1. Another little nail in the coffin? :)

Do euro-land-owners now increase their rents accordingly to cover the extra costs, puting themselves at a disadvantage in the market? At first It sounds like it could bump up prices but it will probably do the opposite - we'll probably buy less land and/or sell some we already have to reduce overheads.

Another dive for land prices and little another nail?

Posted at 8:08PM on Sep 27th 2007 by Hal

2. I might believe they want to get rid of the EU residents? So do we need to drop our land prices to finally get rid of this shit? Doh !!! And then they keep asking us "is your sl experience getting better or worse?" Shame shame !!! This place is going deeper down the shitter everyday and they know it !!! And btw are they making deposits to each EU country's federal tax office as well or is it as cover up for there losses after the gamble bans? it stinks... so LL whats next? finally improve quality or change the name "second life to camper heaven?" no shit...

Posted at 8:31PM on Sep 27th 2007 by More than old enough, dang

3. I have to wonder why it has taken them this long and if they will have to pay any fines for not doing it before.

Posted at 9:00PM on Sep 27th 2007 by Tateru Nino

4. Isn't this something LL has to do, by law?

Posted at 9:54PM on Sep 27th 2007 by Luciftias Neurocam

5. Expect it in the US very soon, also.

http://www.theseminal.com/2007/09/25/action-keep-internet-service-tax-free/


(sorry if this posts twice)

Posted at 10:10PM on Sep 27th 2007 by Kahni Poitier

6. Will european residents in Second Life be taxed to death by Linden Labs ?!?

The new policy regarding VAT from Linden Labs will probably cause the financial demise of most european sim ownners, who will have to pay roughly 20% more for all sim related costs... causing the disparition of this sims, wich in turn will cause the departure of many European residents who won't fit as well outside their langage zone.

Being french,I think our community will be shattered by such a decision...

Posted at 10:33PM on Sep 27th 2007 by DD Ra

7. "Will european residents in Second Life be taxed to death by Linden Labs ?!?"

I appreciate the fact that this might seem unfair to Europeans, but Linden Lab is not to blame. This is not a tax levied by LL, but an attempt to comply with local laws. Do you think that LL is going to keep this tax for themselves?

I expect we will see something similar happening in the US and other countries soon, as well. People who want to complain about this tax should complain to their elected officials.

Posted at 10:56PM on Sep 27th 2007 by Don

8. I suppose it was bound to happen eventually.

But what really irks me about this is the two-faced attitude of the EU: on the one hand, they're forever complaining about the US's insistence on extraterritorial application of its laws (Sarbox, trading with Cuba/Iran, Hague Invasion Act etc), and on the other hand when the smell of Euros is in the air, they're perfectly willing to dictate the terms under which US companies trade with their customers.

Posted at 3:10AM on Sep 28th 2007 by Westray Galbraith

9. Sorry but I won't put the blame on the EU, but on Linden Labs.

They don't give us a stable service, don't even try to traduce the content from the website in our language (German being for some part an exception) wich most games do (shouldn’t a “platform” be more serious ?) and now they just decided to raise costs for land by 20% for us... when the land cost's nothing...well done Linden Labs, but it will not conduce me to spend more in SL.

On the contrary, it's one more nail in the coffin for me (after the loss of my password by Linden Labs, problems with paypal, Linden Labs having the only online payment system where I must try several times to be able to pay, objects and appearance being lost...)

I stay in SL for the wonderful community, but not for Linden Labs.

I can buy anything in the US or in England on the web, like .pdf with no taxes, and event objects get rarely charged... but if Linden incompetence must be taxed... it will cost me too much...

Posted at 4:15AM on Sep 28th 2007 by DD Ra

10. LL has 2 options here if they want to charge VAT, either add VAT to the current price in Europe or make that current price inclusive of VAT.

