IMPORTANT- Is SL handling EUVAT for sellers? #VATMOSS

[FataMorgania]

I'm not sure how many of you have heard, but from Jan 1st a new EU law came into place that effects all digital sales worldwide. You can read more about how it effects you here:
http://euvataction.org/

This effects us as sellers on Second Life in a large way.

This is not just a EU problem. This a a worldwide problem. I'm interested to know if Linden labs actually know about it because as a legal marketplace and digital provider they are the ones responsible for it. Yet we've heard nothing (that i know) about it from them. Digital goods now have a threshold of 0, thus pretty much killing free trade.

This also effects virtual currency like Linden Dollars, Bitcoin, IMVU credits etc.

As a precaution before Jan 1st I had to set every item in my store to free incase any EU customers purchased something from me. I don't want to have to register for VATMOSS when I am thousands of pounds under the 81k threshold of my own country. As sellers we have to safeguard ourselves about this incase LL decides to not take responsibility for location tracking and tax handling on all digital items we sell to eachother.

If you want to know more on digital tax then do a quick google for EUVAT or VATMOSS and you'll find a bunch of resources. Also there's a group on Facebook fighting this tax directly called Digital VAT 2015. They have the best links for anyone who is concerned and doesn't want to get chased by some random countries tax authorities over a $0.09 sale profit.

[Theresa Tennyson]

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FataMorgania wrote:

I'm not sure how many of you have heard, but from Jan 1st a new EU law came into place that effects all digital sales worldwide. You can read more about how it effects you here:

http://euvataction.org/

 

 

This effects us as sellers on Second Life in a large way.

This is not just a EU problem. This a a worldwide problem. I'm interested to know if Linden labs actually know about it because as a legal marketplace and digital provider they are the ones responsible for it. Yet we've heard nothing (that i know) about it from them. Digital goods now have a threshold of 0, thus pretty much killing free trade.

This also effects virtual currency like Linden Dollars, Bitcoin, IMVU credits etc.

As a precaution before Jan 1st I had to set every item in my store to free incase any EU customers purchased something from me. I don't want to have to register for VATMOSS when I am thousands of pounds under the 81k threshold of my own country. As sellers we have to safeguard ourselves about this incase LL decides to not take responsibility for location tracking and tax handling on all digital items we sell to eachother.

If you want to know more on digital tax then do a quick google for EUVAT or VATMOSS and you'll find a bunch of resources. Also there's a group on Facebook fighting this tax directly called Digital VAT 2015. They have the best links for anyone who is concerned and doesn't want to get chased by some random countries tax authorities over a $0.09 sale profit.

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Linden Lab will argue that in a Second Life "sale" -

1.) Nothing actually changes hands - it all stays on the servers and generally has no use outside of Second Life

and

2.) No actual money changes hands, only "game tokens" (Lindens).

 

Therefore, Second Life "merchants" don't actually HAVE "customers" in a real-world sense.

Tax law only applies to things of real-world value or else you'd have to declare your winnings in a game of Monopoly. It's true that right now, you can exchange Lindens for real-world money but Linden Lab will maintain that's only because they choose to, and those who cash out are already subject to taxes.

If a court somewhere determined that "things" in Second Life had real-world value I'm sure the entire grid would be shut down almost instantly because the administration necessary to handle all of that would be unsustainable.

[Perrie Juran]

I find it interesting that I can find next to zero information on how this affects businesses outside of the E.U.

There has been no uproar from any U.S. businesses about this that I can find.

As far as I can tell this legislation currently only affects businesses located in the E.U. 

I tend to agree with Theresa's analysis.  The one potential being LL needing to remove the ability for E.U. residents to pay 'real' currency instead of $L's on the Market place so all transactions were strictly done with game tokens.  Though a problem could arise because our own FinCEN has ruled that the game tokens ($L's) do have value.

Crazy stuff.

People in the E.U. would need to contact their own tax professionals on this.  I doubt LL would say anything because they are not in the business of giving legal advice. 

[Sassy Romano]

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Perrie Juran wrote:

The one potential being LL needing to remove the ability for E.U. residents to pay 'real' currency instead of $L's on the Market place so all transactions were strictly done with game tokens.  Though a problem could arise because our own FinCEN has ruled that the game tokens ($L's) do have value.

