Comments on: Two Experts Suggest Virtual World Profits May Be Taxable Even Before Conversion to Real World Cash http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/ Legal Issues That Impact Virtual Worlds Tue, 13 May 2014 04:03:48 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: Rock, Paper, Shotgun: Bacon Plague Watchtower » China And The Future Of Gaming http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-30397 Rock, Paper, Shotgun: Bacon Plague Watchtower » China And The Future Of Gaming Tue, 21 Jul 2009 08:02:00 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-30397 [...] it on with a high mark-up for yuan. Can we expect similar initiatives occurring in the west? According to tax experts from the UK and US it is legal for people to be taxed on profits earned in online currencies . But back in China, the [...] [...] it on with a high mark-up for yuan. Can we expect similar initiatives occurring in the west? According to tax experts from the UK and US it is legal for people to be taxed on profits earned in online currencies . But back in China, the [...]

]]> By: Tracking Second Life New Virtual World Currency http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-21268 Tracking Second Life New Virtual World Currency Wed, 25 Mar 2009 14:03:05 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-21268 [...] taxation issues [virtuallyblind] [...] [...] taxation issues [virtuallyblind] [...]

]]> By: Benjamin Duranske http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10664 Benjamin Duranske Wed, 31 Oct 2007 00:35:21 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10664 I'd guess there no universal tax authority coming - you'll just pay income based on your own nation's income tax regime. Think of it like the internet, not a new place. If I sell you something over a web site, I pay tax on it here. If you sell me something from your Outer Mongolian (or Parisian) website, you pay tax on the income there, based on whatever rules apply. Same deal here, at least for the far foreseeable future. I’d guess there no universal tax authority coming – you’ll just pay income based on your own nation’s income tax regime. Think of it like the internet, not a new place. If I sell you something over a web site, I pay tax on it here. If you sell me something from your Outer Mongolian (or Parisian) website, you pay tax on the income there, based on whatever rules apply. Same deal here, at least for the far foreseeable future.

]]> By: Caroline http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10663 Caroline Wed, 31 Oct 2007 00:31:14 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10663 Thanks for the info (we've posted a link on the above blog for the benefit of French virtual world users)...Naive though I may sound, what rate of tax will be used for Virtual World taxing ? I could be doing virtual world trade in Outer Mongolia or Paris or even Easter Island on my internet or mobile phone access to SL and in each of these 'real' worlds the rate of tax is (if I'm not totally mistaken) different. Which Virtual UN Tax authority are we going to see come into existence to deal with this ??? Thanks for the info (we’ve posted a link on the above blog for the benefit of French virtual world users)…Naive though I may sound, what rate of tax will be used for Virtual World taxing ? I could be doing virtual world trade in Outer Mongolia or Paris or even Easter Island on my internet or mobile phone access to SL and in each of these ‘real’ worlds the rate of tax is (if I’m not totally mistaken) different. Which Virtual UN Tax authority are we going to see come into existence to deal with this ???

]]> By: Benjamin Duranske http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10512 Benjamin Duranske Fri, 26 Oct 2007 18:30:36 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10512 @4 - the idea with these presentations wasn't an "internet tax" exactly, but just a regular application of current tax law on income generated using a virtual world. I think it's pretty well beyond dispute that income generated by selling digital only content (at least when cashed out) is taxable. It's no different than a web page where you sell digital-only stuff (say, pdf game guides, or software). The question with virtual worlds that have their own currency is whether that's profit before you take it out of the world as real-world cash, and that's what these guys were getting at. @4 – the idea with these presentations wasn’t an “internet tax” exactly, but just a regular application of current tax law on income generated using a virtual world. I think it’s pretty well beyond dispute that income generated by selling digital only content (at least when cashed out) is taxable. It’s no different than a web page where you sell digital-only stuff (say, pdf game guides, or software). The question with virtual worlds that have their own currency is whether that’s profit before you take it out of the world as real-world cash, and that’s what these guys were getting at.

]]> By: Magnum Serpentine http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10511 Magnum Serpentine Fri, 26 Oct 2007 17:28:00 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10511 Ok, Can you tell me how to split a penny into 1/16th or 1/2000th of a penny so I can pay my taxes??? As stupid as my comment sounds, thats about how stupid it is for any government to tax the net. Ok, Can you tell me how to split a penny into 1/16th or 1/2000th of a penny so I can pay my taxes???

As stupid as my comment sounds, thats about how stupid it is for any government to tax the net.

]]> By: Steven "PlayNoEvil" Davis http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10423 Steven "PlayNoEvil" Davis Tue, 23 Oct 2007 15:18:55 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10423 This sounds right. After all, I pay taxes when I sell a stock, not when I convert the shares back to cash. This sounds right. After all, I pay taxes when I sell a stock, not when I convert the shares back to cash.

]]> By: Benjamin Duranske http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10422 Benjamin Duranske Tue, 23 Oct 2007 14:34:37 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10422 Tax isn't my specialty, but I am certain that these guys both mean that the income is taxed only once. The question is <em>when</em> it is realized as gross income -- when it is earned in-world (and, say, becomes part of your Linden balance in Second Life) or when it is withdrawn as your local currency. Up until now, conventional wisdom has said that the line will be drawn at withdrawal. It's interesting to me that these guys are talking about at least the possibility (and in Anderton's case the probability) that it will be considered taxable at the point it is earned, even if it is left as part of a user's in-world balance. The thing that seems to be driving this shift is that the line between in-world and not in-world is getting blurrier, as we move toward being able to order real world goods and services with our in-world balances. Tax isn’t my specialty, but I am certain that these guys both mean that the income is taxed only once. The question is when it is realized as gross income — when it is earned in-world (and, say, becomes part of your Linden balance in Second Life) or when it is withdrawn as your local currency. Up until now, conventional wisdom has said that the line will be drawn at withdrawal. It’s interesting to me that these guys are talking about at least the possibility (and in Anderton’s case the probability) that it will be considered taxable at the point it is earned, even if it is left as part of a user’s in-world balance. The thing that seems to be driving this shift is that the line between in-world and not in-world is getting blurrier, as we move toward being able to order real world goods and services with our in-world balances.

]]> By: Tony http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10421 Tony Tue, 23 Oct 2007 14:22:13 +0000 http://virtuallyblind.com/2007/10/23/tax-virtual-profits-in-world/#comment-10421 So this raises a question in my mind then. Would this just be an extra level of tax? Or if you are taxed on a virtual good sale, would you be exempt from income tax when that amount was withdrawn? It doesn't make sense to get taxed once for "virtual income" and then again (on the same money) for "real income". This would make it double taxation for personal sales and such and even TRIPLE taxation for larger businesses. Something like this seems counter-productive in trying to foster this new industry's growth. So this raises a question in my mind then. Would this just be an extra level of tax? Or if you are taxed on a virtual good sale, would you be exempt from income tax when that amount was withdrawn?

It doesn’t make sense to get taxed once for “virtual income” and then again (on the same money) for “real income”. This would make it double taxation for personal sales and such and even TRIPLE taxation for larger businesses.

Something like this seems counter-productive in trying to foster this new industry’s growth.

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