The Virtual Economy Research Network reports on a new Swedish tax ruling that signals the beginning of virtual world incomes being taxed.

On April 7 2008, the Swedish Tax Agency posted a ruling on their website, titled “Virtual worlds — value-added tax” In it, the agency states that in-game transactions may incur liability for both value-added tax (simillar to Australian GST) as well as income tax under Swedish law.

Vili Lehdonvirta translates; Transactions between participants in a virtual world, where the deal is about the sale of a “product” or a “service” against reimbursement in an internal currency, should be considered, according to the Swedish Tax Agency’s ruling, [actual] sales of electronic services, if the internal currency can be exchanged to a valid legal means of payment. If the internal currency cannot be exchanged to money, the transactions should not be considered [actual] sales.

Next time you buy and sell virtual furniture with a Swede in Second Life, consider the implications of off shore tax transactions, adding GST to virtual goods, and the golden question for virtual/real world tax crossovers-who to invoice.

Read more here.