Questions About VAT?

There have been a lot of questions about why we sent out an email announcement to EU citizens that we will need to charge VAT, and why there was no advance notice.

Second Life has been growing exponentially in Europe over the past six months. We consulted with a number of highly-qualified tax advisors, and the bottom line is that we must charge VAT to EU residents in order to comply with EU tax regulations. Here is one article among many that discusses our scenario. We’re sensitive to Residents’ opinions and regret that some of you are surprised, but we have no choice other than to comply with applicable laws.

We individually contacted residents who would be affected by the tax and so did not initally do a blog post believing a general announcement could be confusing for those Second Life Residents not impacted.

There is more information about the VAT decision on the website and in the Knowledge Base.  You can log in with your Second Life name to see the full FAQ.

About Robin Linden

Be the Change. You must be the change you wish to see in the world. ---Mahatma Gandhi
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133 Responses to Questions About VAT?

  1. Alyx Sands says:

    I was surprised by the fact that VAT wasn’t INCLUDED in the prices you charge, but added on top. THAT is not the usual practice. USUALLY you say the price is so-and-so, inclusive of xx% VAT.

  2. Ann Otoole says:

    Hopefully Linden Research is highly active and paying the right people to work hard in DC to make sure the internet tax exemption in the US is extended or made permanent. Yes you need to be lining some pockets because thats how the beltway 2 step works.

  3. Gomez Bracken says:

    Thank you Robin – it’s a start..

    Without wishing to start a flame on the subject, can you tell us EU customers why we are still paying the same base (ex-vat) price as US residents? I’m assuming that now you are charging us VAT, you should not be charging us state of claifornia sales taxes (7.25%) also? As it stands, we are being charged VAT on the ex-vat price AND us state tax…

  4. Luna Larsen says:

    well you did not contacted me at all 😦
    i got just yesterday morning a mail for my Alt, but no mail for my account.
    VAT, nice and for what ? for a service that does not work at all.
    all my tickets to the support got no answers.

    more than half of my objects from inventory are still: ” missing from database “. and we are not talking about peanuts.

    so i am happy for the VAT and for the great support i get for paying a few hundert usd every month 😉

  5. Felix Oxide says:

    @ #3 Gomez

    I do not believe there is a state sales tax for the service… yet

  6. Jesseaitui Petion says:

    Didn`t you contact them a bit too late, though? It seems some didn`t receive the e-mail; and some who did are only getting a few days notice before they have to pay an additional 17.5%

    I love this platform, but man, I don`t think you guys realize we are adults and not children.

  7. Tiana Whitfield says:

    To be fair, I saw the charges implemented on my account page long before I received any email.

    Could you tell me what will happen with BFPO addresses as they are VAT exempt. Are your systems in place for that?

    Also for all this time as a EU resident I assumed I was already paying tax as by law we need to be know if we are not…

    I have no problem in paying what is due… I just feel that we had it sprung on us despite thinking we were already paying it.. but sprung on us with no warning.. this has affected a lot of peoples budget in the sense that the day before they were buying land having no warning this would be sprung…It seems land is being dumped now already.. What a mess.

  8. Rene Erlanger says:

    Linden Labs’s arrogance on this whole matter is amusing!
    I have never witnessed so much incompetence all under the same roof as shown here over the last few months!

  9. Jesseaitui Petion says:

    @ Rene – Yeah it`s quite terrible.. I have not even logged in since this whole uproar occured. I`m too appalled and disgusted. All I have done so far is follow the chats on the subject and wonder “What`s next? What`s next…”

  10. Luna Larsen says:

    @ 5 and 6. i agree at 100 % with you 😉

  11. Funky Monnett says:

    I just find it very odd that when it comes to for example gambling .. we have to play by US rules .. but when it come to taxes .. its European rules all of a sudden ..

    If you ever dream of making SL the new internet standard, you should really carry on like this … just my 5 cents + 17.5 % VAT

  12. Cruise Swain says:

    Are we atleast gonna have the option to pay our tier through L$ so that we europeans can still compete?

  13. Melanie Milland says:

    I pay my tier with US dollars gained from the sale of L$. This money has never been anywhere near the UK, it has not been earned in the UK, not been paid to me in the UK and is not spent in the UK.
    VAT should not be charged in this case…

  14. I fully understand that the current EU tax laws are not a choice of LL to implement, but rather a necessity, though this will affect the following residents and virtual companies I believe :

    1. premium users based in Europe will now be charged their local VAT percentage on a) their account fee b) any tiers paid to LL c) see the article about VAT for other services. For most European users this will mean an increase in cost of 17% to 25%, depending on their locality. The only way out of it, is by having a RL company controlling and paying for the fees and file for tax exemption.

    2. virtual companies based in SL, and not residing in the EU will need to find out if their “customers” are EU based and if so, charge them VAT as well. While transactions in L$ are – according to the page on the LL website – exempt, if you for instance allow your residents to pay tier in USD or Euro, the situation could be much more complicated.

    However, in order to charge VAT, you would need to be registered as a company. I can only guestimate how large of a percentage of the “virtual companies” in SL are actually individuals. When exactly does an individual that offers services on a regular basis become a company? The plot thickens, I tell you…

    3. this puts all European based “companies” or “service providers” at a direct disadvantage, as they’ll have to take the increase in cost into account when setting a price for the services they provide. As outlined before, 17% to 25% depending on their locality.

    4. Any US based “virtual corporation” that has already made statements that they are tax exempt, I would advise to seek legal council in order to make sure about that. Tax laws are not easy to understand, and if someone decides to check into certain aspects of the tax regulation and how that “virtual corporation” is handling it, things may turn out ugly.

    5. If LL feels bound to comply with international and EU tax regulations, I can’t wait for some other regulations to come into effect, or to be forced into effect. My Second Life seems more and more like my Real Life : regulated and limited, though there is one major difference. In RL some laws protect me as well, in SL we only seem to get the limiting ones. I hope that being able to fly and Teleport in my Second Life offsets the increasing regulations and limitations.

  15. Nano Ashby says:

    What I don’t understand is, I’m dealing with LL, and I am billed in dollars, so I am dealing with an american company, the product is in america, and the services are used in america, so… I see no reason why I should pay vat. I’m taking this up with the local vat office but so far no response from LL with the details requested.

    I’ve not had an email. My account shows the vat added. If LL is to say I am now a customer of the UK LL, then ok, but bill me in sterling, and ask my permission to migrate my account from the US to the UK.

    if, as I suspect, I am still a customer of the US LL then I need much more justification for the application of vat than what you’ve offered so far.

    the UK VAT office wish to know, under what pretext do you consider yourself (LL) liable to account for vat.

    will you answer?

  16. Vanessa says:

    Robin: In the “interview” with Prok you stated that LL has been absorbing the VAT all along, which in my opinion has to mean that account fees and tier fees were *ALWAYS* VAT inclusive like any EU citizen would expect.

    That obviously means that you’re not just adding VAT to current fees, you’re simply executing a country-specific price hike that only affects EU citizens, under the guise of being forced to comply with EU law.

    It would be helpful to clarify whether LL didn’t realize it needed to pass on VAT for EU members until recently (quite unbelievable, but a possibility I guess) or be upfront that this is really just a targetted price increase.

    Nothing in the post really answers the question as to why there was no advance notification either. A simple “after reviewing our pricing for EU citizens we’ve made the painful decision to raise our prices to offset the VAT we’re required to pay – and have been absorbing up until now – to the EU member state you reside in” would have gone a LONG way to informing residents and would be met with understanding and you could have posted that weeks or months ago.

  17. Anderson Philbin says:

    It does seem to be a simple solution that you could just move your account address to the Cook Islands or some other tax haven. It’s not as though LL actually delivers anything to you.

