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

Yes it does, although the information i receive on it is far from perfect.
Normally I would SEND invoices on services rendered. And of course receive invoices on services rendered from others.
The Account Statements are basically a mix-up of both now.

The 'account statements' are atm. invoices from LL with (in my case mostly) a negative billing amount. (Money received)

Also, they're using US accounting standards.
They don't show any information on VAT at all. (Either charged or being exempt through exchange of VAT numbers)
They are not directed at my company, but at me personally. (Wrong billing address)
They don't show a clear 'amounts billed, or amounts received'
etc. etc.

I generally see them as 'backup account statements'/'specifications of services rendered'
I tend to see my cashouts to my own accounts (paypal, bank accounts) etc. as the actual money transfers, and use my own internal invoicing for administrative purposes.

LL banned gambling because it is against US law.
Many of us do not live in the USA and are allowed to gamble but now can't in SL.
I'm not much of a gambler myself so I can live with it - even if I personally think it's ridiculous to impose such barriers on users not governed by US law - move the servers out of the USA and rejoice in the liberty you crave!
Now LL are collecting taxes for a foreign country!
Is every US business doing this? Has LL had a compliance order issued from the EU?
European countries don't collect internal US taxes I believe so why does the US collect taxes on behalf of Europe?
With bank fees and foreign exchange fees, each government is already taking their cut.
This certainly makes playing Second Life more expensive for Europeans and therefore against the principals of the VAT law.
LL, being outside of Europe and operating a 'virtual economy' are in a prime position to challenge this intrusive law by saying "No - we will not charge VAT because we are in the USA' - get your ISP to charge VAT but not us - coz we ain't in Europe!" or similar.
If there is a good legal reason for a US based company to collect European taxes, please LL post these details so we know.

All I know is I pay VAT on nuthing basically as thats what land is basically in SL. So to save myself 17.5% Vat on this nuthing I sold my humble 1/4 sim and buggered off to rent privately and pay no VAT.

Seems to me there are many ill and many overinformed ppl posting here, fascinating as it is I'm sure. Just one point for the tintanks is we pay income tax, national insurance *which supposedly pays for our med care NOT VAT!* and VAT on top on all but a handful of supposed essentials.

Asinine comments like *move to a country that doesnt charge VAT* is so F..ing stupid, now you wonder why so many have a poor view of *the land of the free*

As for applying to international law, I for one as a woman wont be covering up my body except for my eyes to appease Muslim decrees will you. me so wonders where this will end?

Frustrated and VAT free *smiles knowing my non existant VAT money isnt supporting the phoney war that ar@e in the whitehouse started in Iraq and the imbecile here in the UK followed along!

Porky same here. I am entitled to a written statement and also to obtain Linden Lab VAT number. As of yet I am not offsetting the VAT myself so have not submitted ours.

Feel free to share what you get via HMRC, as this would help us too. I have not reported them for failing to provide what is required under law as I am wondering if the account summary is sufficient (but I think not as the VAT number isn't displayed). Our financial year ends in October, so I am hoping it is resolved prior to then.

Actually I spoke to HMRC today on this. And they were incredibly helpful. They confirmed if in the UK we are paying VAT to a company, we should be getting a VAT statement that includes the companies registered information and VAT number.

I wonder if they brought on VAT on their financial cycle, if so it may be a year from introduction until we receive the statement....checks date....

How is the VAT collected from linden labs, I assume it goes to the big EU pot and none of it actually comes back to the country I am based in or does in get divided up and paid to individual EU governments?

Not that i agree with its charges at all, but i'f i must pay it i would rather my own government wasted it than the big black hole EU pot that goes god only knows where.

Chriss, the facts of what you are saying are true, however, I think your conclusions are flawed. You play SL under EU rules because you live in the EU. Any thing you do, you do under EU rules because that is where you live. You cannot gamble in SL because for legal concerns SL is basically a US website. You cannot gamble legally on any US website. Websites based in other country may be able to offer legal gambling, but your participation is control by your place of residence, the EU.

My conclusion is that LL isn't and wasn't really concerned about the well being of the EU customers......

my EU-sim is connected to a large group of USA sims....my simbill went from 295 to 360 us$ in 3 weeks of notice......raising rentalprices??? nah nah...poof...renters gone next door.

selling my sim in those weeks for a good price was not an option since the collapse of the secondhand simmarket was still bad cause of the anti-gambling crisis......selling a sim was throwing away a large part of the initial startprice..

