The OnlyFans Models Dilemma in Ukraine. Why the idea of paying taxes can turn into a crime. Plus legal commentary from Legalife

We bring to your attention an article by Yelyzaveta Supivska of the News PRO portal, as well as a commentary on the topic of this article from Doctor of Law Iryna Yakovets, which was provided at the request of CO "Legalife-Ukraine".

Let’s find out why the authors of the platform may face criminal liability after paying income taxes

The OnlyFans online platform operates legally in Ukraine and pays taxes to the state budget every year. For example, in 2023, the owner company accrued $1.27 million for the provision of services in our country. However, models who earn good money from content are in no hurry to pay income taxes. Otherwise, they could be prosecuted in Ukraine for distributing and selling pornography.

The News Pro website ("Новини Pro") figured out the dilemma for the owners of Ukrainian accounts on OnlyFans.

How OnlyFans works

OnlyFans was founded back in 2016 by the Stokely brothers. The company is registered in the UK, but a significant part of users are Americans, and 70% of the platform’s annual revenue comes from the USA. In 2018, Leonid Radvinsky, an American of Ukrainian descent, bought about 75% of the business: according to Bloomberg, he has earned more than $1 billion in dividends over the past three years.

OnlyFans saw a rapid rise in popularity during the coronavirus pandemic. Every year, the number of authors and so-called ‘fans’ (content buyers) is steadily increasing. According to the 2023 report of Fenix International (the company that owns OnlyFans), financial indicators are growing:

• The growth of registered creators was +29% compared to 2022 (4.118 million people in total);
• subscriber growth was +28% compared to 2022 (305 million people in total);
• revenue as of 30 November 2023 was $1.31 billion (+20%);
• net profit for the previous financial year was $485 million.

In Ukraine, OnlyFans operates legally, paying taxes for the provision of electronic services in the country. According to Danylo Hetmantsev (Данило Гетманцев), chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, the service paid $1.27 million (UAH 52 million) in 2023. This is the so-called ‘Google tax’ that all large multinationals not registered in Ukraine must pay (20% of income).

Claims to Ukrainian accounts

In September 2024, Hetmantsev published data on the amount of income of several Ukrainian authors on OnlyFans. Not only does the number of accounts triple on average every year, but users are also in no hurry to pay taxes to the state budget, although they should.

‘A taxpayer who receives foreign income, i.e. money from sources outside Ukraine, is obliged to file a tax return for the reporting year and declare such amounts with their respective taxation,’ said the head of the VRU committee.

This includes an 18% personal income tax and a 1.5% military duty. Otherwise, the supervisory authority has the right to charge additional taxes and impose a penalty. Hetmantsev published information about the earnings of several Ukrainian women on OnlyFans:

• Citizen C received over $4 million for creating paid content;
• citizen K earned more than $3 million from the same activity;
• Citizen B earned $1.8 million in income.

Given these amounts, it is indeed a pity that the state budget is not replenished by taxes on the income of the platform’s authors. This would be an additional source of revenue, especially since the number of Ukrainian accounts is growing every year. But this issue is a double-edged sword, as girls and women may turn into criminals because of paying taxes.

What the Criminal Code says

The content published on the site is divided into erotic, sexual and pornographic. The first two types are not prohibited in Ukraine, while the production, sale and distribution of pornographic items is punishable by

• a fine of 1,000 to 4,000 tax-free minimum incomes (UAH 17,000 to 68,000)
• probation supervision for up to 3 years;
• Restriction of liberty for up to 3 years.

If these actions are committed repeatedly, or by prior conspiracy by a group of persons, or with the receipt of large amounts of income, the punishment will be increased to imprisonment for 3 to 7 years with a ban on engaging in certain activities (Article 301 of the Criminal Code of Ukraine).

The problem is that there are no clear criteria for defining pornography. The Ministry of Culture, in its Order No. 212 of 16 March 2018, established the following definition of pornographic material

• the main content of the product or a significant part of it is a close-up demonstration of the genitals in an excited state or a detailed description or demonstration of a sexual act;
• the product contains a naturalistic image that is as close as possible to the real anatomy and physiology of a person and his/her sexual intercourse;
• the products are created solely for the purpose of sexual arousal of its consumers.

However, in 2023, this document expired. Therefore, in practice, even content of an erotic nature, i.e., quite innocent and created for aesthetic purposes, can be declared illegal. Getting fined or imprisoned for using OnlyFans is not an isolated case, but a real threat to Ukrainian women.

Therefore, a logical question arises: if content creators start fulfilling their tax obligation and regularly pay money to the budget, their illegal activities will be easily exposed. And the sale of salacious photos/videos will turn into a court case, the outcome of which is rarely decided in favour of the accused.

