VAT-Another one bites the dust.

well you'd have to stop charging VAT to people when they buy Lindens, too.

Otherwise in order to save VAT registered business's 20% on tier - all Euros would have to pay VAT when buying lindens AND pay VAT when making purchases.

Oh pish and nonsense. All nations have restrictions. This directive was introduced to encourage European business to have a level playing field, platforms such as SL weren't much of a consideration in 2003.

You think American laws aren't around to protect American business Chris?

Count 'em out, ride 'em in,
Ride 'em in, count 'em out,
Count 'em out, ride 'em in
Rawhide!

The time and costs of complying with the laws are an added weight upon the EU business owner.

Just because the EU requires all the horses in a race to wear hobbles, does not mean that the competition is free, just that those who are better are kept from realizing their own potential.

And the consumers suffer because of those laws. I would repeal every one of them, but then I would repeal every law passed since 1900.

Because EU business who sell to the states don't encounter trade restrictions. Again, balderdash.

Is LL's buying system sophisticated enough to do this?


Right now by what Yumi is saying they are treating all Europeans as consumers, rather than businesses.

In the US when you sell something you aren't required to differentiate between the two.


To do what is being Suggested LL would need some kind of program following all the EU customers around and collecting VAT every time they spend a $L.

As far as I know people _aren't_ changed VAT when they buy L$. But yes, you're right - VAT should be charged when the money is spent, whereas converting it to L$ is just currency conversion. (I don't _think_ you have to pay VAT on converting currency.)

When you buy L$, the only thing you owe VAT on is the 30 cents fee (and when you're selling L$, the only thing you owe VAT on is the 3.5% fee).

And LL is eating the VAT cost there so nothing really changed when it comes to buying/selling L$.

But these laws exist and they exist both sides of the atlantic. One day walls will come tumbling down but right now we're in a situation of local jobs for local people.

Good point Collette, who is going to decide if they bought that prim penis for business of pleasure? Is the software that good?

All businesses have lots of tax paperwork to do. I don't think VAT adds that much more to be honest.

I don't think it matters they would have to pay always?

Even if they do pay always i'm not sure the software infrastructure even exists.

what i'm saying , if your right and this is the right way to do it - Second Life probably cant do it yet.

It would require some big coding changes, wouldn't it?

Um, LL can just embed it into Second Life itself. Any time an item is bought from a vendor (ie, with a "buy" or "pay" control), by a Euro customer, VAT is charged on it. Yes, you can get around that by paying the selling avatar directly, but "cash in hand" exists as a tax dodge in the real EU as well, and it isn't used as a reason to not collect VAT on any other transactions.

As for differentiating between business and consumer purchases - that's actually the business' responsibility. They have to report all the VAT-exempt purchases they made to the taxman.

Well I have to agree with the redneck here. I was talking to a guy last week about volunatary VAT registration as he's self employed and he said it would cost him more in accountancy fees than it was worth.

For a RL physical business in the EU, this can often be the case. If you don't register, you have to pay VAT on your supplies, and then recover it by increasing the prices you charge your customers. However, since you are in the EU, for trade in RL physical objects you are only competing against other EU businesses, all of whom are charging VAT too, so this doesn't mean your prices become uncompetitive.

If I pay someone's tip jar, I don't owe VAT on that though.

Just because you're paying/buying something doesn't mean you actually owe VAT on that transaction.

How could LL keep a hold on that? They couldn't.

They would have to charge it on everything. Including direct resident to resident money transfers

Since otherwise you could perform tax evasion simply by paying creator directly.

Wouldn't this idea end up costing Euros far more than the system LL put in place?

Unless you are a VAT registered business ...

Right now in the EU you dont have to pay all this VAT on every thing in SL, just your tier.

And theres probably a lot in the EU who don't pay any tier ..

Call me confused... Maybe someone discussed this somewhere in this thread.. if so I missed it... Here's my question:Linden Lab is a US company.. To my knowledge, it has no corporate presence in EU..
How in the heck can EU force LL to charge VAT? Unless they're doing it as a courtesy to EU.. I know here in the US, all the states would LOVE to get everybody paying sales tax on things purchased via the internet... But nobody (in their right mind) does.. The only time you get dinged for sales tax on internet purchases is if the company you are purchasing from has a "presence" in your state.. All I can say, if my "costs" to live in SL were to increase 20 flippin' percent, I'd be out of here so fast my head would swim.. I suspect that will happen a lot to the folks from the EU as time goes on..

Tas

LL has a UK office, so they're vulnerable to the law in the UK.

The EU VAT act actually says that, if a purely US-based firm refuses to co-operate with the law saying that they should charge VAT to European businesses, then the EU can take sanctions against them, including blocking their shares from trading on EU stock exchanges, and refusing to enforce the US company's copyrights in the EU. However, I don't believe any of these have even actually been used.

Rather than just quoting selectively, I transcribed the whole relevant questions from Zee's voice town hall so it's more reading but you'll get the context and can draw your own conclusions about whether they do or don't have an registered LL office .

(Punctuation is my own guess obviously, based on my tone)

Q: Can I ask whether LL have voluntarily decided to follow EU rules, or did the EU approach LL?
A: We're trying to be proactive here: we have not been contacted by any authorities on this subject, but we did recognize - while completing our own audit - that this is a liability that was growing, much more rapidly than we expected it to.

In the same way we weren't contacted by anybody to shut down gambling, we weren't contacted by anybody to comply with VAT.

Q: Why haven't you created a general tax like iTunes? No matter what country you come fom, it is the same taxes, no VAT.
A: I wasn't aware of that. I don't know how they handle that because in the US - when we charge a sales tax - we have to charge it wherever the local jurisdiction is (when I say we, I mean "us" in general because Linden Lab isn't obligated [Comment: guess on the word "obligated", the actual word was garbled and I could only understand the -iated] to charge local sales taxes in the US).

What iTunes may be doing, what you may be referring to, is we've subscribed to what's called the "special scheme" under VAT rules. Under the special scheme we don't have a EU company, we've just registered with one country to pay VAT and so the special scheme makes it easy because then we just collect and remit to the one country who then redistributes it to all the other EU countries and with the special scheme we charge at the rate of the country of residence of the end-user.

What iTunes may be doing is that Apple may have an entity in for example Luxembourg and then in Luxembourg they charge at a 15% rate regardless of where you all live in the EU. That could be what you're referencing, and for now, because we don't have an entity in Europe, we're using the special scheme and because we're using the special scheme we basically pay the VAT that's required by where you live.

I hope we can get to that point too, because Luxembourg has a much lower tax than other countries, for example.

Well the other option was to let the liabilty snowball til one day LL suddennly pulls the plug overnight and goes into receivership when presented with responsibility for mass tax evasion? Sounds better huh?
If you earn an income, you pay tax on it, simple, if it's a loss, it will get credited back on your tax return. Be glad of the money that people have recieved tax free for the last few years, but then the taxman may knocketh for that one day too.

The difference (or problem) is, that LL for example doesn't offer receipts that meet the requirements of the german tax authority - therefore I wouldn't be able to get the payed VAT back. Therefore charging VAT this way is illegal.

So did they (LL) approach the relevant authorities to let them know they were charging VAT? Surely there is some procedure they have to follow, paperwork to fill in etc. They must have an audit trail. If they are registered as a business in the UK this information (inc their accounts) is available to joe public as they must be registered with Companies Houes.

Ciaran might know more than me about this and correct me if I'm wrong.