Questions LL should answer re. VAT

I am doomed I will be taxed for buying "tokens" that will never leave SL and benefit my country. EVERY TIME?

Before I had found about this vat stuff.. that very morning I think I brought about 10K to go off shopping..1k here.. 3k there... So those transactions may be taxed?

This changes every thing completely.

I dread to think what that will be like, with everybody shouting, swearing and filling chat history with all the usual clichés. I'll try and make it though.

Robin's office hours are at 11am UK time on Tuesdays, for anybody interested.

I am so worried about this... the thought of being taxed on buying L$ made my stomach drop to the floor.

Yes, although keep in mind that our sales tax rates are much, much lower than Europe's VAT rates. Even the high end state sales taxes in the US (CA, for example, with 7.25%) are small when compared to the 17-25% you deal with in Europe.

So to be honest, even if everyone in the US was paying their local state sales tax on LL transactions, it would never be a level playing field with Europe because the tax rates are so wildly divergent -- and in fact a handful of US states have *no* sales tax at all -- so the field would never be level unless noone paid any tax.

You pay VAT on the entire amount, regardless of where the funds come from. So if you're in the 17.5% VAT bracket it comes down to:

$195 (base price) + $34.13 (VAT) = $229.13

So $150 comes from your US$ balance and an additional $79.13 comes from your CC.

It can't be all that productive since I think Robin only handles the communication aspect, so she can probably talk about why there was no announcement, but she's probably not qualified to accurately answer questions about EU law or past financial operation. Hopefully she'll invite Zee along as a guest to answer those.

Simplified: when you buy L$ from the LindeX your money doesn't end up going to LL at all, it just ends up on the account of another resident who is cashing out.

Hopefully they'll make that case a bit clearer for everyone next week .

(Edited because I got the numbers wrong )

My transaction is with LL. In my company accounts, I have a charge in US$ to the Credit Card account. It refers to Second Life.
In the in-world transaction history, there is no indication that the 'currency' transactions are related to avatars as opposed to LL.
I have no idea what resident(s) I might be buying L$ from, or selling to, or where they reside.

If my company is buying and selling goods or services for hard currency, I have to record complete details of the transactions in the accounts.


The Linden is not a currency.

meh..... I have no idea now whether my answer re charges on L$ exchange was right or not ... /me says Sorry! all for any confusion/anguish.

I suspect that, when it comes to whether this is a taxable issue or not, the authorities will look very hard at what is actually happening behind the scenes, despite whatever LL "say" happens on their pages. It is the actualite that will determine whether buying and selling Lindens is taxable for EU residents. And Sling is right - Lindens will not be treated as a currency... more like game tokens I would think.

That said, I can't imagine this hasn't already been looked at.

... er........
Inc

Given that they have specified that just about everything else we pay LL for is vatable (premium subs, tier, land purchases from LL), the lack of mention of the Lindex makes me think that LL believe it is not vatable. If they currently intended to VAT the Lindex they would presumably have included it in the list.

Whether you trust their assessment of what is taxable is up to you.

Re: VAT: If we gotta pay, we gotta pay. Simple as that.

But do us residents of European origin end up paying any US taxes to LL? If so could it be looked at to see if we could be exempted from those?

Im a bit confused about the land purchases bit....

so land sales direct from Lindens are subject to VAT but land purchases from indiviual sellers are not ?

where's the difference ?


Is the idea to make Lindens world so real that every bit of awful real life buraeucracy is imported in here too... In that case as I dont 'camp' 'erotic dance' 'sell drugs' or 'sell my body' (for medical reason or otherwise ) in SL and am in other words 'unemployed' can I claim sl welfare at an sl benefit office too ?

No you don't. This has been asked numerous times because I think Europeans don't understand how sales taxes work in the US -- which is fair enough because it's really very different from VAT systems. In the US, you only pay sales tax for online transactions if you are a resident of the same state where the person you are paying has a business presence. So, for example, California residents could be liable to LL for California sales tax -- but I believe, in any case, that California doesn't apply that tax to services. But in any case, as a non-resident of California, you'd never be charged California sales tax.

There is no federal sales or value added tax in the US -- it's all state (and sometimes local) sales taxes.

Of course the thing non VAT paying US ccupants of LL should think about is how quickly the vat charges have been implemented. No chance to sell land and reduce tiers for example. The next tier payment will plainly and simply be upped.

So whats to stop lindens simply upping the tier fees at the blink of an eye and without prior warning too ??

Nothing, of course, and I expect that this will happen at some point.

Why, when mailnland tier fees are based on your previous 30 days usage, are we being charged VAT for land we owned before September 27th, the knowledge base says we won't be charged VAT prior to September 27th.

