Dear VERN readers,

I am pleased to announce that I have accepted a position with
Pillsbury, a global law firm with San Francisco roots and a high-tech history dating all the way back to cutting-edge 1880s telegraph cases. I'll be helping establish and build Pillsbury’s new virtual worlds and video games practice. Returning to practice with a large law firm means that I’ll be somewhat less free to comment on virtual law issues than I was while self-employed. As such, this is my final post at VERN.

Virtually Blind periodically runs “quicklinks” — items that are not long enough for a full story, but are worth a click. Here’s the current batch.

We reported earlier about the 20% tax rate legislation on virtual currency transactions in China. Shanghai Daily has now published an article concerning this legislation and about the fall-out that followed.

According to Korea Times, MMO publisher Nexon "is preparing to repay users who own paid items" in ZerA, an unsuccessful Korean MMO that is due to be closed in January. The game was launched in 2006 and peaked at 40 000 concurrent users. According to Korea Times, ZerA took three years and 10 billion won (approx. 7.5 M USD) to develop. Plans to launch in Japan were dropped after lukewarm reception in Korea.

Our friends at MindBlizzard report that a Netherlands court has found criminal liability for the real-world theft of virtual goods from the hybrid free/paid MMO roleplaying game Runescape.

From the post at MindBlizzard:

[T]he court has reached a verdict and has sentenced two boys to conditional detention and civil services because of the virtual theft from the game Runescape. [T]he boys from Leeuwarden, at the time both 14 years old, forced a thirteen-year-old victim to hand over virtual goods, a mask and an amulet, and to transfer the items to their account. The thirteen year old had collected a large amount of credits with which artifacts could be purchased. The boys forced him to a house and there he was kicked and threatened with a knife, until he transferred the goods and credits.

Greg Lastowka over at Terra Nova writes about the way Sulake limits the amount of money users can spend on virtual goods in Habbo. I've written a little bit about the topic in a paper that has been in review for a long time. Basically what interests me in it as a researcher of consumption is how a certain type of spending is legitimized and becomes socially acceptable. Lots of products from jazz music to microwave meals were initially "improper" consumption, not something a respectable person would buy. Gradually, in a process were advertising played no small part, people accepted those goods and started to consume them. At the same time, they left behind some of their earlier ways of consumption.

Should Blizzard pay taxes for the gold it earns by selling items to World of Warcraft players? Professor Theodore P. Seto's analysis of the taxation of virtual assets is the first to distinguish between businesses and ordinary users. In this post, I attempt to explain and comment on his paper.

The discussion on how virtual assets are and should be treated by the taxman is becoming increasingly relevant as business based on virtual assets grows. The taxman wants to make sure that businesses involving virtual asset transactions are treated on an equal basis with other businesses. At the same time, publishers and gamers want to make sure that ordinary gameplay is not hampered by interventions from tax authorities.

About a year ago, there was a story ricocheting on some news sites about Sweden planning to impose taxes on virtual property sales. It turned out to be a bit of a dud: all they wanted to tax was real-money income, not in-game transactions. Real income, regardless of its source, is supposed to be reported to the taxman anyway. Swedish WoW players would not have to include epic drops on their tax statements, nor would Second Life entrepreneurs be required to report their profits — unless they convert the virtual income to real money, I deduced.

However, nine days ago the Swedish Tax Agency posted a statement/ruling on their website, titled "Virtual worlds — value-added tax" ("Virtuella världar — mervärdesskatt"). In it, the agency states that in-game transactions may incur liability for both value-added tax as well as income tax under Swedish law. Below is my translation of the summary part of the statement interspersed with some analysis.

Greg Lastowka at Terra Nova has put together a wonderful bibliography on virtual world related articles in law journals. Several of them deal with virtual property and virtual economies.