A little VAT question
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Kyrah Abattoir
cruelty delight
Join date: 4 Jun 2004
Posts: 2,786
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10-22-2007 22:50
I understood so far that since LL deal with Europeans they have to charge VAT, however, LL isn't actually charging my credit card or my paypal account. Since i have some extra credit on my account it's what is used to pay my land use fees.
So technically i am not paying LL , they are simply reducing their debt they have with me. so why are we charged VAT on what is in essence a debt??
Anyone could clarify?
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Perre Anatine
reflect..repent..reboot
Join date: 6 Jun 2007
Posts: 714
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10-22-2007 23:22
LL does not owe you a dept..you have simply deposited funds in your SL account. You have used your credit card or Pay Pal account to emplace monies in your LL account (this may be $L or $US). LL will withdraw funds from your account when they are due - whether they be membership fees or land fees. As you are in France they will simply remove from your account an amount which which is inclusive of your local rate of VAT.
Put it another way..LL will withdraw from your account what you owe them + VAT. Your SL account will simply become depleted faster...bummer huh!!
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Kyrah Abattoir
cruelty delight
Join date: 4 Jun 2004
Posts: 2,786
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10-22-2007 23:28
That's the thing, i haven't made any credit card deposit in 3 years.
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Chas Connolly
Registered User
Join date: 24 Jan 2007
Posts: 1,433
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10-22-2007 23:38
Those bloody Americans, eh.
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Kitty Barnett
Registered User
Join date: 10 May 2006
Posts: 5,586
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10-23-2007 02:01
From: Kyrah Abattoir So technically i am not paying LL , they are simply reducing their debt they have with me. so why are we charged VAT on what is in essence a debt?? You're being charged VAT on a service LL is providing to you. Where the money you're paying LL with comes from isn't relevant, the only thing that matters is whether you're an EU citizen or not. |
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Kyrah Abattoir
cruelty delight
Join date: 4 Jun 2004
Posts: 2,786
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10-23-2007 02:37
Yes but in essence i'm not even paying them. Hell i can't even ask then to send me a receipt so i can write them off my taxes as professional spendings.
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tired of XStreetSL? try those! apez http://tinyurl.com/yfm9d5b metalife http://tinyurl.com/yzm3yvw metaverse exchange http://tinyurl.com/yzh7j4a slapt http://tinyurl.com/yfqah9u
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Dnate Mars
Lost
Join date: 27 Jan 2004
Posts: 1,309
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10-23-2007 02:49
Actually, what is happening is that every time you cash out, you are getting income. Then you are using that income to pay back to LL. So, really, you should be getting taxed on the income and with VAT on the service.
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Kitty Barnett
Registered User
Join date: 10 May 2006
Posts: 5,586
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10-23-2007 03:27
From: Kyrah Abattoir Hell i can't even ask then to send me a receipt so i can write them off my taxes as professional spendings. You could try and ping Zee Linden inworld to ask for a progress update on that. They should have had that in place by now  . |
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Sling Trebuchet
Deleted User
Join date: 20 Jan 2007
Posts: 4,548
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10-23-2007 03:35
I understand that it is LL's intention to make proper VAT invoices available for download.
The VAT invoices can only be of interest to VAT-registered businesses.
As others posted above, the amount liable for VAT is the full tier amount.
The audit trail for the payment of those invoice amounts has to be clear.
Direct payments from a credit card account are straightforward.
Full or partial payments taken out of a US$ balance on the account will immediately bring the LL account US$ balance into the accounts as if it were a bank or cash account.
Any conversion of L$ to US$ balance is therefore revenue, and is subject to Corporation Tax.
It still concerns me that payments to LL will be for a mixture of VAT and non-VAT. It's going to raise questions.
An audit trail of US$ transactions is currently available - Account History.
LindeX Currency Buy tranactions may need to be broken down (by LL) into their service charge (and VAT) and the amount that presumably has been paid to 'somebody, somewhere'.
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Ace Albion
Registered User
Join date: 21 Oct 2005
Posts: 866
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10-23-2007 08:13
I'm not convinced that VAT is applicable. Based on UK VAT rules...
The only service which could be said to "be enjoyed from the location of the customer" is access to the SL grid.
Linden Lab does not charge for access to the SL grid. They haven't charged since June 2006.
