Publication date: February 12, 2025
What are Loot boxes
Loot boxes are boxes in a virtual environment to be purchased through micropayments (e.g.: in games) or premium currency, with the help of which the user draws a digital item that changes the appearance of the character or items (so-called skins) or items that can affect the course of the game. Loot box can be understood as an element of computer games, virtual boxes containing randomly selected virtual items that make it easier for the player to move to the next levels of the game. They can be purchased for real money using micropayments or for virtual money earned in the game. [1] To better illustrate, we can give the example of the game Counter Strike 2. In this game, after finishing the game, the player can receive a box, which requires a key to open, costing about $ 2.50. When the player buys this key, by transferring his money, he can draw a “skin” for the weapon, which changes its appearance and has a specific value expressed in different currencies. As a curiosity, we can say that the most expensive “skin” for this game is worth 400 thousand dollars [2].
What are micropayments and premium currencies?
Micropayments are payments for a specific virtual item, service, or premium currency. The user pays with their own money, e.g.: using BLIK, PaySafeCard, bank transfer or SMS. After making the payment, the subject of the transaction is made instantly, to the player’s account or directly to their virtual inventory in the game. Premium currency according to the Gryonline.pl definition is: “Additional means of payment appearing most often in MMO productions distributed on a free -to- play basis. Premium currency (e.g. diamonds, platinum, coins) is sold through a microtransaction system and allows the purchase of special items and amenities unavailable to players using free game options[3]“. As an illustrative example, we can refer to “gold” in the game World of Tanks, for this currency you can buy better ammunition or a tank, which will help the player gain an advantage during battle. Premium currency resembles Gacha (from Japanese Gacha (Russian:ガチャ, pronunciation: gacha) is a mechanic that requires the spending of in-game currency (which is sold in-game for normal real-world currency). The gacha lottery does not guarantee receiving the desired item and has been criticized as a form of gambling [4].
Is Loot box is a type of gambling?
Loot boxes meet the criteria for recognizing them as gambling games de facto, because it involves a certain monetary contribution and the risk of randomness, because the result of drawing an item depends on chance. In some situations, it involves receiving an item worth less than the user’s contribution itself. For example, in the previously mentioned game Counter Strike 2, you can draw an item whose market value is less than the purchased key ($2.50), or greater than the price of the key, so you can draw a “skin” for $100, then sell it and buy another game on the Steam platform. Skins can be the subject of roulette, blackjack games, bookmaking, this is possible on sites that operate not only with monetary contributions, but also with items from these loot boxes. Some websites also contain boxes with game items, further diversifying their trade by modifying the contents of the boxes or playing with them. However, the legal status of loot boxes are not clear.
Skin Gambling
Skin Gambling can be explained as gambling with skins/gambling skins. The example of the previously mentioned game Counter Strike 2 is a prime example of using loot boxes, and the development of online casinos in the form of websites through which games known from casinos are played, using skins and betting on e-sports matches (competition between at least two players or teams), and the amount of the winnings will depend on the total amount of stakes paid in the form of virtual items or their currency equivalents, such a game will meet the criteria of a mutual bet in the form of a totalizer described in the Act. However, if the rules of the skin gambling game provide that the amount of the winnings will depend on the agreed ratio of the deposit to the winnings between the person accepting the bet and the person paying the stake, then such a game should be classified as a mutual bet in the form of bookmaking.
Currently, in Poland, organizing betting without the permission of the minister responsible for finance is illegal. However, running an online casino requires a license. Additionally, the entity must conduct business in the form of a joint-stock company or a limited liability company. Conducting such business may expose to liability under Chapter 9 of the Fiscal Penal Code, sanctions range from fines to 3 years of imprisonment.
Are they regulated by Polish law ?
The concept of loot boxes is a new term in the Polish legal system. It has not been explicitly mentioned in any act, and the doctrine has not yet formed a firm view on the phenomena related to the discussed issue. However, with the growing popularity of using loot boxes , developers’ earnings and the huge risk of gambling addiction among children (age verification is very easily bypassed by, for example, a false statement by a person under 18 years of age), the Ombudsman for Children applied to the Prime Minister to amend the provisions of the Gambling Act to protect young people from addiction. Therefore, changes in these regulations can be expected.[5] In addition, the issue of loot boxes will be dealt with by EU legislators. “In 2023, the European Parliament adopted a report calling for the establishment of harmonised EU rules to better protect players in the area of online video games. The Parliament also called on the European Commission to analyse the way loot is sold boxes and to take the necessary steps to introduce a common European approach to ensuring consumer protection”. Under Article 1, Section 2 of the Gambling Act, such games are games of chance, mutual betting, card games and slot machine games. The case law of administrative courts has established the position that the catalogue of gambling games is closed. The Ministry of Finance is changing its attitude towards loot boxes, because in 2019, the Polish Minister of Finance stated that boxes in games do not fit into any categories of gambling games. So the legal status of loot boxes is not clear, but everything indicates that this state of affairs will change in the near future.
How has this been solved in other countries?
Belgium
Belgium was one of the first countries to take concrete regulatory steps against loot boxes. In 2018, the Belgian Gaming Commission found that some loot mechanics boxes are illegal because they can be considered a form of gambling, and their random nature makes them resemble betting. A game that introduces loot boxes without a clear understanding for players of what might be included in them is considered to be in breach of gambling regulations.
Netherlands
The Netherlands has taken similar steps to Belgium. In 2018, the Dutch regulatory authority ruled that loot boxes, which offer items with financial value and can be sold or exchanged, are a form of gambling if not properly identified. He therefore issued an order to remove such items from games that were available on the Dutch market.
