Will Lindex transactions attract VAT or not?

The Lindex/VAT goalposts have moved but unfortunately the doublespeak that's appeared on the VAT FAQ doesn't help much. Apologies in advance for how you must get there but the crappy support portal won't let you visit specific pages directly via a URL.

Go to http://support.secondlife.com, login and search for 4592. First result should be the FAQ VAT.

Extract number 1:



Please note the final list item.

Extract number 2:





Assuming they HAVE moved the goalposts now, it would be helpful if LL followed the business models of companies like Blizzard by charging us in our native currency (pounds or euros). That way, most customers will hardly notice the VAT because we'll be avoiding a currency conversion fee every time we buy Lindens or cash out.

They're processing payments in the UK, so if they can't do this, I'd love to know why.

My guess is the transaction fee that LL charges is VATable.

Considering that the blog also suggests we check with tax lawyers I think nobody knows the answer. These are tricky times.

The Lindex transaction fee will attract VAT, I'm not sure if it should.

Yep, that's what I figured. The second quote is still wrong though because when you buy $Ls on the Lindex, the money you pay includes their commission fee, so VAT absolutely is applied.

God. This shower couldn't organize a pair of open legs in a brothel.

LOL. They're being deliberately cagey on the Lindex, it's true.

The problem is that in this very document, LL is basically saying (and of course, I paraphrase to simplify):

Extract #1: Yes, Lindex transactions will attract VAT.
Extract #2: No, Lindex transactions won't attract VAT.

They need to consult basic English classes, not a tax lawyer.

Well I can't ever remember having to pay VAT on a commission fee before. I thought most financial services came under the VAT exempt rating anyway.

I mean if I buy holiday money, I'm pretty sure my commission is around 2%, not 2% + 17.5% of 2%.

The problem is that by LL's definition of the L$ not being a currency but only a game token provided by LL with no official monetary value the Lindex is no official financial service.

By their definition it can only be regarded as an service provided by LL to buy or get rid of a tool (L$) to help you play a more interesting SL.

If the EU tax authoroties sees it the way LL sees it (which they will do without doubt) we will have to pay VAT for its use no matter if you buy or sell L$.

just an matter of time of that will be charged and we get inworld transaction tax

Actually, you need to read the words written.

extract #1: * LindeX transaction fees
extract #2: No, because you are purchasing L$ from another Resident

The L's are not VAT'ed, the 30 cent transaction is.

It will probably become subject to VAT overnight.

Right now, my credit card shows a list of payments to "Second Life".
There is nothing there to distinguish between Tier and LindeX purchases.

LL say that they will at some time in the future introduce a facility for us to download a VAT invoice.
It will be interesting to see how (or even if) LindeX transactions are recorded on that.

If LL claim that we are not buying the L$ from them, then the purchases can't appear on the LL invoice.
But they are charging a transaction fee - so that should appear on their invoice- and should be treated for VAT exactly as any other charge the LL make.

An auditor or taxman will look at the credit card statement.
Right now this shows a list of payments to Second Life. They are a mixture of Tier and LindeX payments, with nothing to distinguish one from the other.

"You claim that there payments are NOT to LL?
Who are they made to then? Where are these parties resident? What are their VAT references?"

Blizzard will charge you in dollars if you're signed up via world of warcraft.

They charge you in pounds or euros if you're signed up via world of warcraft europe.

Two different worlds and you don't meet each other.

Ahem, I did read the words written, and I'm aware of exactly where the VAT is being applied, however, the transaction *includes* the fees. Therefore

Extract #1: Yes, Lindex transactions will attract VAT (because the transaction includes the fees).

Extract #2: No, Lindex transactions won't attract VAT (but the transaction includes the fees .. so it must!).

Instead of arguing about the correct interpretation of doublespeak, perhaps it would be more helpful if the company just learned how to communicate effectively?

Oh I see. So the US version is a separate 'grid' (to speak in SL terms ), and you can choose to use that if you wish?

It would cover the 3.5% seller's fee as well, raising that to 4.2%.

I don't know if you can choose it anymore. Same with City of Heroes. Orignally it was one game but then both opened European versions and they are to all intents and purposes separate grids. Which is a shame because I know plenty of Americans who play both games.

The people who signed up before the European versions came out certainly play with Americans and I doubt they get charged VAT.

They can't get away with charging VAT on currency exchange - its just not chargable. VAT only applies to goods and services, and currency exchange doesn't count as a service - its the same as banking and investments.

L$ isn't a currency though, it's a limited licence right to services...or some mumbo jumbo like that... game tokens redeemable for services.

I'm also curious about what the VAT implications are when you do happen to buy L$ directly from Linden Lab (and *not* from another resident). What I mean is, last month LL minted and sold over 100,000,000 L$ directly. Some of that was sold on the Lindex. So it wasn't in resident-to-resident transactions. When you buy on the Lindex, there's a chance some of the L$ you buy are being sold by Linden Lab. How does that impact whether VAT is charged or not?

-Atashi

What is the currency exchange? Surely the Linden Dollar is not recognized as a "currency" by the tax authorities.

But common sense would tell me since they said FEES. It stops at 30 cents. And then as Kitty mentioned the seller fee. When you buy, since that fee is flat, I'd almost bet my pixel butt that the tack on is automatically set. It's quite easy to program to charge a set price.

Now seller's fees it could get hairy as far as coding, but they'd take their current model of what you sold, find the figure of taxable, then tax that. I honestly don't see what's so hard to understand. I see no doublespeak whatsoever here. (Ironic, since they usually do.)

Just because you buy 5385395839589L, the tax is still on that 30 cents fee. If you sold 59753950L, the tax is on the percentage charged for sale. (I think it's 3.5% right now.) So it figures up what 3.5% of that is, and that's what's taxed.