  18. Angel says:

    The problem faced now is that Europeans are no longer going to playing on a level playing field.
    They will pay more for tier and therefore they will need to charge more for rentals or other serivces on their land in order to cover this excess and make the same profit non-europeans would make.
    This basically forces them to rent land on privates sims own by non-europeans in order to try to get on some kind of level ground. So I expect the number of Europeans holding large portions on mainland or owning privates wims will drop dramatically in coming months. No warning, no time to prepare, it just IS …well I hope you have your VAT number LL.

  19. kerunix Flan says:

    VAT was supposed to be included in the tier fee. because there is no mention of VAT being excluded so, by default (by law), vat was included in the tier fee. LL have to support it.

  20. Stoni says:

    What is a vat, who pays it, how is it paid, when and to whom?

  21. Quintrix Barbosa says:

    #3: In the US, there is no sales tax on a “service”, and by US laws the internet is not allowed to be taxed. In other words, nobody is paying California State sales tax.

  22. kerunix Flan says:

    @12 : tax evasion is not exactly the kind of good solution we’re expecting 🙂

  23. mimi says:

    Still I wonder.. I’m sure this decision wasn’t made over one night… why didn’t you warn us some weeks in advance? Why didn’t you warn europe residents when buying an island that the prices you mention at the website would get much higher when they bought land with you?

    Now we are stuck with land which is more expensive than we expected, and we have to pay extra without prior notice! That’s so unfair… in any real life company people would consider this a scam 😦

    I think it would only be fair to pay back resisdents the extra money for at least one month, to give them the chance to sell the land if they don’t consider it the money anymore… I’m happy I never bought that much land and I sure will not buy any land from you in the future!

    At least rent is safe.. one can get rid of land easily when Secondlife decides to make another unexpected move which costs us lots of extra money!

    I don’t look forward to the unexpected and probably terribly managed way Age Verification will be pushed on us over us in one night.. up till now too many things costing us money have been handled in a terrible way..

  24. Alf Lednev says:

    Robimn Linden wrote “We consulted with a number of highly-qualified tax advisors, and the bottom line is that we must charge VAT to EU residents in order to comply with EU tax regulations

    So SL EU residents will be forced to abide by EU Tax laws but NOT by allowed the proections offered by EU Privacy laws?

    Since it is sprouted ad nausem that SL is US based and everyone MUST obey US Law, Why suddenly is SL saying EU residents must pay EU taxes on tiers etc. The amounts are small and the servers are in the US, so aren’t they bound by US Laws as repeatedly told about everything else?

    Selective application of different international laws are to be the norm? If it’s money, SL laws seem to be to grab all that can be got ( I am sure Lindens will be playing the short term money market with the EU Vat taxes before handing them over to the EU) . If its not money related, bleat US servers/US laws on privacy.

    So EU Tax laws must be met but EU privacy laws pertaining to residents will not be as US Law overides? Uh huh selective application of international laws is a minefield that Lindens have just started tap dancing in. Roll on Hipihi as SL fades slowly into the morass of the courts.

  25. Pingback: More VAT information, or confusion «

  26. Hilton Harpoon says:

    There are various issues that have made me unhappy with the way LL has conducted it’s self on this matter:

    1- No prior warning period or in other words, it’s immediate effectiveness.

    2- Are European citizens being double taxed, are we paying US and EU taxes?

    3- Should content creators pay tax for a service that is more then web hosting, or should we be demanding it from LL for delivering the content provided by LL to it’s user base as well as and not limited to marketing the Second Life platform thus increasing the value of the overall experience and LL as a company.

    4- Since taxes are being demanded of EU customers at this time and LL is acting as the tax collection agency, does this mean that LL is taking responsibility for the amount of taxes not collected up to this date? What are the risks for customers of LL if the VAT taxes are demanded of LL by the European authorities?

    5- Since LL is delivering a product in Europe and intends to collect from it’s customers a European tax making it an obligation for customers to pay this tax, will this obligation of compliance bring with it the privilege of European rights to online gambling (legal in most countries) in the future using the Second Life platform, or does LL intend to in force certain European financial laws, and ignore our European online gambling rights?

    Much more needs clarification, but these are my most important concerns at this moment.

  27. Ian Banach says:

    I could understand paying VAT for Premium, but paying for virtual land? that is just a host space in some US servers, nobody pay european VAT for get USA based hosting.

  28. Doug Tweak says:

    Let’s see – A company determines that in order to make a profit (their primary reason for existence) they must charge $295.00 dollars per SIM. As this small company grows international and is faced with taxation system different from their native country they finally realize that they must comply with other countries tax laws. So – let see – they can still charge the people from that country 295.00 and absorb and pay the loss of the 15% or whatever it is that is due for taxes. They can subsidize the other other countries tax system and pay it for their residents. Effectively selling their product for two different prices since the tax portion of the $295 dollars in your country is not an income for them. Who would really expect a company to do that! If they charged $295 to you they make less money from you then from other countries. So to meet their bottom line they have to raise prices across the board.

    It just makes no sense to me why so many people are upset with LL. You have effectively been getting away without paying the taxes so far. Why not direct the outrage at your own government. They are the ones getting they extra money LL must collect – correct?

    Look – I agree – taxes suck. But if your country imposes them don’t expect LL to have to pay them.

  29. Dekka Raymaker says:

    I received my e-mail advising me that being a European customer I would be charged VAT on ant financial transactions in the future, well guess what you won’t be getting any financial transactions from me in the future. And god I was so close to buying an island in July, but put it off because my father died. Looks like that’s not going to happen now, well not until you realize…

    …maybe you considered the option of paying the 17.5% from the service charges as you now have then, but hey which company wants to start losing 17.5% of it’s revenue overnight? Well just maybe the knee jerk reaction of people dumping land to get back to a tier they can afford, canceling outstanding orders and not making an order they were likely too will be a much greater loss than 17.5%

    And all the smarmy US citizens making comments about well it’s your government, you have to pay taxes, you are clueless to the implications. For everyone with a business in SL, especially residents with property, your going to see your present dwidling profits start to spiral down out of control, I’m sure this will put SL into free fall now.

    Stupid, stupid people.

    Oh just in case you didn’t get it, I’m annoyed!

  30. Deeka Hold says:

    Well well well!! if you think 25 dollar a month isnt enough yet, EUROPEAN taxes applly to the DOLLARS, so it becomes 29,75 A MONTH.

    WHAT the HELL are you lindens thinking?

    AMERICAN LAW – ok…

    1) what the hell does america have to do with europe?
    2) Howmany tax does a US player pay?
    3) can we get a RECIEPT SO WE CAN DECLARE!!??
    4) Can you PROOF i bought something in ENGLAND ( 17.5% is BRITTSH VAT , there is NO SUCH THING as a EUROPEAN VAT )
    5) Since when does ENGLAND fall under AMERCAN LAW?
    6) What is the VAT rate in ASIA or AFRICA, or SOUTH or NORTH AMERICA or AUSTRALIA? so i can move there to pay less.

    Please, buy a server in holland, under DUTCH law, where we can get laid , gamble and smoke drugs, where an american prude cannot tell us what to do

    I expect awnsers to my questions, ALL of them.

  31. Ian Banach says:

    can I deduce this SL VAT from my usual tax declaration? If so, I need invoices and your LindenLab european VAT ID (or like you name NIF)

  32. Walker Moore says:

    The most disturbing thing apart from the lack of notice, is that you’re illegally applying VAT to the existing billing period, having given no notice beforehand. According to EU law, if you didn’t mention VAT, the assumption is that it’s charged. It would be quite legal for us to report you to Customs & Excise for this ‘oversight’, besides disputing any additional VAT charge for the present billing cycle with our credit card companies.

  33. Luciftias says:

    “I’m sure this will put SL into free fall now.”

    How many times has this been said over the last few years.

    One of these days, maybe, it will be right.

  34. Ian Banach says:

    Why u apply european Law in this issue and for games issues you apply USA law? Eurepean are under european laws in SL or under USA laws?

  35. @ 19 Ian Banach : Incorrect.

