Tax Treaty Monitor
OECD/International
Influencer Income and Tax Treaties
This article considers the categorization of the
income earned by influencers in relation to tax
treaties, with specific reference to the allocation
of such income to articles 7, 12 and 17 of the
OECD Model.
1. Introduction
1.1. Income generation by influencers
New social media platforms have revolutionized human
communication. However, not only do they influence
social interaction, but they also present opportunities for
their users to express themselves. Ordinary people use
these platforms without the intention of going beyond
that. Nevertheless, some people make their living or even
make a fortune by doing so. At the outset, they start small
by posting some photographs or videos on well-known
social media platforms, for example, Facebook or, more
commonly, Instagram, through which they gradually
draw the attention of more and more users of these plat-
forms, becoming popular by being respected for their, for
example, fashion choices. That, in turn, draws the atten-
tion of many companies who identify these individuals as
having the potential to advertise their products.
These individuals are broadly referred to as influencers.
Their primary activity is to upload pictures or videos from
their daily lives, i.e. trips, events, moments of relaxation,
etc., on these platforms. On these photographs or videos,
products of a brand supporting them financially are often
visible. Such products are also praised by the influencer
by way of comments accompanying the picture or video.
This form of advertising is referred to as product place-
ment. Beyond advertising income from product place-
ment, influencers can also derive income from other
sources. The very best of them become so famous that
companies wish to use their image or name, for example,
to put on products, i.e. income for the use of, or the right to
use, image or name rights.1 They also often participate in
big events with all costs covered by the companies whose
products are advertised by the influencers, i.e. sponsor-
* LLM, LLM (Eur) and research associate at the Max-Planck Insti-
tute for Tax Law and Public Finance in Munich. The author
wishes to thank Prof. Dr Dr h.c. Wolfgang Schön for his invalu-
able support in writing the article. The author also thanks Prof.
Dr Craig West and Prof. Johann Hattingh for their comments
on earlier drafts of the article. Any errors or omissions in this
article are the author’s own. The author can be contacted at
savvas.kostikidis@tax.mpg.de.
1. “If you have a great relationship with an influencer, they may let you
use their photograph on your website (with a link to their profile.) Most
of the time, however, you will have to purchase image rights.” See obvi-
ously, Legal Use of Influencer Content (2019), available at www.obv
ious.ly/blog/2018/8/15/wi13p1pn6dpz4fa7nygnta8hfq6ev4 (accessed
19 Mar. 2020).
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Savvas Kostikidis*
ship income.2 Some even design their own collections
and sell their products, i.e. merchandizing income.3 It is,
therefore, apparent that influencers derive many differ-
ent forms of income, which should be treated separately
when it comes to their taxation. These individuals can be
internationally active, which makes the treatment of their
income a matter of international tax law and an important
matter to be deal with.
Take, for example, a well-established influencer who
resides (the state of residence or the residence state) in
Germany and travels for a fashion show to London (the
state of source or the source state).4 The influencer posts
during or after the fashion show pictures of it on Insta-
gram with the brand of a well-known clothing company
clearly visible together with a flattering comment prais-
ing the clothing company. All of the expenses of the influ-
encer are covered by the clothing company, and, addition-
ally, compensation for the time spent by the influencer is
granted in conjunction with an in-kind payment, i.e. the
clothes advertised are given to them free.5
2. “Larger, high-tier influencers do have opportunities for speaking
engagements and in-store appearances,” see Mic, How much money
do influencers actually make? (13 Feb. 2019), available at www.mic.
com/articles/192799/how-much-money-do-influencers-actually-make
(accessed 17 Mar. 2020).
3. For instance, the famous German blogger Farina Opoku has opened her
own online shop, through which she sells her own products. See Farina
Opoku, available at www.farinaopoku.de/ (accessed at 27 Feb. 2020).
4. State of source is understood the state of activity. This is an important
limitation of the scope of the term “source”, since, as commentators
inform us, “[t]he origin of income does not seem to be self-evident”. See
E.C.C.M. Kemmeren, Source of Income in Globalizing Economies: Over-
view of the Issues and a Plea for an Origin-Based Approach, 60 Bull. Intl.
Taxn. 11, sec. 2.3.1.1. (2006), Journal Articles & Papers IBFD. Courts
have had to decide whether the “source” of income from athletic per-
formances is the residence of the payer. Pro, see the decision of the Swiss
Bundesgericht/Tribunal fédéral (Federal Supreme Court, Bg/Tf) in CH:
Bg/Tf, 6 May 2008, Case 2C_276/2007, para. 6.2., Case Law IBFD and
contra, see that of the UK House of Lords (HL) in UK: HL, 17 May
2006, Agassi v. Robinson, UKHL 23 (2006), paras. 17(2) and (3) as per
Lord Scott of Foscote. See also C. West, The Taxation of International
(non-resident) Sportspersons in South Africa p. 115 (U. Cape Town 2009),
available at https://open.uct.ac.za/handle/11427/5618 (accessed 18 Mar.
2020): “[t]he source rules do not specify by whom or when the payment
must be made”.
5. It very often is the case that influencers earn in-kind income: “54%
of social media influencers say they’d be more likely to posts [sic] in
exchange for free products or in-kind if they’re a genuine fan of the
brand or product”. See Your Influencer, Average Salary of an Instagram
Influencer, available at www.influencer.yrcharisma.com/average-sal
ary-of-instagram-influencer/ (accessed 17 Mar. 2020). Whether a
payment is made in cash or in-kind does not play a role with regard to
the allocation of the taxing rights thereon. The term “income” for the
purposes of the allocation of taxing rights “may include … every actual
advantage (every increase in wealth, every shift or increase in property
[sic] …)” and “The form of the payment should not be decisive”. See,
respectively, P.J. Wattel & O.C.R. Marres, Characterization of Fictitious
Income under OECD-Patterned Tax Treaties, 43 Eur. Taxn. 3, sec. 2.1.
(2003), Journal Articles & Papers IBFD and R. Ismer & A. Blank, Article
2, in Klaus Vogel on Double Taxation Conventions 4th edn., para. 36
(E. Reimer & A. Rust eds., Kluwer L. Intl. 2015).
Bulletin for International Taxation June 2020 359
Savvas Kostikidis
Apart from the question of whether the compensation
for the expenses for the fashion show comprises taxable
income, which has to be answered by the relevant domes-
tic law,6 a series of issues arise within the framework of
international tax law. To begin with, the tax jurisdic-
tions involved may claim the taxing rights in respect of
the income generated from the activities of the influ-
encer. Which state may levy taxes - the United Kingdom
as state of source or Germany as the state of residence of
the influencer? Making the example a little more com-
plicated highlights an additional issue. Suppose that an
influencer receives a lump sum, i.e. a single payment of
money, as opposed to a series of payments made over time,
for their participation in a series of events and fashion
shows, which take place all over Europe. If it is assumed
further that the source state has the taxing right over the
income, how should the lump-sum payment be appor-
tioned among the source states involved? Consequently,
there are two further issues with regard to the interna-
tional taxation of influencer income. First, as section 2.
demonstrates in detail, in order to point to the state that
has the taxing right regarding an item of income (the
source or residence state), it is necessary to determine
how the tax treaty between the states involved treats the
item of income in question, i.e. “vertical apportionment”.
Second, where the source state has the taxing right on an
item of income derived from an influencer activity, the
apportionment of the income between the source states
involved must be clarified, i.e. “horizontal apportion-
ment”.7 Issues, such as tax administration and enforce-
ment aspects pertaining to influencers, are not consid-
ered here. Also, the treatment of income arising from sales
through the activity of influencers that is received by the
companies whose products are advertised is not subject to
investigation. What is examined in this article are the two
issues outlined above regarding income that is received
by the influencers themselves and this only within the
treaty framework.
1.2. Treaty framework
Countries regulate the allocation of taxing rights by con-
cluding tax treaties. These are, to a great extent, based on
the OECD Model.8 The OECD Model consists of a series
of articles that treat different types of income. With regard
to income derived from influencer activities, several arti-
6. F. Wassermeyer, Article 17, in Doppelbesteuerungsabkommen (Double
taxation agreements) paras. 35 and 47 (F. Wassermeyer ed. C.H. Beck),
(Mar.2019). German income tax law, for example, would classify such
in-kind income as taxable income. See A. Brunckhorst & C. Sterzinger,
Ertragsteuerliche Beurteilung von Bloggern, Podcastern und YouTu-
bern, 56 Deutsches Steuerrecht 32, p. 1693 (2018). This issue has also
drawn the attention of Greek tax authorities. See G. Agouridis, Greek
Tax Authorities target “influencers”, Independent Balkan News Agency
(IBNA) (5 Feb. 2019), available at https://balkaneu.com/greek-tax-au
thorities-target-influencers (accessed 17 Mar. 2020).
7. This approach and terminology regarding income from entertainers
and sportspersons is used by A. Cordewener, Tax Treaty Issues Related
to Qualification, Allocation and Apportionment of Income Derived
by Entertainers and Sportspersons, in Taxation of Entertainers and
Sportspersons Performing Abroad sec. 6.4., p. 122 (G. Maisto ed., IBFD
2016), Books IBFD.
8. Most recently, OECD Model Tax Convention on Income and on Capital
(21 Nov. 2017), Treaties & Models IBFD.
360 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
cles of the OECD Model are relevant, each entailing dif-
ferent legal consequences. The first distributive rule that
comes to mind is article 17(1) of the OECD Model.9 Under
this provision, income derived by a resident of a contract-
ing state as an entertainer or as a sportsperson from that
resident’s personal activities as such exercised in the other
contracting state, may be taxed in that other state, i.e. the
source state.
Influencer activities could be treated according to a more
general provision dealing with income from independent
services, i.e. article 7(1) of the OECD Model.10 Article 17
of the OECD Model is a lex specialis in relation to article
7(1), as the former deals with the taxation of a specific
category of persons, i.e. sportspersons and entertainers.
In these circumstances, under article 7(4) of the OECD
Model, the special provision takes priority over article 7.
This lex specialis relationship between the two provisions
entails that the application of article 7(1) of the OECD
Model is not excluded by article 17.11 In other words, the
more general provision applies whenever the more special
provision does not. Accordingly, if article 17 of the OECD
Model does not apply with regard to influencer income,
article 7(1) applies. The latter provision requires, in con-
trast to article 17(1) of the OECD Model, the existence
of a permanent establishment (PE) in the source state to
enable source taxation.
Under article 5(1) of the OECD Model, a PE is a fixed
place of business in the source state. From that it follows
that source taxation according to article 7 of the OECD
Model requires a long-term (“fixed”) presence in the
source state.12 Even other forms of PE that do not require
a fixed presence in the source country, for example, an
agency and a services PE, contain substantial threshold
9. It is assumed that influencers receive the income directly and not
through another person, in which case article 17(2) of the OECD Model
(2017) would apply. This provision is, therefore, not dealt with.
10. The scope of this article is restricted only to cases where influencers
provide independent services so that article 15 (Income from employ-
ment) of the OECD Model (2017) is disregarded. This position has
been adopted, as influencers “most likely work as [sic] independent
contractor[s] for the companies [they] promote.” See Editorial Team,
Filing Taxes for YouTubers, Bloggers, and Other Social Media Influenc-
ers, TaxSlayer (6 Sept. 2019), available at www.taxslayer.com/blog/fil
ing-taxes-for-youtubers-bloggers-and-other-social-media-influencers
(accessed 28 Mar. 2020). Article 7(1) of the OECD Model (2017) requires
that “business is carried on” (emphasis added) as well as the existence of
an “enterprise”. Both requirements are fulfilled in the case of influenc-
ers independently offering their service, as the content of terms “busi-
ness” and “enterprise” is interpreted widely. With regard to these two
terms, see S. Kostikidis, Die Abgrenzung zwischen Einkünften aus unbe-
weglichem Vermögen und Unternehmensgewinnen im OECD-Musterab-
kommen, 97 Steuer und Wirtschaft 1, p. 50 et seq. (2020).
11. B. Clark, Robert Mitchum 17 - Australian Taxation Office 0: The Taxa-
tion of International Athletes, 10 Bond L. Rev. 1, p. 127 (1998).
12. OECD Model Tax Convention on Income and on Capital: Commentary
on Article 5, para. 6, second sentence (21 Nov. 2017), Treaties & Models
IBFD: “[t]his place of business must be “fixed”, i.e. it must be estab-
lished at a distinct place with a certain degree of permanence”. Here,
it should be noted that countries following the UN Model Double Tax-
ation Convention between Developed and Developing Countries (1 Jan.
2017), Treaties & Models IBFD tax services, and that is what influenc-
ers offer, without the requirement for the existence of a PE. Still, under
article 14 of the UN Model (2017), a taxpayer either must have a “fixed
base” (article 14(1)(a)) or their “stay”, i.e. physical presence, must exceed
183 days in a 12-month period (article 14(1)(b)). So, there is a substantial
threshold requirement here as well.
© IBFD

requirements. In particular, on the one hand, an agency
PE requires that activities are being “habitually” carried
out.13 On the other hand, a services PE requires a sub-
stantial number of days of physical presence in the source
country,14 thereby requiring that the number of days on
which services are provided in the source state exceeds 183
days in a 12-month period. In contrast, for article 17 of the
OECD Model to apply, a short-term income-generating
activity suffices to grant the taxing right to the state of
source, as article 17 does not stipulate a threshold require-
ment, such as a PE, for source taxation to arise. Return-
ing to the example, according to article 17 of the OECD
Model, the United Kingdom would have the right to tax,
whereas, if article 7 applied, Germany, as the state of resi-
dence, would have the taxing right for income accrued in
the United Kingdom, as, in the latter state, there would be
no PE. And it can be generally ascertained that an influ-
encer does not have a PE in any source state due to their
extreme mobility and not staying a long term in any state,
other than their residence state.
