VAT: Discussion w/Zee Linden July 31-Aug 03 2008

Linden Labs is going in the right direction by levying VAT on Europeans -- simply because it's the law, and they have no choice about compliance with tax law.

If other jurisdictions such as America don't have a federal sales tax, then they don't have to do it there -- simple as that.

Different jurisdictions, different tax laws. If you don't like the tax laws where you are, take it up with your legislators -- not Linden Labs (though good luck getting your legislators interested.)

BTW everyone earning income should bear in mind that all income is taxable, regardless of the source. If the income is significant, you can bet the taxman will be interested in order to finance investment in, um, services. Ignorance of taxes owed has never reduced anyone's bill anywhere.

Katt,

I really appreciate LL's opportunity for us to discuss with you you again, but i have to say i'm dissapoint (although strangely not supprised) with the lack of feedback by Zee... Apart of a single blast of quick fire relies half way through the 3 day period, we had had no further respose.

I would have expected some form of colcluding post from Zee, maybe detailing any plans LL have to *help* EU residents (ok, it may not be LL's fault we have to pay VAT, but residents here have detailed ways that LL could help us avoid aying some of the VAT charges), but no - it seems that LL have just stuck thier hand in the hornets nest and stirred things up again, whilst now leaving the discussion going with no chance of a Linden response...

I know that if one of my RL customers had a problem, I'd be willing to try to help them rather than sit there with my hands over my ears singing "I can't hear you, I can't hear you"...

Gomez

Do LL know that in the UK... :-

It's always good practice to display your company's registration details on your website and business email, but now it's the law. Yes, that's right - it's the law.

The First Company Law Amendment Directive came in on 1 January 2007, and you're now required to put the following information on your website and business emails:

Company registration number
Place of registration
Registered office address
You're also required to have the following information on your website:

The name, postal address and email address of the website's service provider.
The name of any trade bodies or professional associations that the business is part of, including membership or registration details.
Your VAT number, even if the website is not being used for e-commerce transactions.
Any prices on the website must clearly state whether they are inclusive or exclusive of tax and delivery costs .

QUOTE. from the forum.

VAT thread is open but won't have active Linden participation

--------------------------------------------------------------------------------

My mistake, I shouldn't have actually closed the thread, I should have instead noted that Zee Linden and I would not be participating now that the three days of the active talk have passed, but that if you'd like to continue talking about VAT, please go ahead.

WHAT????

And just when DID the Lindens participate. What a complete waste of time, and a complete con by LL AGAIN.
As usual, lots of promises, and nothing gets done, nobody answered any questions other than to say that the people who could sort out the website listed prices to include VAT in the marked price are working on grid stability. Well that says it all doesnt it.

Great " active talk" 23 pages, and half a dozen comments by lindens.
Thanks for nothing again guys.
Now remove this post .

I smell the wind of change... It is sometime the tatic of companies to 'explore' the general concensus of the population and their opinions, before changes are made. Not because it will sway them, but perhaps to see what sort of potential drama it will create.

I suspect that as LL now has a growing presence in the EU and are considering not just having its accounts there, but also installing EU servers to spread the ever increasing loading on the system, there maybe a potential in doing so, that everyone maybe liable for VAT. I doubt the system could, or should, be developed solely for EU users to loggin and use SL, direct from EU servers, as there are too many shared services in the core system. On that basis, it will simply extend the LL network for routing purposes. Overall, this could mean, as LL will be paying VAT on all the services, connections, hardware etc in the EU, VAT could effectively become a spread charge for every user.

Before anyone jumps on the 'Us and Them' bandwagon, if LL creates a presence here in the EU, even with a limited company within its group, its overheads, including VAT which it cannot claim back, will have to be borne by the whole group. Much the same way that local US taxation costs are borne by all users as 'running costs'.

Just a thought

CAN WE PLEASE PAY TIER IN L$ ?
WILL IT WORK ?
ARE YOU CONSIDERING IT ?

If you are not even considering such an apparently simple and effective solution, then it would seem to me that your concern for our plight is zero.

Surely we at least deserve to be told whether you are willing to consider it ? Is that too much to have expected from this thread, given it's stated purpose ?

