21. None of the above comments understand the actual law being applied. Under a 2002 EU directive enacted into the tax law of each EU country, if there is "no physical product" in an e-service, then the point of taxation is not the country of the supplier, but the country of the consumer. Points made above about VAT law all refer to physical product, which in this case is irrelevant (as are references to gambling). Mercia (paying 21% VAT which means I am paying the same for a mainland sim as a Canadian pays for a private region)

Posted at 3:57PM on Sep 28th 2007 by Mercia McMahon

22. This will have a huge effect on the SL economy - much more, I think, than the casino ban, which has already sent mainland prices falling by 40% in recent months.

- Mainland: We will surely see a rush of EU residents dumping their mainland parcels at any price. Does the phrase "market crash" comes to mind?

- Premium memberships: Many EU residents will drop their premium memberships. The great majority of the "value" of premium memberships is the stipend. Why pay VAT on this when direct purchase of currency is not subject to VAT?

- Private islands: EU residents will be driven out of the landlord business, as they won't be able to compete with non-EU sim owners. EU residents will be much better off renting private islands (VAT free) than owning them. My heart goes out to EU residents who already bought sims for renting out; they are royally buggered.

Unlike the casino ban, LL *does* actually have a choice here, albeit an expensive one: they could absorb the VAT themselves.

Posted at 2:38AM on Sep 29th 2007 by Not Happy

23. @18

Your question of whether the Sky Box Vendor should charge VAT is a good one.

It all depends on VAT registration. If you are VAT registered you must charge VAT on goods and services and if you are not VAT registered you must not charge VAT. If your turnover is over a certain limit (In the UK it is currently set at £64,000) then you must register for VAT. Under that amount it optional to register if you want to charge VAT on sales and recalim it on expenses.

Which brings us to another point. If the Sky Box vendor was VAT registered he would charge VAT and reclaim the VAT on textures he bought to make it if that was sold to him by another VAT registered trader. Of course we must know which country each vendor is in and thier VAT number to acoount correctly and to report intrastat movements acroos Europe. Starting to get complicated isnt it?

On a lighter note: Of course these transactions are all in Lindens so the VAT needs to be calculated in Lindens. I wonder if we can settle our tax liabilities in Lindens? Maybe LL can set up an Avatar called Inland Revenue and we can pay him our linden taxes inworld. Hows about it LL. Yes.. I know it silly... but you started it. LOL

Posted at 4:52AM on Sep 29th 2007 by Bob Wellman

24. I'm amused by some of the comments made by people now having to pay VAT.

If you really think that VAT should be inclusive, then LL should have a separate price list for each EU member state which reflects their cost of doing business (i.e. VAT). So you gain zero instead of having your VAT subsidized by LL.

Not that I don't see a problem with LL's usual ham-handed approach. For instance, I heard a rumor that LL charges *everybody* California Sales Tax (8.5%?). If I don't think it's fair for me to pay your VAT, then you shouldn't have to pay my sales tax. But I'm not sure this is actually happening. If it is, it's inclusive. Normally american sales taxes are added, not inclusive / invisible.

And as others have pointed out, there is no process for receipts and refunds. At least none that I've heard.

I'm laughing at the landlord situation. If landlords can claim a refund, and need LL to deal with that, then don't they themselves have to collect VAT for their home government from their tenants? Have fun with that. Will VAT be inclusive in their rents? ;) Will landlords have their own process of receipts, with ID numbers? I assume that the governments have a process to track refunds and collections because claiming fraudulent refunds is just too obvious a way to cheat.

Yeah, I'm a bitter bitch right now. Deal. :)

As for the other obvious idea of claiming an off-shore address:

"If you say that you come from a different country that doesn't charge VAT, it's very likely that discrepancies between your IP address and your declared country would get caught in our risk detection system and may cause your account to be flagged for review or even suspended."
- http://secondlife.com/corporate/vat.php

I'm waiting for VAT to be charged on LindeX transactions, since I think it's impossible to charge and track VAT within the SL economy.

OMG VAT is fun! I have a friend in RL who wants to bring that system to the U.S. and make it the main form of taxation. Right now I want to shoot him.

Posted at 4:46PM on Sep 29th 2007 by Nightbird Glineux

25. I hasten to add that I am totally against LL subsidizing anybody's VAT. If you don't like paying VAT yourself, bitch to your home government.

Not that that's going to get you anywhere.

Posted at 6:46PM on Sep 29th 2007 by Nightbird Glineux

26. second life is going the same way as internet explorer --- too much red tape ---

Posted at 9:23AM on Oct 2nd 2007 by brenda bunny

27. I think LL should "grandfather" sims owned prior to the effective date and absorb the VAT themselves. They are still getting approx. USD 250 net, which is considerably more than the USD 195 net for mainland sim or previous grandfathered sims.

Rationale: Fairness. LL "sold" these sims on a certain basis which they should stick to. This change is *not* due to any recent change in law but rather LL's decision to apply existing laws in a certain way (not to mention their decision to open an office in Brighton). In fact, consumer prices in the EU are necessarily *inclusive* of VAT, so an EU resident buying a sim could reasonably have assumed that the prices (especially monthly land fees) are end prices. Instead, those who showed their confidence in SL by buying sims for renting out are facing losses, since most can't pass this on to their renters.

Posted at 6:11AM on Oct 4th 2007 by Not Happy

28. OK i would like to say something some of you are going on about buying prouducts in sl all from differnt countrys and being charged VAT. Have obivisouly lost the plot VAT is only charged on land fees and prices paid to LL if you are euro. Also if you are all going to kick up a storm for LL you are actually kicking yourself in the ass. All im saying is all you guys who act and talk like finicial experts stop one minute and listen to whats coming out of your mouth, it is a load of crap to make you sound good or something catch yourself on and say something that matters. thats not including everyone there is some good posts there but the wanabe finicial VAT experts you know whoi you are you would be better to just say nothing at all :-)

Posted at 6:02PM on Oct 10th 2007 by David McNeill

29. Some time ago I was a premium rate customer and owned LL land. However, the poor 'help' service and the introduction of VAT has helped me to review my status as a customer. In simple terms, my land has now been sold and I rent a private island at a very reasonable rate (no VAT there!) - I have also downgraded to a basic account. My theory is simple, pay nothing to LLs and enjoy the SL experience as best I can. I would encourage all fellow Europeans to do likewise - LLs do not seem to listen to complaints or whinges, so hit them where it hurts, and that is in the pocket my friends.

Posted at 10:26AM on Oct 27th 2007 by Melanie