Sweden Looks to Bring Taxes In-World

A year ago Sweden moved to tax real-money transactions for virtual goods--a fairly reasonable step as each transaction immediately provides real, measurable income to one party. According to a statement posted on the Swedish Tax Agency's website 9 days ago, "Virtual worlds — value-added tax," the agency is looking to tax in-world transactions even before they are converted to real currency. 

Vili Lehdonvirta  of The Virtual Economy Research Network has posted a translated summary, explaining that "Transactions between participants in a virtual world, where the deal is about the sale of a "product" or a "service" against reimbursement in an internal currency, should be considered, according to the Swedish Tax Agency's ruling, [actual] sales of electronic services, if the internal currency can be exchanged to a valid legal means of payment."

If the seller has a fairly permanent business and that is large enough in scope, the activity will be considered a professional enterprise, pushing it into tax laws beyond just a hobbyist trade. Likewise if the seller, even if otherwise not considered a professional, has some permanence and "sells electronic services for more than 30 000 Swedish kronor," they've entered the professional range.

Even more interesting, any sale involving a Swedish party, regardless of whether he or she is a buyer or seller or the nationality of the other party, is considered as occurring in Sweden.

I'm not clear how close this is to being considered actual policy, but there'll certainly be more discussion and hashing out of specifics, like how unofficial markets like IGE or Sparter play in or what exactly constitutes a service or trade in a virtual world. The ruling also seems to make some sort of distinction between MMOGs and "parallel virtual worlds." I'm assuming that means something more like Second Life. I can't read Swedish, though, so I'm not sure what that means.

As Lehdonvirta  points out, though, MindArk, the company behind the real-money trading heavy Entropia Universe, is based in Sweden.  They've been pretty careful to stay ahead of the curve on legal issues, a point they always emphasize, so it should be interesting to see what changes, if any, this brings for Entropia.

[via The Virtual Economy Research Network]

Comments

[csven]

Right [/sarcasm]

[Fool]

I'd rather walk