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AdSense Specials

Do I have to pay taxes on AdSense and YouTube earnings?

When you start a YouTube channel or build a website, you probably don't think about making money from it. But once the site or channel is up and running, monetising it often comes into play. AdSense is a good and easy way to do this.

Now some questions arise:

• But what about the income?
• Do I have to pay taxes on it?
• Do I need to register a business?
• What about VAT?
• Do I need to bill Google?
• Do I need an accountant and a tax advisor?

We will look at the answers to these questions here. As there are specific legal and tax requirements in each country, I will remain at a more general level.

Self-employed

You are not an employee of Google because you are self-employed. If you are self-employed, your income is taxable and you must file a tax return.

Earnings

Yes, you want to generate income. The law then talks about the intention to generate income. Google will then transfer it to your bank account and it becomes income for you.

Business registration

In many countries you have to register your business. You usually register with your local authority or tax office, where you will also receive a licence or tax registration certificate.

Small business owners

There are often simplifications for small business owners when it comes to bookkeeping and tax returns. It is advisable to consult a tax advisor.

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Taxes

When you earn income and profit, you usually pay taxes to the state, in the form of the tax office. There are two main types of tax: income tax and sales tax.

Income tax

For income tax purposes, you are usually required to file a tax return once a year. The profit you earn from AdSense will be included in your taxable income.

Value added tax

You do not have to pay VAT on AdSense earnings because Google is based in Ireland and the EU applies a reverse charge mechanism to this type of income. This means that Google is responsible for the VAT.

If you do not want to or cannot use the small business scheme, you will still need an EU VAT number, you may need to file an advance return for VAT and you will need to regularly report your turnover in a recapitulative statement. They must also issue an invoice and send it to Google. As you can see, there are quite a few formal hurdles.

In the UK and USA, advertising revenue is not subject to VAT.

Accounting

The extent of the accounting obligations often depends on whether you can benefit from a small business scheme. For double-entry bookkeeping, the obligations are greater, often the profit and loss account is sufficient. However, both types of accounting require you to document your income for the tax authorities.

Invoices - Receipts

The basis for the booking is usually the receipt of the business transaction, e.g. an invoice or the bank account statement.

The receipts

There are two common questions in the AdSense community regarding payment receipt:

• Where can I find my payment receipt?
You can find your receipts and payment information in your AdSense dashboard at Payments / Payments info/ Transactions / View transactions . Click on the link "Automatic payment Bank account ..." to get to the payment receipt. Select the option "Detailed transaction view" and "All transactions":

• Is this receipt suitable for accounting purposes?
This receipt is suitable because it contains all the information you need for this transaction. Together with the bank statement, it is the basis for proving the accuracy of the entry or record.

Self-receipt for confirmation payment

Google AdSense uses a transfer of between 0.01 and 0.25 EUR to your bank account to confirm the account. There are always questions in the community about whether there is a receipt for this and how it should be booked.

As there is no document for this, you can write your own document describing the background to this entry and record it as extraordinary income.

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Google AdSense tax information

A common question on the support forum: What is the Google AdSense tax information? As we've seen above, most of the time you won't need this information, as you'll find it on your payment receipt. However, you may need this information for other purposes:

Google Ireland VAT identification number:

(IE6388047V)

Name and adress

Google Ireland
Gordon House
Barrow Street
Dublin 4
Irland

You can find more information about tax law on this AdSense help page.

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