...a money-back option??????? omg....that would hurt

LL clames they payed VAT FOR us till sept 2007....which of course they didnt.....

LL gave the VAT notice via the blog...no personal message....tickets about VAT werent answered for weeks....oh??? they didnt see that amount of tickets coming????

LL points to EU for complains.....what ever did LL to fight for us EU-ppl? NOTHING!...they just ignore the EU-TAX-Dog till they couldnt anymore..

.....they knew EU would loose ANY economical state/balance inside SL.....did they CARE??? of course...pfff...lol....they did EVERYTHING to avoid the VAT-thing OR come with a solution, or not???

Anyway...after weeks/months of frustration...and pain in my wallet.....from the bottom of my heart ......i hope LL's EU-customerbase will bleed empty....SL isnt a place to be for any EU market action..and....very cheap sims are not far away with the current OpenSIM projects...

What really the sad part is.....is that this Forum Topic...will set LL not to work for a solution....but just keeps the Marketing/PR people busy responding as smooth and correct as possible...and...to point to the old VAT information blog or the EU for any further comment....

*cry*

Hello

may it is better if we all pay the same. i mean: everyone have to pay the same taxe, the highest tax. The difference between our real taxe and and the high tax can be used from Linden for whatever - but that´s the only way for us to have the same level i think.

regards

min

ps. no, i dont real think that is a idea to make all happy, most will cry i belive

Sorry for my English, I never write in a Engishforum.
I don't agree with the VAT, its wrong becouse this is a virtualworld, its not the real world.

You have stared the VAT and what will bee next?
If i sell my sl flowers, i need to pay in Holland VAT (BTW) of this transaction.
If i have an income (salari) i need to pay icometax (loon/inkomstenbelasting)
If i sell house i have to pay transaction tax (overdrachtsbelasting)

You cant start the road you are on now, its not good this is a virtualworld.

I understand there are big companies, and yes they will lower there coast with the VAT they have payed. But the biggesed group are the normal/smal users of sl and we have extra coast becouse this VAT, and thats unfair.
Find out a way to skip this.

There is no US sales tax. All sales taxes are charged on the State Level. Some staes, like New Hampshire and Delaware have no sales tax. Here in New Jersey, sales tax is 7%, with some areas designated as Urban Enterprise Zones that can charge 3%. There is no tax on clothing or food in NJ.

This past November The Internet Tax Freedom Act was signed, extending the ban on Internet Service Taxes and some online purchase taxes until 2014.

Oh and please ignore the idiotic "Sucks to be you to have to pay VAT", from the morons here. Every country has their idiots, besides the ones we elect.

yes, and thats a reason for me to say: Lets make us all even - everyone pay the same tax, cause i real think there is no way back to pay no tax

regards

Min

As a California based company with servers located within the United States, why are you subject to any EU law? EU subjects have to pay their VAT. But explaine why a United States company can be compelled to serve the EU as a tax collection agent. If the EU wants the taxes collected, it is their responsibility to compel their subjects to do so. Citizens of the United States are not subjects of the EU.

Linden Lab remits the VAT they collect to HMRC - the tax authority in the UK. HMRC has a system for sorting out the payments and passing the tax collected on to the other EU Tax authorities.

I do not know whether the tax authorities in other EU states have a similar system or not - this may only be a service provided by HMRC (Her Majesty's Revenue and Customs.)

I think this could be because Linden Lab have a registered office in the UK and the VAT Man can knock on the door and shut them down.

Believe me the VAT Man is a very scary being - vastly more terrifying than anything you encounter in Second Life. They have powers that can make the hardest nosed business executives lose sleep.

Its not the real World - its a second world

so i think, its a real good idea, that that everyone of us residents are even. it should be not importand where we come, and also we have to pay all the same VAT.

its like rl, you go into a shop any buy a bread for example. why should the next one pay more or less, cause he is from annother country?

no

better we all have to pay the same

You can find Linden Lab's VAT Reg No on your statements.

Go to your Account page on the website and select "Account Statements" from the options on the left panel.

View a statement and the VAT Reg Number is under the address on the left hand side.

VAT Registration ID: EU826011179

Your ok there Minela - there is not VAT on food - yet...... on restaurant and hotel services, yes, but not when buying food at the grocers or supermarket or farm shop.

