Game server (Minecraft) Revenue
May 21, 2012 | 40,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
I am currently running a Minecraft server (Minecraft is a very popular computer game that allows each buyer to legally host a server).
I am now giving players the opportunity to buy items in the game for real money. Currently, I am describing this as a donation with consideration, but I don't think this will likely pass.
This 'donation option' should allow me to finance the server, but I have already earned about $430 = 340€ within a month and the monthly costs are about $40.
I have read in various sources that this is taxable if I make an amount of over 410€ in a year, which I could soon exceed...
So to my actual question. What are the tax-free allowances before I have to pay taxes? When do I need to declare the profit? What happens if I exceed the amount, should I register a business or instead declare the money as income? What else do I need to consider if I continue as before and end up making about 400€ (what if more/less) monthly?
I apologize for the many questions, but I am an absolute novice in the field and just want to avoid inadvertently breaking any laws.
Thank you for your response.
Dear inquirer,
First of all, thank you for your request, which I am happy to answer based on the information provided and in the context of your initial consultation. The response is in accordance with the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
The activity is to be attributed to commercial income if it is carried out sustainably and with the intention of making a profit. Taxable income is the profit as the excess of income over expenses or a loss if expenses exceed income. If the profit does not exceed 410 euros, it remains tax-free if you are an employee. A loss should always be claimed, as it reduces the tax burden on the remaining income. According to your information, you have only generated a loss so far.
The profit/loss is to be calculated in an income-expenditure account. In this case, the operating income is compared to expenses. You submit this along with your income tax return to the tax office.
VAT is not levied if the gross income does not exceed 17,500 euros per year. This way, you can avoid VAT returns.
Since it is a commercial activity, a business registration is required at the trade office of your municipality. Income subject to trade tax remains exempt from trade tax up to 24,500 euros annually.
I hope that these details have provided you with a sufficient overview of the situation in the context of your engagement and this initial consultation.
Best regards,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant
