The gaming market has been developing dynamically for quite some time, and the solutions used in games increasingly intermingle with the real world. This is the case, for example, with the trading of virtual items, which may occur both within the game and outside of it (sometimes even on the black market). This raises questions about how such transactions should be taxed with VAT. Answers may soon be provided by the Court of Justice of the European Union (CJEU), which is currently examining the case of Žaidimų valiuta MB, a company trading in in-game gold (C-472/24).
The Žaidimų valiuta MB Case
The Lithuanian company Žaidimų valiuta MB purchased gold from RuneScape players using traditional currency. RuneScape, developed by the British company Jagex in 2001, is an MMORPG that uses a virtual economy based on gold. The company then resold this gold to other players at a higher price through social media platforms (e.g., Facebook). Lithuanian tax authorities demanded that the company pay VAT on these transactions, initiating a dispute that is now before the CJEU.
Opinion of the Advocate General
On 11 September 2025, Advocate General Juliane Kokott issued her opinion in the case. She rejected the idea that in-game gold should be treated as virtual currency eligible for VAT exemption. Instead, she took a strict view:
- She analysed the CJEU’s judgment in Hedqvist (C-264/14) issued on 22 October 2015, showing that the Court considered transactions involving the virtual currency bitcoin to be VAT-exempt only because its sole purpose is to function as a means of payment and because it is accepted for this purpose by some businesses. In contrast, the primary purpose of in-game gold is entertainment (e.g., enabling game progression).
- She introduced a distinction between real means of payment and gaming utilities based on their context of use, noting that the use of “money” in a game—even if used as a currency or means of payment within the game—cannot be equated with its use in legal commerce as a means of payment between businesses.
- She declined to classify in-game gold as a multi-purpose voucher for VAT purposes because it constitutes an electronic service in itself, not a security (or right) conferring entitlement to a future service.
At the same time, the Advocate General proposed extending the margin scheme to what she described as second-hand digital services. In her view, the traditional distinction between supplies of goods and the provision of services is inadequate in the era of technological advancement.
Position of the Polish Authorities
So far, Polish tax authorities have taken a more liberal position, indicating that such transactions may be VAT-exempt. They have frequently referred to the CJEU’s reasoning in the Hedqvist judgment.
For example, in an individual tax ruling of 14 May 2025 (No. 0111-KDIB3-3.4012.104.2025.2.PJ), it was concluded that sales of virtual currencies from games constitute currency transactions exempt from VAT under Article 43(1)(7) of the Polish VAT Act. According to the authority, in-game gold constitutes virtual currency within the meaning of the Anti-Money Laundering and Counter-Terrorist Financing Act. The authority made no reference to the requirement—established by the CJEU—that virtual currencies must have the sole function of a means of payment in order to qualify for VAT exemption. It considered acceptance by players to be sufficient, regardless of whether they are businesses or whether the currency is accepted in actual commerce.
The CJEU’s Ruling
The forthcoming judgment (expected soon) may have significant consequences.
First, it may define specific rules for VAT taxation of transactions involving in-game gold, and potentially other in-game items.
Second, it may reshape the CJEU’s own approach to the VAT treatment of virtual currencies.
Third, it may influence the application of VAT rules in Poland—especially regarding the conditions for VAT exemption of digital goods (many virtual items do not meet the Hedqvist criteria for VAT-exempt transactions). This could affect taxpayers’ VAT settlements, potentially creating tax arrears if previously exempt services become subject to VAT, particularly where output VAT exceeds input VAT. It is important to remember the law-shaping nature of CJEU judgments, including their impact on the binding force of individual tax rulings.
Finally, the CJEU’s decision may also address at least some of the questions surrounding VAT taxation in the digital economy, using legal provisions that were largely drafted in a predominantly analog era.