Linden Lab hosts servers in California and Texas.
Linden Lab has a Business Establishment in San Fransisco (Head Office).
Linden Lab has a Fixed Establishment in the UK (branch office).
The only way Linden Lab can be said to belong in the UK, is if the UK office is the most directly connected with making supplies.
So, Linden Lab rents me server space in California. A company not within the EU, providing a service not within the EU. Whether I access it or not, or where from, is a seperate issue. Access is not part of the tier agreement.
Linden Lab doesn't charge me a dime (or even a shilling) for allowing me to connect to their US based servers. This is very different to services such as World of Warcraft, where the access itself is the service charged for. Likewise with ISPs- the crucial point is that in these cases, you're paying to be able to access a service from your computer in your EU country. Renting server space doesn't have anything to do with access.
So, what's 17.5% of $0?
On the topic, Linden Lab charges VAT regardless of where the money comes from.
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Incanus Merlin
Not User Serviceable
Join date: 12 Apr 2007
Posts: 583
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10-23-2007 10:25
From: Ace Albion I'm not convinced that VAT is applicable. Based on UK VAT rules...
The only service which could be said to "be enjoyed from the location of the customer" is access to the SL grid.
Linden Lab does not charge for access to the SL grid. They haven't charged since June 2006.
Linden Lab hosts servers in California and Texas.
Linden Lab has a Business Establishment in San Fransisco (Head Office).
Linden Lab has a Fixed Establishment in the UK (branch office).
The only way Linden Lab can be said to belong in the UK, is if the UK office is the most directly connected with making supplies.
So, Linden Lab rents me server space in California. A company not within the EU, providing a service not within the EU. Whether I access it or not, or where from, is a seperate issue. Access is not part of the tier agreement.
Linden Lab doesn't charge me a dime (or even a shilling) for allowing me to connect to their US based servers. This is very different to services such as World of Warcraft, where the access itself is the service charged for. Likewise with ISPs- the crucial point is that in these cases, you're paying to be able to access a service from your computer in your EU country. Renting server space doesn't have anything to do with access.
So, what's 17.5% of $0?
On the topic, Linden Lab charges VAT regardless of where the money comes from. Sorry to disappoint Ace, but VAT IS payable if you are resident in the EU.... there is an EU directive (dating from 2003 I think) which clearly states that for electronic services the taxation point is determined by the country of consumption (i.e. where you are resident), NOT the country of supply. Please note that VAT is a Consumption Tax, not a Sales Tax, so a different logic applies. Whether LL are based in the EU or not is largely irrelevant to VAT being due - but it IS relevant when it comes time for LL to remit VAT to the national treasury, since now they have a presence in the EU, enforcement action can (pretty easily) be taken against them if they fail to pay. They are required to account for/pay the VAT due on all EU residents' taxable transactions with LL. Inc
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Ciaran Laval
Mostly Harmless
Join date: 11 Mar 2007
Posts: 7,951
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10-23-2007 12:58
From: Incanus Merlin Sorry to disappoint Ace, but VAT IS payable if you are resident in the EU.... there is an EU directive (dating from 2003 I think) which clearly states that for electronic services the taxation point is determined by the country of consumption (i.e. where you are resident), NOT the country of supply. Please note that VAT is a Consumption Tax, not a Sales Tax, so a different logic applies.
The problem is that the directive doesn't clearly state that for electronic services the taxation point is determined by the country of consumption. Sometimes it does and sometimes it doesn't and I think that's the angle ace is coming from. |
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Incanus Merlin
Not User Serviceable
Join date: 12 Apr 2007
Posts: 583
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10-23-2007 16:36
From: Ciaran Laval The problem is that the directive doesn't clearly state that for electronic services the taxation point is determined by the country of consumption. Sometimes it does and sometimes it doesn't and I think that's the angle ace is coming from. True enough, Ciaran - it is a little complicated. But my reading of the HMRC Internet guidance is that, to all intents and purposes, if an individual is resident in the EU and is NOT using their SL activity as part of an established (and VAT registered) RL business, VAT is payable to LL on the VATable elements of LL's charges & fees. Inc
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"The wide world is all about you; you can fence yourself in, but you cannot for ever fence it out" - Gildor Inglorion, LOTR
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