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Entropia profits and taxes

e-lite said:
No, it doesn't work like that. You always pay tax according to the country which you are a citizen of or the country you work in. Playing Entropia is not considered as you are working in Sweden.
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Yes when you are talking about income tax/tax on profit. But VAT follow other rules where you can be responsible to paying Swedish VAT when you are selling to a Swedish citizen or other EU citizen from outside of EU.

e-lite said:
Not quite correct that either. Selling things in Entropia to other players counts as the same sort of sale you would do if you sell a used car, a watch or whatever on "blocket" in Sweden. You are not paying tax on private trades between private people.

I can go to the beach and pick up a rock and then sell it to someone for a million dollars without needing to pay tax. As long as you are not marketing yourself as a commercial business.
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I disagree on this also. I'm sure "Skatteverket" would see it either as income from "Hobby" which should be taxed, or income from "business". The tax for hobby and business is the same so it does it matter much. But it does matter when it comes to VAT. You pay VAT on business sells, but not if you are a "Hobby".

The Tax-free sells you are talking about is for personal things and items under 50 000 SEK, and it's a bit hard to claim that the money you get from selling stuff inside of Entropia is a such thing. "Skatteverket" sees this as an electronic service that should be taxed. If you trading inside of Entropia with the purpose to make a profit, you are a business and should pay income tax (if you live in Sweden) as a business and also pay VAT.

The problem and confusing thing often comes from the fact that you as a person don't see your activity as a business, but it don't take much to be classified as a business. For example, if you are a miner, it's a bit hard to claim that you are not mining to make a profit. Same if you are a crater and are selling items in a shop. Have you done that regulatory for more than one year you pretty much are a business.
 
If you want tax advice, ask a tax advisor, not someone on the Internet who once met a bloke in a pub whose brother knew a guy with a friend who did it and it was fine.
 
Oleg said:
If you want tax advice, ask a tax advisor, not someone on the Internet who once met a bloke in a pub whose brother knew a guy with a friend who did it and it was fine.
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Which is why I am linking to the actual articles on IRS own website.
 
billairboy said:
Yes when you are talking about income tax/tax on profit. But VAT follow other rules where you can be responsible to paying Swedish VAT when you are selling to a Swedish citizen or other EU citizen from outside of EU.



I disagree on this also. I'm sure "Skatteverket" would see it either as income from "Hobby" which should be taxed, or income from "business". The tax for hobby and business is the same so it does it matter much. But it does matter when it comes to VAT. You pay VAT on business sells, but not if you are a "Hobby".

The Tax-free sells you are talking about is for personal things and items under 50 000 SEK, and it's a bit hard to claim that the money you get from selling stuff inside of Entropia is a such thing. "Skatteverket" sees this as an electronic service that should be taxed. If you trading inside of Entropia with the purpose to make a profit, you are a business and should pay income tax (if you live in Sweden) as a business and also pay VAT.

The problem and confusing thing often comes from the fact that you as a person don't see your activity as a business, but it don't take much to be classified as a business. For example, if you are a miner, it's a bit hard to claim that you are not mining to make a profit. Same if you are a crater and are selling items in a shop. Have you done that regulatory for more than one year you pretty much are a business.
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For me as a person, withdrawing money from entropia, there's no VAT (moms) involved what so ever.
 
e-lite said:
For me as a person, withdrawing money from entropia, there's no VAT (moms) involved what so ever.
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It's not the withdrawing that is a translation that should be taxed with VAT, it's the in-game ped transaction that should be taxed. I know it sounds crazy, I'm just telling you what the tax agency have said in a statement. :silly2:
 
billairboy said:
It's not the withdrawing that is a translation that should be taxed with VAT, it's the in-game ped transaction that should be taxed. I know it sounds crazy, I'm just telling you what the tax agency have said in a statement. :silly2:
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:scratch2: So, every hand you win in a poker game is taxed before you cash in your chips?

Ingame money is nothing until cashed for local legal currency.
 
melander said:
We do yes, at 30%.
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It's actually around 50%, because you also need to pay social cost inform of "Egenavgifter".

e-lite said:
Well, even though the "hobbyverksamhet" tax is not applicable to Entropia Universe, you are right, you do have to pay tax on hobby income. But only if it exceeds approx €1300 euro per year in profit. HOW EVER, you are also allowed to subtract the costs and economic deficits you have had previous years. So if I payed €2000 to Mindark the previous year without withdrawal, I can withdraw €3300 this year completely tax free.
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The 12500 SEK (€1300) tax free income is only from sell from berries and similar stuff, everything else in taxed on the first earned krona.
 
billairboy said:
It's not the withdrawing that is a translation that should be taxed with VAT, it's the in-game ped transaction that should be taxed. I know it sounds crazy, I'm just telling you what the tax agency have said in a statement. :silly2:
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unless they come out with some specific EU guidance, the Swedish taxman gave information on how virtual currencies in virtual worlds should be taxed (and damn complicated it was too), nothing about PED transactions. there is no real transaction with EU as the goods are virtual, and the PED isnt probably considered a currency. you buy tokens, you trade for items you never own, you sell tokens. no taxable transaction, except if you are selling so many tokens your local tax office consider that income. no one is being charged or paying VAT in Entropia, so it follows that VAT doesn't apply.
 