    If your US based web host doesn’t charge you VAT yet, they are either :

    1. absorbing the cost because they feel it’s too big a task/cost to decide what customers are European based and those who are not,


    2. not complying with EU tax regulations that have been announced in 2003 and are effective since July 1st 2007. If that is the case, it’s only a matter of time before there’s a knock on their door.

    Mind you, I was surprised by this new regulation going into effect as well.

  36. Mikhail Obscure says:

    I contacted HM Inland Revenue today (UK). If LL income from UK sales exceeded £66000 then they will have become liable to register for VAT in this country. I was informed that its highly likely that they would have to pay outstanding VAT to the UK governemnt from November last year. I suspect that they have only just been made aware of this and have panicked, hence the sudden unnanounced charges on our accounts.

    LL should be aware that they need to display their VAT registration number on any bill sent to us by law. So far they have not responded to my support ticket on this matter.

    Yes VAT shoud be included in our tiers, not added. Lindens need to review thier tier charges to reflect the growing popullarity of SL and the lower land prices. Too much land is empty not becuase of cost but because of the exhorbitant tier charges.

    please join group “against VAT” and register your protest

    As I state in all my posts is anyone from LL reading this and if so respond.

  37. Oh, they actually did provide their EU tax number in the knowledge base if you log in and look up VAT. It’s right at the bottom and according to the article, you should be able to use the statement to declare your taxes.

  38. Dekka Raymaker says:

    @24 Luciftias

    yeah well I was careful not to say it definitely would 🙂

  39. Deeka Hold says:

    i just know this is thought of by an american, its easy to see that

  40. Lukas Mensing says:

    When will Linden Lab be obliged to comply with chinese regulations about freedom of expression, and with Saudi arabia and Iran regulations about female avatars that must wear a veil

  41. Deeka Hold says:

    i mean, a european wouldnt charge you more for something that well bought

  42. Charlotte B says:

    Ok VAT I understand, however I believe LL have not been clear around the policy they are implementing.

    Linden Labs please publish your VAT number and for the UK the legal entity you are charging through. I will be happy to use my Limited Company as I use SL for profit and already declare income profit thorugh my normal tax return.

  43. BurnA Greenwood says:

    I found this truly shocking and sold all my land in protest. It is not much of a warning if you send it out after the event! Also downgrading my account as I think this is an unacceptable level of service. I’m sure if you wanted to get really legally technical you’ve probably broken a number of laws in this implementation by misleading your customers as to pricing.

    There are a number of questions that remain:

    1) Will there be any cost alteration to allow Europeans to continue trading fairly (i.e. a separate US and European rate)

    2) Why wasn’t VAT included in the ‘global’ price until acceptable notification could be given… i.e. why are you passing the costs of your mistakes onto us.

    3) Will there be any new incentives to stop Europeans from leaving – it seems a popular option at the moment!

  44. kerunix Flan says:

    2007-09-28 11:42:43 Adding 19.6000% VAT (France) for Island charge
    2007-09-28 11:42:41 Adding 19.6000% VAT (France) for Island charge
    2007-09-28 11:42:41 Adding 19.6000% VAT (France) for Island charge
    2007-09-28 11:42:39 Adding 19.6000% VAT (France) for Island charge

    They are not losing their time reading us… busy feeding the guinea pig to run the VAT server 🙂

  45. Votslav Hax says:

    ….i have a feeling that someone in us contacted someone in euro and voala’…vat…! come on people.. government agencies at work here. linden is not sure how to deal w/this except..COMPLY!(sp)….Nike.”Just do It”… Be done w/ it..
    Linden… we appreciate your work..we pray you appreciate ours…

  46. Sy Beck says:

    Sorry Robin, but that post won’t wash. The moment you set up in Brighton you were liable to VAT (even before you then were easily turning over £60K p/a in European membership and assets). Your financial advisor would of/should of told you at the time when you were discussing it. Given that fact, you have known since the day you set up in the UK that we were going to be charged extra or deliberately withheld telling us that you were “absorbing the cost”. At no time since then have you taken the opportunity to broach the subject with us in adult or professional business manner. You now expect us to believe that LL suddenly woke up to the fact and unilaterally imposed a VAT charge yesterday morning PDT. This again simply doesn’t wash. Add to this fact you were actively selling land (mainland & island) to European customers up to the point of notification by email points only to the fact that you were deliberately scamming us into buying a product that was going to cost us a lot more in less than 24hrs.

    I cannot express my anger enough at the shabby way LL have handled this matter and it simply adds to your reputation as being amongst the worse in customer service. I too am checking with my local tax authorities and have also submitted a Freedom of Information request asking for all correspondence that you have had with HM Custom & Revenue to get to the bottom of this because something doesn’t smell right.

    I’m sorry to have to say things this strongly as I’ve stuck with and supported LL through many issues but the way you have handled this is simply outrageous and as you can see from other posts this is widely shared amongst your user base. And not just Europeans.

  47. Funky Monnett says:

    Ok .. here is a solution .. let us pay the tier with Lindens .. no vat can be charged on virtual money .. problem solved

  48. Count Burks says:

    one island owner pays 195 USD in grandfather tier while another one pays 295 +25 % VAT : 369 USD.

    174 USD difference for an island. If you have 10 that’s like 1740 USD difference per month. Discrimination

  49. Aislinn says:

    OMG! I had no idea this was going on. While I’m in the US, this seems extraordinarily unfair to UK residents. Aren’t the LL fees high enough, for a service that has constant bugs and losses that we all have to pay for again and again? I understand taxes, and fees, and complying with the law, but this on the heels of the threatened privacy invading documentation melodrama is way way too much!

    As it stands right now, inventory is missing many items, Linden dollars come and go, without LL returning them often times, teleport is hit and miss, log in crashes are frequent, the list goes on and on. Add to this the inept handling of abuse/complaints sent in to LL.

    Why enforce only part of your TOS, terms and tax fees? Why part? Why not all?

    This insane waffling and inability to carry through has forced my family to discontinue their upgraded accounts for basic. We could see no logic in paying for a service that continually took our money and refused to give what it claimed it would in return for the fees (including the new land we NEVER had access to, or the support of a TOS to allow us all to live peacefully. We have been harassed and pestered by ass***** for quite awhile and all LL has done is ignore us)

    So, now, why pick on the UK? Should not all taxes, etcetra be inclusive in your fees?

  50. Lord Humphrey says:

    You state that you regret that some of us were surprised by this ……looks to me like the majority of us are more than surprised! We were given no indication that:

    a) VAT was not already included in the price we pay, (a given that it is in the UK unless stated otherwise)
    b) that you were looking into an issue that could mean a substantial increase in costs for the majority of your customers

    If you were sufficiently aware of this to seek advice from your tax advisors, why then were we not extended the courtesy of advanced notice at least from the point you were aware in order to warn us of the possible or likely charges?

    I made an agreement to pay you x amount for premium fees and x amount for my Island along with $295 per month tier fees. There was no statement to the effect that these charges were exclusve of VAT. SO little wonder I am now surprised to find that you can slap my account for extra charges, and with little or no notice.

    When the UK government recieve your first payment and slap you with a backdated bill for all the months you have not apparantly paid VAT on my fees will you be forwarding that onto me also? If so I would appreciate rather more notice than you extended applying this charge.

    As others have stated I trust I will no be recieving a VAT invoice from LL monthly.

  51. sunray seasaw says:

    VAT wird erhoben wenn eine nicht europäische firma waren oder dienstleistungen nach europa liefert.

    die server von LL stehen und werden in den USA betrieben. Mein gekauftes land befindet sich in den USA.

    Nun will LL VAT von mir und liefert mein Land nicht nach Europa.

    Hört auf zu diskutieren, wir müssen LL anzeigen, das ist der normale weg.

    Vllt fällt auch irgendjemand endlich mal auf, das LL in den USA leistungen an amerikanische bürger vertreibt ohne dafür die mehrwertsteuer an das amerikanische finanzamt abzuführen

    Linden Lap hat gewaltige Summen an Steuern in den USA hinterzogen und wird mit sicherheit bald gekillt.

