VAT Nonsense = Non Renewing European

What on earth is going on here?

I live in Europe, but I sure as hell am not going to be charged European VAT by a company that is neither European, or even based in Europe. I've run a business long enough to know this is nonsense.

They're not getting a penny in VAT out of me, that's for sure. It's up to the companies based in Europe to charge VAT, and European VAT laws have no power over non European based companies. Get your fact's right.

How do I clear my credit card details to avoid auto-renewal, please?

When this bullsh*t is finally revealed for what it really is - then I might re-join.
Until then, I'm outa here - so again, how do I clear my details?

Whew - this topic is like the Energizer bunny

While I completely agree that you have *plenty* to be upset about - Linden Labs recently opened an office in Brighton, UK - hence the new VAT dilemma.

Go into your account on the website and follow the link for updating / changing your payment info.

It will warn you that it is going to delete the current info. Accept the warning and then after the current info is deleted, just don't enter any new info.

-Atashi

Click on the SecondLife logo at the very top of this forum. This takes you to the main SecondLife page. Click on 'my account' on the top right. On that page, on the right again, click on upgrade/downgrade my account.

Actually you can go to updated payment method to clear out your credit card information.

you people's is fast...

Go to your 'My account' page on the SL website and payment info. This should let you remove your CC details.

Actually it isn't nonsense - there is apparently an EU directive from 2003 to collect VAT on internet service from no-EU companies selling to EU members.

Well, actually it *is* nonsense but it is nonsense from Brussels (no surpise there) rather than LL.

On the other hand, increasing fees without notice in the manner that LL has done is indefensible, breaks a previous commitment from LL and in many EU states is illegal.

Matthew

This is getting very surreal



OP:

- Second Life / Community/ My Account
- Right-margin menu
- First option under Membership is 'Cancel Account'
- Click that and confirm

then

- Top right-hand corner of the window
- Little 'X'
- Click

That's a good summary of the issue.

Ironically, if I understand this correctly, the tax only protects Europeans from LL's competitors. Think about it: this protectionist tax is designed to level the playing field between non-European companies and European companies - but it doesn't take into account the micro-economy inside SL, or any other virtual world. Assuming all things were equal in quality between There, ActiveWorlds, SL, etc. and some European virtual world, the European virtual world would be at a price disadvantage in a VAT-less world. But here comes VAT to save the day! *eyeroll* VAT imposed on these other worlds allows the European virtual world to compete with the others, but at what cost to the Europeans inside the actual game?

If this were any other game, this would be a non-issue. But because there is an actual economy inside the game with real money at stake, it's a huge issue.

oh well, if no-one else is going to ask....


Can I have your stuff?

Inc

It must be monday morning. I can't believe another thread on VAT is open.

I really do hope LL gets taken to task for this. They are showing an increasing mixture of incompetence/smug arrogance that really makes wanting to continue to do business with them an issue.

Well then perhaps they'd better close it again. Out of curiosity though, what is their excuse for a 'virtual' based company having to open an office in Europe in the first place? Please don't let technical support be one of them, because they could always set up a freephone number to America - it's a lot easier than creating a totally unfair situation such as this (and a heck of a lot cheaper too).

Thank's to all who have replied, and sorry for my tone, but it's about time these Linden's got their arse in gear and considered the unfair consequences of such stupidity. There is no real reason for needing to open an office in Europe. Whatever it's intended to do, could have been done in the office they have, or another office in America.

This is totally inconsiderate stupidity on their behalf as far as I'm concerned.

How will VAT affect the mega land barons from the EU such as Anshe Chung. Do these folks have special deals with SL such that SL can't raise their rate

Mmmm, why might that be do you think?

I wonder what the forum discussions would have been like if LL had actually thought through its communication strategy in advance and sent an e-mail of the form:

"Under the 2003 EU directive xxx, non-EU companies such as LL are required to return VAT on internet services such as SL sold to EU citizens. This has meant that the revenue recieved from EU accounts is significantly less than that received from elsewhere. Due to the recent increased growth and interest in SL from the EU, if is unfortunately no longer economically viable for LL to adsorb VAT, and it is with extreme regret from LL will have to increase fees for EU accounts inline with your countries rate of VAT. The new fees will come into effect from 1 December 2007"

Or something along those lines.

Matthew

Exactly. The very position this law was introduced to prevent, has actually put EU business people inside SL into that position.

The only issue with LL is that as they are now good UK/EU business people they have to comply with this law. Whereas if they'd stayed in California they could have stuck two fingers up at it.

