Taxing a Galaxy Far, Far Away: How Virtual Property Challenges International Tax Systems

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A multi-billion dollar e-commerce industry is testing the limits of international tax systems. While general forms of e-commerce have posed challenges to international tax regimes before, the sale of virtual property is uniquely difficult to tax. If a German player in the online game Star Wars: The Old Republic sells a powerful lightsaber to a Canadian player, there is no clear way to locate or describe the transaction. Was it the sale of goods or services? Did it occur where the buyer, seller, financial intermediary or server was located? Without the ability to answer these questions consistently, international tax regimes will clash, resulting in over- or under- taxation and a misallocation of tax revenues.

Volume 51, Number 2 51 Colum. J. Transnat'l L. 479