after 5 hours of research and reading outdated paypal documentation I finally give up!
I need to test a simple paypal subscription button with the paypal sandbox.
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The problem is that you've generated a 'hosted' PayPal button in the live PayPal website, but you're sending this data to the Sandbox.
Since the hosted_button_id
isn't recognized in the Sandbox, it returns an error.
You'd need to either:
www.sandbox.paypal.com > Profile > PayPal Buttons.
TL;DR: Sandbox is 100% separated from the Live PayPal website. A hosted button generated in Live, doesn't work in Sandbox.