If there is a need for a Uk office, surely that office isnt just providing for the EU residents, but for all of SL, therefore, why shouldnt everyone contribute to that office,s expense? ie. VAT!!!

Because if you are a UK supplier of services to a non-vat area you do not have to charge it, at least the last time I supplied services to the UK and South Africa I was told by the VAT office that there was no need to charge it.

On a similar note I always understood that if I charged vat to a European client the vat was at 17.5% (the UK vat rate) and not the rate that was chargable in their country, likewise if I receive a service from Ireland say I get charged at their VAT rate and not the UK rate. I have seen people complaining about being charged 25% VAT and I wonder if this is an possible mistake.

Just my 2p's worth

Fortyniner...I understand that, but LL decided to open the UK office, for what reason, i dont know,all I DO know, is, this seems the reason that Europeans are now paying VAT, whatever work they are carrying out there, must be to serve all residents, world over, so, all VAT should be shared.

Lol, thats my words. My experience of SL is splitted! Its simply not possible to talk on intelligent base with the support line. This useless support who anytimes respond in the same manner with useless answers (and how to's who normal thinking peoples a long time before have done ..). Im really not surprised!
Perhaps better we leave SL concerning the support and didnt pay anymore to them unless they file to bancruptcy.
After that if the company is sold to a owner who knows how to take care and support to their customers our chanches to use this game more ealisy will increase strongly.
Have you readed me and thinked about the inputs we have given here to you LindenLab?!!

Otherwise its funny and sometimes i need some additional informations who are not given directly from the support lines to us. Ive asking me a bit why my experience here is so hardly divided.

I do not think that is accurate. I have added numbers to your list for easy reference.

1 - Certainly
2 - Possibly
3 - No
4 - No

Even if VAT were applied to all 4, they are 4 separate tax points and your VAT burden would be 17.5%.

[/b]

I'm certain that any tax authorities following this discussion will also be interested in hearing the ways that you yourself have thought of to avoid paying taxes.

Why?

Tax avoidance = Legal (which is what i'm suggesting)
Tax evasion = Illegal (which I'm not suggesting)

To repeat my thoughts and those of others here, allow us to pay tier fees in L$ - No RL currency involved (especially if sourced from in-world earnings), No vat on tier payable...

Gomez

Of all the suggestions made, the ability to pay tier in L is probably the most viable one that doesn't impose draconian fees on everyone else. I understand LL's concern about it. Couldn't you put together a test group? Select a sample group of people as a test group to try it out for a few months, say 6 months, and see what happens?

If you can buy RL services from Linden Lab with $L then the $L now has RL value and would be subject to tax. I don't think that would be a work around and probably cause a lot more problems than it solves.

EDIT: Also that would probably put a hurt on the economy.

The L$ already has an RL value, you can sell it. And you already can pay ONE service offered by LL in L$: the region transaction fee of L$ 28,000. So I don't see a reason for not expanding this.

You can sell it sure, but it's only "official" use is for virtual goods. Once LL makes it official the $L can be used for RL stuff then it is subject to taxes.

Did not know about the region transaction fee... I am sure they have some reason to cover their ass..

Even if you could avoid taxes paying in $L, the value of the $L would be severely compromised if all the EU people (and others if the choose) started paying in $L. That would be a massive $L sink making the $L a lot more valuable and in the end you would possibly be paying more to buy $L than you would be paying for VAT. One of the downfalls of a non fixed $L value ecomomy.


I don't think consumers would like getting less the $265L per $1USD.

I doubt that. Where is the difference between:

SIM owner sells L$ on LindeX to residents to get USD to pay the fees with

and

SIM owner payes his fees directly in L$ and LL sells them to residents?

The only reason why people don't get less than 263L/USD now is because of Supply Linden's activities. I have a sell order at 263 that has been sitting there since April. APRIL. While in the meanwhile, Supply Linden has been happily printing millions of new L at 264 to regulate the economy. Obviously, Supply Linden's activities would have to change, and probably would have to sell even more L to maintain the value at 264.