Another provision that could apply, especially with regard
to income for the use of, or the right to use, the image
and/or name of an influencer is article 12 of the OECD
Model.15 In principle,16 article 12 of the OECD Model, like
article 7(1) and in contrast to article 17, provides for res-
idence taxation:
Royalties arising in a Contracting State [source state] and bene-
ficially owned by a resident of the other Contracting State [resi-
dence state] shall be taxable only in that other State.
Because of this difference regarding the allocation of
taxing rights, the demarcation between articles 12 and
17 of the OECD Model is of significant importance.
With regard to article 12 of the OECD Model, the
income-generating factor is not an activity undergone
but, rather, the exploitation of rights. Accordingly, income
from the exploitation of rights is henceforth denoted
as “exploitation income” in contrast to “performance
income”. So, articles 12 and 17 of the OECD Model never
refer to the same income-generating event. On the one
hand, if the activity itself is the income-generating event,
only article 17 of the OECD Model applies, and article 7,
of course, as the general provision if the requirements of
article 17 are not met. On the other hand, if an item of
income emanates from the exploitation of rights on an
activity, article 12 of the OECD Model applies, or article 7
being a general provision also to article 12, thereby apply-
ing when the requirements of the latter are not met, for
example, none of the rights referred to in article 12(2) are
exploited. Consequently, articles 17 and 12 cannot apply
to the same income-generating event. Their relationship
is one of mutual exclusion.17 If, for example, an influencer
13. Art. 5(5) OECD Model (2017).
14. Art. 5(3)(b) UN Model (2017).
15. Para. 9, fifth sentence OECD Model: Commentary on Article 17 (2017).
16. The words “in principle” are used because tax treaties, for example,
based on the UN Model, may permit the source state to levy withhold-
ing taxes. See article 12(2) of the UN Model (2017).
17. A. Cordewener, Article 17, in Reimer & Rust eds., supra n. 5, at para.
19; Wassermeyer, supra n. 6, at para. 18. Referring to the relationship
between articles 12 and 17 of the OECD Model (2017) as “implicit”, see
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
takes part in a television advertising, the income-generat-
ing event is this activity, and, therefore, articles 7 and 17
apply. If, on the other hand, an influencer transfers to a
clothing company the right to use their face as a logo on
t-shirts of their brand, only articles 7 and 12 of the OECD
Model come into play, as the income is not generated by
“the activity as such”, but, rather, by the exploitation of
rights. Of course, this distinction is not always that easy
to make, which can easily lead to qualification conflicts as
experience, i.e. existing case law, demonstrates.18
In sum, articles 7 and 12 of the OECD Model, at least in the
case of entertainers and sportspersons in light of the fact
that their stay in the source state is normally short term,
provide for residence taxation. Consequently, income
falling under these provisions is allocated only to one
state, i.e. the residence state. On the contrary, article 17
of the OECD Model enables source taxation without the
necessity of fulfilling any threshold requirements. Due to
the difference in the allocation of taxing rights between
articles 7 and 12 of the OECD Model stipulating residence
taxation, on the one hand, and article 17 stipulating source
taxation, on the other, the vertical apportionment between
these provisions is a crucial issue. The vertical apportion-
ment between these provisions is pivotal also for another
reason. They may stipulate different methods of avoidance
of double taxation, i.e. the exemption or credit method.19
This situation became evident in a recent German case,
in which the demarcation line between another provi-
sion and not articles 7 and 12 of the OECD Model, i.e.
article 15, and article 17 was in question.20 The demarca-
A.J. Martín Jiménez, Article 12: Royalties (OECD and UN Models) and
Article 12A: Technical Services (UN Model (2017)) – Global Tax Treaty
Commentaries sec. 6.2.9, Global Topics IBFD, although it is submitted
that this author also focuses on whether there exists a transferable right
for which the payment is made. If no such right exists, article 12 OECD
Model (2017) cannot be applied in the first place. What is being said is
that the relationship between articles 12 and 17 OECD Model (2017) is
an “either-or-relationship”. Either there is a transferable right and the
payment refers to it and article 12 OECD Model (2017) applies, or there
is no such right and the payment refers to the activity, and, therefore,
(only!) articles 7 and 17 apply.
18. An historical example offers the dispute between Germany and the
United States in the famous case of Boulez (1984), for which, see infra.
Germany claimed that income gained by the German resident (the state
of residence) conductor Pierre Boulez from the sales of live concert
recordings that took place in the United States (the state of source) was
taxable in Germany, as Convention between the United States of America
and the Federal Republic of Germany for the Avoidance of Double Tax-
ation with Respect to Taxes on Income art. 12 (22 July 1954), Treaties &
Models IBFD applied, which corresponded to article 12 of the OECD
Model. On the other hand, the opinion of the United States was that
performance income, in this case income from personal services, was
in question and, therefore, the taxing right thereon was to be allocated
to the United States. The US Tax Court (TC) classified the income as
income from personal services, as Mr Boulez “had no licensable or
transferable property rights in the recordings”. See US: TC, 16 Oct. 1984,
Pierre Boulez v. Commissioner of Internal Revenue, Docket No. 12705-79,
Reports of the US Tax Court (1984), p. 584 (at p. 595), Case Law IBFD.
19. Arts. 23A and 23B OECD Model (2017).
20. See the decision of the German Bundesfinanzhof (BFH) in DE: BFH,
30 May 2018, I R 62/16, Entscheidungen des Bundesfinanzhofs vol. 262,
p. 54. The BFH regarded the taxpayer as an entertainer for the purposes
of article 17 of the OECD Model (see I R 62/16 (2018), supra, at paras.
24-25). It also found that article 17 of the OECD Model applied with
regard to both income from performances and income attributable to
rehearsals that took place without the presence of public (see I R 62/16
(2018), supra, at para. 26 et seq.).
Bulletin for International Taxation June 2020 361
Savvas Kostikidis
tion line between articles 15 and 17 of the OECD Model
was of importance in that case, as Germany wanted to tax
income of its resident taxpayer from performances as an
opera choir singer and rehearsals both of which took place
in Switzerland, although the latter being without the pres-
ence of public. It could do so only if article 17 of the OECD
Model, and not article 15, applied to the income in ques-
tion. That was because article 15 of the OECD Model pro-
vided for an exemption of the foreign, i.e. Swiss, income
from the German tax base, whereas, under article 17, the
foreign tax was to be credited against the German tax.21
As the German tax rate was higher than the Swiss one,
Germany would have been allowed to tax the income
after the application of the credit method.22 This position
presupposed that article 17 of the OECD Model and not
article 15 applied.
The second issue relates to the horizontal apportionment
of income falling within article 17 of the OECD Model.
As article 17 of the OECD Model provides for source tax-
ation, the situation often arises that more than one source
state is involved, all of them have a taxing right on the
income falling under article 17 and all of which want to
assert their taxing rights. In this respect, the questions to
be answered relate to which apportionment formulas are
currently suggested and whether a tailor-made formula
only for the case of influencers could be desirable and fea-
sible.
So, the different distributive rules coming into play with
regard to influencer income have also different legal con-
sequences regarding both apportionment issues refer-
ring to influencer income, i.e. vertical and horizontal
apportionment. Accordingly, this article adopts a two-
step approach. First, the different items of income gained
by influencers, as presented in section 1.1., are allocated
to the applicable distributive rule. The starting point
is article 17 of the OECD Model. Only after its scope is
clarified, can it be indicated which items of income can
fall under articles 7 and 12 of the OECD Model. That is
because article 17 of the OECD Model is a special provi-
sion in relation to article 7 and its ambit does not interact
with the one of article 12, given the either-or relationship
of the two articles (see section 2.). Then, the horizontal
apportionment of income falling under article 17 of the
21. I R 62/16 (2018), supra 20, at para. 21. This is in accordance with para-
graph 12 of the OECD Model: Commentary on Article 17 (2017), which
recommends that states adopt the credit method. Adopting the credit
method constitutes a deviation from the general German treaty policy,
which stipulates the exemption method as the rule of thumb. So,
Germany follows the group of countries “deviat[ing] from their general
tax treaty policy, in which they normally use the exemption method”.
“Many countries follow this recommendation [of the Commentary]
as a compensation for foreign taxation”. See D. Molenaar, Taxation of
International Performing Artistes sec. 7.3.1., p. 181 (IBFD 2006), Books
IBFD. With regard to the German treaty policy on the method of relief
of double taxation, see Kostikidis, supra n. 10, at p. 49.
22. This is called the deficit credit. See R. Altshuler & H. Grubert, Repatri-
ation taxes, repatriation strategies and multinational financial policy, 87
J. Pub. Econ. 1, p. 79 (2003). An example may help the reader to com-
prehend this effect. If a resident in State A is taxed in State B on EUR
10, 000 of income derived there at a rate of 10%, thereby amounting
to EUR 1,000 of creditable tax, and State A taxes the same amount on
a rate of 20%, thereby amounting to tax of EUR 2,000, the difference,
i.e. EUR 2,000 – EUR 1,000 = EUR 1,000, is still payable in State A.
362 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
OECD Model, i.e. the apportionment of income between
more than one source state in which influencer activities
take place, will be dealt with (see section 3.). In section 3.,
which rules apply is discussed with regard to the income
apportionment under article 17 of the OECD Model and
which are preferable for influencer income.
2. Vertical Apportionment of Influencer Income:
Article 17 of the OECD Model
2.1. The purpose of article 17 of the OECD Model
Article 17 of the OECD Model deals with the allocation of
taxing rights for non-resident entertainers and sportsper-
sons. It stipulates that the state of source has the taxing
right regarding income from the performance executed
therein. It has already been pointed out that this alloca-
tion, unlike other rules enabling source taxation, i.e. in
relation to articles 7(1) and 12(3) of the OECD Model, is
not contingent on the fulfilment of threshold require-
ments. This approach can only be comprehended if focus
is placed on the original purpose of the enactment of
article 17 of the OECD Model.
In principle, source taxation is attributable to the fact
that the source state provides to non-residents operating
business within its territory almost the exact same ben-
efits it is offering to residents, who are subject to taxa-
tion with their worldwide income. As a result, non-resi-
dent taxpayers, in return, have the obligation to contribute
financially to the state providing them with these benefits,
and, therefore, subject the income accruing therein to tax-
ation, i.e. benefit principle.23 The state of source should be
able to assert tax jurisdiction with regard to income from
entertainers and sportspersons. It is the state providing
the infrastructure needed for these taxpayers to execute
their performance and the marketplace where the product
of that performance is brought. A big sport tournament
can take place, for example, only in specific states which
have the necessary infrastructure to host it. Consequently,
doctrine associates source taxing rights provided for in
article 17 of the OECD Model with the benefit principle.24
However, other scholars25 see, primarily, tax policy reasons
behind the enactment of article 17 of the OECD Model.
It is argued that source taxation without any threshold
requirements stipulated in article 17 of the OECD Model
is the outcome of the suspicion of the OECD that enter-
tainers and sportspersons do not declare their income in
the state of residence. Accordingly, it is important for the
practicality of their taxation to enable the source state,
which has easier access to information regarding the exe-
23. For a critical analysis of the benefit principle, see W. Schön, International
Tax Coordination for a Second-Best World (Part I), 1 World Tax J. 1, sec.
2.2.2.1. (2009), Journal Articles & Papers IBFD.
24. Y. Wagner, The Historical Background of Art. 17 OECD Model, in Tax-
ation of Artistes and Sportsmen in International Tax Law p. 63 et seq.
(W. Loukota ed., Linde 2007) and R. Kreisl, Treatment of Artistic Income
where there is no Public Performance according to the OECD Model, in
Loukota ed., supra, at p. 144.
25. H. Grams, Artist Taxation: Art. 17 of the OECD Model Treaty – A Relic
of Primeval Tax Times?, 27 Intertax 5, p. 189 (1999) and J.A. Nitikman,
Article 17 of the OECD Model Treaty – An Anachronism?, 29 Intertax
8/9, p. 268 et seq. (2001).
© IBFD

cution of the performance taking place in its territory, to
levy tax irrespective of threshold requirements so that
these taxpayers do not fully evade taxation. As a result,
the provision has an anti-evasion character. This finding
derives mainly from the 1987 OECD Report entitled “The
Taxation of Income Derived from Entertainment, Artistic
and Sporting Activities”:
[s]ophisticated tax schemes, many involving the use of tax
havens, are frequently employed by top-ranking artistes and
athletes.... Travel, entertainment and various forms of ostenta-
tion are inherent in the business and there is a tendency to be
represented by adventurous but not very good accountants. 26
Aside from the general scepticism expressed by the OECD
towards the entertaining and sport business circle, the
Commentary on Article 17 of the OECD Model provides
a more subtle explanation with regard to the attribution
of source taxing rights and connects the latter with the
avoidance of “practical difficulties” concerning income
gained by entertainers and sportsperson.27 The OECD
currently justifies the retention of article 17 of the OECD
Model with the following statement, also explaining what
are the practical difficulties accompanying the taxation of
entertainers performing abroad:
[r]esidence taxation [with respect to income gained by non-res-
ident entertainers and sportspersons] should not be assumed
given the difficulties of obtaining the relevant information, that
Article 17 allows taxation of a number of high-income earners
who can easily move their residence to low-tax jurisdictions and
that source taxation of the income covered by the Article can be
administered relatively easily. 28 (Emphasis added)
Taken together, a combination of these justifications
makes sense. Taxation in the source state can be attributed
to the application of the benefit principle. Moreover, it is
the nature of income from entertaining and sport activ-
ities that justifies a special provision governing the ver-
tical apportionment of taxing rights due to the recipi-
ent of that income being mobile and earning substantial
sums outside their residence state in which they tend to
under-declare income.