    Wenn wir europäer noch wenigstens ein bisschen zu unserem recht und unserem geld kommen wollen. Müssen wir rechtzeitig rechtliche schritte einleiten.

    Es wird sammelklagen geben, bitte beteiligt euch.

  52. notagambler says:

    LL isnt allowed to put the vat above the price for Eu-residents.

    not in eu-law.

    prizes for end-consumers need to be included all taxes, and LL is knowing that. they also arent allowed to took the vat if they dont deliver warez in eu…. and they always tell us they dont do that. and only a eu-company can take taxes from eu-residents… but linden-liars ar always using us-“law” when they need more money from the gamerz….

    lindens are liar´s.

    they have no company in EU that would be a contract-partner of any eu-rsisdent of SL and so they cant use eu-law to take taxes/vat.

    these 15% is only for to fill their bags.

  53. Montana Corleone says:

    So you’ve been talking for months, then drop it on with zero notice? Some people getting the bill before the notice? Well, quelle surprise, another shoddy bork up from LL.

    So if this was in 2003, what have you been doing for 4 years? Tax evasion? All invoices have to have your VAT number on by law.

    Right, in case you hadn’t noticed, VAT is an end user tax. So if you are a landlord, you should pass that on to EU residents. So I think it tme we established in a UK court that L$ have value (and clearly do since you can freely exchange them for USD in several places on the web) and instigate procedures to do that so that the correct people pay the VAT. And you have an office, billing, support and banking in the UK, so that is assets, falls under UK jurisdiction.

    While we’re at it, better rewrite that crazy ToS to comply with EU law, oh, and by the way, once you have entered into a contract in Europe, you can’t then chnage the terms willy nilly every other day.

    So right, if we comply with this, then we must comply with other laws, and it’s legal to gamble where I am online, so put that back too please.

    And you haven’t been growing exponentially in Europe from your own Key Metrics guys. Users in Germany have dropped by 25% since you included actual user numbers, and 20% in France, and nearly all European countries plummeted in August versus an increase in the US…

    I suspect it will plummet an awful lot more now. And we still have ID Verification to come lol. There go 50% of your users and loads of your income. Have a nice life.

  54. Montana Corleone says:

    Oh, and if the services don’t work, ie down time, sims down, crashes, inventory lost etc, then no service is being supplied, therefore no VAT is payable. Get that part of contract law right too.

  55. Stick says:

    Ewwwwwwwwwwwww !!!!
    Lucky i heard this..
    I was about to buy another island
    Not now 😦

  56. Chaley May says:

    This is stupid and not thought out at all.. Paying 17.5% more for everything puts the EU at a loss. But this will simply be bypassed by people purchasing land and L$ through someone from a country outside the EU for about 2% cost of using paypal.

    This means people outside EU will be able to take advantage of this but its going to save us europeans 15% and wont have the land in our name.

    The $9.95 premium accounts i can understand paying VAT for. But when people are paying sums over $100 they are usually not the ones receiving the service but renting out land.

  57. paulie Femto says:

    Has the size of objects which can be accurately simulated decreased? Can we simulate objects smaller than a billiard ball, fer instance?

  58. notagambler says:

    i wonder if the ll-employees, situated in EU, pays all they need to pay in eu as employees…..

    i only wonder…..

  59. concerned says:

    What a screw up.This is without a doubt the most incompitent company on the internet now.Why do i say this?

    You make us agree to TOS that says we are paying for a service that is not guarenteed to work then you have audacity to tax us on it,

    You provide us with a copyright protection that isn’t even internet supported,all by snail mail or fax when clearly it would make much more sense to have e-mail dmca as this could include the original layers textures,A digital service that thinks paper is the best way to provide evidence of digital infringment,yeah as if thats not a way to put people off bothering.

    You run updates midweek then say on a friday we don’t want to roll a restart because we might not have staff to cover what goes wrong,Monday roll outs would be first thing anyone with an ounce of sense would think of.

    Your decide to blog instead of keep forums supported because this will enable you to interact more closely with community but since this move your interaction has become well only way to put this is arrogant,non exsistant and frankly shoddy.

    I support many many things you do but instead of having 2 clients 1 with voice 1 without(you decided to make veiwers optional so people could stay without) you find an exploit and instead of giving a choice we must all download this update.
    You ask us to Verify our identities with a company we have no reason to trust and why should we when last year we all had to change passwords because your servers had become comprimised.

    I am sorry but i’m not being asked to pay extra to protect you when this year i have felt less and less protected and less and less valued as a customer.

  60. Puff Woodin says:

    WOW, HOW MUCH BS CAN WE TAKE? Not make a blog? Ye think we SO STUPID? This is somehow required? Let’s see the laws requiring this step.
    Dang Lindens, I was yer best promoter, ye keep pullin this crap.
    Makes it hard to defend your little thought out ways of change. Try hiring a blonde, and ask her what she thinks. I;m one, and i find this stupid.

  61. anonymouse1 says:


    VAT is just the latest example of LL’s poor record of public relations. Being the person in charge of “community” at LL, I certainly hope that you start doing a better job than you currently have been.

    This is a change that effects EVERYONE on the grid, not just the people who live in the EU. There is NO reason for it not to have been included in a communication to the entire grid.

    You, personally, and LL in general have a long way to go in order to earn back the trust of the community. Linden Lab’s recent attitude of disregard for resident opinion is reprehensible. You ignored us with voice, you ignored us with IDV. The fact of the matter is that it is not “our world, our imagination” anymore.

    The current voice implementation sucks pretty badly and is rife with bugs. It would have been better to wait 6-8 months for a solution that was sensitive to the entire communities’ needs.

    With IDV you threaten to ostracize those who refuse to give out personal details all the time tooting the horn of trust. You are not listening to us… you are not communicating…

    Right now SL is the only game in town… but that situation will not last forever… with so many virtual world projects coming online (see MIT’s study) SL’s special position will *soon* be challenged.

    You, personally, are principally at fault from the way I see it for the decline of many user’s enjoyment of SL. Many of the people I have spoken to recently say that the only thing keeping them in SL are their friends…. this is the same for me too.

    All we are asking of LL is to be honest with us and to *listen* to us, is that really too much to ask?

    Anony Mouse

  62. Alyx Sands says:

    #33: Unfair to UK residents? We in Germany have to add 19%, other countries have even higher VAT…and of course we have to pay what are country’s VAT rate is.

    And OF COURSE I got charged FIRST and got an email a day LATER….

  63. I am in SL to make music only. Which means that all my expenses are music realated. In Denmark I don’t need a VAT number to get my VAT refunded, all I need is a receipt.
    So basically, you can’t charge a musician living in Denmark for VAT unless you give me a danish laws verified VAT receipt.
    Will you then print that out and send it to me free of charge?
    And how come you have been thinking about this for so long and then give us few days notice. If you take the business side of SL so seriously that you add european VAT to something we buy in the US, which is wrong doing btw, then why don’t you become a little bit more professional about those sudden changes all the time.
    And to be honest, all money I transfer into SL via tier payments and so on, does never turn into any value I can use in my RL area, rendering this VAT thing totally stupid.
    But I’m a musician, so I don’t really need land nor a premium account 🙂 So I’m staying, but not paying.

  64. Max Duesenburg says:

    Here we go again…

    VAT is applied to the end user. Legally LL have to give prices INCLUDING VAT when selling to an end user. Like most people I assumed that LL were complying with the law. So now suddenly VAT gets added to peoples bills.

    Hmmm, with this new found legal awareness I wonder if LL will also comply with other applicable laws – Like giving refunds when their service is not working or not up to reasonable standards ? What about the Data Protection Act ? And what about that TOS which has already been laughed out of court ?

    Linden Lab – have a word with yourself.


