The question I've been wondering about is "should VAT be payable on the whole of the premium payment?". The conclusion I've reached is not it should not.
Since the purchase of L$ does not attract VAT, the portion of the payment that is covered by the stipend should be VAT free ... it's effectivly a refund and as such should attract a refund of VAT.
The cost of this to LL should be zero as being treated as a refund of VAT it should be deductable from LL's net VAT bill (VAT paid to suppliers is deductable from VAT collected from customers with only the net being payable/refundable). To illustrate my point (I've used UK VAt of 17.5%, Lindex rates for L$ sales (L$264=$1 since LL are selling L$), an exchange rate of $13=£7 and 13/3 weeks a month for simplicity.
The rebate would be L$300 a week * 13/3 weeks a month / 264 $/L$ * 7/13 £/$ (looks nasty but simplifies to) £700/264 a month. The VAT refund would be £0.46 a month/£1.39 a quarter/£5.57 a year. People with older accounts may see this rise by a third or two thirds depending on the stipend they recieve.
An alternative would be to increase the stipend paid by the rate of VAT charged. Linden Labs would still be able to claim the VAT refund of an amount equal to the increase in the value of the stipends paid.
Whilst not leaving a totally level playing field for europeans it would reduce the the discrepancy between them and non-european residents.
Just my L$2's worth ...
Allan