UK VAT Law

Did you tell him that LL have a registered business presence in Brighton, and that payments for said service are processed in England?

Part of Linden Labs is based in the UK (actually just down the road, can see em out of the window)

So why are we having to pay and receive in $US so we have to deal with lower exchange rates and exchange costs?

Interesting thing here is: If they are paying a company in the UK, those Americans should be levied with a 17.5% charge too .. by law.

Did you tell him that LL have a registered business presence in Brighton, and that payments for said service are processed in England?

Why are people upset it wasn't on the blog? If you are affected haven't they sent you an email? If you are not affected why would you want to know?

I got mine yesterday, which I'm happy to say is the day after I upgraded to annual membership and paid my first sub.

so the european should get a really close american friend and in exchange for the american friend simulating land ownership to the Lindens for the european friend, the european friend in return buys more lindens with euro for the american friend because the dollar is so cheap.

your world, your imagination right?

And actually I think Linden Labs is seriously wrong about this issue. Let me tell how VAT system in Finland works:

There is VAT-registered selling company AA which has V.A.T Code number 111 and there is purchaser BB who is also VAT registered and has V.A.T code number 222. Both of these VAT registered informn montly (yes every moth) about their VAT sales and purchases for tax burecracy and pay them monthly.

Ok so company AA is selling product. Products costs 10 euros and VAT 22% is added so total sum is 12,2 euros. Purchaser company BB buys membersip and pays 12,2 euros to company AA.

So companies enter transaction to heir ledgers and inform VAT tax burecracy.

Company AA
We have VAT sales for company BB V.A.T code 222 total 2.2 euros during September

Company BB
We have purchased products from company AA V.A.T code 111 which are under V.A.T total sum 2.2 euros during September

Company AA pays to VAT tax to Finnish tax burecracy total sum of 2.2. euros for September VAT sales

Company BB get from VAT returns from Finnish Tax burecracy total sum of 2.2 euros.

There are no freaking VAT exemption in Finland (Linden Labs is saying that if you have VAT code you inform that and we dont claim it). If they are claiming it they have to claim it for every product/service sold. They also have to inform monthly Finnish tax burecracy about their VAT sales and if there has been VAT registered purchasers. Tax Burecracy of Finland then returns payd VAT's to VAT registered parties or companies.

My tier is due in two weeks, so not everybody got a month's notice. Haven't heard from anybody whose tier is due in the first few days of October yet. Anybody?

One of my estates fees are due on the 7th Oct and I only got email notification today, so i somehow have to find the 17.5% of $295 (which I assume it will be) in a few days and my other sims fees are due on the 13th....so thats about $104 I need to find from thin air in a fortnight.

That applies to goods, SL is a service not goods. Arguably falls under VAT Act 1994, Schedule 5, Paragraph 7A as a telecommunication service originating outside the UK and is therefore vatable.

The reality probably is that no-one knows whether SL is vatable. If they get it wrong LL's UK (and EU) operations could be in serious trouble. My guess is they are playing it safe.

Interestingly, the premium subscription rate does not seem to have changed, at least on my account, and I paid my annual sub yesterday. I cannot see why tier payments should be treated any different for VAT purposes than the subscription.

Did you tell him that LL have a registered business presence in Brighton, and that payments for said service are processed in England?

Yeah but there's a basic problem here. Previously everything was presumably taxed at source. So everyone paid whatever is due in San Francisco or whatever and we had a level playing field.

Now all of a sudden SL isn't level. It's lucky dip depending on your local taxation laws. It might seem like small difference right now (especially if you're American and so far uneffected). But wait see how it pans out over time. You'll see quite a cultural shift in who can be bothered to sell and spend in SL.

And the worst case scenario? I'd imagine LL bungles it so badly that UK VAT is payable.. and since that means the UK technically is the service provider ... won't everyone be liable for the 17.5%?

No. It doesn't "make it clear".
If you wade through:

http://customs.hmrc.gov.uk/channelsPortalWebApp/
channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id
=HMCE_CL_000346&propertyType=document

You'll see that the place of supply in this instance seems most likely to remain in America.

"1.5 What is “place of supply”?

For VAT purposes, place of supply is the place where a supply is treated as being supplied, or made. This is the place where it is liable to any VAT. There are a number of place of supply rules for determining where services of different kinds are made.

* Where the place of supply of services is in a member State of the European Community (EC), that supply is liable to VAT (if any) in that member State and in no other country. If the member State is not the UK, such supplies are said to be “outside the scope” of UK VAT.
* Where the place of supply of services is outside the EC, that supply is made outside the EC and is therefore not liable to VAT in any member State (although local taxes may apply). Such supplies are said to be “outside the scope” of both UK and EC VAT."

Sorry but case not closed.

PS. If anyone in the UK buys web-hosting services from America, I'd be intrigued to know if you pay VAT. The few sites I've checked claim that local taxes only apply. That is the tax of the state in which the web-hosting company is registered.

Yup I've read that page as well.
For one thing "it is not legally binding on member states". So the HMRC's other documents may well override it.
That guidance is also intended for UK suppliers trading or intending to trade on the internet.
The guidance note specifically gives no guidance for a UK individual receiving a service from outside of a UK / EU country.
It doesn't address my situation of being a UK receiver of an American service.
So you can't just quote it as something to look at and throw your hands in the air yet.
You'd be better off looking at the longer document that I already quoted
... OR ...
POLITELY Raise the issue with HMRC via email.
Give Linden Labs address as the supplier and ask if VAT is due on access to a specialised database located in America.
The software is free and is not part of what you are paying for.

To : [email]Enquiries.estn@hmrc.gsi.gov.uk[/email]

Re :
Linden Lab
945 Battery Street
San Francisco, CA 94111

phone (415) 243-9000
fax (415) 243-9045

And copy LL in if you feel the need.

What is their Brighton address?

A friend of mine has been looking for it because she wants to raise some questionable VAT and related contract issues with Consumer Direct, but they won't deal with a business based in San Francisco. CD are a government funded service and basically the first point of call before Trading Standards these days.

http://www.consumerdirect.gov.uk/

I did a search and only came across other people looking for the Brighton address for various tax reasons!