Billions in online tax evasion

Sweden | 2009-07-18

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Online tax evasion is big business
Growth in e-commerce is still strong and so is online tax evasion. Municipalities and the state lose around five billion SEK each year because of undeclared income, The Swedish Tax Agency evaluates.
In 2007 the Tax Agency started a national project with 60 fiscal officers assigned to investigate tax evasion in relation to online activities.

So far companies and private persons have been assessed with around 670 million SEK.

Most of the ‘lost money’ has been found at poker sites, where the Tax Agency uncovered 350 million SEK in undeclared incomes. Among else it is about dividend from these lucrative enterprises.

“When it comes to these poker sites it is often about ‘fake traders’, where you have a server abroad but pretend the company is located at Virgin Island when in fact all of the personal operates from Sweden”, says project manager Dag Hardyson to newspaper Dagens Nyheter.

Many people buy and sell online without thinking about the possibility that they may have to pay taxes.

For example do the Swedish Tax Agency hold that you have to pay tax for selling an avatar from a computer game. The agency has investigated the trading in avatars during a 14 month period and found the advertised sum of avatars for sale by Swedes to be 662 million SEK. But no one has ever declared any income for trading in avatars to the Tax Agency.

There are a number of activities online that should be taxed, but seldom is: trading in domains or whole internet sites, so called Virtual Estate. The agency evaluates there to be around 180 companies in the country that have this as their business model.

Other activities under the scrutinizing eye of the Tax Agency are online marketplaces, porn and astrology sites. Also the selling of legal drugs, often operated by people from organized crime, has been inspected, something that has resulted in around 20 tax field audits.

David Jonasson


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