The Affiliate marketing tax regime
/in Corporate/by Antonio FerraraAffiliate marketing is a business model whereby a company pays a commission to an affiliate for each sale or action generated through traffic sent from the affiliate’s own website or marketing channel. To be more clear, this is what happens: the affiliate promotes the company’s products or services through its website or through other channels: social media, email marketing or online advertising. If a user clicks on the affiliate’s link and makes a purchase or performs a specific action such as registration, the affiliate receives a commission on the sale or action performed. Affiliate marketing is, therefore, a business strategy of wide-ranging promotion through collaboration with websites or influencers and, at the same time, represents a profit opportunity for affiliate partners.
How to declare it
Flat-rate/simplified scheme
If you are an affiliate and have been granted access to the flat-rate regime, your taxation will be simplified compared to other forms of taxation. In fact, under the flat-rate scheme, taxable income is calculated on the basis of a flat percentage of turnover, without the need to file ordinary accounts.
As regards affiliate marketing, the income to be declared will consist of commissions received by affiliates. These commissions will be subject to the flat rate of 5 % or 15 % provided for by the aforementioned scheme.
As regards filling in your tax return, you will have to indicate, in the section on self-employment income, the nature of the income and the total amount of commissions received. In addition, you will have to fill in the RS box, which contains information on the tax regime adopted and the income to be declared.
In summary, if you are an affiliate and you are registered under the flat-rate scheme, your taxation will be simplified and the income to be declared will consist of the commissions received and subject to the flat rate of 5% or 15%. It is important to bear in mind that, according to the regulations, you cannot deduct expenses incurred for affiliate marketing activities in this status, but the regime does offer certain tax advantages and the possibility of benefits.
Sole proprietorship or partnership
Sole proprietorships and partnerships are further legal regimes that can be chosen, although they are different. In the former case, the VAT number is individual, whereas in the latter there may be one or more partners.
In terms of taxation, on the other hand, the two regimes are the same and we are talking about IRPEF taxation: as income increases, so does the amount to be paid in taxes. There are four different percentages that apply: 23%, 25%, 35% and 43%.
The first percentage is applied to income below 15,000€, the second for income from 15,001€ to 28,000€, the third from 28,001€ to 50,000€ and the fourth for amounts above 50,001€. However, as taxation is graduated, in the case of income of 30,000€, 15% will be calculated on 15,000€ and 25% on the remaining 15,000€.
Sole proprietorships and partnerships therefore allow tax to be calculated on a real margin, which is why the amount to be taxed is equal to the difference between income and expenses.
Remember, too, that you will have to keep track of the expenses incurred for affiliate marketing activities in order to be able to deduct the expenses incurred from your taxable income and reduce the tax payable.
Incorporated companies
If you own a corporation and engage in affiliate marketing, the applicable tax regime will depend on the legal form of the company.
If the company is an Srl (Limited Liability Company) or a SpA (Joint Stock Company), the income generated by affiliate marketing will be subject to corporate income tax (IRES), which currently has a rate of 24%.
The company will have to file a corporate income tax return (UNICO SC form), which contains all information on the income generated by the affiliate marketing, the expenses incurred and the applicable tax credits. In addition, the company will have to file a VAT return relating to the affiliate marketing operations carried out.
It is important to note that corporations may deduct expenses incurred for affiliate marketing from their taxable income. Such expenses include, for instance, advertising costs, website management costs and commissions paid to affiliates. However, deductible expenses are subject to limitations and restrictions and must be precisely documented.
Moreover, if the company transacts with affiliates located abroad, it may be subject to transfer pricing and cross-border transaction tax rules.
After graduating in business administration with a thesis focusing on ‘the IASB audit process’, I further built up my education by continuing my studies in the subjects of corporate finance, international trade and production processes. Go to profile