EU: Sale of in-game gold are taxable digital services (CJEU Advocate General opinion)

The Court of Justice of the European Union (CJEU) on September 11, 2025, published the nonbinding opinion of its Advocate General (AG) in case C‑472/24, which, if followed by the CJEU, could have an important impact on the value added tax (VAT) treatment of in-game currencies.

Facts

The taxpayer engaged in virtual gold trading by purchasing and selling in-game gold from an online computer game. The Lithuanian tax authority found that the taxpayer earned significant income from reselling in-game gold at a higher price, exceeding the Lithuanian VAT registration threshold. Consequently, the tax authority assessed VAT totaling €46,688 for the years 2021, 2022, and 2023. The taxpayer contested the tax authority's decision, claiming that the income from in-game gold sales should be exempt from VAT as it constituted trading in virtual currencies. Alternatively, the applicant argued that in-game gold should be considered a multi-purpose voucher, which is not subject to VAT. Furthermore, the applicant asserted that the taxable value for VAT purposes should be the margin between the purchase and selling prices, as no separate commission fee was charged for the sale of in-game gold.

Questions before the CJEU

1. Does the sale of in-game gold fall within the scope of the financial services exemption in Article 135(1)(e) of the EU VAT Directive?
2. Alternatively, does the sale of in-game gold qualify as a multi-purpose voucher, which is not subject to VAT under Article 30b(2) of the EU VAT Directive?
3. If the sale of in-game Gold does not fall within the exemption nor qualifies as a multi-purpose voucher, does the resale of in-game gold fall under the second-hand good margin mechanism?

Advocate General opinion

First question

Article 135(1)(e) of the EU VAT Directive exempts transactions involving legal tender, including negotiation. According to the Advocate General, for in-game gold to qualify for this exemption, it would need to be considered legal tender, which it is not. The CJEU previously extended in Hedqvist, Case C‑264/14 (October 22, 2015), this concept to bitcoins due to their use as a means of payment, but significant differences exist between bitcoins and in-game gold. The EU VAT Directive's exemption aims to facilitate payment convertibility without VAT impediments, particularly in cross-border services. However, the exemption does not apply to private means of payment, such as in-game gold, which functions as play money within a game rather than a means of payment between operators in legal transactions. Therefore, the sale of in-game gold should not fall within the scope of the financial services exemption in Article 135(1)(e) of the EU VAT Directive.

Second question

According to the AG, in-game gold does not meet the criteria for a voucher under Article 30a of the EU VAT Directive, as it does not specify goods or suppliers from the voucher itself, nor does it obligate acceptance as consideration for a service. In-game gold is considered an electronic service, providing a specific benefit within the game, not merely facilitating a later service. Additionally, a voucher typically involves a purchase from the issuer for a specifiable value, which is not evident with in-game gold, as it is primarily earned rather than purchased. Therefore, Article 30b(2) of the VAT Directive, concerning VAT consequences upon voucher redemption, is not applicable to in-game gold.

Third question

The margin scheme is a VAT mechanism designed to prevent double taxation and mitigate competitive disadvantages for traders dealing in second-hand goods. Under this scheme, taxable dealers pay VAT only on their profit margin, rather than the full sale price, when reselling goods acquired from non-taxable persons.

The taxpayer argued that the margin scheme should apply to its transactions involving in-game gold to address competitive disadvantages and potential double taxation. In traditional VAT systems, taxable traders pay VAT on the full sale price, but the margin scheme allows them to pay VAT only on the profit margin when reselling goods acquired from non-taxable persons. This approach prevents double taxation and ensures VAT neutrality by taxing only the added value created by the dealer. In the case of in-game gold, the taxpayer operates in a sector dominated by non-taxable persons, meaning it cannot deduct input VAT on purchases. Applying the margin scheme would allow the taxpayer to pay VAT only on the margin between the purchase and sale prices, reducing the competitive disadvantage compared to non-taxable sellers and avoiding double taxation.

According to the AG, in-game gold is classified as a service, not tangible property, which traditionally excludes it from the margin scheme. Despite this, the principle of VAT neutrality and the evolution of secondary markets for intangible items, like in-game gold, suggest that the margin scheme could be applied by analogy to services traded similarly to second-hand goods. This would align with the scheme's objectives of avoiding double taxation and ensuring fair competition. Whether in-game gold qualifies for such treatment depends on its comparability to second-hand goods and the presence of residual VAT, which the referring commission must assess.

KPMG observation

If the CJEU aligns with the Advocate General's recommendations, businesses involved in the trading of in-game currencies or similar digital assets may need to undertake several measures to comply with their VAT obligations:

1. Assess pricing and margins: Businesses may need to evaluate their pricing models and margins in light of the AG's arguments on whether the margin scheme is applicable on the sale of in-game gold. Since VAT could potentially apply to the full sale price rather than just the margin, companies may need to adjust their pricing strategies to account for the additional VAT liability.
2. Evaluate VAT registration requirements: Entities operating in VAT jurisdictions must monitor their revenue from in-game currencies sales to determine if they exceed the registration threshold. Failure to register and comply with VAT obligations could result in assessments and penalties, as seen in this case.
3. Assess pricing and margins: Businesses may need to evaluate their pricing models and margins in light of the AG's rejection of the margin scheme for in-game gold. Since VAT would apply to the full sale price rather than just the margin, companies may need to adjust their pricing strategies to account for the additional VAT liability.

The case could have further implications for in-game transactions when in-game currencies are exchanged against digital assets, such as skins. If the CJEU follows the AG’s opinion, this could potentially mean that such transactions would be considered a barter transaction of digital services that would be also subject to VAT. Moreover, the case does not address the VAT obligations of platforms and/or games facilitating these transactions between parties as questions. While under the EU VAT rules, platforms are liable for VAT on the sale of digital services they facilitate, the provision and existing guidance is unclear as to whether such obligation applies also when the underlying seller does not qualify as a taxpayer for VAT purposes (e.g., occasional seller) or qualifies as a taxpayer for VAT is below the VAT registration threshold.

For more information, contact a KPMG tax professional:

Philippe Stephanny | philippestephanny@kpmg.com

Chinedu Nwachukwu | chinedunwachukwu@kpmg.com