VAT in Finland and rights to charge it

Open letter and question to Linden Labs

I also like many other European member saw Linden Labs announcement about Value Added Tax (TAX) collection. If i have company i can enter my VAT-number and can be released from it.

When Linden Labs charges VAT from my purchases it has to be registered as a Value Added Tax liable company to Finland and pays value added tax to Finnish goverment monthly.

I am inquering what is Linden Labs VAT code number in Finland.

I am also sending inquery to Finnish tax burecracy if Linden Labs is paying monthly VAT to Finnish VAT authority and is it registered as value added tax liable company in Finland.

If Linden Labs will charge VAT (22%) from my land tiers and they are not registered as VAT member to Finland i will inform Finnish Tax Authorities and ask them to take appropriate legal matters toward Linden Labs

That's right! Linden Lab should send proper invoices with their address and their own VAT number. Now we only have an US$ account history. That is not sufficient. Send me a monthly invoice by e-mail with all the correct information!

I wonder if Linden Lab will pay the tax to my country if I do no provide a VAT number and have to pay the 19% tax from the Netherlands. I pay all my 'maintenance' (tier) fees using linden$ -> US$ conversion. So my credit card is never charged, and money is not transfered from me to Linden at the LL company borders. I suspect that LL will keep the 19% in their own pocket in this case.

Also, they never stated that tax was NOT included in previous fees.

I understand that taxes have to be paid in my country, and that the rules are that LL should collect them.. but when money is not transfered outside the company borders they will probably collect the money for their own pocket. Sickening.

Meni

they are ignorant, they`ll say "pay it or f`off"

Well i inquered about legality of this action from Finnish tax burecracy and if Linden Labs is registered as Value Added Tax liable and paying company to Finland.

I also wait Linden Labs answer to my question.

This is a very interesting point. Basically, Linden Labs will have to register for VAT with every single European country whose residents they charge VAT. After all, any VAT I pay to Linden Labs has to by law be paid to my government.
I wonder if they think they can keep it.

And it's 19% in many European countries.

Well i got answer from Finnish Tax burecracy. As many have said this is related to EU VAT registlation about electric commerce for EU outside companies. Basicly companies would have to registrate to each contry for VAT payment.

However EU has developed special procedure that companies outside EU can concentrate and pay their VAT payments to one European Union country instead of paying them to all countries they have business. EU countries tax ministeries then pay/forward payments inside EU to appropriate countries.

Damn. Well its only 3 more dollars per month so not big thing. Basicly what just happens is European countries residents are not equal to other users of SL. Thats how i see it.

Right, which is what LL is doing here with its UK presence.



Ehm .. well it's you folks who have elected governments who have these VAT laws. I thin LL was not in compliance with these laws. Don't blame LL, blame your EU and your VAT schemes.

umm isnt Corsica part of EU?

Hehe that is SL Corsica, not "Corse".

Well, I DO blame LL and I am not HAPPY.

When I signed up earlier this year, I made an agreement with LL about the service they would provide and the prices I had to pay for that service.

Now they raised the price with 19% because LL did not do his homework: The VAT was not included in the prices and it should have been included.

So, from my point of view, LL has raised the prices with 19%, without prior notice.
LINDEN LAB made a mistake and I have to pay more then agreed.

I think it is a b.. shame that they threat the customers this way. But I have the impression they do not care about what we think of it.
And after 3/4 year in SL it does not even surprise me anymore. When it comes to communication with customers, LL has still a very, very long way to go.

When I signed up for this service, they promised me the possibility to buy cheap first land but they cancelled that part of the deal without prior notice.

There are lots of opportunities for them to compensate existing residents.
For example they have the possibility to give EU residents the right to own 20% more land for the same tier? Make it a temporarely offer.

I am very dissapointed with this service and the lack of communication from the company.

I agree completely with Danielle. When I joined SL, those laws were already there. They never said that Tax was NOT included. Most Europeans assumed that tax was already included, because that is the law. Now Linden Lab discovered they made a mistake and increase the fee with 19% for me.

Also... my tier is mostly funded by converted Linden Dollars because of a running SL business. So there is almost no money transfer from me to LL at the 'LL company borders', and that is probably the only tax part they have to pay to my government. They will probably put the added 19% in their own pockets.

I may find a way to have my fees covered by a valid VAT-id, to not have to pay the tax. However I do need a monthly invoice for that, with their VAT number and address on it. Now the fees only show up in my US account balance without any specification. That's not sufficient for clean bookkeeping.

Meni

I'm not sure what the law is like in Finland et al. but UK law stipulates that all bills, receipts etc have to have the VAT portion specified as a separate item. I would have expected this to be the case EU wide.

I'm obviously not overjoyed at having to pay tax which I hadn't anticipated and which wasn't part of the original contract with LL.

I gotta say, however, that for all the complaints LL are clearly seen to be feeling their way on any number of issues (including technical) pretty much all of the time. So you quickly get to know who you're doing business with and decide on that basis whether you want to continue doing so .

In similar vein, SL is like any other commodity; if you don't want to pay VAT, don't buy the goods. It's not like it's an 'essential' purchase.

