VAT being charged for EU accounts

Hi,

if you (LL) are going to charge VAT in the EU it is the law in the UK that you provide a couple of things when billing:

1) a bill that indicates the non-VAT and VAT portions
2) a registered company / personal VAT number on said bill

If you don't provide these things, it is my understanding that the bill can be challenged.

Are you going to be providing these things?

Oh, and why was this not announced on the Blog, it is effectively upping the net monthly charges for accounts and tier. Is this allowed by the TOS etc?

LL are probably so defective they do not realise this.

Roll on the challenges

However it should be relatively easy for them to adjust the emails we get from billing to include the VAT elements and that will be the end of it.

this has now sparked the end of my secondlife. first they say we cant gamble in SL even though its legal in the EU. but on the other hand we have to ABIDE by vat laws in the EU.

its dear enough as it is, and the product isnt 100% that they sell. my SL crashes all the time with every update and i have a very good pc.

i think a lot more will leave, i may just sell my land, and get rid of my premium account. that way LL get no money off me until i feel the product deserves it. maybe we should all do the same and see were that leaves them.

a disgruntled customer

ok, if I pay something to LL with my EU credit card, I will be charged vat.
Now what happens if I pa, say my premium account fees from my USD balance, with USD that I got from selling lindens ? In this case I wonder how added value for EU can be applied.

Well could be worse we could have got the servers moved to gambling allowed Europe and had to pay VAT on all our transactions

My accountant advised me in similar terms, and suggested that I pass the correspondence on to my own tax inspector. However, there seems to be more to it than that. Someone in the US tax system should care about what Linden are doing. Isn't it illegal to levy a tax into a foreign state, or give a tax allowance, without having the benefit of a dual agreement between the tax authorities of both countries (as is the case between the Republic of Ireland and the UK?)

There is also the moral issue of increasing your fees (which is all that Linden are doing since I don't believe for a moment they will be passing the revenues on to the UK authorities) while pretending its a tax.

Advantage for US residents...!
But is stupid to make me pay VAT, i agreed to buy an island and pay the monthly fee of 295 US$. You change the rules for new buyers not for actual owners.
Otherwise we should get refunds for our parcels. New policy should not have effect of previous land owners.
My country charge 20% VAT....you mean i have to pay 70$ just because you change policies over night.

I never paid Dutch VAT on stuff I bought from abroad on the Internet before. Maybe that is wrong.

Maybe it is right to charge me the Dutch VAT, but in that case I want the USA VAT deducted from my bill! I don't see how I can be charged taxes on ONE purchase in TWO countries.

Here's a link that explains in a little more detail the change to the EU law a few years ago that has made this VAT charge possible.

http://www.out-law.com/page-3684

It would be good for LL to make the VAT return to the "elected" Member state visible, so that we EU customers can be assured that the monies levied under the scheme are indeed making their way to the EU.

I dont see it on the URL you just sent

It's all pretty easy..

* We agreed to pay a certain amount of money, these agreed sums are by ALL EU country laws supposed to include VAT unless otherwise stated. So, $295 (example) is VAT inclusive.

* ALL EU countries demands the VAT charging company to be registered for VAT in the respective country. (Linden Labs is not registered in UK, Germany, Holland, Denmark, Sweden or Finland - those I checked)

* When VAT is charged, the billing company MUST provide ALL details of EVERY transaction to both the country tax authority AND the buyer. (Linden Labs only know you by e-mail address)

* The charged VAT MUST be declared every month to the respective country tax authority.

* All VAT charge specifications MUST include seller's and buyer's tax registration numbers and personal (company) details. (Did I mention that Linden Labs aren't registered in most EU countries?)

---

So, unless Linden Labs provide you with an invoice (on paper, in ordinary mail) stating:
1) THEIR VAT registration number for YOUR country.
2) YOUR VAT/Tax registration number (or similar identification number).
3) THEIR full company details, including US tax registration and company registration.
4) YOUR full name and invoice address.
5) Specification of the service / goods delivered (oh, FULL specification).
6) Amount without VAT.
7) VAT amount.
Billing date
9) Latest payment date (must be at least 30 days to allow for international money transfers).
10) Ways of payment (at least one way to pay in your local currency to a local account should be available).

Then you don't need to pay VAT to Linden Labs. These facts are what I got presented to me after spending 2 hours on the phone with a tax lawyer at the Swedish "Skatteverket" (governmental tax/vat authority) yesterday.

So, lets take me as a Swedish citizen with a private sim as an example.
I pay US$295 monthly via PayPal, so far, so good.
Linden Labs aren't registered in Sweden, so already there the rest is invalidated, but just for fun, lets go on with it all.. With LL latest statement, they want me to pay US$295 + 25% Swedish VAT. Eeep.. If I should pay Swedish VAT, I should *not* pay Californian sales tax, so US$295 - 8.25% -> 272.51 and then VAT 272.51 + 68.12 -> 340.63.