You are assuming all people are making enough in $L to pay their tier? I suggest many are not and pay out of their own pocket (I am paying out of my own pocket). Also this is not just covering SIM owners. This covers everyone that pays tier and has to pay VAT. That is anyone on mainland and anyone that has to buy $L to pay for the tier or products that the SIM owner is charging for renting or selling.

Or am I reading this thread title wrong and we are only worried about SIM owners? That would be a little selfish I would think.



When I started SL you got about 240L to $1USD (late 2005). Then LL opened up SL to anyone and the $L crashed. It got over 300L to $1USD for a while. It took a long time for them to get the $L stable at around $265L to $1USD. They said their mark was $250L to $1USD but they seem to have settled for $265. It would not take much to mess that up. Just adding more or taking more $L isn't as easy as it sounds and wasn't back then.

I am just saying this is my theory why they do not want to go this route. That and making the $L appear to have RL value. Either of those two would cause more damage to everyone than good for just the one's that pay VAT.


What I really don't understand is why is there even a open official discussion about this? LL should know better than anyone of us how the systems work.. Getting opinions from people that do not seems a step backwards. Maybe this is just a PR stunt to make it seem like they are listening to us but really already know what they can and won't do.

Seriously one way or another people will have to pay VAT at some point. Someone has to be buying $L and spending it or LL would make no money. Either that or the people that have to pay VAT expect the people that don't to pay their difference.

The only real fair solution for this is for people that have to pay VAT to suck it up and deal with it or work to get their VAT laws changed. If SL becomes a non-viable business solution for them because of it then it is what it is. Just like RL..... We are given what we are given to work with and can only do so much with it.

Jodina, I am at the point where the all the L that I take in is sufficient to pay my tier and other costs. LL doesn't have to touch my credit card, I can just sell it on the market and they take it from my USD credit. Paying tier in L just cuts out that last step. Where does LL make their money from me, or others like me? Clearly from LindeX sales to other people, plus the 3% cashout fee.

The L is already fungible for rl money, but we just use doublespeak to compartmentalize in our brains that it's really play money.

I don't think most people that pay tier even attempt to make $L in SL. They just want a place to call home. These are the people that pay LL's real bills. Now if everyone had the ability to pay in $L how would LL make profit from tier? They can't just pick and choose who pays tier with $L.

All I can really add is If it was as easy as you say they would already be doing it. I can only guess is to why and you heard my guesses. Right, wrong or indifferent only LL can answer.

I re-read the very first post in this thread from Katt and now realize this thread was not started to change their policies or gather ideas to do so. It was just started to make it more clear why they do what they are doing. However is seems many of the obvious questions are still unanswered and us speculating an answer is probably causing more problems that it solves also. LL knows the questions and they choose not to answer or they have and we missed it or don't get it.

Anyway I can't add or subtract anymore. LL knows why they won't allow $L for tier so it is up to them to answer (maybe again) if they choose.

Why I am not spending time in world on my vacation week and wasting it here I am not sure... I am reading through the thread looking for Zee's name and looking for answers and have found some.

As for my concern of the economy:


and as for the Tier being paid in $L



This is somewhat what I expected. I did not know that VAT was not being charged for $L purchase. This seems very strange and have a feeling that will change in the future.. However he seems to make it clear the more obvious the $L has value the more it will be looked at for taxation and even if they let tier be paid in $L then you would have to start paying VAT for $L anyway going right back where you started... Also notice the last sentence. If you buy land from someone complying with the regulations you should still be charged VAT.

In anyway this goes it looks to me there is no way to avoid VAT and they will just have to deal with it. Making people that don't have to pay VAT cover the charge is not acceptable to me. Other opinions may very though.

Anyway I got all I need to know.

Maybe Jodina, there could be implications for everyone but as these platforms develop there are bound to be changes over time, but there are big estate owners whom you can pay in Linden dollars and not have to pay VAT, that is a viable alternative for Europeans right this very minute. The shift to Linden Lab accepting payment in Linden dollars for tier is just asking them to accept payment options that are already available inworld for land tier fees.

The regulations aren't enforceable on business outside of the European Union.

The regulations even when followed, don't apply to all business outside of the European Union. Someone privately selling one island has absolutely no need whatsoever to charge VAT.