It won't - Anshe Chung is probably a registered business in RL with a VAT number anyway, and therefore could claim VAT back.

The irony here is that those with a large enough financial hit due to the increase to seriously consider making a legal move against LL for lack of notice, are the ones most likely to be able to reclaim the VAT anyway.

Matthew

Well last time I checked Anshe charges by Paypal. She's almost certainly a VAT registered business, she would be able to pass the VAT charges on in that circumstance.

Alternatively she may run her business out of China, I'm sure someone said she has an office in China.

Well Anshe has ALOT of land vacent and has lowered prices alot lol
guess they are feeling it now

It's not nonsence.

The E-Business Directive passed by the EU in 2003 makes them responsible for collecting VAT from EU customers.

Other companies (AOL, Ebay, etc.) do the same.

This Directive became enforcable when Linden Lab setup office in Brighton.

If you'd like to put pressure on the government to abolish this Directive when it comes up for renewal next year, please follow the link in my signature and sign the petition. If we get 200 signatures, we get a government response.

If you're not British, you won't be able to do that, but you can still contact your own MEP to register your disgust at a misguided Directive that effectively punishes European users of innovative global products that have little to no competition.

She does. It's registered in Wuhan.

There was a payment structure overhaul in Dreamland last month which resulted in 16m2 squares being carved out of resident's parcels for payment boxes. Information appeared to suggest that Paypal support was being withdrawn, but the anshechung.com website still have Paypal subscription buttons.

Can anybody explain exactly what happened last month, to stop my imagination running riot and attempting to conclude she was tipped off about this whole VAT thing in advance.

You're all heart, aren't you?

Actually, that's a good question.
I've got 512 Square Meters and custom built designer house to get rid of.


Like I said...

Perhaps they'd better close it again. Out of curiosity though, what is their excuse for a 'virtual' based company having to open an office in Europe in the first place? Please don't let technical support be one of them, because they could always set up a freephone number to America - it's a lot easier than creating a totally unfair situation such as this (and a heck of a lot cheaper too).

Thank's to all who have replied, and sorry for my tone, but it's about time these Linden's got their arse in gear and considered the unfair consequences of such stupidity. There is no real reason for needing to open an office in Europe. Whatever it's intended to do, could have been done in the office they have, or another office in America.

This is totally inconsiderate stupidity on their behalf as far as I'm concerned.

You mean that someone who has actually made an actual living-income profit from Second Life may have become friendly with Linden Labs workers and use obtain inside information from these relationships? That's unprecedented!

The tax is meant to level the playing field for European businesses, not European consumers. Too many people were using American products because the price wasn't taxed. Internet Providers like Freeserve were kicking up a stink because AOL were providing the same service for less because they didn't have to pay VAT.

The EU clearly didn't have massively multiplayer online games with internal economies in mind when they passed the Directive. Paying VAT on a £13 monthly WoW bill is peanuts. As is the VAT on the average monthly broadband bill. But when consumers are paying hundreds of dollars a month for sims on a non-profit basis, it puts them at an enormous disadvantage.

Very short sighted legislation, the impact of which was never going to be fully felt until enough consumers were buying digital services from American over the internet. Nothing like a massively multiplayer game to make us all sit up and take notice.

It does raise an interesting question.

Normally if you are VAT registered although you claim VAT back from anything you buy, you have to pay VAT on anything you sell. If you business is making a profit you'll be selling more than you buy, so you end up paying the VAT man anyway! You only end up getting money back from the VAT man if you business is buying more than it is selling, which typically means you are running at a loss (or cooking the books).

So if you don't have to register for VAT because your turnover is too low, it is often not worth doing so anyway [Note to those in the US, this is another difference between VAT and sales tax - if I were to buy a service from a small enough ISP with a low enough turnover, VAT may not be applicable even if that ISP were in the same country]

However, Anshe Chung being a registered business should have no trouble getting VAT registered if they aren;t already.

Any payment in L$ is not liable to VAT.
The Lindex is apparently also not liable to VAT (either buying or selling L$)
Moving US$ out of your account is not liable to VAT (LL is not "selling" you anything) although is liable to income tax.

So this seems it might be a scenario where you can make an income which is not liable to VAT, but still (presumedly) claim VAT back.

The EU VAT office likes to receive money, not give it away, so if this is the case, I suspect the EU VAT office is not going to keep paying out a VAT reclaim to a business which apparently is perfectly healthy without investigating. It could be "interesting" to see how they plug the loophole.

Matthew