JohnCapital said:
:scratch2: So, every hand you win in a poker game is taxed before you cash in your chips?

Ingame money is nothing until cashed for local legal currency.
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In poker you are not trading anything, in Entropia you are. That is the view the tax agency have. I know, sounds crazy and in reality it would probably be impossible to follow the statements they have done.
 
billairboy said:
In poker you are not trading anything, in Entropia you are. That is the view the tax agency have. I know, sounds crazy and in reality it would probably be impossible to follow the statements they have done.
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By their logic, PED is a recognized currency, just like Pounds and Dollars, which makes MA (or at least the ingame world) a recognized country, meaning they aren't subject to other country tax laws anyway. :D

They can't have it both ways. They can't recognize a currency as viable for taxation but unviable for all other implications.

I'd love to argue this in court.
 
Oleg said:
If you want tax advice, ask a tax advisor, not someone on the Internet who once met a bloke in a pub whose brother knew a guy with a friend who did it and it was fine.
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Very true, on the internet everyone is a specialist and everyone knows better. The individual can be very wrong, but the general mindset of many people can atleast push someone in the right direction.

A tax advisor might be such direction. Problem is that a tax advisor is a lot more expensive than what most people withdraw. Maybe it is an issue MindArk should look into. Afteral the community is their client.
 
billairboy said:
It's not the withdrawing that is a translation that should be taxed with VAT, it's the in-game ped transaction that should be taxed. I know it sounds crazy, I'm just telling you what the tax agency have said in a statement. :silly2:
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Can you please link the statement?
 
JohnCapital said:
By their logic, PED is a recognized currency, just like Pounds and Dollars, which makes MA (or at least the ingame world) a recognized country, meaning they aren't subject to other country tax laws anyway. :D

They can't have it both ways. They can't recognize a currency as viable for taxation but unviable for all other implications.

I'd love to argue this in court.
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Recognizing a currency is not the same as recognizing a country.
 
Crone said:
Very true, on the internet everyone is a specialist and everyone knows better. The individual can be very wrong, but the general mindset of many people can atleast push someone in the right direction.

A tax advisor might be such direction. Problem is that a tax advisor is a lot more expensive than what most people withdraw. Maybe it is an issue MindArk should look into. Afteral the community is their client.
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Crone said:
Can you please link the statement?
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Crone said:
Recognizing a currency is not the same as recognizing a country.
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I'm not sure the real Crone still posts any more. :(

Do the 3rd person, its what we all remember.
 
Crone said:
A tax advisor might be such direction. Problem is that a tax advisor is a lot more expensive than what most people withdraw.
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Here in the UK, HMRC (the government department that collect income tax, among other things) have free helplines you can call to ask about this stuff. Don't you have something similar in the Netherlands?
 
Crone said:
Recognizing a currency is not the same as recognizing a country.
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I'm sorry, I'm personally unaware of any case where a currency is formally recognized but the country of origin is not. If anyone is aware of such a case, I'm willing to learn.
 
aridash said:
unless they come out with some specific EU guidance, the Swedish taxman gave information on how virtual currencies in virtual worlds should be taxed (and damn complicated it was too), nothing about PED transactions. there is no real transaction with EU as the goods are virtual, and the PED isnt probably considered a currency. you buy tokens, you trade for items you never own, you sell tokens. no taxable transaction, except if you are selling so many tokens your local tax office consider that income. no one is being charged or paying VAT in Entropia, so it follows that VAT doesn't apply.
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They do treat the virtual currencies as real money because they can be exchange for money. The exchange of money inside the game is classified as "selling and buying of a electronic service" just like a company selling something online to a customer.

Crone said:
Recognizing a currency is not the same as recognizing a country.
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Here:
http://www4.skatteverket.se/rattsligvagledning/1939.html?q=virtuell+värld

in Swedish, that's why I have avoided posted it. The most interesting part is in section 4.2
 
billairboy said:
They do treat the virtual currencies as real money because they can be exchange for money. The exchange of money inside the game is classified as "selling and buying of a electronic service" just like a company selling something online to a customer.
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they may well treat virtual currencies as real money, the point is they do not at this time recognise the PED as such, and if they did, the transactions are all for items that the players themselves do not own (and there's no services to speak of). we can go round in circles on the matter, the advice i saw was it doesnt count, and no one ever had a VAT demand for EU trading.

as i recall, when the Skatteverket guidance came about many moons ago, the feeling was there was alot of specifics that hinted to Entropia, and certainly the authorities would be aware of the game. however subsequent advise (maybe elsewhere than here) was that it didnt cover EU because of ownership. the guidance would cover if you had say an online marketplace, brought and sold services through a virtual world, or traded virtual goods (music, art, designs, anything like that). i.e. it is to prevent you carrying out commercial activity in a virtual world to evade VAT. trading a virtual gun for virtual credits, which you do not own, does not count as a transaction. if we owned the virtual assests in the game, we'd certainly be liable to VAT, and we'd be getting info on everyones real world location in game to enable tracking and payment accordingly.

edit: i have looked for the source of this view, i cant find it, so i leave it there as more speculation.
 
