Are domains assets?

[rolf]

Hi,

Does anyone know the tax treatment of domains? I'm particularly interested in the UK tax treatment.

Are they technically assets and subject to capital gains tax?

Should the profits just be registered in your personal tax return?

Or do they constitute casual earnings and you should therefore register as self employed???

I'm puzzled to say the least!

By the way, I'm talking about earnings that are too small to constitute forming a company.

[GT Web]

The way I do it (I am by no means an expert):

Revenue = all domain sales
Costs = reg fees and all my domain purchases

Owning a domain does not constitute an asset (at least one worth more than reg fee) because it is impossible to guess a value of the domain.

I would also like to hear from someone more knowledagable than myself, but I haven't had any problems over the past few years.

[CashCowDomains]

you don't report any earnings via domain name monetization (ppc, adsense, ypn or affiliate earnings) ???

[Rubber Duck]

Originally Posted by rolf

Hi,

Does anyone know the tax treatment of domains? I'm particularly interested in the UK tax treatment.

Are they technically assets and subject to capital gains tax?

Should the profits just be registered in your personal tax return?

Or do they constitute casual earnings and you should therefore register as self employed???

I'm puzzled to say the least!

By the way, I'm talking about earnings that are too small to constitute forming a company.

Good question and I am from the UK as well!

I already had a company running and put my domains through that company as a side line.

When I launched into IDN in a big way I set up a separate company (Chinese Domains Ltd) with my partner.

No domains are not generally allocated more value than their registration fee, which is written off every year. Traffic and sales are treated as income and that which is identifiably as from the EU is declared for VAT.

With corporation tax, as you are allowed £10,000 a year exempt as long as it is not taken as dividend during that year, it may be beneficial to revalue your portfolio to effectively carry a tax credit into future years. We are investigating this avenue at present.

I believe that the Revenue in the UK, whilst unable to grasp the concept at present will track down those who do not properly declare their earnings. I personally believe limited company is the way to go.

Best Regards
Dave Wrixon

[oberheimer]

and if i sell a domain name, how do you do to avoid the tax. Let's say you sell it for xx xxx then you are supposed to pay tax on that.

[Rubber Duck]

Originally Posted by oberheimer

and if i sell a domain name, how do you do to avoid the tax. Let's say you sell it for xx xxx then you are supposed to pay tax on that.

Well, perhaps Sweden is different but I don't see anything in British Law to say that Domain sells are exempt from tax. In the UK it makes more sense to be taxed as a company than as an Individual.

Best Regards
Dave Wrixon

[Domagon]

The treatment of domains for tax purposes really depends on the situation ...

For folks who primarily register and/or buy low-priced domains and then resell in a manner similar to other forms of merchandise, they should likely treat them as "inventory".

For folks who buy domains and resell for considerably more than their initial registration / purchase cost, they should likely treat them as investment assets; capital gains, etc.

There are other accounting variations that some folks use - key is to be consistant and have a logical, justifyable basis for the method chosen.

Regardless of how one treats domain names, taxation should be expected if doing more than a few thousand dollars worth of sales per year unless of course off-set by purchases, expenses, etc.

Ron

[Acro]

In the US:

Selling price - Purchasing price = Taxable amount as capital gains (if 1 year old).

[snicksnack]

Normally a domain is not considered an asset. The domain can however also become smiliar to a brand/represent a certain value and then the good will could be capitalized in the blance sheet.