How the taxman could finally turn off the 'King of Porn'

He has been dubbed the "King of Porn" – but the man who has achieved global domination in the booming business of internet pornography was until recently a phantom figure. Just two years ago a team of investigative journalists from Germany's Süddeutsche Zeitung newspaper tried to track down the entrepreneur behind You-Porn, the online sex site which today enjoys a reputation almost as wide as its less salacious cousin YouTube on which it is modelled.

Last week, the identity of Mr "YouPorn" was suddenly laid bare. State prosecutors in Cologne revealed that the reclusive 34-year-old German owner of the sex site and seven more of the world's most successful internet porn sites, had been arrested in Brussels on charges of persistent tax evasion.

His name is Fabian Thylmann. Yesterday he was sitting in a Cologne police cell after having been extradited from Belgium, where he lives. He faces charges of persistently avoiding paying tax on the £60m his vast global online sex network is estimated to earn each year. Mr Thylmann is contesting the charges.

Within the past decade, Mr Thylmann, a married father of two, has managed to revolutionise pornography consumption and has made online sex available to all. Germany's Focus magazine referred to him as "The Ruler in the Realm of Lust".

Mr Thylmann's empire is run by its parent company "Manwin" which is the industry's global leader. His sex sites include brand names such as YouPorn, Brazzers, PornHub and MyDirtyHobby. Using the same principle as YouTube, his websites allow visitors to watch pornographic videos for free. The income is generated by advertised sex "pay sites" which offer longer, full-length porn videos. An estimated 16 billion viewers click on to Manwin's sites every month. Only a fraction are reported to use the pay-for sites, but they bring in revenues in excess of £60m each year.

The rise of YouPorn and similar sex sites has crippled the traditional porn industry, which relies on sex film cinemas, pornographic DVDs magazines and sex shops, to generate income. If the complaints of those involved in the sex industry in famous locations such as Hamburg's famous Reeperbahn red-light district are to be believed, then virtual sex has also hit prostitution.

By contrast, Mr Thylmann, Manwin and its subsidiary companies control and largely dictate the terms of a booming global online sex-video market, including the content of individual films. The company employs 1,000 across the globe and has over 35 subsidiaries in Luxembourg, Canada, Germany, the US, Britain and Ireland. Germany's Die Welt newspaper claims to have exposed Mr Thylmann. Its journalists said they had gained access to Manwin's internal accounts which showed that although German pornography actors performed for his sex videos in Germany, they were paid by a subsidiary company in Cyprus.

Mr Thylmann denies he avoided tax and maintains that he was minimising his tax burden. His lawyers will now have to convince prosecutors there's no case to answer. If they fail Germany could be hosting the King of Porn's trial.