26. OECD, The Taxation of Income Derived from Entertainment, Artistic and
Sporting Activities para. 7 et seq. (OECD 1987), Primary Sources IBFD.
27. Para. 2 first sentence OECD Model: Commentary on Article 17 (2017).
28. OECD, Issues Related to Article 17 of the Model Tax Convention para.
5 (OECD 2014) [hereinafter OECD, Report (2014)). Admittedly, it
could be argued that, if source taxation is based on the rationale that
big amounts of income are generated in the source jurisdiction and
that high-income earners are susceptible to relocating their residence,
source taxation should also be levied (for equality reasons) with regard
to all individuals that fulfil these requirements. However, this article
is restricted to classifying influencer income according to the OECD
Model (2017) and does not intend to make such a policy recommenda-
tion. See also infra n. 50. On these issues, see B.J. Arnold, The Taxation
of Income from Services under Tax Treaties: Cleaning Up the Mess, 65
Bull. Intl. Taxn. 2, sec. 2.3.9. (2011), Journal Articles & Papers IBFD,
contemplating whether “the scope of Art. 17 could be expanded to deal
with more types of high-value services, i.e. situations in which taxpay-
ers other than entertainers or athletes can earn substantial amounts in
a short time in a source country” and “a monetary threshold for source
country taxation [could be introduced] so that non-residents earning
relatively small amounts of income in the source country are not faced
with compliance issues”.
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
2.2. The personal scope of article 17 of the OECD
Model
2.2.1. Opening comments
Section 1. describes the core of influencer activities. Influ-
encers share their private and public life with the users of
social platforms, like Instagram, by posting photographs,
videos, etc. It is questionable whether income derived from
such activities falls under article 17 of the OECD Model,
which refers to the income of entertainers and sportsper-
sons. In order for article 17 of the OECD Model to apply,
two requirements of the article need to considered further.
First, article 17 of the OECD Model applies only to income
realized by a specific type of person, i.e. entertainers or
sportspersons (the “personal scope”). Second, article 17
of the OECD Model applies only to income from a resi-
dent’s activities exercised as such, which emphasizes that
not every item of income realized by an entertainer or
a sportsperson falls within the ambit of article 17 of the
OECD Model (the “objective scope”). This section focuses
on the personal scope of article 17 of the OECD Model.
Only when that requirement is fulfilled, can the analy-
sis be extended to consider whether influencer income
falls within the objective scope of article 17 of the OECD
Model (see section 2.3.). The analysis commences with
some general remarks on the content of the personal scope
of article 17 of the OECD Model (see section 2.2.2.). The
findings so derived are then applied to the case of influ-
encers of the OECD Model (see section 2.2.3.).
2.2.2. In general
Article 17 of the OECD Model employs the terms “enter-
tainer” and “sportsperson” without defining them. More-
over, a definition of these terms cannot be found in article
3, which contains the general definitions used in the arti-
cles of the OECD Model. In such cases, the term must be
defined by means of interpretation. Such interpretation
can follow either the rules and content for which the law
of the state applying the tax treaty provides or an autono-
mous interpretation for the purposes of the tax treaty. In
this respect, article 3(2) of the OECD Model gives prior-
ity to an autonomous meaning of undefined terms if the
context of the tax treaty requires such an interpretation.29
The Commentary on Article 17 of the OECD Model, pre-
senting the context of a tax treaty based on the OECD
Model, contains some useful pointers regarding the inter-
pretation of the terms “entertainer” and “sportsperson”.
29. Two major assumptions are made here. First that the phrase “unless the
context otherwise requires” in article 3(2) of the OECD Model (2017)
results in a systematic preference of the autonomous interpretation of
treaty terms. Second that the OECD Model: Commentary on Article 17
(2017) relates to the “context” referred to in this provision. Though both
are contentious, a consideration of their validity does not fall within the
scope of this article. With regard to the first assumption, see the two
viewpoints that dominate the discussion in K. Vogel & R. Prokisch,
General Report, in International Fiscal Association (IFA), Interpreta-
tion of double taxation conventions, Cahiers de Droit International vol.
78a, sec. 3.e. (Kluwer L. & Taxn. 1993), Books IBFD with reference to
country practice as well. See more recently Kostikidis, supra n. 10, at
p. 52. With regard to the second assumption, see E. Reimer, Interpreta-
tion of Tax Treaties, 39 Eur. Taxn. 12, sec. D.2. (1999), Journal Articles
& Papers IBFD.
Bulletin for International Taxation June 2020 363
Savvas Kostikidis
Accordingly, the autonomous interpretation of these
terms is possible by resorting to the OECD Commentary
on Article 17, and, therefore, should be given priority over
an interpretation according to domestic law.30
In particular, the Commentary on Article 17 of the OECD
Model indicates that both terms presuppose the existence
of the following two conditions. First, the performance
of the entertainer or sportsperson must be public. This is
derived from the OECD Commentary on Article 17, which
refers to “payments... closely connected with a public per-
formance” (emphasis added).31 Second, the performance
must have an entertaining character. This requirement is
also stipulated in the OECD Commentary on Article 17
according to which “[a]rticle [17] may also apply to income
received from activities which involve a political, social,
religious or charitable nature, if an entertainment charac-
ter is present” (emphasis added).32
It must be stressed that these two criteria making a person
an entertainer or a sportsperson relate to each perfor-
mance of these individuals. It is the character of the per-
formance (on a stand-alone basis!) that makes a person
an entertainer or a sportsperson.33 For instance, when a
tennis player takes part in a Grand Slam tournament, they
are acting as a sportsperson, as this performance is both
public and entertaining. If the same person wins a million
dollars in a lottery, their activity is neither public nor
entertaining. Accordingly, although derived by a person
who is, in relation to another performance, i.e. the Grand
Slam tournament, an entertainer for the purpose of article
17 of the OECD Model, the lottery earnings are not real-
ized in the capacity as an entertainer. Section 2.2.3. now
deals with the application of these two criteria to influenc-
ers, whereby emphasis is placed on the second, that being
the vaguer of the two.
2.2.3. The personal scope of article 17 of the OECD
Model with regard to influencer income
The two criteria set out in section 2.2.2. apply to both
entertainers and sportspersons. Against this background,
it is of no significance for the application of article 17 of
the OECD Model if the person realizing the income is
characterized as an entertainer or as a sportsperson. In
both cases article 17 of the OECD Model applies.34 Conse-
30. See DE; BFH, 8 Apr. 1997, I R 51/96, Bundessteuerblatt Vol. II (1997),
p. 679, Case Law IBFD. For further arguments, see F. Wassermeyer, Der
Künstlerbegriff im Abkommensrecht, 3 Internationales Steuerrecht 12,
p. 555 (1995).
31. Para. 9, last sentence OECD Model: Commentary on Article 17 (2017).
German case law illustrates how important is this feature of the per-
formance. In particular, an opera director was not considered to be an
“entertainer” for the purposes of article 17 of the OECD Model, whereas
an orchestra director was. With regard to the former, see I R 51/96 (1997),
supra n. 30. With regard to the latter, see the decision of the Finanzgericht
(Tax Court, FG) Nordrhein-Westfalen (Münster) in DE: FG Nord­rhein-
Westfalen (Münster), 19 May 2004, 11 V 1848/04 E, Entscheidungen der
Finanzgerichte (2004), p. 445, at para. 28, Case Law IBFD.
32. Para. 3, third sentence, OECD Model: Commentary on Article 17 (2017).
33. See paragraph 9, last sentence of the OECD Model: Commentary on
Article 17 (2017), which reads: “[t]he reference to an ‘entertainer or
sportsperson’ includes anyone who acts as such, even for a single event”.
34. In detail, see L.A. Romero Topete, Analysis of the Case Law on the Scope
of Article 17 of the OECD Model: Issues Resolved and Yet to Be Resolved,
71 Bull. Intl. Taxn. 3/4, sec. 1.5. (2017), Journal Articles & Papers IBFD.
364 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
quently, in this section, it is considered whether these cri-
teria are fulfilled or not in the case of influencers. Whether
influencers are entertainers or sportspersons is not dealt
with, as such a differentiation is immaterial for the pur-
poses of the application of article 17 of the OECD Model.
As far as the first criterion in respect of the terms “enter-
tainer” and “sportsperson” is concerned, i.e. the public
character of the performance, regarding the activities
of influencers taking place in front of a real public, for
example, participation in shows and live events, there
is no doubt that these are public and thereby fulfil the
requirements of the first criterion of the terms “enter-
tainer” and “sportsperson”. However, it has already been
emphasized that the majority of the influencers “perform”
digitally in the form of product placement. As a result, it
can be argued that this type of activities is not public, as
it does not take place in front of a real public. It is broadly
accepted, though, that the term “public” refers to both
direct and indirect publicity, the latter being virtually,
for example, via radio, television, online media, etc.35 So,
a performance is also “public” for the purposes of article
17 of the OECD Model where, during the execution of the
performance, the relevant public is not physically present,
but the performance is made available to the public vir-
tually, either live or with time delay. This situation can
be attributed again to the benefit principle. Entertainers
or sportspersons who make their performance accessible
to the public virtually still take advantage of the bene-
fits offered in the source state. Such benefits could be, for
example, a Formula 1 track or scenery where an influ-
encer video is recorded and except for that, of course, the
marketplace there as well the value added on the virtual
performance due to the advantages offered by the source
state.
In contrast to the public criterion, the fulfilment of the
entertaining criterion is not that clear with regard to
influencers. As the Commentary on Article 17 of the
OECD Model does not explicitly deal with influencers,
an analogy with individuals presenting similarities to
them, i.e. models, could shed light on the issue. Models are
similar to influencers, as both earn their living primarily
by using their image. In addition, both models and influ-
encers do not possess a specific education, as opposed to
singers, actors, etc. They just naturally present themselves
to the public, which adores them mainly because of their
beauty, style and flair. That makes them two very similar
“professions”, which endorses a parallel treatment of influ-
encers for the purposes of article 17 of the OECD Model to
that to which models are subject. Accordingly, the treat-
ment of models for the purposes of the fulfilment of the
personal scope of article 17 of the OECD Model must be
investigated. In other words, are the activities of models
considered to be “entertaining” for the purposes of article
17 of the OECD Model?
35. See B. Kalteis, Die Besteuerung international tätiger Künstler und Künst­
lerbetriebe p. 210 (Orac 1998) and G. Toifl & P. Vrignaud, Einkünfte von
Künstlern und Sportlern im internationalen Steuerrecht, in Künstler und
Sportler im nationalen und internationalen Steuerrecht 3rd edn., p. 113
(T. Ehrke-Rabel ed., Linde 2011).
© IBFD

The Commentary on Article 17 of the OECD Model con-
strues the participation of models in fashion shows and
in commercials to be an activity that does not possess the
character of an entertainment.36 However, this assessment
can be disputed. It is submitted that the main purpose of
the activity of models is to advertise the clothes they wear.
Nevertheless, especially regarding fashion shows, the
outcome of fashion shows is the enjoyment of the people
watching them. Generally, they contain music and other
events that serve to amuse the public. This leads some
scholars37 and tax authorities38 to advocate the inclusion
of the participation of models in fashion shows within
the ambit of article 17 of the OECD Model, whereas other
activities of models, for example, photograph shoots,
remain outside of the scope of article 17. However, this
differentiation is not justifiable. The OECD Commen-
tary on Article 17 regards a series of performers taking
part in commercials as “entertainers” for the purposes
of article 17 of the OECD Model: “[t]he term entertainer
clearly includes the stage performer, film actor or actor
(including for instance a former sportsperson) in a tele-
vision commercial”.39 Actors are acting when taking part
in a television commercial. The same applies to models at
photograph shoots.40 It does not make any sense to treat
taxpayers, i.e. stage performers, film actors, on the one
hand, and models, on the other, as performing the exact
same activity, i.e. acting, differently for the purposes of
article 17 of the OECD Model. As a result, the full inclu-
sion of models in the personal scope of article 17 of the
OECD Model would be a reasonable solution.41 But even
if it is not accepted that the activities of models are enter-
tainment, there are arguments that advocate the enter-
taining character of influencer activities in themselves so
that the analogy to models can be disregarded.
36. Para. 3 fourth sentence OECD Model: Commentary on Article 17 (2017).
This approach is followed as well by M. Maßbaum, Die beschränkte Steu-
erpflicht der Künstler und Berufssportler unter Berücksichtigung des
Steuerabzugverfahrens p. 29 (Neue Wirtschafts-Briefe 1991) and Mole-
naar, supra n. 21, at p. 92. See also the recent decision of the Italian Corte
Suprema di Cassazione (Supreme Court, CSC) in IT: CSC, 7 Sept. 2018,
Case No. 21865, Case Law IBFD. For more on this case and older diverg-
ing Italian case law in this issue, see E.A. Palmitessa, Tax Treaty Qual-
ification of Payments Made to Models Performing in Fashion Shows and
Photo Sessions: A Commentary on Italian Supreme Court Decision No.
21865/2018, 59 Eur. Taxn. 6, sec. 3. (2019), Journal Articles & Papers
IBFD.
37. D. Sandler, The Taxation of International Entertainers and Athletes
p. 180 (Kluwer L. Intl. 1995); M. Matijevic, The Notion of Artistes in
Article 17 of the OECD Model Tax Convention, in Loukota ed., supra n.