  65. Pingback: Blame Robin Linden… « Identity In The Digital Age

  66. dave talamasca says:

    To be fair, you shouldn’t charge us extra.
    Your US prices must’ve encompassed any tax they were supposed to be liable for.
    You charged us $9.95 and $X for tier.
    We assumed, perhaps wrongly, that $9.95 and $X would include taxes as there was no mention of (+tax/vat) on the signup.
    Eat the tax yourself and keep the charge the same, or there are going to be about a million pissed off EU users ready to up sticks or hand you asses to you.
    My $0.02 – + tax

  67. concerned says:

    @46 max you are correct the sale of any item must include any vat added prior to purchase.

  68. Malroy May says:

    While this thread is open can UK residents join me in looking for the specific info; but I am pretty sure that if LL implement this (and i think they have to in some fashion) they have to make the charge clear in all of their front end (website etc) and to give 30 days notice of the charge.

    Regardless I don’t think 6 days is fair warning and I really feel for Swedes who are going to see tier go up by a quarter!

  69. concerned says:

    What i would like to ask Linden Labs as no notice was given some people may now not be able to afford thier land will you agree to purchase islands back at original price paid?

  70. ISayNO says:

    Well guys, that’s a step ahead on your side that makes me take decisions on mine. So yesterday, i’ve sold all my land and downgraded my 2 paying accounts, and i’m thinking about to take another kind of decisions as well, since i’m being theorically invoiced because i’m receiving a service (anyone saw a invoice of any kind from LL?) that has SEVERAL and HUGE LACKS, including losing of inventory items which i paid for and you lost, declining to assume any kind of responsibilities. Where is your custody assurance? Also, when i purchase ANY KIND of good of product outside my country, i’m not charged in VAT concept, as i CAN’T charge my customers overseas in VAT concept (yes i do international commerce), but as expected, you do things different, usually sucking. So i’m fed up of you LL and you lost with your e-mail almost $1,7K / year i was paying. I think that this time the pain is on your side *breathes deep*. Byebye LL, see you in hell.

  71. dave talamasca says:

    There’s really no other option than to charge the same, and hand over YOUR %17.5 to the EU.

    DO it or be damned for your prices are not what they claim to be.

    You will find me directly behind LL in most cases, but this is a direct abuse of EU law.

    Enjoy the sticking your ognna get from this.

  72. ISayNO says:

    Oh sorry, i forgot to draw a big smile of liberation *smiles SO DAMN big* 🙂

  73. kerunix Flan says:

    i contacted concierge live chat -> submit a ticket if you have a question.

    So i submit a ticket, here is the answer :

    Hello, Thank you for contacting Second Life regarding VAT. Many of your questions may be answered here: or in our Knowledge Base. We will be updating both as new questions come in. Due to the anticipated support volume, please understand you may not receive a direct response to your VAT ticket. We will be reading all of the tickets and gathering questions to add to the Frequently Asked Questions (FAQ). If you do not hear back from us directly, your answer may appear there in a few days.

  74. Rowan Valentine says:

    Wow way to suddenly grab more cash from us Europeans….seems LL only do things that make them cash eh?

  75. Jean says:

    Example for one private sim tier fees :

    295 USD it’s 246.65 USD + 48.35 USD (VAT France 19.6%)
    And after SL must be have a credit for invest in the UK office development. On eBay it’s similar. I think the fees isn’t increase but there are a price with VAT (actual price) but SL must indicate the price without VAT on the billing, and he must do a billing also 🙂 and if the UE company haven’t bill with VAT price and no VAT price, after the company can’t have a refund of VAT o.o we understand? because I have no receive notice for preparing more money for my tier fees of the private sim. And if SL must be to pay the VAT after SL should be to receive a refund when SL will invest for marketing or other… it’s usual.

  76. Rinaldo Debevec says:

    I didn’t read all the entries concerning the VAT announcement, but I’ll bet quite a few europeans are steamed about having to pay their governments’ 17.5% commission to use SL! But you know the law in your country is what it is, and Linden Lab didn’t make that law, and you know in the virtual world as in the real world, “nothing is certain … except death and taxes!” [P.S. in SL terms, “death” meaning have your sim go down in a rolling restart]

  77. Me says:

    I received the email * 1 day * prior to my tier billing date, and to be honest – yes, I’m upset about how this has been handled!

    Would I have sold my land if I did have knowledge of this, lets say, 2 – 4 weeks before?

    I really don’t know, but it would have given me time to think about my future in SL, look for different land models like renting instead of owning or whatever – and then come up with a decision after giving all this some thought.

    How can someone make a decision and maybe sell land within less than a day?

    I was actually going to buy more land to let my small business grow, I won’t be doing such a thing now.

    It’s not only because of the 19% my tier increased over night (was 40 USD, is now 47.60 USD, my membership renewal won’t be due untill February), but what trust was still left in LL has just vanished into thin air, this is not how I want to be treated as a paying customer – and that’s what I am, that’s what many are.

    I have never complained about my tier or membership cost because I made the decision to pay it when going premium and buying land, but increasing my monthly cost without giving me the chance to make the decision if I’m willing to pay the increase is just SO WRONG!

    When ebay added VAT to their service they announced it some time before people were actually charged, so everyone had time to adjust to the new rules – we didn’t like it either but at least they gave us some time.

    If it’s the law then that’s how it is, but doing it without prior notice is just ….. a very poor reflection of business practices 😦
    Yeah, really looking forward to what will be next….

    My overall SL experience has changed from “wow, what an awesome world” to “getting a headache when logging in”, and I have some decisions to make.

    I’m not saying I will leave for good, but this made it pretty clear to me that I took all this way too seriously, it’s about time to step back a little.

    I really think it’s sad, especially looking back at the past months, I do miss the world I once fell in love with 😦

  78. concerned says:

    @54 I understand this let me explain to you my account had tax added then 5 hours later i recieved an e-mail about this,now if as they obviously have known for a while kept us informed we could have made an informed choice to leave,to cut back or to hope it didn’t happen,The fact that not even an idication was given is unforgivable and it is actually must have prior notice of any changes to rates of a service.

  79. Maelstrom Janus says:

    Today I asked for lindens vat number to be sent to me by email to persue an enquiry with HM Customs and Excise. For some reason while my initial request was acccepted I was later told this info would appear on the FAQ. I hope the number becomes available soon because according to the tax office you cant charge UK sl users without one.

    On the matter of arrears I wonder how difficult its going to be because when I asked recently for transaction info prior to the details currently available on the ‘my account’ pages I was told that info was not retained by linden’s. I’ll be interested to see how that holds up. However as we were not made aware of vat charges when we bought land etc. I would certainly be resistant to any attmept to push for arrears.

    Some people in the US may think ‘tough blame your governments’ but surely Lindens knows its going to acquire a following around the world and should as a large company be aware of the implications. I dont know how many sl citizens are from the US but Im already thinking of cutting back on my transactions in sl because I dont suddenly want to start paying v.a.t once again the argument for liden tier fees to be set out in sterling and euros is to me clear at least.
    By the way if we’re paying vat now could we possibly have Linden’s give us a set price for premiums and tiers in sterling, yen and euros. The price of being an sl member for me depends on the conversion from pounds to dollars and while that may be favourable at the moment I’d much prefer lindens to be giving us the opportunity to pay fixed prices in sterling rather than wondering what the bill is going to be next month as determined by the value of our currency against the dollar.

    Incidentally I would like to know when and where someone from lindens responds to the points made in these remarks because they never seem to be apparent. Either for this or the matter of identification.

  80. Taylor Bayliss says:

    I knew this would happen – that’s why I moved to the US in ’73 !!

  81. Montana Corleone Says:
    “So if this was in 2003, what have you been doing for 4 years? Tax evasion? All invoices have to have your VAT number on by law.”
    Does that mean that the residents that already paid the VAT can sue LL for tax fraud?
    Or atleast report that to their local tax offices. This kind of a approach would never be tolerated in Denmark. Let’s see what the next headlines will be about SL.
    It seems to me that you guys just don’t get what good business is all about. You know, the one that actually keeps the customer in first place.
    And since we’re on the topic, who will eventually get all those VAT’s in their pocket? I mean, considering the stabilty of SL, is it possible that all files would just be deleted somehow and LL kept all the profit?
    No no, I’m not questioning your credibilty, since you have to have one in the first place :p
    Great work guys!

