Tier fees increased by tax

Am not sure if this has said before. I think maybe it has and got missed but for UK players at least...

"VAT is not payable for goods and services originating from outside of the UK"

Even if the payment centre is now in the UK, the "service" (ha!) provided by SL clearly originates from outside the UK which is why American laws are applied to it.

So someone in the UK branch has failed to check with revenue and customs on whether VAT is payable (it isn't). I've just sent in a support ticket explaining the error and pointing them at the relevant page from the HMRC website.

May I suggest many other UK residents do the same?

That's great news. So why are they charging you?

What is the URL?

Matthew

Jesus, what a fecking email to wake up to. I immediately went to the EU website regarding VAT and it says this.....

General overview
What is VAT?
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the Community. Thus, goods which are sold for export or services which are sold to customers abroad are normally not subject to VAT. Conversely imports are taxed to keep the system fair for EU producers so that they can compete on equal terms on the European market with suppliers situated outside the Union .

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/index_en.htm[url]Now Im an estate owner and I AM competing with others in the EU so VAT would apply there, but I am also competing with other outside the EU so it shouldnt apply there. Also some of the people who pay me fees are not from the EU, how the hell is this going to work?

when u know, let me know as i`m as f`ing clueless about all this vat shit as u are

I received this in my mailbox this morning (it's 8.30 am in the UK).

Hello, Deira Llanfair.

We have identified that you reside in a European country. Accordingly, your next bill will reflect Value Added Tax (VAT) charged at the rate specified by your country. Please note that VAT applies to all payments to Linden Lab such as land sales, monthly maintenance fees and Premium subscription fees.
If you are eligible for a VAT exemption, you may submit proof of your exemption status, such as your VAT number, here:
https://secondlife.com/account/vat_enter_id.php

If you have other questions, please read the VAT FAQ:
http://secondlife.com/corporate/vat.php

You can also contact us via the support portal:
http://secondlife.com/support

Best regards, and thank you for your continuing support.



Linden Lab
Creators of Second Life
----------------------------------------------------------------------

Like other EU residents in RL, I thought that we did not pay VAT on products and services originating outside of the EU.

How do you get an exemption? Who qualifies for one and why?

I wish I knew! Maybe LL just mean if you are already VAT registered (because you run a business, for example) then give us your VAT Registration Number. But even so, I believe you still have to pay the VAT, and then reclaim it???? Not an expert on VAT, I'm afraid.

Added for information - I do know that you have to be running a business with a certain amount of revenue to be VAT Registered in the UK. I was self employed for a while, but I never earned enough to have to become VAT registered.

Quoting from someone on another forum (hope they don't mind):
"Anyone in the EU who is running a proper RL business of which the Tier payments are a legitimate busines expense and are VAT registered can claim back the VAT paid on Tier, but of course they are also liable to corporation tax under these circumstances and have to charge their EU customers VAT. VAT is targetted to be a consumer tax and companies generally are just revenue collectors and the net impact is zero for them (some exceptions being organisations such as schools and hospitals which are not VAT free)

Hobbyists are however unlikely to be able to.
The big EU players who are Vat registered therefore won't be hurt by this other than cash flow as in-game transactions are currently not liable to VAT - They woin;t have to pass on the VAT costs to their SL customers. Non-VAT registered will be hit badly."

No need to be offensive mate...., i have no problem paying tax, i have a problem that they havnt given suffician notice period or have advetised that prices either include or exclude VAT BEFORE purchase NOT after. This is a requirement under UK sales law.....

So essentially I appreciate your point of view... my Degree begs to differ on your idiot comment

I doubt though that many have a VAT-number for SL only.... because it not free (there are processing costs involved if I remember well).

Morwen.

Another thought - I think an officially Registered Charity in the UK would be VAT exempt.

I also note that my tier payment date was yesterday and LL have not yet billed me - they will have to show the VAT as a separate item on the invoice. I wonder if they are still amending affected software. :-/

I can vouch that you are not only not an idiot, but you make one hell of a mega prim banana.