The world may be virtual, but the server hosting we pay for is real - and that's what tier really is - server hosting charges.

It seems that EU residents may be suffering a big financial disadvantage simply because LL has chosen to open offices/branches/service-centres within the EU.

Did LL realise that this consequence would follow ? Did those EU residents calling for such support realise it ?

If eliminating this presence would remove this liability, I seriously suggest it be eliminated.

If you are currently an EU resident, please post your opinion. Would you be happy to lose all local support, and always deal with the US, in return for escaping from VAT ?

My vote is - eliminate local support if it would eliminate VAT.

It seems this would eliminate the legal requirement to charge VAT in many EU countries.

If this is so, what earthly reason is there for not doing it ?

The idea is to avoid VAT by increasing transparency for the sim market.

proposal to LL:

- estimate the lifetime of a sim server.
- set the initial cost to buy a new sim to "near-zero" and demand a slightly higher monthly tier so that within the estimated lifetime you can expect to get the same value out of your sim as you did before.


Effect:

- transparent profit margin for sim owners right from the start.
- less risk for sim owners, bc the initial investment is smaller
=> transparent costs/risks for sim-owners mean transparent lease prices for inworld tenants, also: more people will enter the sim market
=> stronger competition => competitive lease prices
=> VAT-residents will be able to rent a sim inworld from other residents for just a small amount over the tier that is payed to LL by non-VAT-residents.

EU residents will still not be able to compete with US residents regarding direct payment to LL but at least all the 'smaller' residents who just want to rent land for personal needs will effectively have 'near-fair' running costs compared to non-VAT-residents.

Is LL doing it correctly ? It is quite complex.

I think we should have the right to see the list.

For instance, there are some anomalies. Guernsey and Jersey, for instance, appear to be part of the UK (they have UK postcodes). But they are not members of the EU, and no VAT is chargeable to their residents. There may be other anomalies.

I am about to move back home to Guernsey. How can I go about getting VAT removed from my tier ? What is the procedure in general for changing VAT rate when changing address ? Either within the EU or across its boundary ?

There may be other anomalies, places which appear to be in the EU, but are not. Is LL aware and respecting their rights ?

Could we please have either a link to, or a posting here of, the list of countries whose residents are being charged VAT, and their rates ?

So many apparently good ideas founder because of an unintended consequence not noticed by the proposer.

In this case, LL would encounter a huge uncontrolled surge in demand for new servers from hopefuls dreaming of commercial success. On failing to profit they would simply cease paying tier, abandoning all the now surplus servers, the cost of which LL would never recover.

You would transfer all the risk of these unfortunate ventures from the hundreds of naive starry-eyed entrepreneurs to LL, and thus onto everyone else.
____________________

PS That's even assuming you could craft some sort of transitional/legacy arrangement to avoid wiping out people's prior land investment. Which would seem very hard to achieve if not impossible.

A definite non-runner, in my opinion.

Using the forum för such discussions is a VERY good idea. It will (maybe) even help lowering pressure on the official Linden Blog.
Now discussing again this VAT problem is a waste of time for LL and for us users...
Maybe you choose this subject to test communication through forum because the VAT is a "hot" and "sensitive" subject and this will help you measure the pressure on this medium?
I don't think it's a good idea...
Its more like a "barking session": Discussions where we can give our opinions and where our opinions do NOT help changing the situation...
The actual situation is clear and will not be changed:
Zee Linden after a "successful experience" at HouseValues, Inc. came to Linden Lab and as a CFO decided to implement VAT för EU residents.
Did this have a positive consequence on SecondLife (long term view)? we will see...
Some EU residents continued with the losses generated by the VAT thing, others registered RL businesses to not have to pay VAT, others sold or abandoned their estates to rent from non EU residents, and some others simply sold their virtual properties and downgraded to "basic" as I simply did...
We could test the forum together with a more interesting subject, like the interoperability etc etc...

I assure you that our days of taking y'all's poor view seriously are certainly coming to a middle.

Low transfer costs will increase the fluctuation in the sim market, yes, but a returned sim is not a dead sim for LL, it can be sold again quickly. Of course, LL should not overflood the market with sims but they have all the market data at hand to estimate the need for new sims. It might seem more comfortable to run a zero risk company but good business is not about minimizing the risk, it is about maximizing the expectation value, and I think a more liquid sim market is more attractive and therefore more profitable.