EU – European Court of Justice: VAT Taxability Rules for the Transfer of in-game-assets  

In recent years, we have witnessed too many cases in which the primary questions in tax discussions concern the VAT taxability of virtual currencies and digital products. In the CJEU case C-472/24, the EU Court of Justice issued a preliminary ruling on the VAT treatment of the transfer of virtual currency (in-game gold) from an online video game in exchange for traditional payment instruments. 

The initial question the court had to resolve was whether the sale of in-game gold, from a VAT perspective, could be treated as a tax-exempt financial service or a taxable supply. The second question concerned determining the taxable amount. 

Case Background

The Lithuanian Tax Authorities asked the CJEU for a preliminary ruling on this case. The State Tax Inspectorate applied VAT to these in-game transactions. The taxable person claimed that these transactions are tax-exempt under the EU VAT Directive(tax-exempt financial services – Article 135). 

Additionally, it stated that if trading in virtual currencies is VATable, the taxable amount should be based on the margin, not on the full consideration received. 

Court of Justice: Decision

The EU Court of Justice rejected the claimant’s argument, holding that it invoked EU VAT Directive Article 135 and that these transactions should be treated as financial services, which are exempt from EU VAT. The virtual currency (in-game gold or the like) doesn’t have the mandatory features that make it acceptable as legal tender. 

On the second question, the CJEU held that the total consideration a taxable person receives from its customers should be treated as a taxable amount, not the margin. The claim that trading in-game gold as currency could be treated, for VAT purposes, as a multi-purpose voucher was rejected. 

It cannot be treated as a multi-purpose voucher because it obviously lacks the characteristic of “unpredictability” in what it can be used for later (i.e., a lack of consumable alternatives). 

The purchase of the in-game gold provides the buyer with benefits exclusively for the in-game activities.