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OnlyF, an online platform known for its adult content, should pay UK value-added tax (VAT) on the full amount subscribers pay to content creators, not just a 20% cut, EU legal counsel said on Thursday.
OnlyF was founded in 2016 and has over 100 million users. During the pandemic, OnlyF has flourished as a way for developers to make money by selling content directly to paying subscribers.
OnlyF operator Fenix sued in UK courts after UK tax authorities ordered it to pay VAT on all payments made by fans, not just the 20% VAT it receives from creators for services such as collection and distribution fees .
The tribunal then sought advice from the European Supreme Court (ECJ). The application was made before the UK leaves the EU in 2020.
European Court of Justice defence lawyer Athanasios Rantos said the court should confirm that the UK’s provisions for applying EU VAT rules to online platforms are valid and do apply to OnlyF.
“The regulation implementing the VAT Directive, which stipulates that online intermediary platforms are in principle subject to VAT, is valid,” he said in a non-binding statement.
“The relevant provisions of the VAT Directive do not impose any restrictions on its scope or scope. Consequently, no class of services are excluded from the substantive scope of the clause,” he said.