Online Affiliate Programs - Income Taxation

Service-Tax

Taxpayers are increasingly starting to earn money online. For this purpose, they join various types of affiliate programs. However, the issues of their accountability, as practice shows, pose problems for them. They often end in a dispute with tax authorities. How are online affiliate programs taxed?

Online affiliate programs - how to settle accounts?

The PIT Act contains, in art. 10 sec. 1 catalog of sources of income, the income from which is subject to taxation according to the rules specified for a given source of income.

On the basis of the PIT Act, the correct classification of the income is of fundamental importance for the taxation of earned income. It is also important to determine whether we are dealing with a business or other source of income under online partnership programs.

Pursuant to the PIT Act, economic activity means gainful activity:

  • manufacturing, construction, trade, service,

  • consisting in searching for, identifying and extracting minerals from deposits,

  • consisting in the use of things and intangible assets

- conducted on its own behalf, regardless of its result, in an organized and continuous manner, from which the revenues obtained are not included in other revenues from the sources listed in art. 10 sec. 1 points 1, 2 and 4-9 of the PIT Act.

Internet space rental

Under the provisions of the PIT Act, the issue of proper qualification of revenues from providing space for remuneration on the website has been interpreted by both tax authorities and court judgments. When advertising space is made available, this income can be taxed under two different sources of income, i.e .:

  • non-agricultural business activity,

  • a separate source of income, which is leasing.

The position of the tax authorities was that the revenues from the lease of space should absolutely be accounted for as revenues from economic activity.

However, the administrative courts were of the opinion that if the space is not rented as part of a business activity, the remuneration received by a natural person managing a website should be classified as a source of income from lease, tenancy or other similar contracts (Article 10 par. 1 point 6 of the Personal Income Tax Act). The courts indicated that the contract under which one entity provides another entity with the possibility of displaying specific content (usually advertising) on ​​the website is an unnamed contract similar to rental or lease. Although the subject of such a contract is neither the lease of things, nor the lease of things or rights, however, it is commissioned to use a virtual entity, which is part of the area of ​​the website.

We can find such a position, among others in the judgment of the Supreme Administrative Court of 9 March 2012, file ref. II FSK 1548/10 or the judgment of the Supreme Administrative Court of 19 June 2012, file ref. II FSK 2485/10.

Bearing in mind the above judgments, the Minister of Finance issued a general ruling of 5 September 2014, No. DD2 / 033/55 / ​​KBF / 14 / RD-75000, in which he stated, inter alia, that:

(...) a natural person providing a place on the website in order to post content of the nature, inter alia, advertising, for remuneration, obtains income from a contract of a similar nature to a rental or lease contract. Revenues on this account should be qualified as the source of revenues referred to in Art. 10 sec. 1 point 6 of the PIT Act, provided that they are not obtained as part of business activity. Income from this source of income is subject to taxation on general principles, according to the progressive tax scale specified in art. 27 sec. 1 of the PIT Act (...).

Review revenue

It is becoming popular to post product reviews on your websites as part of affiliate programs, for which website creators receive appropriate remuneration.

The sources of revenues have been enumerated in Art. 10 of the PIT Act. In paragraph 1 point 9 of this provision, other sources were indicated.

Income from the so-called other sources are defined in Art. 20 paragraph 1 of the PIT Act. Pursuant to this provision, revenues from other sources include in particular: amounts paid after the death of a member of an open-ended pension fund to a person designated by him or a member of his / her immediate family, within the meaning of the provisions on the organization and operation of pension funds, amounts obtained from an individual account old-age security and payments from an individual retirement security account, including those made for the benefit of the entitled person in the event of the saver's death, cash benefits from social insurance, alimony, scholarships, subsidies (subsidies) other than those mentioned in art. 14, surcharges, awards and other free benefits not included in the revenues referred to in Art. 12-14 and 17.

The wording used in this provision indicates in particular that it contains only an exemplary calculation of revenues, which means that capital gains, not included in other sources of revenues, constitute revenues covered by this provision.

Therefore, it should be considered that the revenues from participation in the online program for the placement of reviews should be classified among other sources. Such a position was confirmed by the Director of the Tax Chamber in Katowice in a letter of October 11, 2016, file ref. IBPB-2-2 / 4511-676 / 16-1 / KRB, where we can read:

(...) the income (income) obtained from participation in the program described in the application constitutes, as the Applicant rightly claims, income from other sources referred to in Art. 10 sec. 1 point 9 in connection with Art. 20 paragraph 1 of the Personal Income Tax Act (...).

The moment when income from participation in the Internet program arises will be the moment when the funds are left at your disposal, i.e. most often - the moment of their impact on the account. The income must be shown in the PIT-36 tax return submitted for a given tax year and the tax due on the sum of income obtained must be calculated according to the tax scale specified in art. 27 sec. 1 of the PIT Act, i.e. depending on the sum of total income obtained by the taxpayer in a given tax year, taking into account the first or second tax threshold, i.e. 18% and 32%.