There is a Tax issue if the sale mechanism is in the canister. There is a question of not only where did the sale take place but also who did it. Generally in internet sales the point of sale is the website where you purchase the item and the owner of the website is taxed in their jurisdication. If you own a canister with your own NFT’s and have a sale mechanism in it likely your location will be the place of sale and you will be subject to various local sales taxes.
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Unless you are willing to responsible for all of the tax liabilities that comes with making sales, from a tax and business perspective ideally you want the shop to be in charge of the sales and you to be in charge of the asset.
Just to clarify this is in relation to business taxes that relate to such things as VAT and also sales turnover. If you have profits and loss taxes that is a separate issue.
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To clarify around this topic, initially there were two groups 2 years ago:
- sale mechanism separate from collection canister
- sale mechanism within collection canister
Ultimately we came to the agreement within the working group to focus on a base NFT standard (ICRC-7). An approval & transfer_from mechanism similar to ICRC-2 was split of into ICRC-37.
The intent was to enable wallets to support all NFTs with ICRC-7, no matter how they’re being sold or traded.
What ODIN.fun @bob11 should realize - We ICP investors some of us have BIG pockets some dont but we all support the ecosystem. When Bioniq or Toniq plays us out - dont expect our money into ODIN - is not natural - not only that people hold back to even like or retweet - You are hurting your platform and ICP ecosystem. Big players with BTC also check the devs their backgrounds their reputation into the ecosystem -
@Kyle_Langham I belive that Dfinity should be more agile and strickt on the delivery - with teams you are collaborating
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Sir, this is a Wendy’s.
Please let me know when find the first NFT “shop” charging VAT.
(I’m not saying you are wrong…but I’m not sure VAT compliance is at the top of many people’s list in consideration…if you’re an artist you’ve got the most to lose so we should certainly listen to what you have to say.)
(On the other hand, I’d imagine artists “pay” a pretty penny for shops to take on that risk, so what better way to help artists save than by just configuring the smart contract to set aside the VAT and if you pass the threshold to pay it straight to the taxing authority🪄. And/or sounds like nice service for someone to offer from the transaction log…build the reports…file em…send payment…etc).
(Also…it looks like VAT is exempt for international sales, so if you set up an NFT DAO in the Marshall Islands and every artist gifts their Art to DAO in exchange for secondary future royalties and the DAO sells it then is it exempt? If the nodes that run a canister are in 13 countries and the actual sales happen on a canister with funds going to a canister then what jurisdiction should the tax be collected in?)
Are there any clear answers to any of these questions in the web3 space?
If you have to choose between hosting the marketplace yourself and doing some business taxes but your stuff is sold in every (European equivalent of) wal-mart in the country or heading it to one shop, perhaps managing the taxes is worth it?
(Also under consideration, as the openSea and Toniq use cases bear out, when you give the rights to one shop they tend to leverage those to their own advantage and not necessarily the artists).
(Finally…if you want to limit the sales to only ones that go through “shops” you can REQUIRE broker codes and report those codes and their sales to the local government and place the burden back on the shop to collect and deal with the VAT…they’d need to get approval from the buyer for X +VAT% and have the sale canister pull the sale funds and their canister pull the VAT funds…I finally have a use case for Batch approvals…nice…web3 tech! :)).
(of course some government will eventually get their head out of their rears and define actual rules and we’ll need to adhere to those…but wth do we do in the mean time…too much time twiddling my thumbs already…want to build)
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Great then, maybe you can create a fresh thread to kick start the Working Group discussions and forum discussions.
So we can finalize this and streamline all the resources and content related to this. Anyone interested can join here without having to discuss non technical and unrelated stuff. Also maybe make an announcement and inform relevant parties about NFT infra revival on IC
I’ve followed this topic closely and later saw decreasing activity due to narrative shift like DeAI, Bitcoin etc.I also have couple of ICSnakes NFT. Would be cool to migrate them to an ICRC standard from EXT so they can be traded anywhere on the network without restriction. I also understand storage is going to be an issue..
This is when it so important to work with people in the real world. I run a legitimate design business and pay my taxes as honestly as I can. If you knew the nightmare of tax compliance and costs I have gone through to do this. Yes in the UK I would likely have to charge VAT on NFT sales people and businesses in other countries as well as the UK. The easiest tax position is for a shop to deal with its own compliance in whatever place it exists and for an artist to take royalties.