Sorry the VAT is payable . In July 2003 legislation came into force specifically for online services which means that the location of the customer determines the tax paid not the location of the supplier.
This has always been a difficult tax to enforce as it applies to non EU companies but many of the larger E-services companies already comply with this, Linden Labs is just the next company falling in line - probably easier to enforce because of their EU presence


see http://www.theregister.co.uk/2003/06/13/july_1_is_vat_day/ for an article explaining the legislation and the full details can be found on the HMRC website at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000922&propertyType=document

Can't wait til we move the servers to UK to allow gambling so we all have to pay VAT

I have a question....

For those British citizens that have BFPO in their address details should be tax exempt.... so why has no one explained this to LL?

Even Amazon have that system set up!

I have a rl business in Europe (The Netherlands) and have an official VAT number for my company. I make a decent amount of money in sl, but it has no relation to my rl business activities. Furthermore, my only costs in sl is the year account (72 USD) which I pay to LL. I have lands on private islands from estate owners, who live in the US. I pay tier to them.

So my question is: does the VAT measure only have influence on my year account (which will raise up to 86 USD because of 19/20% VAT tax in The Netherlands)? Or are also other things involved, like for instance money transactions (withdrawls) out of the game?

Someone should organize a letter or start a new thread collecting all the questions you would like to have answered when LL decides they are going to start communicating with their paying customers about this issue.

I'm the OP Raymond quoted above

From my understanding the VAT burden in your case is only on your Annual subscription . Money you pull out of the game will not have VAT applied to it, (though of course there is personal income tax implications but those have always exisited).

I too have a rl EU VAT registered business but my Tier and subscription are non business related so couldn't claim the VAT back in these cases. The chances are if I did try then if it was allowed I would be then stung for income tax on the benefit in kind .

Well, as long as the US$ is as low as it is at the moment (we get around 1.4 US$ for a Euro at the moment), the consequences of this VAT thingie are imho overseeable. If they calculate the tax from the US$ pricing, that is.

Any European resident pays VAT according to their country VAT % which LL will collect for that country the system is this:


Receiver: Provider: from Europe - Non-EU
European resident Pays taxes in provider country - pays taxes in receiver country
European company pays taxes in receiver country - pays taxes in receiver country
Non-EU resident No Taxes - No Taxes
Non-EU company No Taxes - No Taxes


simply meaning anything going IN the European Union gets taxes applied to it
anything going OUT of the European Union has either no taxes unless the receiver lives in a country that does apply taxes to it.

I've read every page that concerns this on my country tax website and this is where i got the information from.

I would have a guess that the reason there is no blog post or anything else yet, is because it is *not just* the EU that is going to get hit with this...

They simply have not finished the software and web-pages to show who pays what.
How many states are there in the USA with different sales taxes?

Friday night will probably be when they announce everyone effected.

as im an idiot Ray .... are you calling me an Idiot *lol*

When it comes down to it ... NON of us really know whats actually legal or not, or in deed wether that law would apply or how would be applied in each country.

It still brings me to say that in most cases VAT is paid in a certain way ... e.g. people who gamble at the horses pay VAT on thier stake in order to avoid paying VAT on any winnings as these means that that VAT is already paid.

Does this not count the same in SL..... as you have paid VAT on your MEMBERSHIP land costs are a result OF that emembership therefor should be exempt.

the Law is the Law ..... and i tend to think that LL will proberly Tax the US players in order to offer fair competition before the monopolies comminsion thow a paddy over why EU residents arnt able to compete with US residents due to taxation overheads.

OK, but Friday is not when anything suddenly becomes taxable. One question I didn't see answered above is this: When did tier fees start attracting tax? Not all of a sudden today, I don't think. So European residents are potentially liable to BACKDATED TAXES, potentially to whenever LL moved its accounting to Europe, or potentially to whenever electronic services ceased being tax-exempt.

There's a horrible thing to contemplate ...

The EU legislation which covers this came into force on 1st July 2003 - however , in the case of VAT issues the onus lies on the supplier not the customer - If anyone has to pay backtaxes and/or fines then LL would be the ones charged. However this would be very unlikely - HMRC do tend to take a more pragmatic view and if LL have come into line , its unlikely they would ask for back payments.