UK VAT Law

The EU views that differently -- in other words, that LL should comply with EU country pricing laws when pricing services it is selling to residents of those countries.

Be that as it may, that is what the current EU directives say, as signed into UK (and other countries) law. There are enough threads dealing with how unfair it is, about the lack of notice etc, however can we keep this thread for people in the EU trying our best to deal with the situation?

For one, I'm trying to get to the bottom of exactly how VAT registration would affect me, in terms of:

Reverse charging of VAT on electronic services from non-EU suppliers (LL)

How I would account for payments made in L$ to me, to the HMRC

How I would deal with payments from EU residents being theoretically taxable whilst non-EU payments are exempt in an environment where the location of a customer is unknown

As a tax-newbie, these are difficult questions for me to answer and having a sensible thread where they are discussed withoutapportioning blame to the EU / the UK / LL / EU residents etc would be extremely beneficial to me.

I totally agree, but there ARE, US companies with NO EU involvement that are collecting VAT on Internet purchases and presumably passing that on the the tax authorities in Europe.

They have been asked to do this and some of the cowardly bast... sorry, responsible companies are actually acquiescing.

Of course, a lot of Europeans gave the same indignant argument about banning European casinos by invoking American laws (not that I have any opinion on that issue myself.)

But we saw how much notice LL took of that. Guess how much notice they're going to take about the Eurotax collection issue. Given how eager they seem to be to set up a pointless office in Europe, and enthusiastically turn taxman's poodle in the face of outrage and indignation, I reckon they'll be phasing VAT collection into inworld transactions by Christmas.

It's hard not to conclude that their objective is simply self-destruction. It would be funny if it wasn't such a tragic waste of potential. Oh well, maybe googleworld (or whatever fills the smoking crater SL leaves when it finally crashes,) will have the sense not to go out of its way to needlessly antagonise its customers.

Not law outside the EU though. It has no legal force on me, not living in the EU.

/me shrugs

Actually they can't, because transactions in Linden are exempt from VAT, and therefore if you have a business and are being paid in Linden, you cannot collect VAT.

Sigh.

No, it doesn't have any influence on you as a non-EU, non-commercial entity. Yes, it does have influence on LL as a non-EU commercial entity both doing business in the EU and with employees and assets in the EU.

Now, can we get back to a discussion about what the law means to those of us actually affected by it? Or are we doomed to be dragged back into a discussion of how EU law doesn't apply to a US individual?

The law is an ass

- by the way for our american firends in the uk an ass is a donkey although I guess the US interpretation of 'ass' works pretty well too

It may be an ass, but it is also currently the law.

and you think I dont know that ????

I sold my land in SL because of it today so excuse me for trying to make light of a situation which to be very blunt makes me puke.

I'm not trying to make light of it. I'm trying to figure out how to work within that very law.

Actually, LindeX is an exchange. You are buying L$ from other residents, not from LL. Therefore the transactions are not taxable.

In addition, when you buy L$ on the LindeX, you are not increasing the amount of L$ in game. What you are buying are "second hand" game tokens from other individuals. Second hand goods cannot be taxed with VAT.

This is just speculation on the reasoning behind not taxing LindeX transactions.

However, LL does retain a commission on LindeX transactions. I see no reason why their commission is not taxed.

If you believe you have "employees in the EU", believe me you have bigger legal things to worry about than offshore VAT collection.

None of this should be subject to EU laws. Just because Brussels says they can tax something doesn't mean they have the jurisdiction to do it. Everything that takes place in SL takes place on servers located in the USA -- all transactions, all socialization, everything. If you take the view that this is "doing business in the EU" or "having employees and assets in the EU" if your customers or employees happen to be typing fom keyboards in Europe, then your "employees" should be compensated and benefitted according to the laws of the EU member states as well, your assets should be taxed under the asset tax regimes of the various member states and so on.

They do have employees in the EU - they have an office in Brighton, UK.

Yes I thought you were speaking about "business owners" *within* SL. Of course LL has to comply with all local laws in its EU operations, that is not open to question.

And this, I should inform you, actually _hurts_ European businesses. Because, you see, if a European business can _collect_ VAT on its products.. it also becomes exempt from it on its supplies.

But that's a legal issue. You'd have to get your VAT laws changed. LL can't do that for you.

My exact wording was



with specific mention of LL.

No. The whole business of L$ transactions is just something that LL has made up, and is their choice. VAT laws existed long before LL made the decision to make up a play money currency and plunge it into the legal ether by claiming that it has no value but still everyone can sell it. If LL were to make SL act like 90% of other business payment processors on the web, there would be no problem for European customers or businesses.

So you're basically saying SL should use RL currencies then?

Yes but you also made references to



and



Neither of these refers to LL, I believe.

No, those were part of my now-abandoned attempt to get the conversation back on to the topic of how best those affected by this can respond.

I'm saying that LL should work out a way that will enable European SL businesses to become VAT-registered, so that they can charge VAT to European customers - and in exchange, not have to pay VAT on the land used for their businesses. (And this wouldn't affect anyone badly - unless you have a large business, far larger than most SL ones, you aren't _forced_ to register for VAT, but you can choose to if you want to reduce your costs.)

LL have already done half of this, by allowing Europeans to enter their VAT registration numbers to register an exemption. The problem is that you in order to be VAT registered, you have to be able to collect VAT on your sales to Europeans. MDCs, and real money land barons, can do this - but at the moment people selling content for L$ can't. They can't identify European customers, and even if they could, it wouldn't have any legal standing because L$ has no legal value.

This is my complaint far more than anything about the actual VAT laws. The VAT laws are specifically designed to _avoid_ businesses being put into the position that European SL businesses are in now. The only reason why that is happening is nothing to do with European governments, it's entirely because of LL's decision to use such a bizarre business and currency model for SL. And I don't agree that "we should lobby the government", governments do not have to take account of every surreal decision made by a private company. The business of "Come, see, you can make real money by earning L$! PS They're worthless" needs to change far more urgently than any European laws, and it needs to change for far more reasons than just VAT.

As a result, LL need to finally pipe up and admit that L$ are a US$ equivalent, so that EU business owners can register for VAT if they choose. Then, they need to allow VAT-registered businesses in SL to instruct the SL engine to collect VAT on L$ purchases, using the address the buyer registered at account creation.

Only because LL says they're exempt. If they change their minds, and claim that it's a de facto currency...

Well, it's just the kind of suicidal thing they'd do

Up until last month they'd have claimed tier fees were exempt.