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Oleg said:
Here in the UK, HMRC (the government department that collect income tax, among other things) have free helplines you can call to ask about this stuff. Don't you have something similar in the Netherlands?
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I dont want to get dragged into this one too deeply but

https://www.gov.uk/capital-gains-tax/overview

In the Uk, it is called Capital Gains Tax and there is an exempt limit.

For most, it wont apply, if you are fortunate enough for it to apply to you. Enjoy.
 
Oleg said:
Here in the UK, HMRC (the government department that collect income tax, among other things) have free helplines you can call to ask about this stuff. Don't you have something similar in the Netherlands?
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Actually, The Dutch tax authority (Belastingdienst) actually has a phonenumber one can call. Crone knows it by heart. Comes with the profession. :D But they do not answer questions like these. They will forward you to your tax advisor or accountant. We are not here to give you advise. If it is unclear a test case will be handled by a judge specialised on tax. Guess what that will cost.

In some cases you will actually be forwarded to 2nd line. More than ones Crone received a response that souded like: "you should do it like this, because we don't know better, it might be wrong".
 
JohnCapital said:
I'm sorry, I'm personally unaware of any case where a currency is formally recognized but the country of origin is not. If anyone is aware of such a case, I'm willing to learn.
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Bitcoin has been accepted as currency in Germany. In the Netherlands there are some regional currencies of which Gelre is the most succesful at the moment.
 
I will think about taxes after I get in jail for not reporting income from a video game. Until then it's schrodinger's income. It may be taxed or not.
But don't stop the discution, it's one of the interesting reads over here.
And considering how much we deposit it's not sure we will be alive to report profit. May be my grandkinds will have to worry about this.
 
billairboy said:
They do treat the virtual currencies as real money because they can be exchange for money. The exchange of money inside the game is classified as "selling and buying of a electronic service" just like a company selling something online to a customer.



Here:
http://www4.skatteverket.se/rattsligvagledning/1939.html?q=virtuell+värld

in Swedish, that's why I have avoided posted it. The most interesting part is in section 4.2
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Thanks.

This concerns only VAT.

If Google translated it correctly there is a summary (1). In the second paragraph it states there is no revenue as long as the seller does not change the virtual currency into a recoginized currency. If you do convert your vitual currency into a recognized currency, your "revenue" will be evaluated based on extent, duration and independence. When your activities are found to be a business you will need to come up with IP addresses and tax numbers of all your individual trade partners within the virtual environment since they may or may not be subject to VAT. In that case Swedish traders are doomed. :D One can however deduct paid VAT. Hairdressers, shopowners and land owners are being mentioned specifically.

Good luck to Crone's Swedish virtual entrepreneurs.

Crone looked for "virtual" on the dutch website. Other than webshops, nothing. Pheww...
 
I found an English translation of some of the "Skatteverkets" statement.
http://vatresource.com/en/News/News-Items/Sweden---Adjusted-VAT-decision-on-electronic-services.html


-
Adjusted
VAT
decision
on
electronic
services

As of July 1, 2013, the adjusted VAT decision on electronic service of July 4, 2013, No. 131 868097-09/111 will be applicable. This VAT decision replaces the old VAT decision of December 7, 2009, No. 131 868097-09/111. An adjustment / revision of the old decision was necessary because of the introduction of the concept of the taxable person.

The new decision includes: “any person, to whom an online game is provided, with access to a virtual world, is considered to have received a taxable service. In transactions between participants in a virtual world where the agreement is for the sale of a "being" or a "service" for consideration in an internal virtual currency that can be converted at the prevailing legal tender (money) is considered a sale of an electronic service. If the internal currency is not convertible into money, there is no turnover. A participant who sells electronic or other services in a virtual world is engaging in an economic activity for VAT purposes and is therefore a taxable person.”

An assessment must be made of the scope, duration and independence of this activity on a case-by-case basis, the outcome:

1. Electronic services supplied to a taxable person acting as such are considered to take place in Sweden where the taxable person is either resident in Sweden or has a fixed establishment in this country for which the service is provided. If the service is provided by an establishment which the seller has in this country, to someone who is not a taxable person, the service takes place in Sweden provided that the buyer is outside the EU.
2. An online service provided to anyone who is not a taxable person, from a vendor in a country outside the EU, takes place in the country where the services are acquired, i.e. Sweden if the buyer is located in Sweden.

This new decision has been developed with the introduction of the concept of the taxable person and does not introduce any substantial changes.
 
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