24, at p. 33; and K. Tetłak, Tax Treatment of Team Performances under
Art. 17 of the OECD Model Convention, 2 World Tax J. 3, sec. 5.1. (2010),
Journal Articles & Papers IBFD.
38. See the positions adopted by Argentina, Brazil, India and Malaysia as set
out in paragraphs 3, 3.1 and 6 of the Positions on the OECD Model: Com-
mentary on Article 17 (2017). With regard to the Austrian tax authori-
ties, who take the same approach, see Cordewener, supra n. 17, at para.
38, n. 106.
39. Para. 3, third sentence OECD Model: Commentary on Article 17 (2017).
40. In the same sense, see Palmitessa, supra n. 36, at sec. 2.2.
41. This approach is adopted by Turkey, see paragraph 15 of the OECD
Model: Commentary on Article 17 (2017), as well as by Switzerland,
see Cordewener, supra n. 17, at para. 38 n. 106. See also OECD, Report
(2014), supra n. 28, at para. 30, which cites commentators who main-
tain that “[m]odels … are more analogous to actors” and “the refer-
ences to … models being exempt from Article 17, [must] be deleted”. See
again P. Pistone & E. Schaffer, Entertainers According to Art 17 OECD
Model Convention, in The OECD-Model-Convention and its Update 2014
p. 58 (M. Lang ed., Linde 2015).
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
In this respect, Austrian case law provides an interesting
judgement. In 2015, the Austrian Verwaltungsgerichtshof
(Supreme Administrative Court, VwGH) had to decide a
prestigious case regarding the entertainer capacity of the
“most known party-girl of the world”.42 In 2006, this par-
ty-girl was invited by a drinks manufacturer to present a
new drink in a public relations (PR) event in the Austrian
ski resort of Ischgl. During the event, which was visited
by 20,000 fans, she danced on stage accompanied by 45
dancers and signed autographs for about half an hour.
This party-girl is, inter alia, a model. In this case, however,
she was not invited by the drinks manufacturer because of
her model capacity but – like an influencer, although the
term did not exist then – due to her general image, which
guaranteed maximum advertising. The party-girl argued
that, as the performance served an advertising purpose,
an entertainment character was missing. A further argu-
ment was that she “had only moved her hips to the music
rhythm” and, therefore, that her performance did not have
an artistic character and fell outside the ambit of article
17 of the OECD Model.
The VwGH responded as follows to these arguments.
First, entertaining does not mean artistic. Accordingly,
dancing to the rhythm of music, regardless of the level of
the spectacle offered, can be entertaining. In other words,
the artistic level of the performance is immaterial for the
purposes of article 17 of the OECD Model. Second, the
fact that the drinks manufacturer paid for the advertis-
ing of its products and not for entertainment of the public
does not exclude the fact that the public did not come to
Ischgl because of the product advertising but, rather,
to see their favourite party-girl live. This second argu-
ment had already been raised before by the Tax Court of
Canada (TCC) in Cheek (2002)43 regarding the entertain-
ment capacity of a radio broadcaster of baseball games.
In this case, the TCC Judge, M.A. Mogan, emphasized
the fact that:
[t]he baseball fan who turns on the radio to hear a particular
Blue Jays game wants to know how the Blue Jays athletes are per-
forming on the field. The Appellant [i.e. the radio broadcaster]
may be able to hold the attention and interest of the fan with his
“down time” commentary but he is not the reason why the fan
turns on the radio.44
Overall, based on these arguments, the VwGH held that
the performance had an entertainment character, and,
therefore, the party-girl earned the income in a capacity
as an entertainer.
From the two arguments advanced in the VwGH case,
the second can underpin the position that influencers are
entertainers and the first is useful so as not to exclude
them as such. In particular, it could be argued that influ-
encers are not entertainers because their performances
42. AT: VwGH, 30 June 2015, Case No. 2013/15/0266, Österreichische
Steuerzeitung (2016), pp. 58-64, at p. 58, Case Law IBFD. The withhold-
ing tax of 20% on gross income due was approximately EUR 130,000,
thereby meaning that the party-girl received around EUR 650,000 for
the performance in question, i.e. EUR 130,000/0.2 = EUR 650,000.
43. CA: TCC, 31 Jan. 2002, Thomas F. Cheek v. Her Majesty the Queen,
Dominion Tax Cases (2002), p. 1283, Case Law IBFD.
44. Id., at para. 39.
Bulletin for International Taxation June 2020 365
Savvas Kostikidis
often do not have any artistic quality. However, as the
VwGH emphasized in its first argument, the term “enter-
tainer” is used instead of the term “artist” to demonstrate
precisely that the level of the artistic quality is not deci-
sive for the purposes of determining the personal scope of
article 17 of the OECD Model.45 Accordingly, even influ-
encers posting videos when they stay up late or have a lux-
urious breakfast in a five-star hotel, which they advertise,
may be entertaining, although this activity does not have
an artistic content. Moreover, the second argument offers
insight with regard to whose perspective is relevant, when
deciding whether a performance is entertaining. It is the
public’s perspective and not that of the parties involved,
i.e. the payer and the entertainer. This is a logical proposi-
tion. Even where no advertising purpose is present, enter-
tainment has almost always a commercial purpose for the
entertainer and the persons paying to see them. Does that
mean that their performance is not an entertaining one
for the public?
This question raises the issue as to what kind of activi-
ties are entertaining for the public. The Oxford Dictio-
nary defines entertainment as: “[t]he action of providing
or being provided with amusement or enjoyment”.46 It is
apparent that this definition only places emphasis on the
effect of an entertaining activity and not its content. If an
activity has, and is supposed to have, an amusement or
enjoyment effect on the public, it is deemed to be an enter-
taining activity. This situation holds true even if the enter-
taining activity serves other purposes, such as advertising.
The entertainment of the public, as in the case described
previously in this section and decided by the VwGH, is
the means to attain the end of advertising. In other words,
the effect is the entertainment of the public and through
this effect the advertising purpose is fulfilled.47 As it will
be described in section 2.3.2.2., influencer posts on social
media draw the attention of followers simply because they
amuse and relax them. Granted, this is the weapon of an
influencer, i.e. create a feeling of enjoyment for people
every day so that the viewers keep on following posts of
the influencer.48 If the influencers do not entertain their
followers in that way, they vanish into an online limbo.
Again, the public did not go to Ischgl because it found the
product good and wanted to know more about it from
the lips of the party-girl. The party-girl was not a mere
sales agent introducing the product to the public. In con-
trast, the party-girl entertained the public and through
that action the public became aware of the existence of
the product, as well as its advantages, etc. So, this enter-
45. This is accepted also in German jurisprudence. See I R 62/16 (2018),
supra n. 20, at para. 25.
46. A. Stevenson, The Oxford Dictionary of English 3rd edn. (Oxford U. Press
2010).
47. Compare DE: FG Nordrhein-Westfalen (Münster), 3 Feb. 2006, 2 K
4000/03 E, Entscheidungen der Finanzgerichte (2006), p. 1177, at para. 69.
48. “Through the nature of their very personal and entertaining commu-
nication, they provide deep insights into their private lives with open-
ness and extroversion, thus building up an emotional closeness to their
fan base” (emphasis added). See F. Deges, Influencer – Definition: Was
ist "Influencer"? (Influencer – Definition: What is “Influencer”) Gabler
Wirtschaftslexikon, available at https://wirtschaftslexikon.gabler.de/
definition/influencer-100360 (accessed 28 Feb. 2020).
366 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
taining performance was the reason why the public went
to Ischgl in the first place. The same holds true for influ-
encers. Their followers do not look at their posts to inform
themselves of which products are now on the market but
to entertain themselves. The fact that they get to know
which products are now on market is a mere by product
and/or effect of the entertaining activity. Although a con-
sequentialist approach, the following argument should
illustrate the difference between the party-girl and suc-
cessful influencers, on the one hand, and a sales agent,
on the other. It has been calculated that, for her perfor-
mance, the party-girl received around EUR 650,000. Fur-
thermore, there is evidence that even less successful influ-
encers make USD 1,500 to USD 3,000 for a single post.49
Sales agents can earn reasonable amounts, but certainly
not this kind of money for moving hips and “featuring
pictures of lush green forests and messages of positivity”.
Both the party-girl and influencers more generally offer
something completely different from the services of a sales
agent – they entertain people. That is why they are paid
so generously.
Finally, a helpful and necessary distinction could be
that between entertaining performances and informa-
tive ones. If the performance of the influencer has only
an informative content and such an effect on the public,
for example, an influencer posting videos from a confer-
ence where they make a speech on the causes of global
warming,50 it is not an entertaining event and, therefore,
49. Here, reference is being made to the Instagram influencer Valeria Hino-
josa, who has 134,000 followers (not that many compared to influenc-
ers with over 1 million followers like Farina Opoku, see supra n. 3). See
J. Buscemi, Here's How Much Money These 7 Influencers ACTUALLY
Make, And How Lifestyle influencers with anywhere between 12,000
and 135,000 followers share their income from social media, Huffpost
(19 Dec. 2019), available at www.huffpost.com/entry/how-much-in
fluencersmake_l_5dee68a6e4b05d1e8a556bbc?guccounter=1&guce_
referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_
sig=AQAAAN1c8D9BEPpZ3vPanYMFwA1WHZaN9SyB8yQw_SC98
fGPfleYmc6dufgc2O9g9kPUmXKHZW6Gonu3_IPTXvNv2pC8NzU
7rqWm5wqPhQ0ZEn3cnqIeEzaDcyASlzdDqiYOWox7RuVCl_m19E
J6XehAEV9QIWog54LfxRY2J1gnDr (accessed 19 Mar. 2020).
50. Conference speakers do not fall within the ambit of article 17 of the
OECD Model (2017). See paragraph 3, third sentence of the OECD
Model: Commentary on Article 17 (2017). Such a distinction is not jus-
tifiable. For instance, take a very well-known conference speaker, Bill
Clinton. It can be established that the reasons that justify article 17
of the OECD Model (2017) also apply in his case. First, he earns sub-
stantial sums from conferences outside the Unites States, which last, of
course, so little time that no source taxation is possible on the basis of
the other distributive rules, i.e. article 7 of the OECD Model (2017). As
press reports inform us, Bill Clinton “commanded the largest speak-
ing fees of his career in 2011, earning $13.4 million and exceeding his
previous record by 25%”, whereby the largest sum was earned abroad,
i.e. “$750,000 for telecom giant Ericsson in Hong Kong”. This particu-
larly successful season for Mr Clinton “can be credited to six overseas
events that earned him the largest single paydays of his career.” See R.
Yoon, Bill Clinton has most lucrative year on speech circuit, CNN (3 July
2012), available at https://edition.cnn.com/2012/07/03/politics/clin
ton-speaking-fees/index.html (accessed 14 Mar. 2020). This example
is inspired by D. Sandler, Artistes and Sportsmen (Article 17 OECD
Model Convention), in Source versus Residence p. 223 (M. Lang et al.
eds., Kluwer L. Intl. 2008). The justification of article 17 of the OECD
Model (2017) on the grounds that entertainers and sportspersons are
prone to tax evasion does not justify the distinction between Mr Clinton
and the party-girl. Mr Clinton, as well as, for example, a film direc-
tor, who according to paragraph 3, third sentence of the OECD Model:
Commentary on Article 17 (2017) is no entertainer, but can also hide
income or shift their residence to a low-tax state. There is no empirical
evidence that these phenomena exist only or to a greater extent in the
© IBFD

does not fall within the scope of article 17 of the OECD
Model. Admittedly, this can be assessed only on a case-
by-case basis.
In sum, influencers should fall within the personal scope
of article 17 of the OECD Model. First, an analogy with
models can be made who, according to one interpretation
in scholarship that is also adopted by the tax authorities,
are entertainers. Alternatively, and perhaps more impor-
tantly, if the entertaining capacity of models is contested,
influencers still fall within the personal scope of article
17 of the OECD Model on their own right because (and
only when!) their activities have an entertaining content,
as opposed to an informative one. This holds true for both
the participation in public events and their online activ-
ities, i.e. product placement. The next step is to examine
whether the items of income related to influencer perfor-
mances with entertaining character fall under the objec-
tive scope of article 17 of the OECD Model (see section
2.3.). For these items of income that do not fall within the
objective scope of article 17 of the OECD Model, the appli-
cation of other distributive rules is proposed (see section
2.3.2.). But, following the approach taken with regard to
the personal scope of article 17 of the OECD Model, some
general remarks on the objective scope of the provision are
first made to underpin the special treatment of influenc-
ers (see section 2.3.1.).
2.3. The objective scope of article 17 of the OECD
Model
2.3.1. Methodology applied to evaluate an item of
income for the purposes of article 17 of the OECD
Model
Entertainers and sportspersons often have more than one
source, or item, of income. In particular, they not only
receive income for the performance they conduct but also
additional income, for example, regarding participation
in television-spots, etc. Accordingly, it could be assumed
that all different items of income earned by an entertainer
or sportsperson are governed by article 17 of the OECD
Model in view of the fact that they realize the income in
their capacity as entertainers or sportspersons. However,
each type of income must be dealt with separately for
the purposes of the application of the provisions of the
OECD Model and not in accordance with the taxation
that applies to the general framework within which the
total income arises. The same is true for the income real-
ized by entertainers and sportspersons.51 So, the first ques-
tion to be answered relates to when an item of income falls
under the objective scope of article 17 of the OECD Model
in general. In this respect, a methodology applied to eval-
case of entertainers and sportspersons than for other mobile individu-
als. As Arnold (2003) noted: “[t]here is no principled basis for treating
entertainment and athletic services differently from other services”. See
B.J. Arnold, Threshold Requirements for Taxing Business Profits under
Tax Treaties, 57 Bull. Intl. Fiscal Docn. 10, sec. 6.4. (2003), Journal Arti-
cles & Papers IBFD. These thoughts make a more general problematic
issue apparent regarding the nexus for the taxation of mobile persons
and whether a special regime for entertainers and sportspersons is jus-
tified, which is not dealt with here.
