UK VAT Law

VAT doesn't pay for health care, national insurance does.

R USA IZ BETER DAN UR EU PPLz!

Seriously, did somebody actually mention free healthcare in this thread apart from Chris?

I really don't understand why everyone is getting hung up on "cultural" differences.
It's quite simple -

26th September - Land Tier for all = US $75
27th September - Land Tier for US Residents = US$75, but for UK Residents = US $88.13 - an increase of 17.5% and for others in the EU the increase will mean that the same Tier now costs $93.75

Regardless of where the money goes, in effect, the cost of SL for EU Residents HAS increased (15% - 25%).

Since USA Residents don't pay any tax on internet services, the cost has remained the same for USA residents, but has gone up for EU residents.

I know that this isn't LL's fault, but it could have warned us in advance instead of sending an "after the event" message to only SOME (but not all) EU residents.

And, as I said before, the repercussions will have an effect on ALL SL residents. Think of it like this:

1. You pay rent to your landlord every month of $1000 (or whatever).
2. After all your other household bills are paid, you have $100 to spend on cookies.
3. You spend $100 on cookies - The Cookie Guy makes money!
4. The government (not the landlord) imposes a new tax on home rentals.
5. You pay rent to your landlord every month of $1100 (and the landlord gives $100 to the government).
6. After all your household bills are paid, you have $0 to spend on cookies.
7. You spend $0 on cookies - The Cookie Guy makes NO money!

In this instance, since the majority of SL residents are USA residents, then probably the majority of vendors ("cookie sellers" in SL are also USA residents. Which means that your sales will be affected by this sudden increase in costs for EU SL residents.

Please try not to moan too much when this happens (I'm assuming that Chris Norse does not sell stuff in SL, but if s/he is I wonder who'll be moaning most loudly!)

I think the reason why most EU residents are up in arms is the WAY that LL introduced the VAT charge, rather then the fact that they did at all.

Try to imagine a slightly different scenario -

The US Government introduce a 25% tax on "Internet delivered Virtual Worlds" that will be collected by the provders of those worlds at the point of sale.
This new tax is not widely advertised, so not many people actuall know about it.

One day, overnight, LL add 25% to all SL charges without warning, and then (as in AFTER the charge) send an email to a random selection of US residents (but not all of them).

Please tell me how you'd feel in those circumstances??

Of course from where LL is coming from they dont see the difference between VAT and sales tax and are thinking "Oh its like Sales tax, so well just start charging it tommorrow"

Yes its going to hurt everyone in the costs of Second Living. And its going to makes Europeans less competitive.

I think the reason why most EU residents are up in arms is the WAY that LL introduced the VAT charge, rather then the fact that they did at all.

Try to imagine a slightly different scenario -

The US Government introduce a 25% tax on "Internet delivered Virtual Worlds" that will be collected by the provders of those worlds at the point of sale.
This new tax is not widely advertised, so not many people actuall know about it.

One day, overnight, LL add 25% to all SL charges without warning, and then (as in AFTER the charge) send an email to a random selection of US residents (but not all of them).

Please tell me how you'd feel in those circumstances??

VAT IS the same as Sales Tax but I reiterate - What does it matter what you call it, the result is the same -
you're adding to the total cost of a product. To add to the total cost of a product, whether you decide to give half the money to charity, or you have to give half to the government is an increase in the total price

Id be very upset - I have - consistantly - supported people being upset over the lack of notice. I personally think LL should have absorbed the First months cost.

However - realisitically- if in the US a 20% tax was passed on Webhosting. Literally they would charge us on the day the tax came into effect. They wouldnt be required to give us notice at all.

In fact during the Clinton Administration they increased income taxes RETROACTIVLY - which upset meny becuase by tradition this was never done.

But it was legal. As long as it was for the preceeding tax year.

Exactly! - You'd be upset, and quite rightly. I'm just surprised that so many others seem to think that this is just us Europeans having a whinge about nothing, whereas for many it will create real problems.

