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.