51. Wassermeyer, supra n. 6, at para. 41.
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
uate an item of income for the purposes of article 17 of the
OECD Model is developed and presented in this section.
First, payments for the primary performance of an enter-
tainer or sportsperson, for example, a payment received by
a singer for a concert, without doubt fall within the objec-
tive scope of article 17 of the OECD Model. This state-
ment is confirmed by the text of article 17 of the OECD
Model (“from the resident’s personal activities as such”
(emphasis added)) and the Commentary on Article 17 of
the OECD Model (“Besides fees for their actual perfor-
mances” (emphasis added)).52 For this reason, the primary
performance is always the departure point of the analysis
in evaluating the application of article 17 of the OECD
Model to an item of income, i.e. the first step. In the case of
items of income that is derived from an activity other than
the primary performance, for example, from an interview
after a concert, it is necessary to ascertain, in a second
step, whether a close connection with the main entertain-
ing performance exists. This is derived from the OECD
Commentary on Article 17, which reads “[i]n general,
other Articles would apply whenever there is no close con-
nection between the income and the performance of the
activities in the country concerned” (emphasis added).53
If there is no such connection between the item of income
in question and the primary performance can be detected,
the income-generating activity must be assessed sepa-
rately, i.e. the third step. It can be in itself a “performance”
for the purposes of article 17 of the OECD Model, which
would mean that the latter provision would apply. For
example, participation in televisions-spots could be a per-
formance in itself. If an advertising activity, for example,
demonstrates a sufficient link to a performance, it must be
treated in the same way as the performance. If not, it can
fall under article 17 of the OECD Model if it can qualify
as a “performance” for the purposes of article 17 in itself.
If the income-generating activity, other than the primary
performance, does not have a sufficient link to the latter
and is not in itself a “performance” for the purposes of
article 17 of the OECD Model, the fourth and final step
is to investigate which other distributive rule could apply
to the item of income in question.
It is submitted that payments for the primary performance
are clear-cut cases that fall within the scope of article 17
of the OECD Model. A tennis player, for example, remu-
nerated for a win in a Grand Slam tournament realizes
income that is covered by article 17 of the OECD Model.
More difficult, and more relevant for influencers, are the
cases in which there is more than one income-generat-
ing activity. In such cases, it first and foremost must be
determined whether the close connection demanded by
the Commentary on Article 17 of the OECD Model exists
between the primary performance and the income gen-
erated by another activity, for example, the tennis player
receives income for transferring the rights on their image
as they raise the Grand Slam trophy.
52. Para. 9, first sentence OECD Model: Commentary on Article 17 (2017).
53. Id., at para. 9, second sentence.
Bulletin for International Taxation June 2020 367
Savvas Kostikidis
The phrase “close connection”, introduced by the amend-
ment of the Commentary on Article 17 of the OECD
Model (2014),54 has replaced the old terminology, i.e. the
phrase “direct or indirect link”.55 It could be argued that
“close connection” and “direct or indirect link” are not
the same thing. Accordingly, the term “close connection”
has either a wider or a narrower content.56 The new ter-
minology, however, has not brought about any changes
regarding the content of the connection required. In other
words, the terms “close connection” and “direct or indi-
rect link” are to be seen as synonymous. This position
arises as the new terminology is only meant to clarify the
objective scope of article 17 of the OECD Model57 and not
to amend (extend or restrict) it. The statement made by the
OECD in its 2010 “Discussion Draft on the Application
of Article 17”, preceding the amendment of article 17 of
the OECD Model and of the Commentary on Article 17
of the OECD Model, confirms that intention: “[t]he fol-
lowing changes to the Commentary on Article 17 are pro-
posed in order to clarify the treatment of these payments”
(emphasis added).58 So, the close connection amounts to
a direct or indirect link.
Lastly, it should be stressed that the income must be
connected with a specific performance and not to the
performances of the entertainer or the sportsperson in
general. The wording of article 17 of the OECD Model
(“personal activities as such” (emphasis added)) demon-
strates that. Enabling source taxation without any thresh-
old requirement and without a link to a specific activity
undertaken in the source state would simply exceed the
purpose of article 17 of the OECD Model to capture activ-
ities “as such” and not the person in general. So, activities
missing the link between payment and specific perfor-
mance are not subject to source taxation under article 17
of the OECD Model.
54. OECD Model Tax Convention on Income and on Capital: Commentary
on Article 17 (26 July 2014), Treaties & Models IBFD.
55. “Article 17 will apply to advertising or sponsorship income, etc. which
is related directly or indirectly to performances or appearances in a given
State.” See OECD Model Tax Convention on Income and on Capital: Com-
mentary on Article 17 para. 9, third sentence (17 July 2008), Treaties &
Models IBFD.
56. Compare M. Tenore, Image Rights, Sponsoring and Advertising Income,
in Maisto ed., supra n. 7, at sec. 7.3.1., p. 143 et seq. Other commenta-
tors accept that both a direct and an indirect link suffice, though they
submit that the term “indirect” is to be interpreted narrowly. See Pistone
& Schaffer, supra n. 41, at p. 61.
57. The OECD Model: Commentary on Article 17 (2008) contained contra-
dictory statements with regard to the link required between the primary
performance and income generation. While the second sentence of
paragraph 9 of the OECD Model: Commentary on Article 17 (2008)
demanded a direct link between the income and a public exhibition,
thereby excluding the possibility that a merely indirect link suffices,
the fourth sentence of the same paragraph stated that OECD Model Tax
Convention on Income and on Capital art. 17(1) (17 July 2008), Treaties &
Models IBFD would apply to “advertising or sponsorship income, etc.
which is related directly or indirectly to performances or appearances
in a given State”. Due to this lack of clarity, Swiss jurisprudence prior to
the amendment of the OECD Model: Commentary on Article 17 (2014)
interpreted article 17 of the OECD Model (1994) as demanding a direct
link. See 2C_276/2007 (2008), supra n. 4, at para. 5.5.
58. OECD, Discussion Draft on the Application of Article 17 (Artistes and
Sportsmen) of the OECD Model Tax Convention p. 8 (OECD 2010),
Primary Sources IBFD.
368 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
Summing up, if remuneration does not refer to the primary
performance of an entertainer or sportsperson as such, a
direct or indirect link, or, as the current version of the
Commentary maintains, “a close connection”, between
the income and the primary performance of the enter-
tainer or sportsperson is required. This link should relate
to a specific performance. If there is no such link, it must
be evaluated whether the other activity, i.e. in the tennis
player example the transfer of rights, is in itself a perfor-
mance for the purposes of article 17 of the OECD Model.
Section 2.3.2. applies these findings to the various items
of influencer income.
2.3.2. Objective scope of article 17 of the OECD Model
regarding influencer income
2.3.2.1. Initial remarks
As the primary activity of a tennis player is playing tennis,
the primary activity of an influencer is influencing their
followers by showing them how they live.59 They do this
by posting material on social media platforms, which is
why their activities are always, at least indirectly if not
directly, before a real public, for example, an influencer
posts photographs from a talk show in which they took
part. Be it through posting photographs from a trip to
the Bahamas or a video from a visit to a glamorous event
or even a photograph from a lazy morning in bed, the
primary activity of influencers is to post material from
their daily life on social media platforms. For this primary
activity, they receive (advertising) income from compa-
nies to place their products on the material posted online,
which results in the advertising of these products. In addi-
tion to this primary activity, influencers undertake other
income generating activities. They may transfer the use
of, or the right to use, their image and/or name, attend
events and advertise products during them, i.e. sponsor-
ship income, or even design and sell products, i.e. mer-
chandizing income. In order to examine whether these
items of income realized by influencers fall within the
objective scope of article 17 of the OECD Model, the four-
step methodology presented in section 2.3.1., which is
used to determine whether an item of income falls within
the objective scope of article 17 of the OECD Model, is
applied. With regard to all four items of income, it is ques-
tioned in the following order whether:
(1) The activity executed for the item of income in ques-
tion to be realized is a “performance” for the pur-
poses of article 17 of the OECD Model. This situation
applies, for example, if product placement is a perfor-
mance falling under article 17 of the OECD Model.
59. The primary feature of influencers is that they “are people, and this is
the key aspect of influencer marketing. Gone are the days of bland press
releases, TV ads that feature models that don’t represent a real human
being, or celebrities being paid to endorse a product.” See E.  Cross,
What is influencer marketing and why your brand should you use it
(18 Oct. 2019), available at www.awin.com/us/influencer-marketing/
what-is-influencer-marketing-and-why-your-brand-should-you-use-it
(accessed 3 Mar. 2020).
© IBFD

(2) Income derived from an activity other than that
carried on by the influencer, for example, merchan-
dizing income, presents a sufficient link to the latter.
(3) If no link between the item of income in question
and the primary performance carried on by the
influencer can be ascertained, it must be examined
whether the activity other than the primary perfor-
mance carried on by the influencer can be character-
ized as a “performance” for the purposes of article 17
of the OECD Model in itself.
(4) If the performance other than the primary perfor-
mance carried on by the influencer cannot be charac-
terized as a “performance” for the purposes of article
17 of the OECD Model in itself, the application of
other distributive rules is discussed, i.e. in relation
to articles 7 and 12.
In section 2.3.2.2., the analysis commences with adver-
tising income derived from product placement, as this
is the item of income that arises directly from the influ-
encer primary performance and/or activity. And as spon-
sorship agreements, as demonstrated in section 2.3.2.2.,
contain an element of remunerating advertising activi-
ties, advertising income is dealt with within the context
of sponsorship agreements. Thereafter, the treatment for
the purposes of article 17 of the OECD Model in relation
to merchandizing income (see section 2.3.2.4.) realized
by influencers and income for the use of, or the right to
use, influencer image and/or name (see section 2.3.2.3.)
are also analysed.
2.3.2.2. Sponsorship agreements
Sponsorship agreements “can be [defined] as the provi-
sion of assistance either financial or in kind to an activity
by a commercial organization for the purpose of achiev-
ing commercial objectives”.60 According to the economic
literature, sponsorship and advertising are distinguish-
able. In particular, advertising has a more product-related
and/or one-off impact, whereas sponsorship has a more
brand-related effect.61 For the purposes of this article,
however, this distinction is immaterial. It only needs to
be established whether the influencer activity, from which
an item of income arises, is an activity covered by article
17 of the OECD Model. And since, as already implied, a
sponsorship agreement can include an element remuner-
ating an advertising activity, income derived from such
an activity is dealt with within the context of a sponsor-
ship agreement. For instance, a boot manufacturer can
hire a football player for a one-off television commercial.
The income derived therefrom is advertising income. It
can also conclude a sponsorship agreement with the foot-
ball player, which, inter alia, stipulates that the latter must
take part in two commercials. The income is still adver-
60. J.A. Meenaghan, Commercial Sponsorship, 17 Eur. J. Mktg. 7, p. 9 (1983).
61. With regard to the spill-over effect of sponsorship compared to advertis-
ing, see N. Pope et al., Winning Ways: Immediate and Long-Term Effects
of Sponsorship on Perceptions of Brand Quality and Corporate Image,
38 J. Advert. 2, p. 7 (2009).
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
tising income, regardless of the fact that it arises within
the context of a sponsorship agreement.
With regard to the content of sponsorship agreements, the
entertainer or sportsperson is typically required to carry
out some or all of the following four activities:62
(1) wear clothes or products or use equipment during a
performance to advertise them;
(2) go to specific PR, and other, events and wear the
clothes or products of the sponsor during these
events to advertise them;
(3) pose for advertising the sponsor’s products;
(4) allow the use of their image and/or name rights by
the sponsor for advertising purposes.
As stated in section 2.3.1., each of these activities must be
treated separately for the purposes of the application of the
distributive rules of the OECD Model. In the case of influ-
encers, the first and third element of a sponsorship agree-
ment coincide. Again, the influencer’s primary activity
consists in them living their life and posting material from
it. When “performing”, they wear clothes or use products
of their sponsors, i.e. they pose for advertising the spon-
sor’s products. In other words, their performance, during
which they wear clothes and use products of their sponsor
(1), consists in “posing” for advertising the sponsor’s prod-
ucts (3). An example where the first and third elements of
a sponsorship agreement are fulfilled through the conduct
of distinct activities could be a tennis player. On the one
hand, for tennis players to fulfil the first element of the
sponsorship agreement, they would have to wear clothes
or use equipment during a Grand Slam tournament. On
the other hand, for the tennis players to fulfil the third
element of the sponsorship agreement, they would have
to pose in a studio where a photograph of them is taken,
which may be placed, for example, in a magazine or even
on the advertising banners of the Grand Slam tourna-
ment. So, in the case of a tennis player, the first and the
third elements of the sponsorship agreement necessitate
the execution of separate activities by that tennis player.
In contrast, in the case of influencers, these two elements
merge into one, being fulfilled through a single activity
from which advertising income arises.
In order to evaluate whether advertising income realized
by an influencer through product placement is income
falling within article 17 of the OECD Model, it must be
first examined whether an advertising activity can be a
“performance” for the purposes of article 17 in general.
