Questions LL should answer re. VAT

The Brighton office is relevant from the perspective of enforcement. It would be hard for EU tax authorities to exercise jurisdiction over LL in California. However, since LL is now in the EU, jurisdiction is easy -- and THAT makes the difference. Under the 2003 EU edict, LL would be technically liable to remit VAT anyway -- but as a practical matter if LL had no EU presence, it would be hard for any EU member state to enforce that against LL in the US.

In terms of the pricing, I see where you are coming from, Sling, but LL is not going to *lower* the amount it receives from Europeans (net of VAT) relating to tier and island payments and the like. The prices are what they are in USD for everyone globally -- that is a fair system. I know that it sucks that some countries have very high sales taxes and apply them to the kind of service LL provides -- but that's no reason to institute a bilateral pricing system. That basically means everyone else is subsidizing Europeans because you support governments who have enacted very high sales tax regimes -- I can't see the sense or the fairness in that.

True, I said elsewhere that having the Brighton office open had nothing to do with this, but you're correct, in terms of enforcement of the VAT rules, LL having a presence in the UK does indeed make it easier for the law to be enforced.

Without that office, what could the EU have done to LL? Sent them a nasty letter?

Well to pay the tax aint bad, Its a pitty that LL dit not tell us it was ex. VAT to begin with. maybe its time they get professional help..... some advisor who knows more about amarican and european laws. couse what's happening all the time is a bit amateuristic, and because of that people leave the game, al the chainges AND all the players (who make this game a success) are handled like trash(in my opinion). there was a time when the customer was king... well not in it's second life.

what's next ?? Furries can't have intercourse in some (mature)places becouse:

"In California, animals are banned from mating publicly within 1,500 feet of a tavern, school, or place of worship.".....

I know. My point was that it's entirely unenforcable until a non-EU company sets up a presence in an EU country.

The UK office has absolutely nothing to do with enforcement or the change in Law re VAT to Europeans. Please take the time to read the link, that is why Robin Linden included it in the blog, posted in my earlier thread.

FYI, If LL was a UK based company they would be charging not only Europeans VAT but Americans too, so the Americans are better off still.

Here is a quote taken from the link as to why Non EU Businesses have to charge VAT to EU Consumers.

Quote:Why are these new rules being introduced?

Under the rules in force until 1 July 2003, most electronically supplied services, including digitised products, and all radio and TV broadcasting services, were subject to VAT in the country where the supplier belongs. That meant UK businesses were required to charge UK VAT on those services to all their customers, irrespective of their customer’s location. Similarly, businesses in other Member States were required to charge VAT at their local rate. However, non-EU businesses were not required to charge EU VAT on supplies to EU customers. The changes removed this distortion of competition so that EU and non-EU businesses are taxed in a similar way. End of Quote.

End of Story.

Again Larry. We know all this, but the 2003 rules passed are _unenforcable_, until a company obtains a presence in an EU country.

I was trying to find out how this is enforced but I have read so much on this today, I will look again tomorrow..

Also, I was hoping that someone with a little more knoweldge may of been able to add more input in the threads but yet to see anything.

Larrie

your comment that, if based in the UK, LL woul have to charge Americans too is wrong... the HMRC website on VAT & electronic supplies also says:
"Supplies to business, non-business or private customers located outside the EC:

The place of taxation is your customer’s country. VAT is not due (although local taxes in the non-EC country may apply) except where they are to another business and are used and enjoyed in the UK - see VAT Information Sheet 01/03 Electronically supplied services and broadcasting services for further details.

Example:

A UK business supplies digitised or on-line tourist information to a private consumer in Australia. The place of supply is Australia and is outside the scope of UK VAT. The UK supplier should not charge UK VAT."

Or did you mean something else?

Inc

You won't find a thing. It's quite obviously unenforcable. The EU parliament could pass a law demanding that all Americans fart at midday on a Sunday, but it's not gonna happen .. and why? Because Americans ain't answerable to any government but their own, and the EU has no power to enforce any law outside its own borders.

Apparantly:

1. The withdrawing of Intellectual Property Protection
2. Blocking companies from raising finances in the public markets where existing EU VAT debt is shown

There may be some agreement with the US government over the issue. That said, I suspect the EU turns a blind eye in a lot of cases, due to the effort of trying to police every non-EU company selling over the net to the EU. The EU probably only takes a notice when a company is making a lot of sales within the EU, whereby going to the trouble of enforcing actually merits the tax gained.

