Taxing Game Gold. Likely Or Just Silly?

One of the sillier concepts that goes around the MMORPG blog rounds from time to time is the idea that the virtual currency that someone can earn in a game might one day attract the icy gaze of the tax monster man who then decides that the 150 gold I earned last year in WoW, or the 200 plat I made in EQ2 by questing and selling a few rares should be added to my taxable income.

Tobold, once again, has put this spin on a recent incident in Eve Online where a bunch of players were scammed out billions of the games currency, Isk. Apparently the Isk scammed, if bought using CCPs official means of buying currency called Plesk, amounted to around 45000 US dollars if it could be transfered out of the game.

Now even though I think taxing game currency is a silly concept, and something of a stupid thing… well, that doesn’t mean it can’t happen. After all, if I had an Isk for every time a government did something nonsensical, I’d have the equivalent of US$45000.

But I don’t think, in reality, that this could happen. Here’s why.

If a goverment decided that the gold you made in WoW was income, then in many countries the activities and costs associated with making that income are tax deductable. This means:

  • Your subscription costs become deductable. If you’re playing a Free To Play, then item shop costs become deductable. Make sure you keep your receipts.
  • Your in-game costs become deductable if you spend gold. Let’s say you buy copper to make a dagger, the cost of that copper can be deducted from your gross revenue before tax is applied.
  • The in-game costs of buying abilities, respeccing talents, and buying mounts is deductable.
  • Mounts may be considered vehicles, and may require depreciation schedules to be created.
  • Most players don’t make fortunes in in-game currency. Most don’t make all that much at all.

The thing is, if a government decided to tax World of Warcraft gold (for example) it’s more likely that the majority of players would spend more in real world costs than they would earn in-game in equivalent currency. That is, they’d make a loss. Raising crafting skills in WoW costs a fortune in gold before you make any real profit, so someone who loves crafting may actually make huge in-game losses.

These losses would then offset against real world income. You subscription for instance would become a tax deduction.

It’s highly unlikely a government would make any money taxing in-game currency earnings. In fact, they’d probably make a loss.

And in anycase, if the scammer does transfer that $45K out of Eve into real money, that does become taxable income. They’d have to pay tax anyway so there is no need for the government to implement any tax rules for MMORPGs.

Unless they’re silly.

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  1. GreenArmadillo

    As you say, the silliness doesn’t necessarily preclude the likeliness. 🙂

    Seriously, the thing about the discussion is that it is somewhat moot because you ALREADY owe taxes if you successfully convert gold into real world currency. EVE time cards are a bit of a quirky case because you could make the argument that you want them because they are in-game items (if you wanted to make yourself pirate bait for example), but ebaying gold/ISK for dollars is pretty clearcut. There’s no reason for the government to wade into the actual day to day life of the game, though I’m sure that studios who do offer player to player RMT (e.g. SOE’s Live Gamer) would prefer not to have to file income reports on their players to the IRS.

  2. Stropp (Post author)

    Exactly. It’s taxable anyway once the gold/isk has been converted into cash so there’s no need for any special regs. And if you are operating a gold selling business (for shame) all the real costs, including subscriptions are deductable and you don’t have to calculate an in-game profit and loss report.

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