The Commentary on Article 17 of the OECD Model
seems to affirm that with regard to commercials: “[t]he
term entertainer clearly includes the stage performer, film
actor or actor (including for instance a former sportsper-
son) in a television commercial”.63 This treatment can be
extended to advertising through the product placement
of photographs and videos by influencers.
As was emphasized in section 2.2.3., it would not be a
consequent approach to treat taxpayers performing the
62. Based on G. Hahn-Joecks, Zur Problematik der Besteuerung auslän-
discher Künstler und Sportler p. 96 (Nomos 1999).
63. Para. 3, third sentence OECD Model: Commentary on Article 17 (2017).
Bulletin for International Taxation June 2020 369
Savvas Kostikidis
same activity under the same circumstances in a differ-
ent way. If advertising activities undertaken by actors
are “performances” for the purposes of article 17 of the
OECD Model,64 influencer advertising activities should
not be excluded as such. Influencers are also “acting” when
shooting and posting photographs or videos, exactly as
actors do. Consequently, product placement, according
to this interpretation of the Commentary on Article 17
of the OECD Model, is, in itself, a performance so that no
connection with another performance is required. This
conclusion is affirmed in view of the entertaining char-
acter of the influencer performance, i.e. product place-
ment. It has already been maintained in section 2.2.3. that
the advertising message conveyed by influencers has an
entertaining effect on the public receiving it.65 And it is
the entertaining effect on the public that makes a per-
formance entertaining for the purposes of article 17 of
the OECD Model. Especially, with regard to influencer
advertising in the form of product placement that effect is
even more evident. It is the “ace” up the “sleeve” of influ-
encers. Amuse people with photographs and videos and
they will follow you. An exception should be made only
in cases where the influencer posts, containing product
placement, have an informative character.
With regard to the second element of a sponsorship agree-
ment, i.e. the attendance of events, during which the influ-
encer advertises sponsor products, the primary influencer
activity, i.e. influencers living their life and posting mate-
rial from it on social media platforms, consists of two ele-
ments that are or may be separately remunerated by the
sponsor. On the one hand, the sponsor may pay the influ-
encer for the execution of the physical element of the activ-
ity, i.e. the attendance of the event as such as part of a
glamorous and interesting daily life of the influencer. On
the other hand, the virtual element of the activity, i.e. the
product placement through the posting of photographs
or videos of the event, may also be separately remuner-
ated. The former element is the means to get to the latter.
In other words, in order to make the photograph or video
from an event which will be posted, for example, on Insta-
gram (the virtual element), the influencer must first attend
the event (the physical element). This is why if the physical
element does not meet the entertaining requirement the
virtual one will not either.
Consider for example an influencer being invited to make
a speech about climate change. If they post a photograph
from the event with them advertising, for example, a
t-shirt, the informative character of the event makes the
character of the product placement activity also informa-
tive. In such a case, the public is not following the post
because it is entertaining but because of its informative
64. With regard to the treatment of actors participating in commercials,
see section 2.2.3.
65. Contra, especially with regard to the entertaining character of shooting
photographs for advertising purposes, see K. Pfeifer, Die deutsche Be­­
steuerung ausländischer Tonkünstler und Künstlergesellschaften p. 250
(Peter Lang 2014). With regard to the entertainment value of advertising
generally, see D. Petrovici & S. Paliwoda, An empirical examination of
public attitudes towards advertising in a transitional economy, 26 Intl. J.
Advert. 2, p. 256 (2007). See also section 2.2.3. for influencer advertis-
ing especially.
370 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
value. Or take, as an opposite example, the participation
of the party-girl in the PR event in Ischgl, which was con-
sidered by the VwGH as a “performance” for the purposes
of article 17 of the OECD Model, as already analysed in
section 2.2.3. If the party-girl had posted photographs
online with product placement, the advertising income
that would have arisen would have also been income for
the purposes of article 17 of the OECD Model. That is
because the physical activity was an “entertaining perfor-
mance” for the purposes of article 17, so that the content
of the product placement would have also been of enter-
taining nature for the public. Moreover, it should be noted
that it is not decisive whether the physical element of the
activity is remunerated for the characterization of the
virtual element of the activity as an entertaining perfor-
mance. This is a logical proposition, especially in view
of the anti-evasion character of article 17 of the OECD
Model. If virtual performances were taxable only when the
underlying physical performance was provided in return
for payment, entertainers and sportspersons could easily
circumvent article 17 of the OECD Model by arguing that
only the virtual element of the performance is paid for and
the physical element of the performance is provided free.
The fourth element of a sponsorship agreement, i.e.
income for the transfer of image and/or name rights, is
dealt with separately in section 2.3.2.3. As in the case of
advertising income arising in the context of a sponsorship
agreement, the fact that the transfer agreement is part of
a sponsorship contract does not play any role in the char-
acterization of the income arising from that agreement.
Finally, there are two more general issues that must be
addressed with regard to income from sponsorship agree-
ments, which may also apply to the case of influencers.
First, there is a general objection against the inclusion of
sponsorship income within the objective scope of article
17 of the OECD Model. According to tax scholarship,66
sponsorship income does not arise from the entertaining
activity as such, as article 17 of the OECD Model requires,
but because of the name and the fame of the sponsored
person, in this case the influencer. Admittedly, the name
and fame of the influencer are decisive for the conclusion
of the sponsorship contract. It is the “performance” of the
influencer, however, i.e. the way and intensity they present
their lives on social media, that is causal to the remuner-
ation, so that the item of income derived is closely related
to the performance as such. In other words, the influencer
must post photographs and/or videos on social media to
meet their contractual obligation, which may even refer to
a specific number of photographs that the influencer must
post and “other project specifics such as the hashtags”.67
66. See D. Mody, Article 17, in Außensteuergesetz, Doppelbesteuerungsab-
kommen para. 29 (G. Strunk et al. eds., Stollfuss Oct. 2017) and
M. Maßbaum, Article 17, in, DBA-Kommentar para. 151 (D. Gosch et al.
eds., Neue Wirtschafts-Briefe 2013).
67. See IZEA, How to Create a Social Media Influencer Agreement (8 Jan.
2019), available at https://izea.com/2019/01/08/create-social-media-in
fluencer-agreement (accessed 28 Feb. 2020).
© IBFD

The performance of the influencer is, therefore, conditio
sine qua non for realizing the income.68
According to case law, the truth is somewhere in the
middle. The US Tax Court (TC) in Goosen (2011)69 held
that sponsorship payments to the internationally famous
golfer Retief Goosen (“Mr Goosen”) were:
paid for the right to use [Mr Goosen’s] name and likeness and
to be associated with his image. [Mr Goosen’s] endorsement
income depended, however, on his playing in tournaments.
The record shows that the performance of services and the use
of name and likeness were equally important. We find that 50%
of the endorsement fees [Mr Goosen] received represented roy-
alty income and 50% represented personal services income.70
A similar solution is conceivable, especially in case of
influencers of worldwide renown.
Second, sponsorship agreements, especially in the case of
influencers where an entire marketing campaign may be
based on them, may provide for a lump-sum payment,
i.e. a single payment of money, as opposed to a series of
payments made over time.71 Since, as already noted in
section 2.3.1., article 17 of the OECD Model requires a link
between the income and a specific performance, in the
case of a lump sum, it must be established, first, whether
such a link exists and, second, if such a link exists, how
the total amount paid is apportioned among the total of
activities that are being compensated. Both issues can be
dealt with according to the Commentary on Article 17 of
the OECD Model by taking into account the content of
the contract or the intention of the parties:
a close connection may be evident from contractual agreements
which relate to a participation in named events or a number of
unspecified events; in the latter case, a Contracting State in which
one or more of these events take place may tax a proportion
of the relevant advertising or sponsorship income.72 (Empha-
sis added)
68. The OECD Model: Commentary on Article 17 (2017) defines the term
“close connection” in the following way: “a close connection will gen-
erally be found to exist where it cannot reasonably be considered that
the income would have been derived in the absence of the performance
of these activities”. See paragraph 9, third sentence of the OECD Model:
Commentary on Article 17 (2017). The definition in the OECD Model:
Commentary on Article 17 (2017) leads to the conclusion that, if suffi-
cient reference is made directly or indirectly to a specific performance
or an event, it is not only the entertainer’s or sportsperson’s fame and
popularity that generates the income. In particular, income from other
activities would not be possible if there had not been for the perfor-
mance within the framework of which these other activities take place.
See also Sandler, supra n. 50, at p. 227.
69. US: TC, 9 June 2011, Retief Goosen v. Commissioner of Internal Revenue,
Docket No. 23323-09 Reports of the US Tax Court (2011), p. 547 (at
p. 563), Case Law IBFD. Previous case law regarding a tennis player set
out a 70-30 split, see US: TC, 25 Apr. 1983, John A. Kramer and Gloria
L. Kramer v. Commissioner of Internal Revenue, Reports of the US Tax
Court (1983), p. 768 (at p. 782), whereas subsequent case law adopted
a 65-35 split, see US: TC, 14 Mar. 2013, Sergio Garcia v. Commissioner
of Internal Revenue, Docket No. 13649-10 Reports of the US Tax Court
(2013), p. 141 (at p. 158), Case Law IBFD.
70. Goosen (2011), supra n. 69, at p. 563.
71. See, for example, the article posted on the website of LEGAVISION,
What Should An Influencer Agreement Include? (22 Jan. 2020), available
at https://legalvision.com.au/influencer-agreement-include (accessed
28 Feb. 2020), inviting potential clients to consider this possibility.
72. Para. 9, sixth sentence OECD Model: Commentary on Article 17 (2017).
German case law has considered the issue and affirmed the proposi-
tion that also a lump sum can be related to specific performances. See,
for example, 2 K 4000/03 (2006), supra n. 47, p. 1177, at para. 53. In a
similar vein, the Dutch Hoge Raad (Supreme Court, HR), saw a link
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
Consequently, it first must be ascertained whether the
contract stipulates the specific performances being remu-
nerated. Should this not be the case, reference to specific
performances can still exist, in respect of which the inten-
tion of the parties is crucial.
In conclusion, advertising income from product place-
ment falls within the objective scope of article 17 of the
OECD Model. The same holds true with regard to mone-
tary payments as well as payments in kind to influencers
in exchange for them wearing or bearing the products of
the sponsor during an event. However, in both cases, if the
influencer performance does not possess an entertaining
character for either the physical or online public, article 7
of the OECD Model applies. Where the main influencer
activity has a physical, for example, participation in a
fashion show, and a virtual element, for instance, photo-
graphs of the fashion containing product placement, the
nature of the physical element permeates into the nature of
the virtual one. Finally, notwithstanding the inclusion in
a sponsorship agreement and/or the payment in the form
of a lump sum, the income can be related to specific influ-
encer performances as such. An apportionment between
the part related to specific performances and another paid
because of the name and the fame of the influencer can be
proposed in case of well-known influencers.
2.3.2.3. Income for the use of, or right to use, image and/or
name rights
It has been stated in section 2.3.2.2. that successful influ-
encers conclude contracts in which they allow the sponsor
to use their name and/or image in exchange for remu-
neration. The image and/or the name of the influencer
can then be at the disposal of the sponsor for them to use
as they wish. In this respect, it must be first discussed
whether allowing a third party to use the name and/or
the right of an influencer is a “performance” for the pur-
poses of article 17 of the OECD Model, so that income
arising therefrom falls under article 17. This should be
refuted. As already implied in section 2.2.1., article 17 of
the OECD Model describes the performance as an activ-
ity (“from that resident’s personal activities as such exer-
cised”). Accordingly, scholarship argues73 that income
from the exploitation of image and/or name rights does
not fall under article 17 of the OECD Model because of
the latter not covering exploitation income.
between the salary paid to a professional cyclist residing in the Neth-
erlands and performances abroad. See NL: HR, 9 Feb. 2007, Cases No.
40.465, 40.604, 41.478, BNB 2007/142, 2007/143 and 2007/144, Case Law
IBFD. The reasoning of the HR was based on the fact that “at the time the
contract was agreed the parties already knew about the performances
abroad and there was no additional payment for such performances; the
salary would, therefore, have been paid even if there was no competition
at all”. See D. Molenaar, M. Tenore & R.J. Vann, Red Card Article 17?,
66 Bull. Intl. Taxn. 3, sec. 3.1.2. (2012), Journal Articles & Papers IBFD.
73. M. Görl, Die freien Berufe im internationalen Steuerrecht der Bundesre-
pubik Deutschland p. 159 (Florentz 1983); M. Grossmann, Die Besteuer-
ung des Künstlers und Sportlers im Internationalen Verhältnis p. 122 et
seq. (Haupt 1992); H.P. Artner, Einkünfte von Künstlern aus der Über-
lassung von Namens- und Bildrechten, 11 Steuer und Wirtschaft Inter-
national, p. 254 (2001); Cordewener, supra n. 17, at para. 95; and Pfeifer,
supra n. 65, at p. 245.
Bulletin for International Taxation June 2020 371
Savvas Kostikidis
Contrary to this viewpoint, according to the Commentary
on Article 17 of the OECD Model, income from allow-
ing a third party to use the image and/or the name of an
entertainer or a sportsperson falls under article 12 of the
OECD Model only “[w]here such uses of the entertainer’s
or sportsperson’s image rights are not closely connected
with the entertainer’s or sportsperson’s performance in a
given State”.74 Conversely, it can be derived that income
from allowing the use of the image and/or the name of
an entertainer or sportsperson closely related to a perfor-
mance falls under article 17 of the OECD Model. Conse-
quently, the OECD Commentary on Article 17 does not
differentiate between income for the use of, or the right
to use, the image and/or the name of an entertainer or a
sportsperson, on the one hand, and other items of income,
on the other, but treats the former as it does with respect
to the latter.
