How affiliate marketer can work legally: everything you need to know about taxes in affiliate marketing

Admit it, you’ve been in situations where you tell acquaintances outside the industry that you work in “arbitrage,” and they respond by asking what that is. No, nobody has? Us too. But some people say that this happens pretty often.

Against the backdrop of various scandals, the profession of media buyer is mostly perceived as something semi-legal. And affiliate marketers are called “shady characters” at the office (scam)  level. And no matter how you try to prove that “arbitrage” is about affiliate marketing and not a “scam scheme,” it is quite difficult to explain this to people outside the field. 

But why is there such a controversial attitude towards media buyers? 

In fact, the answer is quite simple. People see that there is money involved. And immediately an association arises. Many people think that this money is easy. And where there is easy money, there is always something illegal. 

So today we will look at the main problems that an affiliate marketer may encounter. We will figure out how to overcome them and ultimately work legally.

Paying taxes

The first and key problem for the industry is taxation. Sometimes people think that working on the Internet is significantly different from any other profession. However, being a blogger, media buyer, or other digital specialist is the same as working in any other profession, being a private entrepreneur, etc.

Let’s look at a fairly popular case where a blogger-media buyer faced this problem.

The Slobozhenko’s case

Most people have heard about this scandal. ESBU employees decided to check Alexander Slobozhenko’s tax history. They compared the income and valuable items that the blogger displays on his social media accounts with his tax returns. The situation turned out to be disappointing — the ESBU concluded that the blogger was evading taxes. It was also discovered that his company was not officially registered.

Slobozhenko commented on this as follows: “This situation was the result of an insufficiently clear legal model at the intersection of personal activity, public image, and business. At a certain stage, I did not have a complete understanding of how to properly structure these processes in accordance with the requirements of the system. This does not diminish my responsibility — I clearly declared my position on taxes and acted within the legal process.”

(After that, he announced a charity project to support the Armed Forces of Ukraine and, in a relatively short time, donated 20 million hryvnias).

How can these tax issues be avoided?

You see, affiliate marketers, bloggers, and other digital professionals can often find themselves at risk of criminal liability for not having official status.

According to Ukrainian criminal law, such activities can be considered unregistered entrepreneurship.

To avoid this problem, most people use an individual entrepreneur (IE) status. And in fact, this is currently the most effective option in today’s reality. 

In what cases do I need to register as an individual entrepreneur? 

• When you receive income from advertising integrations, affiliate projects, collaborations, etc.
• If you cooperate with brands or agencies under a contract
• You monetize content 
• You sell digital products or online courses through your blog

There are four groups of sole proprietorships. Let’s say right away that group 3 is best suited for media buyers. It provides a simplified taxation system and has the most advantages for running a medium-sized business. 

With group 3, you have the opportunity to:

• Hire an unlimited number of employees 
• Receive cash or non-cash payments in foreign currency and hryvnia; 
• Work with both Ukrainian residents and foreign individuals or companies. Also with any sole proprietors, legal entities under the general taxation system, and municipal enterprises; 
• Receive a high annual revenue limit – 1,167 minimum wages (as of 2025, this is approximately UAH 9,336,000);
• Obtain a VAT payer certificate. 

There are cases when 2 group of sole proprietors is enough:

• You work mainly in the Ukrainian market, in the Ukrainian language.
• Your audience is mainly in Ukraine.
• You do not receive payment in foreign currency.

However, we understand that if you are an experienced media buyer, this group of sole proprietors will not suit your activities. Group 2 may be considered by beginners who are just starting out and do not have huge incomes in foreign currency.

Also pay attention to NACE.

Which NACE should a media buyer choose?

We have figured out the individual entrepreneur status, but now it is very important to choose the right NACE. Since the work of a media buyer does not fall under a specific code, there is a combination that will suit your activity.

For example:

73.11 — Advertising agencies

Suitable for those who earn money from advertising integrations, sponsored posts, and the creation of advertising content.

62.09 — Other activities in the field of information technology and computer systems

For those who also run a website, set up advertising, etc.

Since media buyers mostly work in advertising, these codes are best suited for such activities. If you also blog, you can choose other codes that include the distribution of information content, the sale of information products, etc.

What should I do if I exceed my income limit?

If you are an individual entrepreneur in group 3, and you have exceeded your limit, here is what to do:

• First, a single tax rate of 15% is applied to the excess amount.
• Next, you need to switch to paying other taxes and fees established by the Tax Code of Ukraine.

Be careful to stay within the limit, and if you exceed it, take the necessary measures. If an individual entrepreneur exceeds the limit and does nothing about it, they risk being deprived of the right to remain on the simplified taxation system.

Working with online casinos

Another problem that often prevents people from working legally is advertising online casinos.

It would not be an exaggeration to say that a significant number, if not the majority, of arbitrageurs work specifically with gambling. We will skip the moral component of this niche. After all, we are interested in the legal aspects, especially in light of PlayCity’s activities. So now let’s look at the points to consider when flooding gambling in Ukraine. 

There are strict restrictions on such advertising in Ukraine. For the most part, sports advertising is allowed, but other types of gambling are questionable.

It is prohibited to:

• Openly offering users free bonuses.
• Accepting bets on credit.
• Using military themes in advertising.
• Issuing licenses for this activity to persons who have tax debts.
• Using media personalities, volunteers, or military personnel in advertising.

There are certain cases in which gambling advertising is permitted:

• When it occurs in media for persons 21+.
• If the advertising is on television and radio between 11 p.m. and 6 a.m.
• If the advertising is displayed on search engines and other platforms where the audience is exclusively 21+.

Cooperation with an aggressor country

Another interesting point that is encountered in the work of some arbitrators is cooperation with an aggressor country.

It is surprising to write about this, since it would seem that all conscious professionals already understand the abnormality of this phenomenon. But, unfortunately, there are plenty of such cases, so here is an explanation on this subject:

You must understand that such moves are illegal. Accordingly, any hint of cooperation with Russian companies (even insignificant) can not only severely damage your team’s reputation. It can also be a great reason for various special services to take an interest in you and study your history in more detail.

Keep in mind that this also applies to transferring money to Russian accounts, transactions via cryptocurrency, which can be tracked from most exchanges if necessary, etc.

In summary

The work of a media buyer is definitely about development and many opportunities. However, it is also a profession that does not have a very good reputation and causes a lot of controversy among people. This is not surprising, since the world of arbitration often violates the law, undermining trust in the industry.

Therefore, in this special project, we decided to highlight the most common problems that arbitrageurs may encounter. They can be avoided, and you can work legally, you just need to take into account some nuances. 

This is a particularly important topic for beginners. Very often, it seems that “first you need to earn money, and then worry about taxes.” Spoiler alert — it may be too late. We hope that after reading our article, this will not be the case for you.