Is every escort subject to tax?

Tax liability for escort services — What is legal?

Escort ladies are of course also required to pay taxes. The escort service itself is a freelance activity that does not need to be registered in addition. According to the Prostitution Act, escorts register with the office and this information is also automatically forwarded to the tax office.

At a glance:

Escort services are subject to income tax and, as a rule, sales tax, require complete documentation of all income and expenditure and require independent social security coverage. In some municipalities, there may be an entertainment tax (sex tax), which, depending on local statutes, is levied for the provision of sexual services for a fee.

Is escort taxable?

Every person in Germany who runs a business or receives income is obliged to pay a certain percentage of taxes. Escorts are also required to pay taxes in the erotic sector and in escort work. If you work through an escort agency or even as an independent escort and not go to the Düsseldorf table, tax types such as income tax, business tax and sales tax are stated in the tax return. Escort services are considered a commercial activity in many countries and are therefore subject to tax liability. Anyone who works as an escort — whether self-employed or through an agency — must deal with tax obligations in order to be legally protected and avoid potential penalties.

What taxes do escorts have to pay?

Anyone working as an escort must deal with tax obligations, as this service is considered a commercial or independent activity. The type of tax to be paid depends on whether the escort service provider is self-employed. However, escorts can offset the invoices with the escort agency's commission as an expense and get the value added tax back from the tax office.

income tax

Income from the escort industry is subject to income tax. The working hours are noted independently by the escort and also his income and expenses

• Self-employed escorts must report their income on their tax return annually.

The amount of income tax depends on income. It is based on total annual income and personal tax allowances. This can be recorded by a tax advisor.

Sales tax (value added tax)

Self-employed escorts must also sales tax Pay (value added tax). They often have to charge for their services and pay them to the tax office.

• In germany There is a rate of 19% for services
• switzerland: 7.7% VAT if the annual turnover exceeds 100,000 CHF.
• austria: 20% sales tax as soon as the small business limit of 35,000€ is exceeded.

Escorts who work through an agency should pay attention to the agency's tax liability. The sales tax can be stated by the agency or by the escort herself.

Business tax

Business tax (GeWST for short) is the tax on the corporate profit of an escort lady. It measures the objective profitability of a commercial enterprise. For this purpose, business income is determined. This is included in a business tax measurement of 3.5%. This is how an escort lady's corporate profit is taxed in order to strengthen the local economy.

Entertainment tax (sex tax)

The entertainment tax, historically known as the merriment tax and continues to be known under this name in Austria, is a local expense tax. In Germany, the legislative competence for this lies with the federal states in accordance with Art. 105 para. 2a GG. The tax object comprises the financial expenses for various services, including the accompanying service. Common forms of entertainment tax include in particular the collection of duties on entrance fees for events (also known as ticket tax, known as ticket tax in Switzerland), the taxation of gaming machines (gaming equipment tax) and, more recently, the assessment of taxes on sexual services, which are referred to as prostitution tax or sex tax.

Social security for escorts

Escort taxes aren't the only thing that comes your way. Escort ladies must take care of health insurance, pension insurance and any other social security contributions themselves. Escorts are not employed by an escort agency and must therefore take care of their contributions.

History about escort taxes

Following the decriminalization of prostitution through the Prostitution Act, a municipal expense tax was introduced in North Rhine-Westphalia for the first time in 2003 by the cities of Dorsten and Gelsenkirchen, which is charged for the targeted provision of sexual services opportunities and for paid sexual acts — also known as the so-called “sex tax.” Since 2010, municipalities in NRW have had the right to decide independently on the introduction of this tax after both the Ministry of the Interior and the Ministry of Finance of the state have approved its collection.

Based on a municipal statute from 2005, Cologne levies an entertainment tax on the provision of opportunities for sexual pleasure in certain establishments such as bars, swinger clubs, naturist and sauna clubs. The provision of sexual services outside these places — such as in hotels, motorhomes, private rooms or motor vehicles — is also taxed, with the exception of street prostitution in special service boxes. According to § 6 of the statutes, sex workers must pay a daily allowance of 6 euros. Several lawsuits against this tax were rejected by the Cologne Administrative Court in 2007.

In Bonn, in 2011, a special ticket machine was set up on the so-called execution site to collect the entertainment tax for publicly practised prostitution. Sex workers are required to purchase a ticket of 6 euros between 8:15 PM and 6:00 AM in order to be able to pursue their business on the street. However, income from this tax has been declining for years: While 45,000 euros were collected in 2013, the sum fell to 33,000 euros in 2016 and further to 23,800 euros in 2018.

Municipalities in North Rhine-Westphalia argue that the tax burden could ultimately be passed on to customers.

In Soltau, too, an entertainment tax is levied on paid sexual services, in particular in motorhomes, accommodation establishments and other vehicles. Tax debtors are the operators or organizers of the corresponding institutions. However, it was found by the court that taxing landlords of so-called “love mobiles” is not legal, as the prostitutes themselves are considered operators and organizers during the rental period.

Tax evasion as an escort

If you work as an escort, this income can become taxable, as with any other self-employed or commercial activity. If these taxes are not paid to the tax office or if they are reserved, this is tax evasion. Especially with the high percentage of cash, the temptation as an escort is not to declare all taxes higher. Even as an individual or as a taxpayer, it is worthwhile to document income and expenditure completely and to collect supporting documents. Otherwise, it is also worthwhile to get help in the form of advice.

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