I like most Europeans feel they should do the latter otherwisewe will be discriminated against by LL in that we will have to pay more to use SL than americans. If they make it inclusive LL can pay any taxes they like out of it. Otherwise we should and will scrutinise what they are doing very closely and insist they comply completely with VAT law which they will find onerous in the extreme. Beware LL as European VAT laws are very complex and often conflict across Europe. Enter that minefield at your peril, especially if your own troops (SL Residents) are not on your side.

I must say I find it strange that we cant gamble (not someting I personally have any interets in) because the service we are paying for is based in the US but we must pay VAT presumably because the service we are paying for is based in Europe. Double speak it seems. The service is provided in the US so lets agree on that at least.

I pay VAT to my ISP as the service connects me from the UK to LL in the US. It is they who move the data form the US to the UK and back again so they are importing/exporting it not LL. I really cant see how VAT is applicable to another servise after that point and onwards. Do you?

If the Client software was not free I could understand why purcahse or use of that might attract VAT as it is supplied here in the UK. But it is free so any % of free is free.

I have other questions to ask in my next post if its decided that VAT is, to my amazement, applicable here.

Posted at 4:48AM on Sep 28th 2007 by Bob Wellman

11. No european landlord will pay VAT.
What they'll do is:
1. make an alt using a web proxy that's not in europe.
2. get a friend of theirs from outside europe to buy their land with that alt.

Done. Since LL can't check where the owner of a paypal account lives, this is all to circumvent having to pay taxes.
With a VPN connection to some server in the states or russia or wherever landlords can even log as usual into SL and do business like this. Although they should prolly get another computer or a "hacked" version of the Second Life client so that LL can't check for their system specs so their alt can't be associated with their real accounts.

Simple as that. Anyone who has an interest in selling Land in SL and who is from europe will do this. Local Laws just won't work in SL as long as it doesn't block every proxy worldwide.
It's funny, too because you don't even need to verify your identity to buy land. So there's simply no way LL can ever find out where you actually live. Right now they're doing this by checking your IP, but IP addresses are just no way to be sure where a person is from.

What's interesting is that LL has never warned people that they're about to do this. And what's even more interesting is that it's pretty much impossible to tax income from virtual worlds as long as there are ways to get your money out of them through inofficial means.
This will be the biggest problem of virtual worlds in the future because governments will be fighting them like the music industry is fighting piracy at the moment.

Posted at 4:58AM on Sep 28th 2007 by Juliet Ceres

12. @Bob Wellman:
Very interesting points.
Let me say something about this:
"LL has 2 options here if they want to charge VAT, either add VAT to the current price in Europe or make that current price inclusive of VAT."

There's another problem in here. If LL chooses to make the current price inclusive of VAT, european residents (or german ones at least) could try to argument that they're running a business in SL. And since VAT is neutral for businesses in germany, they would get the amount of VAT they paid to LL back from the german government.
The effect of this is that german landlords who run their business officially in germany would get a price cut of 17.5% on all land in Second Life.

Interesting, eh?

Posted at 5:05AM on Sep 28th 2007 by Juliet Ceres

13. @12 Thanks for you reply

If you think that is interesting look a little further.

In order for LL to be able to legally charge VAT at all they must be registered for VAT in one or more countries in Europe. All customers can (and I say must) insist on receiving a proper VAT invoice quoting the VAT number the VAT is chaged under and full details. Refusal to supply this is illegal if it is requested (in the UK at least).

They must first decided where supply is coming from and register there. So lets look at the 2 possible scenarios of one registartion or one for each country.

If they pick one country as the source of the service(say Germany in your example) they will have to Invoice German customers under that german VAT code charging whatever rate applies in Germany (BTW: rates are not harmonised accross Europe)and German businesses will be able to reclaim it private individuals will not. If they then Invoice a UK customer under that German VAT number they will have to establish whether the customer is a VAT registered business or not. If so they will need to Invoice with the Customers VAT number quoted and not charge VAT as it is an inter country transfer and not charegable. If Private then VAT will apply of course. They will have to provide Intrastat reports to the VAT authority as well to cover this exporting within the EU.

