VAT and in-game currencies: CJEU Case C-472/24 ‘Žaidimų valiuta’ MB

On the 11^th September, AG Kokott delivered its opinion in the Lithuanian case involving the trading of in-game currencies, specifically Runescape gold.

Žaidimų valiuta (ZV) carried out the activity of purchasing and reselling Runescape gold, an in-game item. The Lithuanian VAT authorities issued an assessment for VAT on the sale of the gold, with ZV counterarguing that the sale of Runescape gold is exempt from VAT as a currency (in other words, claiming the exemption for financial services) or alternatively should be treated as multi-purpose vouchers. Following the dispute, the Lithuanian court referred the following questions to the CJEU:

• Is the sale of ‘gold’ from the game ‘Runescape’ an exempt transaction within the meaning of Article 135(1)(e) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (hereinafter: ‘the VAT Directive’)?

• If the answer to the first question is in the negative: is the VAT Directive to be interpreted as meaning that the taxable value of in-game gold consists of the total consideration for its sale, or does it consist only of the difference between the purchase price and the sale price of the in-game gold, in so far as the trader does not charge a separate commission for its transfer?

  
  

In the AG opinion:

(1) Article 135(1)(e) of the VAT Directive (Council Directive 2006/112/EC) must be interpreted as meaning that it exempts only transactions concerning legal tender or non-legal tender that is accepted as a contractual direct means of payment between operators and that thus has no other purpose than to be a means of payment in legal transactions. This is not deemed to be the case for in-game currency.

(2) In-game Gold (as an electronic service) does not merely serve to procure a later consumable benefit in the form of an as yet unspecified service, which the issuer of a voucher would be obliged to supply, but is itself already a consumable benefit. Therefore, it is not a voucher within the meaning of Article 30a of the VAT Directive.

(3) Article 311(1)(1) of the VAT Directive must be interpreted, in the light of technological developments, in a teleologically broader manner as covering also transferable non-tangible objects, provided that they are traded in legal transactions in the same way as tangible objects. The decisive factor is that such services are traded on a secondary market in a comparable way to regular second-hand goods and typically contain residual VAT. It is for the referring commission to determine whether that is the case for in-game Gold here.

Therefore, the AG’s opinion implies that the margin scheme for second-hand goods should not apply to in-game gold since it is not a tangible good, but a service. This raises concerns about VAT neutrality in digital transactions. The AG’s opinion, pending the final CJEU decision which could deviate from the AG’s opinion, comes as a relief to game developers who would be negatively impacted if the same of in-game currencies is treated as a financial transaction, as this would have repercussions on their right to claim input VAT. 

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Josef Mercieca

jmercieca@quazar.mt / +356 2388 4600