My suggestion to people in the EU is to submit a ticket to LL noting the following:

In many EU member states, consumer law requires that prior notice be given for any increase in the amount paid for a subscription service. In any case charging more for a billing period that has already commenced above what was agreed at the beginning of that billing period is a breach of contract.

The notification of the increases to EU customers to rebalance LL's liability for VAT was sent on the 27th September. To accomodate reasonable notice, the new fees should take effect from 27 October. Before that, LL is not authorised to charge more than the previous agreed charges from the credit card on file. Any attempt to do so will be reported to the credit card company as an unauthorised transaction with the full reasons (namely that the increase in charges were implemented without reasonable notice) being disclosed.

If you do then get charged, send a similar letter to the credit card company, asking them to abitrate on your behalf.

Matthew

When it comes to private islands, LL actually made a commitment to provide at least 60 days notice before any price increase:

http://blog.secondlife.com/2006/11/14/private-island-pricing-committments/I'm sure they'll have an answer ready as to why it doesn't apply in this situation though .

The problem is not if they should apply tax or not, but the no warning implementation of their decision to implement it from yesterday and for the last month. This is illegal and can be filled a lawsuit againt them.

Biggest issue though is that they lost respect from many europeans customers and they will not find it again. They also created residents of 2 different speeds with different treatment on them.I just predict that it will have some impact on their economy and from the next month many europeans will try to get rid of the land they own and also a drop in premium accounts.
Which they tried to increase by dumping of too much land previous months.
My conclusion? they have lost it completely.

Only way out? Take it back, then announce their decision to implement VAT, give 1 month notice to all residents, and let them decide if they will remain in this virtual world or if they will change business activity and then implement the tax.

If they don't do that, then they deserve all our ignorance (at least from some of us).They will not miss us anyway and they don't care.

quote - I'm sure they'll have an answer ready as to why it doesn't apply in this situation though .

Naturally they will but you'll need a degree in jurisprudence and tax law to understand it.

Maybe our tax grabbing uk prime minister should be drafted onto the board of Lindens to suggest a few more money making schemes. Avvy's with more than one eye might be a start

Flash - This Just In Double Occular Tax Hits Sl - Eye Patch Sales Hit New All Time High'

/me sings: "...which will bring... us... back... to... DO!"

I dont see where there are 2 different types of customers.

Other than those affected by the VAT or not -

Should everyone not affected by the VAT be expected to pay a higher price to subsidize those who are taxed?

That hardley seems fair.

I have a lot of sympathy for those affected by this, I know its rotten - and quite a lot of Euros I spoke to assumed their prices included the VAT already.

They definitely should have absorbed the cost for the 30 days or whatever so they could have given reasonable notice to people. I dont buy for a second the comment that LL has been paying the VAT out of their pocket all this time up till now, becuase if they had waiting till a notice period expired wouldnt have been a big deal.

Simply put they werent paying the tax, found out they most likely had to, and so started paying the tax ASAP, which was too soon to give notice.

But asside from these concerns, after the dust settles -

If the VAT is required by european tax law, well then the Europeans will have to pay more than those not affected by VAT.

The only 2 speeds involved are those whose governments dont tax their Online property and those whose governments do.

There is no such thing , charge it immediately or what? Lindens don't respect their customers. That's what i get form this. You can't charge without prior warning. We are not that idiots in EU.

I Insist, what they have done is illegal. Without notifying, it's assumed that they were paying the VAT from what they were getting(tier fees atc). VAT included in price. If they wanted to change that, then they would have to warn people that from next month we will start pushing on you the VAT. So we get the time to decide if will keep land or not.

The 2 gears citizens has to do that europeans can't deal anymore with land business o they will have to find other ways of contacting business activities in SL or go elsewhere else. So from my point of view they would have to carefully think of how they implement local rules in a global market. The opposite happened with gambling. Since it's not illegal in EU, SL cut it from all residents because it' not permitted in US. I hope you see the different behaviour of Lindens. (I am not gambling anyway, just refering to the ban).

And ofcoure there is no objection to the point that if VAT has to be applied then it should applied. The methodology they implement it really is that sucks.

Ok - putting asside the respect for customers thing for a moment -

I already agreed with you not giving proper notice was a bad thing -

But taking a step back ------------


LL needs to make X dollars off of second life. SO they charge Y.

If suddenly they have to pay VAT for all the Europeans - well then they have to raise the europeans prices to pay the tax.

They cant charge the europeans less becuase of VAT. Becuase they still need to make X dollars off Second Life.

If just for easy math - HALF of Second Life was Europeans. And the VAT was 20%

then they either have to raise the European's prices by 20% to pay the VAT.

Or they have to raise EVERYONE's prices by 10%.

Thanks Matthew. That's the first helpful thing I've seen posted all day. I'll certainly give it a try!

But what stops LL from putting a hold on the account?