Now lets examine multiple registration (more registrations means more cost and admin of course). Here we decide that each customer is supplied form inside his own countries borders and VAT applies to all. Different rate will of course apply in different countries. So the point you make about unfair competition applies even more (inclusive VAT or exclusive VAT just decides which way the advantage falls).

Now lets say as a customer I register a company in Germany and use people to make SL stuff form all across Europe. I pay for thier SL usage so I am the customer in Germany but the supply is made to many countries. This is know in VAT terms as trangulation. You want interesting well now its really getting there and we havent even scratched the surface.

Like I said LL better to avoid the minefield if at all possible. With so many people who will be upset you can be sure the EU VAT offices will get lots of complaints and they (in UK at least) are legally obliged to investigate them all.

Posted at 5:33AM on Sep 28th 2007 by Bob Wellman

14. They don't get something... lets say your from Germany and you buy a product in the UK you have to pay 18% UK vat on your product and have it shipped... NO GERMAN TAX will be charged only the UK one... so EU SL servers are in the UK so by official mean they have the right to charge the 18% UK VAT but not as example the 21% Belgian VAT and so on... LL did you missed something? Another thing is it say, " on all land sales and payments to LL" If I buy land from you I don't buy land from LL, only tax can be added for tier and premium... if I sell land to you, you pay me so not to LL so in fact theres no extra VAT on that as well to my thinking, right? Another shitty move is "WHY THE HELL THEY DON'T PUT IT ON THERE BLOG?" no a sleazy email in the middle of the night, no warning and so on ... next they will say it's voluntary doh as all the other crappy shit they come up with... One thing im sure about is as soon my place is sold, what wont happen I believe since they make it almost impossible to sell off once you bought (unless somebody's crazy enough to pay you the price you had it for with some tier recoups or proffit maybe and the dude or dudette really likes the environment) DOH... another downward slope is classifieds, does this means these will be not fair anymore as well? (not that they already are though) I pay 20000L$ to have my classified show up in the list per month, what are they gonna ask 21% VAT on that too, how lovely that is...

One last thing, why should almost every land owner/shop owner fall in the camping shit to just get a little traffic? since the more sign ups they get the more campers you see, premiums mostly don't visit camping spots, but haven't you wondered where the premiums hangout these days? Why does people who own like 30 SIMS have like 30 visitors in total on them, even with good content... shops etc? Where are the premiums gone? all hiding in there own cave or what? It used to be fun for a while folks... sorry im spitting my guts but im so f****** sick of there shit... well of course I hear you say now "then just leave" but what about you cant leave unless people start abandoning there highly payed for land and investment, time and work? any recoups possible? hmm I guess not, unless you create 100 noobie alts and have a whole bunch of computers and let them camp, doh !!! And btw as a simple so called small land owner 8k sqm, is it really worthed all the crapp we get? like 40$ tier, 40$ to 100$ and more classifieds, premiums, paying your broadband provider for the highest and fastest subscription since SL is f****** consuming it like cookie monsters, and now vat as well doh (stickie, classifieds are payed in L$ that are a fictional $) all this for a few object sales, good or bad? Oh before I forget, will they charge 10L$ per upload + added vat as well now or send you a monthly upload invoice + vat ? Sorry I feel very bad for wasting almost a year on this pixelated scam ... farewell folks... have a nice life and please don't forget you have a first life !!!

Posted at 7:00AM on Sep 28th 2007 by More than old enough, dang

15. "Like I said LL better to avoid the minefield if at all possible."
That's not possible anymore. Since they've already introduced VAT to SL, there's no way to just "take it back" anymore.

Like with so many decisions lately, LL has decided to go the least feasible way and therefore doomed themselves to fight about taxes and local legislation with their residents (at least those who are not just leaving).

I canceled my premium membership yesterday because I probably won't do much in SL in the future anymore if this trend continues.

Posted at 7:01AM on Sep 28th 2007 by Juliet Ceres

16. @15 Juliet

Maybe they can partly take it back.