  82. Hanneke Bode says:

    I must say the people say the thruth, i will say too why a vatnumber, what can we do with that, i like to hear that, and it is silyy that only the people from europe must pay, and for what are we paying, for something that is fictional
    fictitious, oke for many people it is real, and the mail come 2 days before that there must pay, and when you have investigate it then you are longer busy with it and one month later ?

  83. concerned says:

    I’d like to raise another point we pay our tier for a date to date service a calander month right?so adjust our tax for time grid is unusable or offline because we are not getting VALUE at those times.

  84. concerned says:

    Oh you would owe use a tax refund if you did that,lol

  85. Korwyn Obscure says:

    To #1 and any others.

    No, VAT does not have to be included in any price on the website. I work for a casual video game company here in the states, and unless we wanted to do a website for EVERY possible taxed country (look under teh VAT entry in wikipedia alone for how many different rates there are), you’ll see what the base price is.

    In the states alone, unless you know the local percentage for sales tax, you see the pre-price tax on a purchase until the register rings you up.

    And for those who don’t realize where VAT goes… it goes to YOUR COUNTRY, not LL/SL.

  86. Storyof Oh says:

    Exactly…it was ‘ok’ to pay an amount for a ‘game’ and a flaky one at that, but now its taxable it isn’t a hobby its an expense and a fee for the provision of a ‘service’ …if i buy goods or services which are not fit for the purpose then i can get a refund or replacement. SL varies hourly/daily…….weekly….all the nice bells and whistles that ‘ADD VALUE’…need to be removed to move around at all. There are also many items that are VAT exempt in the UK and elsewhere.

    We are within out rights to demand refunds for shoddy goods…..

    It was also nice timing that i increased my tier a week before this and wouldn’t had i of known….LL just gives such a warm feeling.

    I also expect SL to follow UK law by accepting credit cards as a means of adult identification if they are bowing to other UK legislation…

  87. concerned says:

    1.4 Second Life “currency” is a limited license right available for purchase or free distribution at Linden Lab’s discretion, and is not redeemable for monetary value from Linden Lab.

    You acknowledge that the Service presently includes a component of in-world fictional currency (“Currency” or “Linden Dollars” or “L$”), which constitutes a limited license right to use a feature of our product when, as, and if allowed by Linden Lab. Linden Lab may charge fees for the right to use Linden Dollars, or may distribute Linden Dollars without charge, in its sole discretion. Regardless of terminology used, Linden Dollars represent a limited license right governed solely under the terms of this Agreement, and are not redeemable for any sum of money or monetary value from Linden Lab at any time. You agree that Linden Lab has the absolute right to manage, regulate, control, modify and/or eliminate such Currency as it sees fit in its sole discretion, in any general or specific case, and that Linden Lab will have no liability to you based on its exercise of such right.

    So if tiers are piad in L$ they are not applicable to VAT right?

  88. concerned says:

    Because if the use of L$ as payment is tabable then every item purchased from or buy a europen user would be accountable too.You as the provider of the service would be responisble for collecting this then you would be breaking the eu laws on competition by unfairly giving an advantage to non vat countires because only the sale of an item to the person in a vat based country would be liable to pay this charge,so if i made a shirt and sold it for 100 l$ someone could buy it for that but a uk resident would have to pay 117.50 for same item.

  89. Sy Beck says:

    concerned says: “So if tiers are paid in L$ they are not applicable to VAT right?”

    Correct, but they will never go for it even though it’s a very simple solution.

  90. Wynochee LeShelle says:

    Oh, you Lindens can charge VAT on EU members if that is covered by law, about wich I have my doubts, because: where is a law text for us wich is able to show us if that is right or not?. Just take it from the former existing fees wich we payed and subscribed for. Substract the VAT from all fees we payed so far since 2003. It is not our problem, that LL has forgotten to include the VAT in all european end-users prices and fees. From our view it WAS included because it has to be automatical included since SL is playable from Europe homes and computers and internet. We, as user, have nothing to do with LLs EU-tax problems in connection to the EU. LL have to pay for their faults and mistakes and not the customers. There is no reason for us to accept that, for example, that for an Austrian EU-member-user, a 195 US-dollar tier fee cost from now on 239 US-dollar, because LL has put the mysterious VAT on it…we are really not responsible for LLs problems with taxes. Beside this: is there anywhere in the world an example of such a bad business behavior? Not only that the famous TOS is making us all totaly rightless, because there is NO EU and NO EU-memberstate law included and because there is really nothing guarenteed for us customers, except the guarantee that nothing is guarenteed, especially no stable service and no stable rules and rights, we are now not only “surprised” about this VAT-thing, we are: shocked! We customers have NOT planned to spend several hundred dollars more a year for playing SL. And, hahaha, for that former tier-fee of 195 US-dollar per month, or if someone is an SL island-owner: 295 US-dollar tier fee (with VAT 265 dollar…), a – for example – Vienna Citiezen can easy rent a second nice real-life apartment to have, hahaha, if needed, a discret second relationship with a real person and not only with an comic-avatar. It is very recommended that LL have to stay with both feets on earth with their business behavior and with law things. Yah yah, we are LLs milk cows, but we will not give endless milk, if we see not some green value for all we give to LL. Thanks for the attention, if there is some…

  91. Luna Larsen says:

    well is it now, for a few of us time to say: good bye sl and look what HiPiHi can offer us ??

    or will linden lab wake up ??
    will linden lab listen to us or will they still ignore us ?
    ignore our tickets to the support, laught about us and just take our money without doing anything for it.

    i can already see many rats running away from the sinking ship 😉
    and if linden lab will not wake up, i will be one of that rats.
    clever animals btw.

  92. Vivienne says:

    I want to talk to this “high qualified advisors”. WHO ARE THEY????

    Did they tell you that you have to include YOUR VAT number into every bill?? Oh, they really are HIGHLY QUALIFIED obviously.

    YOU break the law. Carry on like this and SL will be dead within a few months.

  93. concerned says:

    This does have the potential if even half europeans decide to go to free acount to impact the grid 5 fold or more over what closing casinos did,I wont leave sl but i will rent mall space on free account because this will end up costing me over 600 dollars more a year.

  94. Muzicole Undertone says:

    If you ‘own’ land from a company like Azure, you pay tier in L$ I think. So wouldn’t it be possible to run businesses and live on land other than LL land? Forsake LL entirely in terms of transactions. You don’t even have to have a premium account to own third party land I think. If you want to convert L$ to real cash, as large businesses will obviously want to, then do it on a person to person basis.

    Cut LL out of the loop.

    Can someone tell me if this is possible, and if not, what are the problems?

    Seems to me like this could be negated if residents exchange L$ with each other and use third party land or rent mainland from US residents.

  95. Storyof Oh says:

    oh and if the land the tier is raised on is used for prostitution, illegal in some countries, and part of the tier fee handed over to a government body kinda makes the tax collector a pimp living off immoral earnings……

    And if you AV is a furry……do animals pay tax? ……best not to go there………………………

  96. Malroy May says:

    Your World. Your Imagination. Your Tax Returns. Your Data.

    Your Joking…

  97. Porsupah Ree says:

    For the curious, here’s one interpretation of the EU ruling declaring services from outside the EU to be taxable:

    Though this might be contradicted by:

  98. Maelstrom Janus says:

    Maybe Linden Labs needs to determine whether its on US soil or not…because Im wondering if I physically came over to the US and bought goods there…whether Id still have to be paying VAT by virtue of the fact Im english.

    Im just glad Im scared of flying….in the real world anyway 😀

  99. concerned says:

    While this is possible it would mean using a level of trust as we have seen even big banks in sl go down but if l$ are a virtual currency and you are selling virtaul plots or items tax would only occur if you pay land by cash,credit etc.if you are paying by inworld currency then i dont think this could be taxable as in sl tos this currency has no cash value,If you cash in a cheque then that would be up to your counrties laws and maybe some information from LL if this needs tax payable,but buying lindens would mean that they are taxable.

