Wednesday, September 10, 2008

Virtual Inheritance

Ben Duranske (as well as Virtual Worlds News) picked up on an interesting article in the Swedish daily newspaper Göteborgs-Posten, the nation’s second largest. Although it is in Swedish, a couple of Entropia fans have posted translations at (see here and a more polished version here). The main point of the article is that MindArk will begin allowing residents of Entropia to draw up wills to allocate rights to the decedent’s virtual assets. This is an interesting development, but hardly unexpected. The article quotes MindArk Chief Marketing Officer Carl Uggla about the motivation:

“There is land in the game of considerable value which if the player would die is uncertain who would claim [it],” says Carl Uggla.

In fact, at the 2006 State of Play/Terra Nova Symposium, William LaPiana, the Director of Estate Planning at New York Law School, observed that “Anything you own in a very broad sense that has value is property for purposes of these [estate] taxes.” (You can find audio of his comments here, under the Tax and Finance panel).

Of greater significance is the indication that Sweden has begun to tax virtual worlds, as pointed out in this passage:

The [Swedish version of the] IRS has since spring begun to tax the activities within online worlds. “We’re not performing any bigger investigations. It’s more of a service and a way for us to be clear about the rules. I have got questions from several entrepreneurs who want to start activities in these worlds and about how they should go about it. People want to do what’s right,” says Dag Hardyson at the Swedish IRS.

Martina Bertilsson sees the IRS's actions as the logical one. “it’s about validating this business sector,” she says. “A lot of what happens online is still in a legislative gray area and open for pure legal interpretation, but there are now rules implemented regarding income tax for people living in Sweden,” she says.

I believe the translator of this passage has substituted IRS in place of the Swedish tax agency, the Skatteverket. A look at the first sentence of this passage in the original article in Swedish confirms this to be the case: “Skatteverket har sedan våren börjat beskatta verksamheten inom onlinevärlden” (emphasis mine). Also, I’ve added quotation marks where I believe them to be appropriate, as they don't appear in the original article (perhaps Swedish doesn’t use them).

Regardless of the punctuation, the key take-away here is that Sweden has apparently stuck its fingers into the financial aspects of virtual worlds. This could be a precursor to similar moves by other E.U. nations, and even the United States.