The Swedish Tax Agency recently posted a statement on their website indicating that in-game transactions in virtual worlds may incur a value-added income tax. The tax would apply to those who are considered "professionals" or who engage in over $5,000 USD in transactions a tax year. With the current quote on 1,000 WoW Gold residing at $22.69 that would mean you would have to have traded over 220,361 World of Warcraft gold in the course of a year to qualify for the tax under Swedish law. Although the Swedish tax rate varies from 0-25% depending on the type of value-added good, most goods are taxed at 25%.
However, as far as the virtual currency industry goes this shouldn't have much of an effect. If governments continue to impose these types of taxes more virtual currency vendors will simply incorporate in off-shore legal/tax "island havens" like Atlas Technology Group currently does (who owns IGE, MySuperSales, and EZgaming among others).
The purpose behind the law is to prevent companies from using the sale/purchase of virtual goods as a sort of tax haven to hide profits. Interesting enough the one company it is likely to affect is Project Entropia run by Swedish developer MindArk who called the decision “rash” and “unenforceable”. Project Entropia sells virtual currency (Project Entropia Dollar) to finance the game ($1 USD = 10 PED). During 2007, 700.000 players in Entropia produced $400 million in turnover. MindArk estimates that about 10 players would be qualify for the $5,000 USD limit and are eligible for the tax. You can read a translation of MindArk’s full response here.
Hat tip: Virtual Economy