Help needed for new online venture

[new_business]

Hi all,

I am part of a group developing a virtual world and will be selling virtual currency that can be exchanged for virtual goods. We will be a UK registered business and our target markets will be the UK and US.

My questions are in regard to selling to the US market.

What tax issues do I need to be aware of?

Are we classed as exporting?

Are there any other legal issues or anything for that matter that I need to know?

Kind regards

[Indizine]

If ths goods arent physical then you arent exporting anything.

[matt.bluestagstudio]

You need to make sure that your terms and conditions, copyright notices, disclaimers etc can be applied and are valid in both countries.

I'm 99% sure that you don't need to worry about tax issues as you're not technically exporting anything - sure someone who knows far more than I do will confirm.

When it comes to taking payment you'll need to make sure that your payment provider is secure and approved by the respective bodies in both countries. Also need a disclaimer regarding how you set your prices, are you having separate prices for the US and UK or converting the UK price into a US price on a daily basis?

Not sure how you're going to work it, but I'd strongly advise that you don't offer a single payment system and convert pounds to dollars or vice versa. Otherwise people will try and use you for free foreign exchange...it's happened on gambling sites, where you deposit in pounds, it gets converted to dollars and you can usually withdraw in pounds when the exchange rate goes up and make money without paying any fees.

Hope that helps.

[wood1e]

I would seriously look at anti terror extradition laws as well....you don;t want to find yourself on a one way plane to become Big Bubba's new play thing!!!

Joking aside, I would employ a US lawyer to make sure what you are doing by selling into the US is not illegal.

And remember selling into the US is not aboout selling into the US it is about selling into 50 states...

Obviously this is extreme, but many people have been caught out by the all inclusive nature of US law... And ignorance is no defence, nor is state of your health!!!

[new_business]

Thanks for the reply guys,

I did not even consider export tax as an issue until I met with a business link advisor and he brought it up. I don't think he was sure himself but said its something to look in to which is why I've been researching like mad in the hope of finding something on the subject.

We will implement a similar system to xbox live where the user exchanges money for the virtual currency. This can't be exchanged back so I dont think we need to worry about exchange rates. Thanks for the tips though, any issues people can come up with will be a massive benefit as we will then hopefully be fully prepared for launch.

Cheers

[wood1e]

We will implement a similar system to xbox live where the user exchanges money for the virtual currency. This can't be exchanged back so I dont think we need to worry about exchange rates.
Cheers

Without being able to exchange back wouldn't people get a little annoyed if they didn't like the service/product and couldn't return?

Does this not break distance selling laws?

[HuggyBear]

Without being able to exchange back wouldn't people get a little annoyed if they didn't like the service/product and couldn't return?

Does this not break distance selling laws?

As far as I am aware DSR are only for physical products purchased.

[new_business]

Users will be given access to everything and be given "credits" when they start. If they enjoy the world and want more, they can buy credits.

[skeeter]

I would seek professional advice, however...

from what I understand it sounds like "the idea of selling tokens". You can buy tokens in the currency that you decide to sell them through...they are just tokens.

Tax...accountant time VAT/etc/etc. May advise on two trading companies, may advise not...depends on cirumstances.

With selling tokens I think you will find that there is nothing else to think about. People can exchange them once you've bought them. Your product will not be a currency, it will be similar to a currency. Currencies have to be registered and recognised.

This said look at Barter Card...their system is a registered currency I believe. There is a process to get your currency registered. Just like there is a registration process to mark terriroty and establish independence.

Don't take these words for it....seek out the right advice...look at Barter Card.

[new_business]

Habbo is a similar set up however there are many details I have left out for the time being until we get closer to launch. Habbo are not considered to be a direct competitor.

Thanks for the tips guys, it is looking more likley that I will have to seek professional legal and accounting advice.