Actually the service is free (Basic membership inludes use if all services). The VAT is bieng charged on the "premium" bit of the service (i.e. support calls , stipend and right to nuy land. So no premium service fee no VAT. Of course support and stipend would have to go but who cares about that. As for tier that is a maintainence charge so VAT charegable I guess except that the maintenance is carried out in the US not in Europe. If I owned a condo in Florida and the roof was fixed they couldnt charge me VAT in the UK could they.

I dont see they are making legitimate cahregeable European supplies for which they legally can charge VAT against. It is as illegal to charge VAT when none is due as it is to not charge it when it is due.

As soon as I get a VAT invoice I for one will query it with my local VAT office as a suspected illegal charge being levied. Lets all do that shall we?


Thoughts please?

Posted at 8:41AM on Sep 28th 2007 by Bob Wellman

17. Hi All,

I think there are two things here - one is the level of service and professional courtesy we get from a provider of ours (some of us consider ourselves to be 'clients', rather than residents - we buy a service, albeit erratic and slightly 'beta' and I operate in-world with money from my company, and as a professional 'client' rather than a 'happy resident'). And the other is the level of response they expect from us.

I am not necessarily arguing that we shouldn't be paying VAT, but I would argue for a couple of things:

1) Some kind of professional customer care from the people I've invested well over US$2000 in and well over 1,000 hours with. Some kind of warning, some kind of courtesy from someone who depends on me - and people like me - to get paid each month. I'm the client, you see? This is something that LL often don't seem to understand.

2) The ability for their swanky new VAT interface to understand that educational training in Spain is VAT exempt - and that is my primary reason for operating in SL. The interface can bill me 16% more automatically and without notice, but it can't recognise that I live in Spain and that my educational activities in SL (under my status as director of a rl educational consultancy)are exempt. Repeat - I'm exempt - but you didn't take the time to find that out, or to ask me, or to warn me. In short, LL, you assumed and you acted - no warning, no enquiry.... no intelligent action. This is a mockery of a tax you have introduced - badly pitched, introduced, poorly researched and implemented, as usual, in your favour - or in favour of the people who are pulling your chains in government or elswehere.

oh, and 3) If I am to pay you VAT without your troubling yourselves to investigate my tax status, then you will - in turn - issue me with legally binding VAT invoices or receipts which I, in turn, will be able to turn over to my company administrator who will, in turn, be able to present them as an accurate and legally binding portion of my professional income for each year.

That seems only fair to me.... I wish you *had* been fair with me, and thousands of other people before you introduced a blanket VAT charge which is a sledgehammer to crack another nut in your organisation.

Gavin

Posted at 10:22AM on Sep 28th 2007 by Gavin Dudeney

18. Well I've not lived in Europe for some time and are not up to date on current VAT laws but if its to be applied to LL transactions shouldn't it also apply to all transactions? Say i buy a nifty skybox from vendor A. Resident in world and I live in Europe doesn't that vendor also have to apply it? I mean what is the difference? Thats a can of worms

Posted at 1:01PM on Sep 28th 2007 by sirhc DeSantis

19. Do we have a UK VAT lawyer or accountant around?

My memory is that, if you're a US resident visiting the UK, you pay VAT and can (try) to claim it back if you keep a receipt. If my memory is correct, and the law hasn't changed, then should LL actually be charging EVERYONE VAT and issuing VAT receipts (and VAT invoices on a monthly basis as Gavin points out) so that those of you who are exempt can claim the VAT that they are obliged to charge you back?

You have to wonder why LL moved their billing to the UK. If my memory of the details of charging VAT is true (it's supported by scanning through google pages, but they're not lawyers either), you have to wonder how much longer it will stay over here, but they will also be getting spanked wrists if they fail to charge VAT to all their users.

Posted at 1:30PM on Sep 28th 2007 by Eloise Pasteur

20. there are some nice people working for LL, but ofthen the actions (and inactions) of the company itself ends up screwing everything :/

Posted at 1:37PM on Sep 28th 2007 by TigroSpottystripes Katsu