General rule: You’re considered an entrepreneur under VAT law when you sell goods or services under German VAT law. This means you typically need to charge VAT on invoices, which is currently 19% (standard rate) or 7% (reduced rate), depending on the product or service type.
Kleinunternehmerregelung (small business regulation): If your revenue in the previous calendar year did not exceed 25,000 EUR and is not expected to exceed 100,000 EUR in the current calendar year, you can apply for the Kleinunternehmerregelung. Under this rule, you do not have to charge VAT on your invoices, nor do you submit monthly/quarterly VAT returns. However, you cannot reclaim input VAT (Vorsteuer) from your business expenses.
Opting out: Even if you qualify as a Kleinunternehmer, you can opt out of this rule and charge VAT. This might be advantageous if you have high business expenses and want to claim input VAT. Consult a tax advisor to determine if this is beneficial for you.
What is EÜR? Einnahmenüberschussrechnung is a simplified accounting method commonly used by small businesses, freelancers, and many influencers. It involves tracking revenues (Einnahmen) and expenses (Ausgaben), and the difference is your profit (or loss).
When to use EÜR: Generally, you can file an EÜR if your annual turnover remains under certain legal limits (e.g., below 600,000 EUR in revenue or 60,000 EUR in profit annually), and you’re not required to keep double-entry bookkeeping.
Advantages for influencers: EÜR is less complex, making it easier for influencers to manage their finances without hiring a large accounting team. However, proper record-keeping remains essential to avoid issues with the Finanzamt.
Pro tip: Track all your invoices and income to monitor whether you’re approaching or surpassing the thresholds for the Kleinunternehmerregelung. If you exceed these thresholds, you must register for VAT and file returns accordingly. Norman will help you track your expenses and income and verify whether you qualify for the Kleinunternehmerregelung.
How to handle free products and other gifts
Many influencers in Germany receive free products or perks from brands—ranging from cosmetics to travel accommodations. Here’s what you need to know:
Taxable income: According to German tax law, free products provided in exchange for a post, story, or promotional content are considered a form of income. You may need to declare the fair market value of those items.
Exceptions: Items of very low value (often referred to as Streuartikel, typically under 10 EUR in value) might be exempt. Products you test and then return are also typically not taxed.
Pauschal taxation: Sometimes, brands choose to handle the tax themselves by paying a lump-sum (pauschal) tax. If they do this and the product does not exceed certain value limits, you might not owe income tax on it. Verify this arrangement in writing.
Practical tip: Keep a simple spreadsheet listing each product, estimated retail price, date received, and whether or not you returned it, or use tools like Norman to keep them on track. This documentation will help you stay compliant if the Finanzamt has questions.
Working abroad as a German Instagram influencer
If you temporarily move abroad—for instance, to Dubai or Bali—but maintain your German residency (e.g., a permanent address in Germany), you generally remain subject to German income tax. Some influencers trigger a limited tax liability in the foreign country if they spend a certain amount of time there or establish significant economic ties. Double taxation agreements may apply, so you should check whether you owe taxes in both countries.
🎯 Always clarify your residency status if you plan to travel extensively or settle in another country while continuing to earn money on Instagram. This is a complex area of law, and mistakes can lead to significant fines or double taxation.
Bookkeeping tips for Instagram influencers
Accurate bookkeeping is essential for every Instagram influencer who wants to mit Instagram Geld verdienen (earn money on Instagram) in Germany. Here’s how to keep it simple:
Separate business and personal accounts: Open a dedicated bank account for all Instagram-related transactions. This makes it easier to track income and expenses.
Use accounting & tax automation software: 💼 Tools like Norman will automate invoice creation, categorize expenses, track incoming funds, and file taxes automatically. This will save you significant time and allow you to focus on your creativity.
Save every receipt: Keep digital or physical copies of all receipts from camera equipment to platform subscription fees. If you’re VAT-registered, you can often reclaim input VAT on eligible purchases.
Set aside funds for tax: Once a month, set aside a percentage of your earnings to cover income tax, trade tax (if applicable), and VAT. This helps avoid surprises when your tax bill arrives.
Be an Instagram influencer in easy mode with Norman
Norman is a solution designed to simplify life for influencers, freelancers, and self-employed individuals in Germany. If you’re an Instagram influencer seeking an effortless way to manage your accounting and stay compliant with German tax regulations, Norman can help you:
Automate invoicing: Create and send compliant e-invoices for brand collaborations or affiliate income.
Track expenses: Upload receipts on the go, categorize your expenses, and avoid losing important documents.
Monitor tax obligations: Keep track of thresholds for the Kleinunternehmerregelung, trade tax, and more, with tax filing on autopilot.
Stay compliant: Built-in compliance checks ensure you meet German tax requirements, even as regulations change.
Register self-employment: With Norman, you can file the Fragebogen zur steuerlichen erfassung form to register as a self-employed or freelancer.
With Norman, you can focus more on growing your Instagram presence and less on navigating complex tax and accounting tasks.
Frequently Asked Questions (FAQ)
Do I always need to register a business if I make money on Instagram?
If you are regularly earning money from Instagram, you usually need to register a business (Gewerbe) unless your activity is purely freelance under specific artistic categories. Most influencer work is considered commercial. If in doubt, consult a tax advisor.
What if I only earn a small amount from Instagram?
Even small earnings might require you to file a tax return. If your total income for the year (including your main job) stays below the basic allowance (11,604 EUR in 2024), you won’t owe income tax. However, you must still disclose your income if the Finanzamt requests it.
Are free products really taxable income?
Yes, free products given in exchange for promotion are generally considered taxable. However, there are some exceptions for low-value items and returned products. To stay compliant, track the fair market value of items.
How do I know if I qualify for the Kleinunternehmerregelung?
You may qualify if your revenue did not exceed 25,000 EUR in the previous year and is not expected to exceed 100,000 EUR in the current year. This means you don’t have to charge VAT. Keep records of your revenue to make sure you stay below these limits.
What happens if I don’t pay taxes as an influencer?
Failing to meet tax obligations can result in fines, back taxes, and even criminal charges for severe cases. The German tax authorities are paying closer attention to influencers, so it’s crucial to remain transparent and compliant.
Final thoughts
Earning money on Instagram in Germany can be a fantastic way to turn your passion into profit, whether you’re a self-employed entrepreneur, freelancer, or an employee looking to boost your income. However, it comes with responsibilities—especially regarding taxes. By following the steps in this guide and using tools like Norman, you’ll be well-prepared to handle the administrative side of being an influencer. Remember: staying informed and organized is the key to success, both on Instagram and with the German tax authorities.