This runs foul of the consistent demarcation that is broadly
accepted between performance income and exploitation
income, whereby the latter falls outside of the scope of
article 17 of the OECD Model.75 As stressed in section
1.2., that exploitation income falls under articles 7 and 12
of the OECD Model and not under article 17. This sug-
gests the wording of article 17 of the OECD Model, which
refers to “income from activities... executed” (emphasis
added). However, the Commentary on Article 17 of the
OECD Model takes a different line here and encompasses
exploitation income in the form of income for the use of,
or right to use, image and/or name rights under article 17
of the OECD Model, when the latter is performance-re-
lated. With regard to the relationship between articles 12
and 17 of the OECD Model, that means that this is not one
of mutual exclusion, or referred to here as an either-or-re-
lationship, as scholarship views correctly assert, but one of
interaction. In other words, income falling under article
12 of the OECD Model can also fall under article 17, when
the close connection between income for the use of, or
right to use, image and/or name rights and performance
required by the OECD Commentary on Article 17 exists,
which makes a delineation between the two necessary.
Central for the application of article 17 of the OECD
Model is, again according to the Commentary on Article
17 of the OECD Model,76 the close connection required for
exploitation income for the use of or the right to use the
image and/or the name of an entertainer or a sportsperson
to fall under article 17. In these cases, this close connection
is difficult to establish. In fact, the name and fame of the
influencer, built through their total activity, are causal to
74. Para. 9.5, third sentence OECD Model: Commentary on Article 17 (2017).
75. See OECD, Report (2014), supra n. 28, at para. 54, which reads: “[t]he
whole of the final sentence in Paragraph 9 should be deleted. This sen-
tence does not provide clarification or explanation, but confuses the
situation with regard to the separation of the two income streams of
copyright income and performance income.” See also section 1.2. and
the text accompanying n. 17 as well as the footnote itself.
76. Para. 9 OECD Model: Commentary on Article 17 (2017). Preferable is
the approach taken by the United States. US TC jurisprudence relies on
whether the income is predominantly attributable to the performance
or to the property right to distinct income falling under article 17 of
the OECD Model from that falling under article 12. See Goosen (2011),
supra n. 69, at p. 560 and Garcia (2013), supra 69, at p. 60 et seq.
372 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
the income generation and not a specific performance.77
Granted, name and fame are built through performances
but not through a specific performance, which would
justify the allocation of the taxing right on the respective
income to the source state. Accordingly, either contrac-
tual agreements referring to specific performances, for
example, agreement of a payment for the placement of the
image of an influencer on the banner advertising a fashion
show in which they participate, or evidence proving the
intention of the parties to refer thereto are required for a
close connection to be established. It is submitted, though,
that the use of, or the right to use, image and name rights
are contractually permitted for a longer time period and
very rarely refer to specific performances.
Beyond these rather limited cases where payments regard-
ing the use of, or the right to use, the influencer’s name
and/or image are closely connected with a specific per-
formance and therefore fall under article 17 of the OECD
Model, income not encompassed by article 17 must be
allocated between articles 7 and 12. Without going into
too much detail, article 12(2) of the OECD Model contains
an exhaustive catalogue of the rights whose transfer gen-
erates royalties, but the image and/or name of a person is
not explicitly referred to:
The term “royalties” as used in this Article means payments
of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work
including cinematograph films, any patent, trade mark, design
or model, plan, secret formula or process, or for information
concerning industrial, commercial or scientific experience.
Consequently, only an extensive interpretation of the
terms included therein could justify the inclusion of pay-
ments on image and/or name rights in the ambit of article
12 of the OECD Model.78 Nevertheless, both the litera-
ture79 and case law80 on the topic reject such an interpre-
tation. The only way for article 12 of the OECD Model to
apply is if the national legislation of the source state apply-
ing the tax treaty protects image and/or name rights as
a trademark.81 Otherwise, article 7 of the OECD Model
applies. In any case, residence taxation is the outcome in
both cases, as a PE is unlikely to exist in the source state
for article 7 of the OECD Model to provide for source tax-
77. Generally with regard to entertainers and sportspersons, see Hahn-­
Joecks, supra n. 62, at p. 103; Artner, supra n. 73, at p. 253 et seq.; G.
Zadek, Treatment of Advertising Income of Artistes and Sportsmen
according to the OECD Model, in Loukota ed., supra n. 24, at p. 169;
Molenaar, Tenore & Vann, supra n. 72, at sec. 3.1.4.; and K. Tetłak, Taxa-
tion of International Sportsmen sec. 3.4., p. 125 (IBFD 2014), Books IBFD.
78. M. Valta, Article 12, in Reimer & Rust eds., supra n. 5, at paras. 113 and
117, whereby it is clarified that, as the interpretation of article 12(2) of
the OECD Model (2017) must be made by reference to domestic law,
qualification conflicts can arise.
79. Zadek, supra n. 77, at p. 170 and Tetłak, supra n. 77, at sec. 3.5., p. 130,
both with further references. Contra, see Mody, supra n. 66, at para. 27
and Maßbaum, supra n. 66, at para. 112.
80. See the decision of the South African Gauteng Tax Court (GTC) in SA:
GTC, 21 Nov. 2001 and 4 Mar. 2002, Income Tax Case No. 1735, 64
SATC (2002), p. 455, at para. 11.3: “[p]atents, designs, trademarks and
copyright are all rights designed to protect the creators or their assigns
of original intellectual works. The appellant’s name likeness; biograph-
ical details etc are not creative effort by the appellant and are accord-
ingly of an entirely different nature to the rights listed”.
81. For instance, Italy and the United States. See Tetłak, supra n. 77, at
sec. 3.5., p. 130, n. 428 and; Tenore, supra n. 56, at sec. 7.3.2., p. 150.
© IBFD

ation and article 12 (of the OECD Model, as opposed to
article 12(2) of the UN Model) does not provide for source
taxation at all.
2.3.2.4. Merchandizing income
In section 1.1., an example of a famous German influencer,
Farina Opoku, was given as one who either designs and
sells her own products (the first type of merchandizing
income). It is also possible that influencers may allow a
third party to use their image and/or name to design and
sell the products, in respect of which they receive a per-
centage on sales in exchange (the second type of merchan-
dizing income).82 A third type of merchandizing income
realized by influencers, which has not been dealt with in
this article so far, is income paid by companies to influ-
encers for their participation in the design process.83
At first sight, income from designing and selling prod-
ucts is not an entertaining performance and does not
present any kind of proximity to such as carried out by
an influencer, i.e. the posting of material on social media
platforms and/or the attendance of an event. In this case,
income generation is attributable to the business organi-
zation set up by the influencer. Consequently, article 7 of
the OECD Model should apply:
[w]hilst the payment to an entertainer or sportsperson of a share
of the merchandising income closely connected with a public
performance but not constituting royalties would normally fall
under Article 17, merchandising payments derived from sales in
a country that are not closely connected with performances in that
country and that do not constitute royalties would normally be
covered by Article 17.84 (Emphasis added)
According to this passage of the Commentary on Article
17 of the OECD Model, article 17 of the OECD Model
applies on merchandizing income when there is a close
connection with the performances in the source country.
It has already been emphasized that this connection relates
to a specific performance. Accordingly, only in cases in
which reference to a certain event and/or an online post
is made, for example, an influencer designs a t-shirt with
a logo of a famous fashion show and their name as par-
ticipants, and the distribution of the product is under-
taken by the influencer or by a person or entity engaged
by them in a set time and place close to the event and/or
the online post (the influencer in this example sells the
t-shirts shortly before and after and during the fashion
show in the premises where it takes place) can the con-
nection required by the OECD Commentary on Article
17 be established.85 In such cases, the performance of the
82. See, generally, Hahn-Joecks, supra n. 62, at p. 87.
83. A well-known influencer for interior design is Hege Morris who, as
she describes, “[has] worked with numerous design brands”. See HEGE
IN FRANCE, ABOUT ME, available at www.hegeinfrance.com/about
(accessed 27 Feb. 2020).
84. Para. 9, last sentence OECD Model: Commentary on Article 17 (2017).
85. While, in this article, a reference to a specific performance is required
for article 17 of the OECD Model (2017) to apply, a wide interpretation
could permit the application of article 17 in cases where this proxim-
ity is missing. For instance, it could be assumed that income derived
from selling t-shirts with the face of an influencer on it after one of
their public appearances without reference being made to that specific
appearance at all falls under article 17 of the OECD Model (2017). The
OECD Model: Commentary on Article 17 (2017) is silent in this matter,
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
influencer has a pivotal role in the income generation and
not their name and fame.
In the case of the second type of merchandizing income,
it is not an activity that is being paid for but the use of,
or the right to use, the image and/or name of the influ-
encer. Consequently, merchandizing income consisting
of a percentage on sales granted for allowing the use of,
or the right to use, the influencer’s image and/or name
rights is treated like income for the use of, or the right
to use, image and/or name rights. This situation is why
the reader is referred to the findings presented in section
2.3.2.3. Finally, with regard to the third type of merchan-
dizing income, designing a product does not constitute a
“performance” for the purposes of article 17 of the OECD
Model, and it does not demonstrate any link to such a per-
formance. In this case, where, in respect of the product
designed, reference is made to an event in which the influ-
encer also participates, there is no time proximity between
the designing process and the performance in the event.
For instance, the former activity can take place in another
state many months before the event takes place. Also, in
this case, the income in question falls under article 7 of the
OECD Model.86 So, only if the influencer produces and
sells products with a reference to a specific performance
and within a set time and place close to that performance
can an indirect link to that performance be ascertained
and source taxation according to article 17 of the OECD
Model be justified.
3. Horizontal Apportionment of Influencer
Income
3.1. Introductory remarks
The different distributive rules that are relevant to influ-
encer income allocate taxing rights in different ways. Arti-
cles 7 and 12 of the OECD Model provide for – at least in
the case of influencers – residence taxation so that no hor-
izontal apportionment issue arises. Income falling under
these provisions is attributed to the (one and only!) resi-
dence state of the influencer. On the contrary, article 17 of
the OECD Model provides for source taxation. So, when
the income earned is referred to more than one perfor-
mance in different source states, it must also be respec-
tively (horizontally) apportioned among them.87 The
thereby permitting such an interpretation. In detail, see Cordewener,
supra n. 7, at sec. 6.3.2.3., p. 121.
86. In this sense, with regard to entertainers and sportspersons generally,
see Sandler, supra n. 50, at p. 226. Only with regard to sportspersons,
see Tetłak, supra n. 77, at sec. 3.5., p. 134.
87. It should be noted (see supra n. 4) that the source state for the purposes
of article 17 of the OECD Model (2017) is designated to be the state where
entertaining activities (in economic terms the “supply”) takes place.
The market states, i.e. the states where the outcome of the activities is
received (in economic terms the “demand”), do not have a taxing right
on income from entertaining activities. The issue of a nexus for the
taxation of mobile persons is also (see supra n. 50) relevant here, espe-
cially following the OECD/G20 work with regard to corporate income
of consumer-faced businesses from sales, which, under the OECD
Unified Approach, should be taxed primarily in the market states. See
more recently OECD/G20 Base Erosion and Profit Shifting (BEPS)
Project, Statement by the OECD/G20 Inclusive Framework on BEPS on
the Two-Pillar Approach to Address the Tax Challenges Arising from the
Digitalisation of the Economy: As approved by the OECD/G20 Inclusive
Framework on BEPS on 29-30 January 2020 (OECD 2020), available at
Bulletin for International Taxation June 2020 373
Savvas Kostikidis
Commentary on Article 17 of the OECD Model appears
to leave this issue to the discretion of the national legisla-
tion of the source countries applying the tax treaty: “[t]he
Article says nothing about how the income in question is
to be computed”.88 However, it is apparent that the new
version of the Commentary on Article 17 of the OECD
Model provides guidance on that issue. In section 3.2.,
the existing apportionment methods regarding income
falling under article 17 of the OECD Model are briefly
introduced and a new apportionment method appropriate
for influencer income is proposed in section 3.3.
3.2. Existing apportionment methods regarding
income falling within article 17 of the OECD
Model
3.2.1. The apportionment formulas suggested by the
Commentary on Article 17 of the OECD Model
The current version of the Commentary on Article 17
of the OECD Model (2017) gives some insight as to how
income falling within article 17 of the OECD Model
(2017) should be apportioned among several source states:
Example 1: A self-employed singer is paid a fixed amount for a
number of concerts to be performed in different states plus 5
per cent of the ticket sales for each concert. In that case, it would
be appropriate to allocate the fixed amount on the basis of the
number of concerts performed in each state but to allocate the
payments based on ticket sales on the basis of where the concerts
that generated each such payment took place.89 (Emphasis added)
The first example presented by the OECD Commentary
on Article 17 (2017) suggests that, in the case of self-em-
ployed entertainers and sportspersons, the number of
events in each source state could be used as an appor-
tionment formula.90 If, however, the remuneration is suc-
cess-oriented (in the example, 5% of the ticket sales), the
connection with a specific performance is closer, which
justifies an allocation of the income accruing from each
performance to the relevant source state. Furthermore,
although this article deals only with self-employed influ-
encers, it is reasonable also to outline the framework pre-
sented in the OECD Commentary on Article 17 (2017)
regarding the apportionment of income gained by inde-
pendent entertainers or sportspersons:
Example 2: A cyclist is employed by a team.... He is paid a fixed
annual salary plus bonuses based on his results in particular
races. In that case, it would be reasonable to allocate the salary
on the basis of the number of working days during which he is
present in each State where his employment-related activities
(e.g. travel, training, races, public appearances) are performed
www.oecd.org/tax/beps/statement-by-the-oecd-g20-inclusive-frame
work-on-beps-january-2020.pdf (accessed 17 Apr. 2020) [added by
Editor].