  100. Muzicole Undertone says:

    I don’t think this will impact me much as I am in SL mainly for entertainment and spend all my earnings in world. If I want to buy or sell L$ I can always do it via PayPal and one of my many dear American friends.

  101. concerned says:

    @73 It will impact you because this will have a major impact on the lindens coming it to sl,Its an economy and as such is driven by its in world supply and demand if supply stops there will be less demand meaning less money in world,meaning clubs etc can’t affort to give away so much,camping will be set higher,it effects everyone in sl not just people who are liable for tax.

  102. Luna Larsen says:

    @ 67 muzicole. i own right now more than 40.000 sqm land from azure and pay around 210 fees for that land.
    so i paid more at azure for 40.000 sqm like for my sim at lindens.
    it is almost the same like now the new price with VAT at lindens.

  103. Summer Seale says:

    I’ve already had a lot to say at a meeting with a Linden this morning.

    LL, I’ll say it again: You’re about to kill off your EU base. Maybe that’s what you want? I’m not European, but that seems like the only explanation to me.

    Eat the VAT yourselves. You have been doing so all along. What? You weren’t making enough money already? Seriously, this is crap.

    Some comments here are poking fun at the “doomsday” crap? Well, let me tell you: this isn’t age ID or anything like that. It’s going to cost good people their earnings – thousands of dollars in some cases. Age verification, bugs, and all the rest are one thing. But hit people in their pocketbooks, and you start something bad. Perhaps some of those commenting that this is all “doomsday” talk should shut up and ask themselves how they would feel if they were suddenly, with no warning whatsoever, being charged 20% more than American players. Would they just grumble or pack up and leave because they suddenly cannot compete any longer?

    LL, this isn’t a VAT charge. This is a global market you have created, so you are now guilty of charging a tariff. Get it straight: you really, royally, screwed up. Better eat it or lose it.

  104. Muzicole Undertone says:

    Right, but what I mean to say is that whatever happens, there will still be a way for me to pay whatever the Americans are paying. No need to pay over the odds, just cut LL out of the equation and don’t pay them anything.

  105. concerned says:

    @76 damn wish i could have said it like that,wtg

  106. Maelstrom Janus says:

    I have had a sudden thought and that is why are land sales subject to vat while goods bought from indivdual within ll are not…

    Ive never bought land directly from lindens. So why is buying say three space cruisers (dont laugh) which could actually cost more than a 1024 plot of land not susceptible to the same charge of VAT ??

  107. concerned says:

    @77 yes there will but let me suggest you are selling items now and for example sell 3000 lindens of gear per day,if even half the effect tier owners leave or cut back your looking at about 15% drop in lindens coming in just from events they run now times that buy 2 because they will close any camping now all of those are not running events people loved means regs will drift off maybe get bored and leave the effect on the ecconomy could well take off 1000 of what you earn each day.

  108. Luna Larsen says:

    @76 summer, you made my day on this ugly morning in europe 😉

  109. Anderson Philbin says:

    I assume Australia will eventually get around to an Internet Service law for our GST. But, in Australia, the stated price must always include GST. Therefore I don’t care whether LL pay it or not, but I only have to pay the stated price. You cannot legally add GST to an advertised price.

    Is it different in Europe?

  110. MarmelaGramela Doesburg says:

    I’m in the US..selling books through a much bigger player named Amazon. Tons of my books ship to various european countries, None of the buyers there is being charged VAT by Amazon.US – as far as I can tell. And this is for goods, not for a service or the conversion of an imaginary cuirrency – and I’m sure Amazon exceeds the “yearly 66000” by far and has put more thought and planning into this than LL has put into any decision of the last year…
    Someone at LL should start asking themself how long they want to go on with their “cover our own asses in any way on cost of the users” strategy….this is slowly beyond ridiculous

  111. Rene Erlanger says:

    The European community if i’m correct is the largest community now present in SL. The overall impact is significant and will be felt during the next several months
    Undoubtedly it will have a trickle down effect into non-land sectors too.
    Europeans cummulatively own 100’s of PI sims on the grid, not to mention a unknown quantity of sq/m’s on Mainland to. Whilst many small Mainland holders might suck it up and just pay the extra dollar or 3 and shrug their shoulders, it becomes a totally different ball game for PI sim owners.

    I myself own several PI Sims plus 1 on Mainland and reside in the UK. 2 of my SIM’s have just incurred the VAT charge in last 24 hrs, so i’m feeling this impact immediately. I was forced to send out a notice to all my residents on several SIMs of an impending increase to their Tier and rental charges. I had no choice really, it would make little sense holding onto them for minimal income vs time spent.

    Unlike Linden Labs, I felt i needed to be upfront and honest towards my residents (read Customers) and inform them of these impending increases to their Tier or rental payments. I also decided that out of goodwill not to enforce these until Dec 07 meaning that i will absorb the increases until then. This allows my residents 2+ months to decide whether to stay on and accept the increase or place their plots on the market for sale and move to somewhere slightly cheaper. (on average it means $1 increase per 2048 sq/m)

    Moving forward, i have decided to stop buying anymore SIMs or mainland plots, as I’ll be at competitive disadvantage anyway…so is pointless exercise!
    If anything, my next move is likely to sell off any SIM’s should their be an exodus by my existing residents.

    My advise to all Europeans is to sell all your Mainland plots and here’s why.
    Its probably now advisable to buy plots of land on Private Islands from non-EU Estate Landowners. That way you pay the Tier direct to Estate owner and not Linden Labs.
    VAT can not be implemented of customer-to-customer transactions simple as that!
    Why buy a 4096sqm plot with $25+VAT Tier, when you can save yourself the VAT element by buying on a non-EU Private Island. From the above example you save yourself 12 x $4.37 VAT (UK-17.5%) a year on that size plot. If an EU person owns a whole Mainland SIM it becomes 12 x $34.12 (around $400 pa)…by downsizing or switching to renting or buying smaller size on PI one can make a considerable saving.

    The Mainland continents will get more Yellow for sure!

  112. concerned says:

    @812 no it’s same law here in uk but i got an e-mail 5 hours after my account had been changed telling me.Like i say this isn’t europe based it will effect everyone in 1 way or another.

  113. Alexander Regent says:

    Must agree with #76 except from a different angle….they have been in non-compliance for 4 years now…. why the suddent change of heart??? hmmm could it be the all time loss of the dollar to Euro conversion over the past month or so? This would make it even more so expensive for them to “eat it” but still….hey..I have an idea…why not just charge North American members an extra 17.5% as well??? 🙂 ((( ducks for cover)))….just kidding….

    But for all you EU people feel free to visit my island and buy land there…..we only work in lindens and therefor have NO VAT TAX!!!!! (((Shameless self promotion)))

  114. Muzicole Undertone says:

    So it’ll create inflation. The “game” will cost more to “play”. I’ll have to paypal my sweetheart in America a few US dollars more to buy the L$ I need in world for cool items. But, everyone will be paying the same and LL won’t be making a penny from me. If everyone, including Americans stop paying LL for anything, they’ll be forced to do something to change the model.

    Tough times ahead, yes, for all, but LL and the EU won’t be cashing in.

    I realise I don’t have a business perspective on this and I hope you’re not frustrated by that, but even if I scale up the numbers, the biggest losers in this ultimately will not be us but LL – until they have to try something else.

  115. Phil Deakins says:

    An extract from the article that Robin Linden linked to in his post:

    “This scheme offers a discretionary, simplified means of registering and accounting electronically for EU VAT, effective July 1, 2003.”

    Notice the word “discretionary”.

    And here is what Robin Linden wrote:

    “… and the bottom line is that we must charge VAT to EU residents in order to comply with EU tax regulations.”

    LL did NOT have to comply with any European VAT laws, but they chose to. They chose to screw their members. No company outside of Europe *has* to register for VAT, and what Robin wrote is totally wrong. I choose to think that he was mistaken, though there are other possibilities.

