Transactions between two residents not subject to VAT tax, correct ?

Is it true that transactions strictly between two residents is not subject to the VAT tax, correct ? Thanks in advance for your time.

Steve

That is correct ..... for now)

Absolutely, definately, probably, maybe.

I suspect that L$ transactions are definately not subject to VAT.

RL$ transactions, would probably depend on the nationality of both residents and whether the seller was registered to collect VAT with their government.

Of course, IANAL etc etc disclaimer stuff.

-Atashi

if linden transactions between avies becomes subject to VAT ... will the EU accept lindens?

or will they be opening up a EU tax office in sl where you can pay your linden VAT tax?

You can only charge VAT if you are VAT registered.

LL doesn't deduct income tax from L$ sales either, but that doesn't mean you don't need to declare it and pay taxes on the income.

Or in other words: don't look at what LL does or says for guidance, they're only going to look out for themselves and if that leaves their residents in a legal vacuum that is nothing they're going to loose sleep over (they wouldn't even be allowed to give legal guidance anyway).

The only person who could give you a definite answer is your own lawyer.

VAT Tax? Brought to you by the Department of Redundancy Department

/me is watching his mailbox for a 1099 form from LL

I was actually wondering today where some of the "older" posters had gone too.

Welcome back (or if you're just poking your head out: nice to see you're still around )

They don't deduct income tax because we are not LL employees. Technically we are self employed and should file a schedule C.

L$ transactions between residents aren't subject to VAT apparently. If you're using paypal, that's a whole different kettle of fish.

However if you're not turning over something like £64,000 you don't have to pay VAT anyway. I think!

Please be careful to distinguish between "aren't subject to VAT," which is a legal opinion that LL has no control over and "LL isn't collecting VAT," which is a statement about LL's current practices.

A number of people have been saying the former when they really mean the latter. It's the type of statement that could get people into trouble.

I'll go further. Let's suppose that transactions between residents ARE subject to VAT. In that case, LL's responsibility could be limited to providing the records to the taxing authorities. A resident running a business in SL is likely to need to collect the tax and pay it directy, without going through LL at all. Just as a person who operates a store out of a rented storefront is responsible for collecting VAT or sales tax, not the landlord who rents the storefront to the shopkeeper.

humm....

L$ transactions aren't subject to VAT (currently...)

transferring L$ into your Paypal = income, either personal or business. Then the RL $ falls subject to whatever taxes apply in your home location. That would apply worldwide I would think.

Within the EU, if you reach £64000 turnover (or whatever the figure is) you are required to register for VAT. That entails you operating the VAT scheme, basically paying VAT on your sales less the VAT you paid on your purchases.

If you're not registered, you can't claim any VAT back on your purchases (except for a few specific circumstances like exporting your possessions abroad, supplies for the disabled, and so on)


Confused you will be

Inc

And now I've just had a thought, that EU players looking to dodge VAT will be increasingly tempted to buy lindens off of eBay or some other source which may very well have been obtained through credit card theft or other fraud.

If an American and a British or German trade paypay for lindens, is that illegal?

At the very least its going to support a black market in linden currency trading.

True, but the statement from LL is:

"Transactions in L$ between individual Residents are not subject to VAT."

So they don't say they're not collecting them, they say they are not subject to VAT. Now obviously they could be wrong about that but the LL message is not that they're not collecting them.

sif im going to bother with vat

Transactions in a virtual currency are not subject to VAT.

Any service delivered to a EU resident by a registered company IS subject to VAT though, for the RL value of the service.
As it's not possible in SL to know who you're dealing with (anonymity). The only real identity you can deal with is LL.
Which means all services are eventually delivered to LL (as a mediator), and paid for by LL. (Your L$ cashout).

According to tax rulings. Services delivered to a non-EU company are subjectable to VAT based on the location where those services are performed (within EU: yes, outside: no).
Location is a pretty vague thing with a virtual world...

I assume though, it's possible to use the LL VAT registration to be exempt in this case. (Just as LL does for billing)

Also, when services from a eu based company to LL are subject to VAT. This has to be 'chained through' to a EU consumer, if LL is again selling this service to the EU consumer. Meaning, L$ sales from LL to eu residents are then logically subject to VAT too. There needs to be a 0 balance in the end. (Only consumers pay VAT eventually)


When we turn it around, based on the concept of VAT for LL this means:

1. Every EU consumer pays VAT on any service/good they buy, while in their country of origin. (Since 2003, this includes services from provider outside the EU)
2. If a EU consumer buys 300 euros of L$, and uses these to buy stuff/rent land in SL. This is a provided service, and is subjectable to VAT.
3. As it's impossible to distinguish WHO is delivering/receiving which part of the service (the actual L$ transactions. LL is the only legal entity here. If LL claims they're not delivering the services, but others are, then they need to provide a way to transpose these VAT taxes to the people actually delivering the services. (Basically impossible)

Officially, LL can ask for VAT from EU consumers, then EU companies (not residents), need to charge these VAT taxes to LL again, which LL can deduct as expenses. But current VAT laws, are not able to handle this correctly. as it's completely unclear who's performing which part of the service to whom. (US residents are not paying VAT/ EU residents are.. etc.) The L$ economy completely obfuscates this atm.