But BEFORE any payment, I need an invoice printed on paper, delivered in my plastic mailbox, nicely put in an envelope with a stamp on it. (Linden Labs don't have my full name and address)

The invoice should state Linden Labs full details and Swedish VAT registration (they don't have one) and my full name, address and tax/vat number (they don't have either).
It also should state and list full details on all taxable services/goods delivered to me (have they delivered anything at all to me, they don't even know who I am, identity-wise - and they need to be able to present proof of delivery), with all details on every item charged for, both taxable and not.
They should also state taxable amount, they say US$295, but in fact my agreement with Linden Labs mention *just* US$295, and by ALL EU laws, that amount then is VAT inclusive, so to obide the laws for VAT in Sweden, the taxable amount on my invoice (which they cannot send) would be US$236. Then they should state the VAT, US$59, and the total sum of, surprise, US$295.
Then they payment should be due at the earliest 30 days from the invoice print date, and there should be a Swedish account (postal, bank, giro, anything) stated to which I can pay the invoice sum in Swedish Krona (SEK) and not be forced to pay in some obscure ways in US Dollars (USD) even if the invoice is specified in USD.

Then every year, at new years, Linden Labs need to print a yearly tax/vat statement for my declaration where all transactions, with and without VAT, should be summed up. This statement is a must for my income/finance declaration that I have to send to the tax authorities every year. The yearly statement should reflect the state of my payments to Linden Labs at December 31, 11.59.59pm. Oh, this should also be sent on paper...


But, this is all hypothetical since Linden Labs aren't VAT registered, they don't have my full name, address, VAT/tax number and they can't provide proof of delivery of anything at all to me, as a tax paying citizen of Sweden.

Of course, they can shut down my account and and my sim if I refuse to pay whatever they say I should pay them. But then they should trust to meet me in a Swedish court with my SWEDISH tax/vat specialized laywers.

Oh, I've opened a support ticket about all this...

I completely agree with Suzhanna: the VAT LL is charging us EU residents now is not legal. In my case I received the LL VAT email notification on the same day as their new invoice was charged from my Paypal account. Needless to say, that invoice did not meet even the minimal EU requirements on VAT. I therefor have no assurance whatsoever that the VAT amount charged by Linden Labs will NOT be kept by LL themselves.

I am therefor going to ask Linden to return the VAT amount they charged me until they can provide me with a proper bill which meets all the EU requirements. I advice others to do the same.

I suspect that the great urgency with which this VAT change was adopted by LL has made them overlook some very basic VAT requirements. I advice them to get themselves a new EU taxes adviser (and to not pay the bills of the one they have now ).

They don't have to be registered in every EU country, they only need to register with one single country (which they did) and they remit the VAT to that country who then distributes it.

You can read the directive or a summarized version and see for yourself.

In order to get billed you either provided LL with your credit card where you'd type your personal information in yourself, or you gave them a paypal addie in which case PayPal forwards your information on payment.

I think I trust the Swedish tax authorities a whole lot better than some general document. Since I live in Sweden, the Swedish law would apply to me. And in this case, LL has to follow the Swedish tax laws and rules just as any other international organization has to do.


Which of course isn't enough for providing the Swedish tax authority with the information they need. To be able to comply with Swedish tax laws, Linden Labs has to prove the detailed information I listed above. According to the laywers, there are no exceptions whatsoever to that.

The VAT seems so complex to me, if I understand corectly there is still income tax to be paid as well as local sales taxes? Also it works differently in each of the member states?
Yikes as an American Citizen and Japanese resident, I have a lot to learn about the EU! The sales tax rate for Oklahoma where my house is located is 10 percent. I forget what the tax rate is for federal and local income taxes. I do not think it exceeds 20 percent for federal and 5 percent for state. There is no VAT in the United States and my Japanese taxes are low, no retirement one since I pay the 7.45 percent to the US and they have an agrement between them. The health care one is cheap since I have no income in Japan. So what is left is the 5 percent consumption tax and tax on his house. I get to pay them since my husband refuses to work He is wagi wagi today since he wants more money to play with. The story of my life everone wants more from me.
I will be interested in any infomation one can provide!

https://www1.skatteverket.se/ih/ih_app/main.do?country=EN&language=en (Click on the "Information" link for the following passage)
Sounds like you talked with someone who's confused about the directive, or you didn't provide them with enough information to give an informed explanation.

Right.. Then you may try http://www.skatteverket.se/international/international/nyamomsregler/nyamomsreglereng.4.3d21d85f10922490e1080002706.html

Specially the part saying:

"Sales to non-VAT registered entities

If you sell goods and services in Sweden to purchasers who are not VAT registered, you must be VAT registered in Sweden yourself."

Ring any bells?