88. Para. 10, first sentence OECD Model: Commentary on Article 17 (2017).
89. Id., at para. 9.3. The presentation of the apportionment formulas sug-
gested by the Commentary is based on the analysis made by Corde-
wener, supra n. 7, at sec. 6.4.2.3., p. 128 et seq.
90. This apportionment formula corresponds to the “games played
formula”. See J.L. Krasney, State Income Taxation of Nonresident Pro-
fessional Athletes, 47 Tax Law. 2, p. 402 et seq. (1994) and CA: TCC,
15 Jan. 2004, Austin v. Her Majesty the Queen, 2000-5077(IT)G, Domin-
ion Tax Cases (2004), p. 2181, Case Law IBFD.
374 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
and to allocate the bonuses to where the relevant races took place.91
(Emphasis added)
Accordingly, the second example suggests the applica-
tion of a working days formula with regard to income of
independent entertainers or sportspersons.92 However,
these two methods are not incontestable. Judge D.G.H.
Bowman in his ruling in the case Gordon Sumner (1999)93
stated that “problems [exist] in both methods, and other
allocation formulae may be appropriate”.94 As a result, the
question arises whether they are appropriate in the case of
influencers. Section 3.2.2. deals with this issue.
3.2.2. Why not apply them in the case of influencers?
So, the Commentary on Article 17 of the OECD Model
does provide guidance on how the horizontal apportion-
ment of income falling under article 17 of the OECD
Model can occur. As this article deals with influencer
income, the question arises whether these formulas can
also apply in relation to such individuals. It is maintained
here that the application of these formulas would disre-
gard completely the economic framework within which
influencers carry on their activities and realize income.
The company supporting the influencer endorses “per-
formances” that have the best advertising effect possible,
i.e. fashion shows, exhibitions and public events in general
that are well-known worldwide and photographs as well
as videos that are seen by a great number of people and
have the greatest impact on them. Less interesting public
appearances and photographs or videos are endorsed
but, of course, not in the same way as those that have the
greatest advertising effect. So, it is not the performance, its
quality or its level that are essential for the income genera-
tion but, rather, the advertising effect that the former has.
The performance is the means to realize that income. In
other words, it is not the number of performances, but the
advertising effect deriving therefrom that should be used
as a driving factor in horizontal income apportionment.
If, for example, an influencer posts five photographs from
a trip to a traditional German village and one of a trip
to Los Angeles, whereby that one photograph has more
views and likes than all five photographs of the village in
Germany, should the ratio of income apportionment be
five to one in favour of Germany? Especially, as under the
premise that source taxation in article 17 of the OECD
Model is driven by the benefit principle, the apportion-
ment of income falling under this provision must be deter-
mined based on the “nature” of the benefit that the source
91. Para. 9.3 OECD Model: Commentary on Article 17 (2017).
92. This apportionment formula corresponds to the “duty-days formula”.
See Krasney, supra n. 90, at p. 401 et seq. As to how the working days are
calculated, see the decision of the California Court of Appeal (CCA) in
US: CCA, 13 Dec. 1993, Marc D. Wilson et al. v. Franchise Tax Board,
20 Cal. App. 4th (1993), p. 1441 (at p. 1452 et seq.) referring to US: TC,
31 May 1984, Peter Stemkowski v. Commissioner of Internal Revenue,
Reports of the US Tax Court (1984), p. 854 and US: CCA, 16 Mar. 1989,
Paul Newman v. Franchise Tax Board, 208 Cal. App. 3d (1989), p. 972.
93. CA: TCC, 7 Dec. 1999, Gordon M. Sumner & Roxanne Music Inc. v. Her
Majesty the Queen, 98-1222(IT)G and 98-1410(IT)G, Dominion Tax
Cases (2000), p. 1667, Case Law IBFD.
94. Id., at para. 24.
© IBFD

country offers to the influencer.95 In this case, the mar-
ketplace that Los Angeles offers and the value that this
environment adds to the photograph and the product
placement accompanying it is substantially greater than
the marketplace offered and the value created through
the placement of photographs of the German village.96
The same arguments are relevant regarding the working
days formula. Days worked do not necessary reflect the
advertising effect of the performance undertaken. Con-
sequently, the question arises as to how the advertising
effect of a performance can be measured and, in a next
step, how can it result in a fair apportionment of income
falling under article 17 of the OECD Model.
3.3. Proposed apportionment method regarding
influencer income
As demonstrated in the previous section, the advertising
effect of an influencer performance is essential for the
value that this performance has. Accordingly, the focus
must be placed on the measurement of this effect. Only
then is it possible to evaluate each performance, and,
therefore, apportion the income falling under article 17 of
the OECD Model to the source states where the respective
performances took place. An interesting starting point
can be found in German case law. The Finanzgericht (Tax
Court, FG) Hamburg 97 used the number of inhabitants as
an apportionment key in respect of income derived from
a concert tour:
Event sponsoring can be evaluated regionally in various ways...
or, in a simplified manner, in relation to the number of inhab-
itants of the countries travelled on the tour. The simplifying
solution most recently adopted by the applicant is supported
by the fact that the number, venues and advertising of the con-
certs in the various countries had to be geared to the number
of potential interested parties from a marketing point of view.98
This judgement stated that income can be apportioned
among source states according to the marketing effect
attributed to the performance in the relevant source state.
The number of inhabitants of the source state is a good
indicator of the marketing effect of a performance when
it comes to concerts. A concert takes place in a fixed loca-
tion. The more people living in this area, the greater the
possibility for the concert to be a success. However, this
apportionment key is not appropriate when it comes to
influencer income. The measurement of the advertising
effect of an influencer performance is unrelated to the
number of inhabitants in the source state. For instance, if
95. The word “nature” is emphasized because what is proposed here is that
the nature of the benefit should determine the design of the apportion-
ment of income, and not that the “intensity” of the benefit, for example,
how much value is really added to a photograph taken in Los Angeles
and those in the traditional German village, can be accurately mea-
sured. The latter is correctly denied by scholars. See W. Schön, Ten Ques-
tions about Why and How to Tax the Digitalized Economy, 72 Bull. Intl.
Taxn. 4/5, sec. 7. (2018), Journal Articles & Papers IBFD.
96. It is apparent that these benefits are not as clear-cut as, for example,
those that a sportsperson enjoys using a training facility abroad. But
they are certainly related to Los Angeles as a location. Scholars have
denoted such benefits “location-specific”. See Schön, supra n. 95, at
sec. 9.
97. DE: FG Hamburg, 17 Jan. 1997, II 97/96, Entscheidungen der
Finanzgerichte (1997), p. 601.
98. Id., at para. 112 (author’s unofficial translation).
© IBFD
Exported / Printed on 12 Oct. 2020 by IBFD.
Influencer Income and Tax Treaties
an influencer posts a photograph of the Formula 1 Grand
Prix in Monaco advertising a pair of shoes, the advertis-
ing effect is enormous potentially, despite the fact that
Monaco has probably less inhabitants than any other
source country in which the influencer performs.
The advertising effect of an influencer performance
could also be assessed if the sales in the source state of
the product advertised by the influencer relate to the
worldwide gross sales of that product.99 Nevertheless, this
sale-oriented method is not appropriate to depict the value
created through the influencer advertising and, there-
fore, the remuneration, which must be apportioned to the
advertising performance. As with the previous example, if
an influencer posts a photograph of the Formula 1 Grand
Prix in Monaco advertising a pair of shoes, the advertising
effect is enormous. In contrast, the sales of the advertised
product in Monaco are minimal.
An indicator of the advertising effect that an influencer
performance has and, therefore, the driving factor for
income apportionment regarding influencer income
could be the effect that the relevant posting has on social
media. This could be measured, for example, by count-
ing the “likes”100 that each photograph containing product
placement has gathered. In particular, the total number of
likes that influencer posts with product placement have
should be the denominator and the likes gathered for each
photograph should be the numerator of the fraction. For
instance, suppose an influencer has gathered in respect
of all of the photographs containing product placement
100,000 likes. The previously noted photograph in the
Monaco Grand Prix alone gathered 10,000 likes. If, for
all of the photographs containing product placement, the
influencer received EUR 1 million, the income attribut-
able to the performance in the Monaco Grand Prix should
be EUR 100,000:101
X = 10,000/100,000 = 0.1 x EUR 1,000,000 = EUR 100,000
This apportionment formula can be used in the cases
in which the influencer performance either consists of
taking photographs and the posting of the relevant pho-
tographs on social media platforms or in the participa-
tion in events and posting of photographs of this event.
In the latter case, the posting of the photographs of the
event, for example, fashion show, autograph sessions,
exhibition, etc., on social media platforms is essential for
the advertising effect of the performance. Through the
99. Based on a document released by the US Internal Revenue Service (IRS)
to facilitate the auditing of non-resident sportspersons. See J.J. Coneys,
To Tax or Not to Tax: Is a Non-Resident Tennis Player´s Endorsement
Income Subject to Taxation in the United States?, 9 Fordham Intell. Prop.,
Media & Ent. L. J. 3, p. 908 (1999).
100. Admittedly, other concepts, such as views, shares, comments, etc., could
be used.
101. Granted, the likes, follows, etc. themselves contribute to the adver-
tising effect. The more likes, follows, etc. a photograph has, the more
likes, follows, etc. the more likely the photograph will get yet more likes,
follows, etc. What is being said here is that “consumers” themselves add
value to the photograph. However, the states of residence of the con-
sumers do not even come in question as source states to which income
can be attributed pursuant to article 17 of the OECD Model (2017), as
already emphasized – see supra nn. 4 and 87. Again, the issue regarding
the nexus for the taxation of mobile persons becomes apparent.
Bulletin for International Taxation June 2020 375
Savvas Kostikidis
posting of the photographs of the participation in this
event, the latter becomes accessible worldwide, which
exponentially increases the advertising effect of the per-
formance. Accordingly, the companies supporting the
influencer expect from them to post these photographs
and pay them, in principle, for that purpose. As a result, in
the cases in which the advertising occurs during a public
performance as well, the posting process is essential for
the value of the influencer performance and should deter-
mine the income apportionment.
In the rare cases in which the influencer performance is
not accompanied by a post on a social media platform, it
is still the advertising effect of the activity that is, in prin-
ciple, remunerated for. This time, however, the advertis-
ing effect is basically restricted within the borders of the
state in which the performance takes place. Consequently,
a method measuring the influence of that marketplace
must be applied. The method discussed previously in
this section regarding the case before the FG Hamburg
based on the number of inhabitants of the state in which
the activity is executed could be an appropriate solution.
Lastly, with regard to the implementation of the formula,
the best way would be for states to adopt it in the proto-
col accompanying the tax treaties that they conclude.102
4. Conclusions
Influencers are entertainers for the purposes of article
17 of the OECD Model. Fashion models and influenc-
ers appear to be similar to each other so that an analo-
gous treatment of the two seems plausible, given that no
guidance is provided by the Commentary on Article 17
of the OECD Model regarding the treatment of influenc-
ers. Fashion models are regarded by some scholars and
tax authorities as entertainers. Even if this view is not
accepted, influencers fall within the personal scope of
article 17 of the OECD Model, as (and when) their activ-
102. Based on E.C.C.M. Kemmeren, The Netherlands: Is a Football Player´s
Transfer Fee Income Derived as a Sportsman?, in Tax Treaty Case Law
Around the Globe – 2011 p. 342 (M. Lang ed., Kluwer L. Intl. 2012).
376 Bulletin for International Taxation June 2020
Exported / Printed on 12 Oct. 2020 by IBFD.
ities, i.e. posting material of their lives on social media, is
entertaining for their followers.
Influencers realize several categories of income that must
be assessed separately when it comes to their classification
for the purposes of the objective scope of article 17 of the
OECD Model. Primarily, they gain advertising income
which falls under article 17 of the OECD Model, pro-
vided that their posts have an entertaining effect on the
public. According to sponsorship agreements, influencers
are paid to wear clothes or carry equipment, etc. during
events. This income also falls within the ambit of article
17 of the OECD Model. Again, the character of the “per-
formance of the influencer” in this event must be enter-
taining so that a case-by-case analysis is necessary. The
use of, or the right to use, images and/or names rights fall
under articles 7 and 12 of the OECD Model, depending on
whether the image and/or the name rights are legally pro-
tected as trademarks in the source state. Only in those rare
cases where a close connection with a performance can
be identified the income accruing therefrom dose such
income falls within article 17 of the OECD Model. Finally,
merchandizing income falls under article 17 of the OECD
Model only when it is closely related to a specific perfor-
mance. In other circumstances, merchandizing income
falls under articles 7 and 12 of the OECD Model.
In a next step, income falling under article 17 of the OECD
Model should also be apportioned when more than one
source state is involved. Although the Commentary on
Article 17 of the OECD Model provides some pointers in
this respect, this article does not accept the argument that
the approaches proposed based on the number of events
or working days depart from the economic peculiarities
of influencer activities. The focus should be on the adver-
tising effect of the influencer performance. As influencer
advertising is carried out by way of pictures and videos
posted on online platforms, it is proposed that influencer
activities should be evaluated according to the likes, or
similar indicators, such as views, shares, comments, etc.,
of the relevant photograph takers, i.e. the influencer pho-
tograph posts.
© IBFD