VAT-Another one bites the dust.

Is the VAT thing a fairly new procedure, or has it been charged since the inception of SL?

Only recently (last few months) did LL start paying it.

You obviously have no clue as to what is actually involved in providing the infrastructure for a service like SL. The "server" you seem to feel is so easily added is actually a great many servers providing the sims themselves, database servers for the asset system, backup servers for failed servers, various management servers not to mention routers, switches, network cabling and we haven't even tried connecting to the outside world yet which adds another layer of servers, routers and switches as well as the physical connection to the service providers that link SL to the Internet. And then there is the need to provide a link between the "server" location in Europe and the central office in the US.

So no, you can't just put a server in Europe.

/me whips off her pants and waves them in salute

Cheers Colette, I can see how it has cause upset and why there's been a big hoohaa about it. The law is the law, but still it can be a bitter bill to swallow especially for those that have been residents for a long time and all of a sudden the VAT rule is invoked.

Being new I'm all VAT'd up so I know my limits.

Maybe he was a former Vichy-French?

Ooohhh nice. Now we have an alternative to Godwinning a thread....we can Peitan it.

Too obscure

Fiona, I don't mean to be rude, but you really have no clue what you are talking about. This subject has been beaten to death time and time again. Just search some old threads and you'll get many of your answers.

Simply, Linden Labs is charging VAT because they HAVE to, not because they want to. Charging taxes is NOT a money making venture. If anything, it is cost since it requires additional accounting, something they certainly have no interest in doing.

If you want to continue to express your anger towards Linden Labs, then go ahead. I hope you get it out. Just know that the reality is your anger is displaced.

Actually, before a few months ago LL was paying the VAT out of pocket without passing the fees on to the EU residents. It appears that it no longer made economical sense to keep this practice up, so they are now passing on the fees to the users.

I'm not so sure, I thought it was they didn't pay it at all till a few months ago.

Since that time they have been paying it and eating the cost

And it now no longer (after a couple months of that) makes economic sense.

OK, but almost an open and shut book! The question of items purchased abroad has been contentious too, because they can be liable for import duty, even if purchased on Ebay. So if I buy a sim, I'd be liable either for VAT or import duty - it all depends, i suppose, on where it actually became mine - in the LL servers or on the PC in my RL agents premises!

Out west where it is less congested, the speed limit on many interstate highways is 75 mph.

For a number of years 55 mph was mandated from the federal government, states had to comply or else not get highway assistance money.

some states weren't all that strict complying, Montana if I remember correctly had a 10$ ticket for highway speeding for a long time.

Some time in the around 1990? the 55mph rule was removed and thus you get the 65MPH and 75 MPH in places you see today. (Montana for a while experimented with no daytime limit on some highways IIRC)

I'm near a main highway that has BOTH- 55 & 65 MPH. Just depends where you're at. Less populated sections get the 65 MPH.

Doesnt matter anyways... just about everyone does 75-80+ MPH

The whole 55 MPH thing came about during the 70s when the USA had its lil' Gas SHortage. Heh- I remember those days. Just not the reasons behind it till I watched it on The History Channel.

Because LL have totally failed to follow the intent of the law.

If LL were going to implement VAT fully in Second Life, they should have:
* Automatically collected VAT on in-world L$ transfers.
* Allowed reports of this collection to be given to European business holders, so that they could VAT-register and obtain exemption.

At the moment, European business holders can enter their VAT registration, but this is useless in practice because the SL platform offers them no way to meet the legal obligations they need to meet in order to register.

Doing the above would make VAT work the way it's supposed to work: European businesses can compete for US customers on fair terms, because since they don't have to pay VAT on their supplies, so they don't need to pass on the cost and can price competitively. Meanwhile, European customers have to pay VAT whether they buy from the EU or from the US, so there's fair competition there.

The VAT law is not LL's fault, but LL's implementation of it most definately is.

Okay as it is now

You own land thats $100 US a month +20% VAT = $120

You buy $100 US in Lindens + 20% VAT = $120

You spend those $100 US in lindens on stuff.

Total bill is $240

--------------------------------

As you describe it

You own land thats $100 US a month +20% VAT = $120

You buy $100 US in Lindens + 20% VAT = $120

You spend those $100 US in lindens on stuff + 20% VAT (so +20)

You get to claim those business expenses off - 20% VAT (so -20)

Total Bill is $240


-------------------------------

Whats the difference?

Your example only relates to European consumers, not businesses. If you're a business, here's how it goes:

*Current Way*

You own land that's $100 US a month + 20% VAT = $120.

You sell on average 100 items a month, so each must sell for US$1.2, or around L$320 each.

Your American competitor owns the same amount of land and sells the same number of products but has no VAT to pay, so they can sell for US$1 each, or around L$266.

You must either accept having less land or be undercut and go out of business.

*Correct (in EU law) Way*

You own land that's $100 US a month, but are VAT registered so you do not have to pay VAT = $100.

You sell on average 100 items a month, so each must sell for US$1, or around L$266 each. However, whenever SL detects that a European customer is buying an item it automatically charges them the extra 20% and they pay L$320. The extra money does not go to you, it goes to LL's VAT account, and you get a statement for it every month to show the taxman in your country.

Your American competitor charges the same price, L$266. When a European customer buys from them, the 20% is added just the same, just as the law says it should be.

You can match your American competitor in terms of price in every way, and US customers can still benefit from getting cheaper prices.

The difference is it's much easier to point fingers at LL and place blame.

Okay I see the difference now. But wouldn't LL have to admit the L$ is money in your scenario?

Basically what it seems Yumi is saying is that the VAT should be charged on all in world purchases made by EU customers, basically like a sales tax would be.

Or alternatively, we'd like LL to make representations to point out the anomaly.

Ok, Yumi say your EU business owner only uses 10% of his land for business purposes, it is all owned by the same group name. The other 90% he uses for personal use. How are we gonna keep tabs on that? Hire "Taxman" Linden to go around and ensure that all EU business owners are using all of their land for business purposes?

Equality and fairness do not exist outside of the minds of humans. Like it or not, the EU members of SL live on an unequal playing field, their nations saddle them with restraints to free competition.

Nope, the EU has their own tax inspectors for doing that. How or if they would do that for virtual worlds I don't know. But I do know that if it became public that the EU were refusing to allow virtual worlds to be VAT exempted because they couldn't be bothered to inspect them, that would be fairly controversial and it would be in the EU's court, not LL's.



Nope, those laws are exactly intended to encourage free competiton, when they are properly applied.

Perhaps. I don't know - we'd have to see how it works for other credit based systems (like Air Miles). But even if it would require LL to do that, it's still their choice not to.