Three things happened this year - any of which would have attracted the attention of the EU taxman:

i) growth of EU based customers
ii) increase coverage (both good and bad) in the media
iii) opening a UK based office for dealing with payments

Matthew

I'm not aware of any agreement to enforce the fiscal laws of the EU in the US. Having said that, it would be LL's call as to what to do if it received a VAT tax bill from some EU country -- reputational issues and the like come into play -- most companies actually *do* want to comply with laws that apply to them.

From reading that, you're right.

Apparently the EU has decided that every other country in the world is going to collect their taxes for them.

!!!

coco

I see.

In that case, I wish they hadn't opened an office in Brighton. But when they did, they should have informed their customers that this was going to come down, and give them enough time to plan ahead.

coco

Er, um, okay. You're right again.

coco

Edit: Except as regards jurisdiction and enforcement, as raised earlier on this page.

Inc

My last post anwsers your question and was taken from the same website, different page you quoted.
With regards to your example I do not know if tourist information would come under the same category, however, if Second Life was UK based then the SL member in either USA or Australia would have to pay the VAT.
The website contains information as to why it was necessary to introduce the scheme to which non EU Businesses would charge VAT.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000902&propertyType=document

Indeed - and I believe due to the reasons I've outlined. But as I said, I don't think they actually *expect* that (hope, perhaps, but not expect).

However, we *do* expect the legally required notice of any changes to charges.

Matthew

Im from Romania ,an european country . VAT in my country is 19%
my husband is an lawyer and ive asked him about this matter ,he aknowledges there's no legal notice signed by both parts - in this case USA government and European states governments - to apply any taxes of whatsoever for citizens .
yes its a tax in my country that i pay it for goods ,i pay for what i buy ,i pay for what i sell ,both ways i pay these taxes . If i buy sumting online from USA i dont have VAT ( inclusive/ or added to price)
not to mention i lose enough money when im converting my currency in USD$ ,then convert again in "toy money L$ "

and at the option of dumping premium accounts ( wich btw i pay a premium account) and going on free accounts is another bad thing for europeans coz then they wont be able anymore to buy land from LL - as u need premium account for that - so there will end up only USA land owners ...wich looks kinda discriminatory ...
oh well this is a long messed up story .....from any point of view
an USA guy said in blog yesday that u cant escape of DEATH AND TAXES
well figures we are in a game ,we are in second life ,and as we can cheat death with just a relog we should be able to skip the taxes part too


~~~ sorry for my english ~~~

Larrie

On-line tourist information comes under the same category of electronically supplied services - the same treatment applies. I don't understand why you think that if SL were UK based, SL members outside the EU would pay VAT - it seems pretty clear to me that VAT is not payable. The note says in the 3rd example (under Further Examples) - the place of taxation for a customer is in the US, i.e. US tax laws apply, not EU ones. The previous two examples both say "... the (EU) supplier must account for VAT" - that's the bit that says a VAT payment has to be made to the (EU) government. It's missing from the 3rd example.

Inc

I believe those possible solutions were only tabled (ie. submitted for consideration).

Absolutely hilarious because it's so bloody true.

Ah okies, thankies for clearing that up then .

Basically Linden Lab is complying with the VAT Directive if y'all want to Google it.

http://tinyurl.com/3xrxy2



Petitioning the Prime Minister over this EU policy seems like a good idea the more read stuff like this, but I'm a crap writer so I'll just forget about it for now.

http://petitions.pm.gov.uk/

200 signatures get you a government response.

A few thousand signatures and the Prime Minister himself will often respond.

VAT in EU countries!
If I bring goods into the UK (EU) then I am due to pay VAT
However I think it is a valid argument that if a system is provided and run on a server 'outside' the EU, I am not actually importing any goods or service into the EU, I am only using the internet to connect to that 'foreign' based system. I believe Because I am not buying any good that will be import into the UK then I should not be charged VAT.

Specifically something like; 'Secondlife' which is totaly run on servers in San Francisco, I pay to access those servers, outside of the EU, I do not bring that 'Server system' into the EU. Nor I do not pay for the use of the software, as it is open source.

Can someone please explain why VAT should be paid for goods that do not leave the USA and are not actually imported in the EU ?