In the US we tend not to view it as a part of the price. We take the tax cost into account, but we don't view it as a part of the price. This is a cultural difference. For example, LL sets one flat USD rate -- that is what we view as the price. If there wasn't a federal law prohibiting taxes on internet services, it's likely that some of our states would tax this, and the amounts would vary quite a bit from state to state. None of that is considered "price" here -- there is one "price", and what gets "tacked on" on top of that in terms of tax depends on where you live and the laws there. We just view this completely differently from the way Europeans do, due to our different tax system and, as a result, the different pricing conventions that have developed here.

Yes, I understand that - but in this instance, at what point would the tax be charged, if SL was taxable? - Would your local taxman call round in person, or would LL collect the tax on your state's behalf?
Whether you view it as part of the price or not, the result is the same - $5 price + $5 tax = You pay $10 - If you can't afford to pay $10, then you can't have it!
If say, the LL base price for a tier is $75 but your local tax on SL is 100% - whichever culture you come from, your cost will be $150

And, once again, I'm not suggesting for a second that LL should not comply with EU tax regulations - just that adding this tax to "the price" without any warning at all is very, very, very bad practice.

To play Devil's advocate though - in the US there really is no notification policy on taxes.

in the US there really is no notification policy on taxes.

Yes, I understand that - but in this instance, at what point would the tax be charged, if SL was taxable? - Would your local taxman call round in person, or would LL collect the tax on your state's behalf?

Whether you view it as part of the price or not, the result is the same - $5 price + $5 tax = You pay $10 - If you can't afford to pay $10, then you can't have it!
If say, the LL base price for a tier is $75 but your local tax on SL is 100% - whichever culture you come from, your cost will be $150

And, once again, I'm not suggesting for a second that LL should not comply with EU tax regulations - just that adding this tax to "the price" without any warning at all is very, very, very bad practice.

in my view much of the ire I see in these threads is misdirected. Blame your governments and their overlords in Brussels for having this silly tax regime to begin with -- you can rest assured, the folks at LL had no clue about this, and were likely just as surprised to learn as you were that they were supposed to be remitting VAT.

Your view would be justified if LL had not known that this was coming. However they did, they knew damn well it was coming and someone who tiered up or bought an island on September 26th did so thinking their tier payments would be as stated on the land pricing page, whereas LL knew this wasn't true. LL knew by this stage that VAT was going to be added. That's why people are angry with LL.

I doubt LL deliberately hid the costs. As someone else has already pointed out, part of that is probably down to cultural differences, but part is also due to the terrible handling of the issue.

Yes the total cost is increased, but I don't view that as LL changing the "price". That's teh cultural difference that you seem to be missing, sorry. Taxes are a part of your cost, but they aren't considered a part of the "price" here -- I'm just trying to explain to you how the folks in SF almost certainly view this.

We don't know if LL are deliberately hiding the costs, but I hope it is only a cultural difference. You would think that an international company with an office in the UK would check the trading laws of the country they are in. It will only take one person to report the Brighton office for them to be in trouble and liable for a hefty fine, resulting in a large amount of the extra collecting being taken away.

Funny thing is, it's the Brighton office who deal with the payments side of LL so there really isn't any excuse.

It's really a question of semantic differences then - "price" and "cost" and the definitions thereof.

If the folks in SF truly want to operate a multi-national, multi-cultural business, then perhaps they should think more about these cultural differences.

And as I said, legal or otherwise, if (or should that be when?) the US government imposes a similar tax increase on SL, and LL just tack it on without warning - we'll see what comments are generated then. I'm not too sure that USA residents will shrug and say "Hey, it's not a price increase, just an extra 25% tax to pay" and not get annoyed.

And back to the point about economics - the sudden impostion of this extra "cost" is bound to have a more serious impact on SL's economy than if LL had rolled this out more effectivley (think what happens to the economy of any rl country when the government increases interest rates by 25% overnight).

And as I said, legal or otherwise, if (or should that be when?) the US government imposes a similar tax increase on SL, and LL just tack it on without warning - we'll see what comments are generated then. I'm not too sure that USA residents will shrug and say "Hey, it's not a price increase, just an extra 25% tax to pay" and not get annoyed.