United States
There is no lootbox ban in the United States yet, but the topic is being debated in various states. In 2019, there was proposed a bill that would ban the introduction of loot boxes and micropayments in games intended for minors, suggesting that this is a form of gambling addiction. There have also been talks in California and Washington about regulating this issue, but there is currently no specific legislation. However, it can be concluded from American regulations that online gambling has three common features:
It could be argued that each of these elements could be fulfilled by some lootbox systems.
Tax issues
The Director of the National Tax Information in several individual interpretations regarding the taxation of transactions related to the sale of virtual items in computer games presented his interpretation of how loot- related services should be treated boxes and sales of virtual items.
a) Interpretation of November 4, 2020 (ref. 0114-KDIP1-1.4012.428.2020.2.MM)
In this interpretation, the Director of the National Revenue Information stated that the sale of virtual items in computer games, including loot boxes, is treated as the provision of services within the meaning of art. 8 sec. 1 of the VAT Act. This means that the remuneration received for this type of transaction is subject to VAT. According to the regulations, these services, if provided for a fee, should be treated as electronic services and subject to the VAT rate applicable to this type of activity. However, it is important that in order for a given person to be recognized as a VAT payer in such a case, they must conduct business activity in an organized and continuous manner, and not on a one-off or hobby basis.
b) Interpretations of August 18, 2023 (reference numbers: 0114-KDIP1-2.4012.271.2023.1.JO and 0114-KDIP1-2.4012.272.2023.1.JO)
The interpretations of August 2023 confirmed the previously presented line of interpretation, indicating that activities related to the sale of virtual items for which remuneration is received are treated as the provision of services within the meaning of Article 8 paragraph 1 of the VAT Act. The Director of the National Revenue Information explained that a person who sells virtual items in computer games (e.g. loot boxes) and receives remuneration for this, is obliged to settle VAT, if it operates as part of the business activity. This means that this type of activity should be organized, continuous, and not sporadic, for this person to be recognized as a VAT payer.
c) Interpretation of February 21, 2024 (ref. 0114-KDIP4-3.4012.565.2023.3.KŁ)
In an interpretation from February 2024, the Director of the National Revenue Information confirmed that the sale of virtual items is treated as a service subject to VAT. He emphasized that only persons conducting business activities that operate in an organized manner and for profit can be considered VAT payers in this respect. Therefore, persons who conduct business in the form of selling virtual items, and their activity is regular and is aimed at making profits, will be required to settle VAT. However, if the transactions are incidental, related to hobby activities and not organized business activities, then these persons will not be treated as VAT payers.
Conclusions from the interpretation
In summary, the key aspect when selling virtual items and loot boxes is whether the transactions are part of a business activity or are of a one-off or hobby nature. For VAT and PIT purposes, regular and organized activity aimed at generating profits requires meeting certain tax obligations.
The issue of personal income tax
“The sale of game skins should be included in income derived from non-agricultural business activity, in accordance with the provisions of art. 5a item 6 in connection with art. 10 sec. 1 item 3 , and the income obtained from this activity constitutes income from non-agricultural business activity, referred to in art. 14 sec. 1 of this Act, and is subject to personal income tax.”[6] This is what the Director of the National Revenue Information stated in response to an individual interpretation dealing with the sale of skins, because the applicant received income from purchasing skins and then reselling them to other entities at a higher price. However, we are talking here about skins being exchanged for money, where enrichment actually occurs. This means that such a taxpayer – player will be able to choose to tax their activity at a flat rate on recorded income at a rate of 3% or 8.5% and in some situations even 17% or remain taxed according to the so-called scale. However, tax cannot be charged on sporadic sales.
In the case of minors, income from the sale of virtual items should be added to the parents’ income and shown in the PIT/M appendix to their annual tax return PIT-36.
Gaming tax
In Poland, the tax on bookmaking games, including e-sports matches, applies to the activities of operators who offer mutual bets (so-called “bookmakers”). According to the regulations, this tax is 12% of the value of accepted bets. This is a tax that the operator must pay from the total amount that players place on bets, not from their winnings. Both in gambling and bookmaking, there is also a tax on players’ winnings. In Poland, it is 10% and applies to winnings exceeding PLN 2,280. Operators are obliged to collect tax on the player’s winnings in the event of exceeding this amount and transfer it to the tax offices. It is not a settled issue how this looks when we bet skin for skin, because a skin for a game is not a thing within the meaning of the Civil Code and it is difficult to talk about enrichment here, because the price of such an item is variable. The Gambling Act also provides for the payment of “stakes”. Skin is not a means of payment, and it is also difficult to determine its real value by finding a reliable source of the proper value of such an item. The situation of such a bet is a kind of exchange, thing for thing, while the case law speaks of money. An interpretation of such a “barter bet” is needed.
[1]K. Grzybczyk, 3. K-video games [in:] Asian software power and intellectual property law, Warsaw 2024.
[2]https://gaming.komputronik.pl/g/najdrozszy-skin-cs-go-lista/
[3]T. Pietroń, 3. GROWTH OF THE IMPORTANCE OF THE COMPUTER GAMES INDUSTRY AND THEIR FINANCIAL SYSTEMS [in:] Criminal law and criminology in the face of 21st century crises, ed. D. Dajnowicz-Piesiecka, E. Jurgielewicz-Delegacz, E.W. Pływaczewski, Warsaw 2022.
[4]https://pl.wikipedia.org/wiki/Gacha
[5]https://brpd.gov.pl/2024/10/31/rpd-w-spraw-lootboxow-pisze-do-premiera/
[6]Letter dated 24/09/2024, issued by: Director of the National Tax Information, 0112-KDWL.4011.96.2024.1.JK, Taxation of the sale of game skins, http://sip.mf.gov.pl.