If you'd actually bother to read the "special scheme" exemption you'd realize that the normal way (where you do indeed need to register in every single EU member) doesn't apply to LL. They only need to register in a single EU member (which they did) and it's up to that country to distribute the VAT to the countries it's owed to, that's nothing LL needs to bother with under that exemption.

If you didn't happen to mention that LL only provides an electronic service and doesn't deal in physical goods at all then you would get told they need to register in Sweden. And the "special scheme" is something LL can opt in on, they don't have to go that way but it significantly simplifies things on their end.

In any case, the link I provided has an email address for questions related specifically to the "special scheme". Other than the lack of proper invoicing (which they're supposidly making up for this week) LL is all set and registered.

enough stupid to buy the land in the first place. Then you should pay vat for USA when you are an European. SL is is a buggy and crashes all time. How people can pay VAT if you´re not an entrepreneur and do not have a VAT number? And if you do can you take VAT off your taxes if you have a Real Business and you´re running your own company. Any info?

Linden is making several hundreds of advance with newbies who think that land is real but actually only pay for a server, perhaps which have cost only 500 real world dollars that runs the sim. Then user buys the large area of land for 250 real world dollars?
Anyway, if you buy buy only mainland and very small area only. Say 1024 sqr. Otherwise you have to pay large VAT.

Quick rundown on how VAT works without going into the tricky details of exports and stuff like that.

Producer A sells directly to custumor, customer pays VAT to producer A and producer A passes it on to the tax colector.

Producer B sells to shop C who sells to costumer, shop C pays VAT to Producer B, shop C adds profit and costomer pays VAT over the new price, shop C deducts the VAT he payed to producer B and pays the remainder to the tax collector, producer B pays the VAT he got from shop C to the tax colector.

Producer D sells to shop E and knows the VAT number of shop E so shop E doesn't pay VAT shop E adds profit and sells to customer with VAT added, shop E pays the full VAT he gets to the tax colector.

With export it's get tricky because sometimes you can't charge VAT (for exsample when exporting outside the EU) and then you can't deduct the VAT you already payed becouse you can only deduct VAT payed from the VAT you have to pay to the tax colector and not from other taxes.

Holy Crap!!!!! are you all insain??
This legal jargum dogmire will ruin SL... does anyone out their think they are being Ripped???
Hello you bunch of sheep.. people are leaveing SL in drodes.. My Business is gone stright into the can.... where I was selling 15-20 items a day I am now down to 1 every 3 days if I am lucky.
Is there something being done about this? THIS EFFECTS US ALL... Euro or otherwise..
I want to know what the Future of SL is so I can plan my future goals in SL.
Is SL strickly going to bow to any arbatrary Rule anyone can think up to get their hands around a cash cow or is SL looking out for the future of SL and the members of this game. Or is SL just trying to finger the Cash Cow themselves in some way.
If this is a have-to kind of thing, my question is What is the work around? Higher prices??less sells? or the Little guy just have to bow to the bigger business?
REALY!!! I would like to hear how SL plans to survive this.

1. LL has been paying the VAT for the Europeans for years. As a European citizen myself I thank LL for that.

2. The EU ruling has been in place since 2003. LL cannot afford to subsidise EU citizens any more. It was either put VAT on EU citizens or everyone's fees up...

3. LL will survive this, I have little doubt. In fact SL will survive, my partner had a record week in sales last week.

I don't know how 1 goverment can place rules on a company from a different country.
If they say they will stop their people from useing SL... well its their country if they wish to exclude themselves from the rest of the world.. I am sure soon after they will come up with a way to get that Tax from their own people and leave SL out of that... lets not forget what is happening to Yahoo for discloseing information to China about one of their members.
Believe Me if SL was not allowed in their Country Euro People will still come into SL Hook Line and Sinker. of course it would be at their own risk to their govement. But at least it would not be the responsibility of SL.
The Internet was Created to cross those borders and Connect the world. Lets not get sucked into reglatory Laws that can not be enforced just for the sake someone wants a piece of the action.....and Bee?.... I would like to know your Partners secret cause no one else is selling much.

With paying (and therefore knowing, lol) for years, they could (and should!) have given a warning period instead of throwing it at us with a "starting right now you have to pay much more!".



If they did it for years, why not anymore? The profit margin didn't change a bit, if there is VAT to subsidise for 100 or for 100,000 residents from the EU. In fact, the hype in europe brought millions of new users to SL (I know, only a fraction of the new users really stays and pays, still the paying EU users outnumber those from other places of the world). The EU residents made SL as big as it is today.



I had more sales within the last two weeks again, and the number of residents online at peak times is almost at 60k. But I think we have to say thank you to the season, fall and winter are usually the top traffic times for all online communities. When its dark and cold outside people tend to spend more time online, and who spends more time online is more tempted to make this online time a bit nicer by buying nice stuff. If we still had summer with nice long and warm evenings to spend outside it would look really bad.

Absolute rubbish, they've only recently gone over the threshold whereby they have to collect VAT. They haven't been paying it for years at all.