Is the sale of virtual items, including so-called ‘skins’ from games, subject to PIT?

Virtual items, such as skins available in computer games, have become a popular subject of trade on the Internet. The sale of these goods, although seemingly unrealistic, is nevertheless subject to actual tax rules. In this post, we explain how to correctly settle the income from such sales.

Sales as a business activity

The sale of virtual items carried out in an organised, continuous manner, for the purpose of financial gain and on one’s own responsibility should, in principle, be treated as a business activity. The income from this activity is therefore taxable as income from non-agricultural business activity, in accordance with the provisions of the PIT Act.

The above was confirmed by the Director of the National Fiscal Information in a recently issued interpretation[1] concerning a taxpayer who had been trading in virtual game items since 2020. The business model consisted of buying items in Poland and then selling them with a profit on foreign platforms. The proceeds were paid in cryptocurrencies and the taxpayer used an intermediary. Although he was not engaged in a formal business activity, the authority considered his activities to be such a activity, pointing out that it was carried out in a continuous, organised and profit-oriented manner, and the taxpayer bore the risk of this activity and was responsible to third parties for the result of his actions.

Therefore, the taxpayer should register the business and settle the income in accordance with PIT regulations.

It is also worth noting that the sale of skins as part of business activity will be taxed according to the form of taxation chosen by the taxpayer, i.e:

– according to the tax scale (12% and 32%),

– flat tax (19%), or

– a lump-sum tax on registered income.

At the same time, the lump sum rate will depend on whether the taxpayer produces virtual items himself and then sells them, or whether the taxpayer only resells virtual items in an unprocessed state.

In the first case, the rate will be 8.5%, while in the second case, the taxpayer will settle the lump sum at the rate of 3%[2].

What about in the case of a one-off sale?

When the sale of virtual items is of occasional nature and does not meet the definition of a business activity, the revenue from such sale should be included in the sources of income, which are disposal of property rights or other sources.

The choice of the appropriate tax source depends on whether the rules of the game in question provide for the possibility of disposing of the virtual item or not. If there are no such provisions in the rules, the taxpayer selling the virtual item for a consideration sells specific property rights (privilege to use objects in the game) on the basis of a licence. Consequently, he will derive income from the disposal of property rights [3].

In the case of both of the above sources of revenue, the sale will be taxed in accordance with the general rules, i.e. using the 12%/32% tax scale.

What about the sale of virtual items by minors?

In the case of minors, the income from the sale of virtual items should be added to the parents’ income and shown in Appendix PIT/M to their annual PIT-36 tax return.

And what obligations does the buyer of virtual items have?

According to currently issued interpretations, the sale of game skins is treated as the sale of other property rights. Therefore, the purchase of such items may, in principle, be subject to a civil law transaction tax (PCC) of 1%[4].

By disposing of the rights to use virtual objects for a fee, the parties to the transaction are selling a specific property right. Pursuant to Article 7, sec 1 p. 1b of the PCC Act, agreements transferring such rights are subject to PCC. However, this provision will not apply if the transaction is subject to VAT.

PCC tax is payable by the buyer. In practice, this means that a PCC-3 declaration must be filed and the tax paid within 14 days of the conclusion of the agreement.

It is also worth noting that the exemption provided for sales not exceeding PLN 1,000 will not apply to the acquisition of property rights. In view of the above, any acquisition of a virtual object may be subject to PCC.

[1] DKIS interpretation of 24 September 2024, ref. 0112-KDWL.4011.96.2024.1.JK.

[2] DKIS interpretation of 9 July 2024 ref. 0112-KDSL1-1.4011.261.2024.4.DT and DKIS interpretation of 8 January 2024 ref. 0114-KDIP3-2.4011.983.2023.1.MR.

[3] Interpretation of the Tax Chamber in Katowice of 17 September 2014 ref. IBPBII/1/415-510/14/MK.

[4] DKIS interpretation of 1 July 2024 ref. 0111-KDIB2-3.4014.215.2024.3.MD.