  116. concerned says:

    @83 Im personally gonna push to make Lindens buy islands back at original cost because this way they take a profit hit and i think im legally entitled.

  117. Wynochee LeShelle says:

    @Anderson: no it is not legal in Europe – from germany and austria I know it for sure – to add VAT/GST ot whatever taxes on an advertised price. You can give out a note on any bill what the price includes, for example taxes, but the price is the price, there is no chance to increase a price on the fly after advertising a price or after a product, if its “virtual or not”, is saled and buyed. From my view LL breaks any related law in this case. I think not that we user have to accept that.

  118. Garret Bakalava says:

    Well, if it’s any consolation, as you know, the US dollar barely has any worth in Europe. So if I were to buy Second LIfe in most European countries, your dollar would cost me, what about 1.40 USD?

  119. Will Webb says:

    I do agree with some of the comments here:

    In several EU countries (and possibly in EU law itself), it is illegal to post prices that are VAT EXCL.
    In other words, your quoted price MUST INCLUDE the VAT tax.
    AKA if I were to pay 22.50$ per trimester for premium, that price INCLUDES VAT, and you must withdraw the percentage (17.5% for the UK, 25% for Sweden, 21% for Belgium) to calculate your net income.

    Since you charge VAT, you at least recognize EU law, it also makes you possibly liable for violations of said law (or national laws in Europe) concerning the required inclusion of VAT in your quoted prices.

    As for fairness, you should just suck it up and accept the net loss income, OR raise prices for everyone. Period.

  120. concerned says:

    @86 i do understand what your saying and i would support it but for us with islands or established buisnesses we are now forced to make a choice do we put up with this or just go,i have made my decision and that is islands going and im gonna rent at a few malls,600 dollars is to much to absorb with minus 5 hours hours notice

  121. Sy Beck says:

    Phil Deakins: Discretionary

    Discretionary in that instance means the company may use the system to pay all VAT in one country and let that country forward on the VAT due to other EU countries, or at their “discretion” pay VAT individually in each European country. The law still applies, they have to pay.

  122. Maelstrom Janus says:

    Its interesting to make the points here but the question is does anyone at the top of the totem at linden’s actually bother to look at them much less respond. It really makes free expression a little redundant if it actually has no impact and fails to trigger any sort of response.

  123. Flow boy says:

    “so did not ‘initally’ do a blog post believing a general announcement could be confusing for those Second Life Residents not impacted.”

    “due to the trouble we have communicating anything, we decided to not inform those concerned for the benefit of those not concerned.”

    I’m sure it doesn’t do much for clarity when a spell checker obviously isn’t used… i got red loons under my text when i spoll somethink rong. lol…..

    I believe the irony could be reaching toxic levels…

  124. Muzicole Undertone says:

    Even if Azure land is more expensive, it’s just ‘cleaner’ 😉

    And surely it’s better to pay Azure, so they can perhaps reduce their prices, rather than LL and the EU?

    I have no loyalty to Azure btw, just from what I’ve seen…

    Isn’t some Azure land double primmed?

  125. concerned says:

    Azure might be a freer option,what if Azure are european based though you can be sure the cost will be passed on

  126. U M says:

    People saying its unfair in the EU. What about us Japanese users? We have been paying any where between 112 yen to 130 yen to the USA for over 3 years ( in my case ). Thats for tiers and years fees. Now i do feel for that are being taxed and have bought islands. But thats how things work in the Real World. What LL did in a slipping this in last min was not right. but then again what you expect? This is so typical of them. Do you expect anything else from them? So use to this after 3 years and the older users on sl should too. It still doesnt give LL the right to just say its TAX TIME!………. But thats how life in on SL always expect the unexpected……….

    U sagi M usashi

  127. Babu Babeli says:

    First of All I don’t think what LL is saying about VAT is correct at all. I think this is just a hoodwink to fill some coffers a little more because they see the difference in exchange rate with the constantly plummeting USD compared to Euro and Sterling, but they don’t realize that we get equally less numbers paid here for equalent work.

    Secondly, LL has no clue what it is going to get into once it tries to charge us vat. i am sure, if it does so, it would eventually regret. European Laws, especially British go an extra length to safeguard consumers rights. LL doesn’t have the clue what it would mean to get into European waters. Learn a lesson from Microsoft. Just to mention a few:
    1. downtime would enable a european customer to demand a pay-back of the total price or part at least. Because Goods/Services were not delivered as contracted.
    2. LL cannot add in its TOS that downtime cannot be paid back. It will be equalent of saying that Services will not be delievered in Contract Small Print, and will easily be labelled as Scam in any British Court causing even bigger problem for SL. You cannot sell a product/service with a contract that says the former may not be delivered, well, at least in Britain.
    3. The above is not restricted to downtime only but also to inventory loss, and other issues as well.
    4. LL may be liable for paying interest on our L$ balances that we keep inworld, since that acts as current account (we do have access to spend money but the money is kept in SL). And the Base rate will be of Bank of England. Same goes with USD Balances.
    5. A resident may challenge and get a decree to nullify all changes they made in TOS after the first time he/she joined SL. Once a contract has taken place, it cannot be changed and LL methopd of forcing changes in TOS by not allowing access (log in) further makes it nullifiable in the eyes of Law. In simple words TOS cannot be changed every other day, and if they are changed, LL cannot press EU Residents to accept the changes and block their access untill they do. A Contract is two sided, not one forcing on other all the time. To change contract, LL will have to offer either to accept the new terms volunatarily, or continue to operate in previous TOS, or end the contract by paying back damages, and then offering to reopen service under new TOS.
    5. Blocking Log in of a customer who does not accept new TOS, may result in LL paying damages, court fees and accepting to let customer operate under previous TOS.
    6. LL must provide Vat Reciepts to its European customers monthly detailing what was charged and include its VAT Number. It cannot just say willy nilly that VAT is charged.

    anyway, and how fair is it that LL charges us US tax already and then charges VAT on top of it on the amount that includes a tax already. Wow, the new innovative theory of Compound Taxation fresh from LL.

    enough said, but I still believe they are lying or at least ill-informed. LL Service is based in US, the host servers are in US, how the heck VAT can be charged on it. LL is not the only service. I use numerous US based online services including financial ones connecting me to Wall Street and Funds which are the house of accountants and financials, and none ever made this stupid claim of charging me VAT. And, I am not alone, I am sure many readers will share with what I am saying. How many times before you were ever asked to pay VAT by a US Service Provider? NILL! There you go. LL is just trying to trick us out for a little more money I guess.

  128. Muzicole Undertone says:

    Even if Azure were EU based (dunno if they are or not) you pay your tiers in L$. L$ are not taxable, only ‘real’ currency.

  129. concerned says:

    @94 it would be illegal for tax to be collected for a country and not passed back to that country but you’r statment didnt suggest what tax you have been paying if you have been paying tax then yes its wrong to tax 1 region and not another.

  130. concerned says:

    @95 i pay my tier in L4 but its still being taxed

  131. U M says:

    @96 don`t get me wrong if a tax should be collected and it provents a company ( LL ) from getting in to legal problems then shouldnt they follow locat regulations? If said users are in EU locations?

  132. concerned says:

    See lindens dont take money from your lindens only from lindens you have sold but all the money i pay my tier are from lindens sold,so it will be same with azure you pay them lindens they sell those lindens and it becomes taxable.Will LL offer an option for tier to be paid direct from l$ well that would be to easy for them.

  133. Muzicole Undertone says:

    How’s that work then? Perhaps since you’re paying it to LL… As far as I know, SL companies like SL Exchange and presumably Azure and so on work by using an avatar handle. L$ transactions between avatars are not taxed… We won’t be paying VAT on items we buy through SLX because they are actually L$ transactions between the customer and an ‘avatar’ called Exchange Street. With Azure land you pay tier to a little gadget on the ground of each parcel. I imagine that must work like any other object that you pay in SL and is therefore not taxable.

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