Examples of Ukrainian court decisions

Law enforcement agencies in Ukraine are actively working to initiate criminal proceedings for online sex. In the first half of 2024, the police opened as many cases for pornography (including OnlyFans) as in the whole of 2023. The Unified State Register of Court Decisions contains many sentences under Article 301 CCU (Criminal Code of Ukraine). Most of the defendants receive suspended sentences with a requirement to pay a fine.

1. In May 2023, the Avtozavodskyi District Court of Kremenchuk sentenced the couple to a 1-year probationary period for ‘criminal intent aimed at the production, sale and distribution of pornographic video products by prior conspiracy’. The couple filmed sex acts on camera and uploaded them to Onlyfans. In addition, they must pay UAH 13,459.24 to cover the procedural costs associated with the involvement of experts.
2. In July 2024, the Dniprovskyi District Court of Kyiv imposed a fine of UAH 35,700 on the person. The story went viral on the Internet when it became known that the police had purchased photos and videos from the author for UAH 5,110, allegedly for an expert examination.
3. In November 2022, the Industrial District Court of Dnipro sentenced the Kramatorsk resident to 4 years in prison, commuting the sentence to 2 years of probation. The woman made about 90 videos showing her naked body and genitals and posted them on OnlyFans.

It turns out to be a strange situation: you have to pay taxes on your income, but the activities of models fall under a criminal article. It is clear that without a solution to this dilemma, no content creator will voluntarily contribute to the state budget of Ukraine.

By the way, in August 2023, parliamentarians registered draft law No. 9623 in the Rada, in which they proposed to amend Article 301 of the Criminal Code to decriminalise the voluntary production and sale of pornographic products. But since then, the document has been under consideration and no progress is expected.

Text: managing editor Yelyzaveta Supivska

Published on 13 September 2024 on the portal News PRO

Comment from Legalife

Taxation of proceeds of crime: know-how from Getmantsev

If you have stolen something, do not forget to file a declaration of such property and pay taxes before going to prison. And this is not a joke, it is an innovation from Danylo Hetmantsev, a member of the Verkhovna Rada of Ukraine of the IX convocation. At least, these are the actions he suggests people who are ‘illegally enriched’ by committing a criminal offence under Article 301 of the Criminal Code of Ukraine ‘Importation, manufacture, sale and distribution of pornographic items’.

 Thus, in a recent interview, Getmantsev ‘sharply criticised’ the 18+ platform ‘Only Fans’, noting that ‘one of our citizens received more than $4 million for creating paid content on the Internet platform “Only Fans” over several years’. Hetmantsev reminded such ‘entrepreneurs’ of the need to report on the tax year - the obligation to file a tax return, declare such amounts with their respective taxation. Failure to file a tax return within the statutory deadline is grounds for additional tax on the amount of income received at a rate of 18 per cent and military duty at a rate of 1.5 per cent, as well as 25 per cent of penalties.

The online platform OnlyFans operates legally in Ukraine and pays taxes to the state budget every year. For example, in 2023, the owner company accrued $1.27 million for the provision of services in our country. However, models who earn good money from content are in no hurry to pay income taxes. There is one major caveat here. The content published on the site is divided into erotic, sexual and pornographic. The first two types are not prohibited in Ukraine, while the production, sale and distribution of pornographic items are punishable.

If these actions are committed repeatedly, or by prior conspiracy by a group of persons, or with the receipt of a large amount of income, the penalty will be increased to imprisonment for 3 to 7 years with a ban on engaging in certain activities (Article 301 of the Criminal Code of Ukraine).

Law enforcement agencies are actively working to initiate criminal proceedings for online sex. In the first half of 2024, the police opened as many cases for pornography (including OnlyFans) as in the whole of 2023.

It’s a strange situation: you have to pay taxes on your income, but the activities of models fall under a criminal article.

According to Hetmantsev’s logic, people involved in the illegal sale and smuggling of drugs, for example, should also file a declaration and pay taxes. Preferably before they go to prison.  And what’s more, the amounts involved are not insignificant. A few years ago, law enforcement officials stated that the total annual volume of the Ukrainian drug market was about UAH 6.5 billion.

In fact, to resolve the issue with sex work on OnlyFans, it is necessary to decide: what is more useful for the state - paying taxes (and then this activity should be decriminalised and legalised), or ‘protecting society and moral principles’ from such a ‘horrible’ spectacle and punishing those involved in its production (then what taxes can we talk about?).

And the sooner Ukraine makes a decision with decrim of sex work, the better for everyone. The state police will not spend their already limited resources on fighting ‘witches’, the state budget will receive considerable revenues, and people will continue to do what they do now, but within the legal framework and with a sense of security. And Mr Hetmantsev could become the engine to solve this problem. Of course, if he wanted real change.

Text: Iryna YAKOVETS (Ірина ЯКОВЕЦЬ), Head of the Centre for Legal Support of Science and Technology Development of the Research Institute of Intellectual Property of the National Academy of Sciences of Ukraine, Doctor of Law, Senior Researcher