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This is great to know. I’ll keep it in mind when we do some redesigning. This is also why it is super important to have all kinds of folks in the working group…even if you just dive in for the first 10 minutes and raise your concerns before bouncing.
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I think its A very good sign that people actually took their time to write some of their thoughts in this thread. We don´t agree but it means something… maybe NFTs arent so dead… if they were this discussion wouldnt be happening right now.
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I´m actually writing a list of the issues thanks to the feedback of many users who have spent loads of ICP supporting the NFT ecosystem. Ill post it here.
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Hello @sea-snake ICYMI
Would appreciate it if we can start this. Waiting for your response.
Sorry to come back to this, but I had to look up the phrase “Sir, this is a Wendy’s.”
Which seams to be a way way of telling someone that they are being irrelevant.
The fact that you even thought this is part of the route of the whole issue and why so much is broken in the NFT market place.
What may seem like an irrelevant issue in the way that something works you may in fact to those involved be a very big and real issue.
Even more so when financial transactions are involved.
Its worth noting that even when there are tax gray areas, accountants will always recommend you act on the side of caution as most governments tax agencies are not given to being understanding in regards to not paying appropriate taxes even when the information was not 100% clear.
Also we must consider going forwards some of us want to create larger business and brands that could be generating substantial revenue, if we don’t build correctly now are we going to have to remake the standards yet again?
Of course some people may want to be able to have their own market places and deal with any taxes themselves and thats fine as well.
Consulting with the community that uses products is vital not just an afterthought.
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That’s not your job. That’s the “world computer” job. You should query them directly, not index like Bitcoin and Ethereum.
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Here is a list of some of the current technical issues we are currently facing on the ICP NFT ecosystem (Most of them for years).
There are other issues but there is a big consensus about these and these are facts, non subjective.
1 - Missing NFTs (Assets simply missing from wallets) - Most scary, ongoing for years, multiple reports.
2 - Missing funds (Assets not received after payment or money not received after sales) - Serious financial impact, ongoing for years.
3 - Different addresses as owners (NFTs showing incorrect ownership) - Critical ownership issue.
4 - Metadata errors (Missing or incomplete metadata despite correct formatting) - Affects NFT integrity and usability.
5 - Different wallets provide different numbers for NFTs - Potential for costly mistakes in transfers.
6 - Missing images and displaying issues (Images unavailable for months) - Major user experience issue.
7 - Royalties not working properly (Creator not receiving automatic royalties) - Financial impact on creators.
8 - Uncertainty related to cycle costs (Unpredictable hosting costs, affected by malicious apps) - Operational and planning challenge.
9 - Interoperability within marketplaces (No cross-marketplace compatibility within ICP) - Limits market reach.
10 - Pushing canister upgrades on collections without notice - Lack of transparency/control.
11 - Multiple wallet popups and confirmations for the same transaction - User confusion, potential error risk.
12 - Useful features like batch sending turned on and off randomly - Minor inconvenience compared to others.
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You are 100% correct. I apologize if the attempt at humor was in bad taste but the boards have all been a bit chippy lately. I hope the rest of that post conveyed backing off of that default crypto-degen position to take your feedback seriously. It was actually refreshing to find someone on the board thinking about the real-world connection of all of this stuff. Keep at it. I’m listening.
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I’ll make a forum post regarding possible approaches for ICRC-7 metadata tomorrow around this time. Still need to fill in some details, pros and cons for the different suggested approaches so the right information is available to everyone to make a decision on the approach.
The thread will be shared here too for reference.
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Hey Egido, thanks for bringing all these issues up. Some of them I have known about for years and still haven’t been addressed. My question to the community is, who is responsible for fixing these problems and why haven’t these problems been addressed for so long?
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Not Tonic Labs or Bob’s fault. Fault is with the Dfinity Foundation for failing to support ecosystem… chasing hype instead. Foundation needs reform immediately. Why have ICP HUBS not created any new projects?
This question is posed as if these marketplaces are DAOs - they are team controlled canisters.
The team is responsible for fixing the projects problems 
However, they have been rewarded by the foundation for dropping what they’re working on to start the next best thing.
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Created the forum post here: Approaches to ICRC-7 NFT User Facing Metadata
Please have a look, share your feedback and join the discussion!
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