Yeah, we have an active person in the Sandstorm community from Finland who maintains Wekan[1]. I didn't previously know the specifics, but he's had to tell a lot of people "sorry, I can't accept donations" too.
It's so much easier in the US. If you're an individual it's going to be taxable income, but there's no up-front paperwork to do (for that matter, you don't have to "set up" a sole proprietorship here either -- that's just what the tax code calls "some rando doing business by themself"). I've done contract work for years, have a bit of my income coming in through GitHub sponsors now.
Now, if we could only get health care covered for folks who don't have an employer...
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> I host a free project myself and I've had to set up a business (sole proprietorship) and sell things in order to get money for server costs.
What's your side project? Speaking of Sandstorm, I'm wondering if it might be relevant; dealing with the problem of developers needing to monetize things in order to cover hosting costs was one of the motivations for the project:
https://sandstorm.io/news/2014-07-21-open-source-web-apps-re...
[1]: https://github.com/wekan/wekan/