Now that would be a decent compensation for having to pay more, up the amount of land for the tier brackets.

Any other commodity you don't get told after you have purchased. Tier is paid a month behind on total land you owned the month before, so not possible to tier down to avoid it with no notice.

If you have an island on order or submitted a bid on the land store for a sim, that's a lot extra you will have to pay that wasn't budgeted for.

Ah right :embarrassed: . Apologies, that's a different thing entirely.

Is this legal? Imposing changed terms retrospectively would be breach of contract? Contractual disclaimers can't simply nullify existing laws.

Whatever reason LL gives for a price increase on contracted services doesn't matter to the fact they increased prices. It's not a breach of contract, as most companies are allowed to increase prices on services, with proper notice.
It's also required by (EU) law to allow the other party to void the contract if they want to in these cases.

So, no, LL can jack up prices without contract breach, as long as they allow you to tier down/cancel your subscription from this moment on.
On yearly/quarterly premium subscriptions, they should now allow a possibility to cancel before the contract term runs out, and compensate you for the non-used part of the contract.
On monthly premium accounts/monthly tier payments in the period after the price increase, i'm not clear. It's highly likely that LL is required to refund/not charge you for the period after tier reduction/cancellation, if you did so because of the changed contract (higher prices).

But the fact is that this has been applied to tier retrospectively in all cases, denying the consumer the right to cancel the contract if they don't agree with the new terms before those terms come into force. As Denise pointed out, if I decide sell my land and cancel my account immediately, or indeed if I had coincidentally sold my land & cashed out a few days before the change, I would still be liable for this month's tier on my land holdings prior to the date of increase.

And if this is legal, why haven't they added it retrospectively to those annual/quarterly subscriptions already paid ahead of the date of increase?

LL should cut in half all their fees to customers because they fail to deliver the service they say.

Less lawyers more technicians please.
More response to customers less to governments thx.

> /dev/null

What happened is that clearly LL was not in compliance with European VAT laws. They had to come into compliance with them at some stage. Those laws, though, are the laws of the countries where you all live.

Now, of course, LL mishandled this. They communicated poorly, clearly. They did not prepare anyone for this. And some of you may feel like you have a claim against them for changing the rules after you purchased at a certain tier price. The obstacle you have is the TOS, which allows LL to make changes like this unilaterally. Now as I have said elsewhere, you may be able to convince a court in one of your countries to set aside the TOS in a case like this and allow you to sue LL for damages, but that depends on the specific country you live in, and the law as it relates to these kinds of services.

Sorry, but LL have NOT increased their prices; they are simply applying tax in accordance with the EU's requirements. We in the EU (i.e. the player is the ultimate consumer) have effectively been receiving a taxable service which up until now for whatever reason has been tax free, and is now no longer - and you will be taxed at the prevailing rate in your own country, if I have read it right. Only those who have a VAT registered business which is concerned with their SL activities will be able to pass the VAT along to their customer; the rest of us must either swallow the cost, look to other players to meet the cost (via rent, commercial profit etc) or give up all taxable activities.

I agree with others that LL's behaviour towards their player base (in this matter if not others) has been woeful. I believe they should have been alerting European players very early on that there were taxation issues we needed to address. That might have kickstarted a number of people into leaving early; it would have kickstarted the rest of us into looking to see how we could adapt to this additional cost overhead.

Criticising LL for applying a tax in accordance with the prevailing law is pointless.

Inc

They probably aren't registered for VAT.
Also, where are our receipts?

LL isn't complying with the UK pricing law, VAT should be included in the published prices and if it isn't it has to clearly marked alongside the price that it is VAT excl.

Yes I understand that LL have to comply with UK law here, but they need to do it properly. When I purchased my land, the tier fees are listed on the site but now I have to pay more than the agreed price for the previous period.

1. LL has been offering a taxable service since 2003, according to EU law.
VAT taxes to EU consumer are included in purchase prices, except when clearly stated otherwise. This means the purchase prices before this can be considered as price included VAT. If LL internally didn't consider this fact is not of the customers concern.
If these prices were without VAT, it should have been clearly marked as such and the VAT should have been added to the billing.

2. LL now increased prices, and claims these increases are VAT costs. Basically a price that was stated as including VAT is now stated as excluding VAT. The price increase can't simply be claimed as 'extra VAT'. The total purchase price is increased to include extra costs LL makes to pay off VAT costs. This is simply a price raise, and however it is explained away by LL is irrelevant.

@Incanus - sorry but no. Value Added Tax is levied at each stage of production as value is added; from obtaining / producing raw materials through manufacture, wholesaleing or exporting, to retailing. Each then charges that cost on to their customers & finally to the consumer. As the consumer my relation to the product adds no value so the tax is finally levied on and is paid by the retailer / service provider. The consumer is not being taxed.

In choosing to pass the cost on to the consumer (inevitable & unanimous action though it may be) the retailer / service provider is imposing a price increase much as they do in passing on increased labour, fuel. materials costs.

Yes in effect it is a price increase for you. As I said elsewhere, if you feel aggrieved sue LL. You have to convince a court to set aside the TOS, which allows LL to make changes like this unilaterally, but you may be able to achieve that in some European countries.