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When you buy from MP using Paypal (i.e. real currency), the actual transaction is to first buy L$ which are then used against the sale, so once again, you're only purchasing game tokens.

The second part about game tokens having a value is true but that's a different issue than MP purchases directly.

[Fortyniner Beck]

The page on the UK HMRC (tax authority) that deals with this - https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop - says that there is a Non-Union VAT MOSS scheme for businesses based outside the EU (for example, the USA, Canada, China).

I think the Eu are trying to apply the tax to every business that sells digital content to consumers in the EU - note that this only applies if you are selling to consumers so if the "person" you are selling, say textures, to is a business and their SL business is backed up by a RL one there is no need to apply the tax.

Of course, if you are an individual selling to consumers you don't fall under this rule at all - I suspect that many SL "businesses" wouldn't be considered a business by the tax authorities but then I'm no tax lawyer.

All in all, very confusing.

[Perrie Juran]

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Fortyniner Beck wrote:

The page on the UK HMRC (tax authority) that deals with this - 

https://www.gov.uk/register-and-use-the-vat-mini-one-stop-shop

- says that there is a Non-Union VAT MOSS scheme for businesses based outside the EU (for example, the USA, Canada, China).

 

I think the Eu are trying to apply the tax to every business that sells digital content to consumers in the EU - note that this only applies if you are selling to consumers so if the "person" you are selling, say textures, to is a business and their SL business is backed up by a RL one there is no need to apply the tax.

Of course, if you are an individual selling to consumers you don't fall under this rule at all - I suspect that many SL "businesses" wouldn't be considered a business by the tax authorities but then I'm no tax lawyer.

All in all, very confusing.

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I took a glance at that page and decided it wasn't worth my time to try and decipher it.

I've enough fun with mt tax laws here.

But I will fall back on what I said, I could find no articles about any uproar from Non EU Countries about this.  So apparently outside the EU, no one is worried about having to comply.

[Taeem]

Sl is just my private fun, but since I´m in the EU and this might affect my RL work, I had to read into it. 

To my understanding it says basically that if you´re a EU-based business and deliver digital goods to a private customer in another EU state your service becomes taxable in the customer´s country (up to now taxes of where your business is based applied).

Reason for the new regulation is, of course, what else, more tax justice...businesses like amazon for instance are based in low tax countries legally but have the highest income with selling to high tax coutries, whatever.

MOSS is there so people with small businesses like me who don´t have a legal and tax department, won´t panic and give up their business because they need to apply for taxing in all other EU countries, in case someone from wherever downloads some digital content every 7.5 years. 

It doesn´t matter anymore where the business is based, just where the service is being delivered. Only for digital goods. If someone in France downloads something from me, where he is, in France, the new regulation applies = French taxation, if I´d burn what he wants from me on a cd and send it to him, in France, where he finds it in his mailbox, taxation of my country applies. Total logic, isn´t it, the only question is why has it been different up to now

If I´m not in the mood for VATMOSS, I'll have to, clearly, well visibly, exclude people from other EU-countries from the blessedness of being able to download my business's digital goodies. I couldn´t find anything yet on non-EU-countries, so in SL-terms, this should only apply to merchants who are a EU-based business (that then depends, as ever, on where their countries draw the line between private non-taxable, private but taxable, taxable ) and sell to someone who downloads their products in another EU-country. 

I´m no lawyer, I´m no accountant, just someone who hates taxes, not even to pay them, but everything around that, it´s just how I understood the info I read on the topic.

If that is the case though...do you as a SL merchant get the IP of someone who buys your virtual shoes? I hope not, and if not, would that make LL viable to have to send you a list of which amount your MP, or inworld-business sold to which other EU-country, monthly, quarter-yearly, or yearly, depending on how often your VAT -declaration is due? I don´t know, I don´t hope, life 'out there' (and most of all taxes) is complicated enough, so maybe a prayer to whatever virtual gods SL-merchants believe in for LL countering it like suggested in a post is in order, I really don´t think world economy or tax justice would suffer too much if everything went on as it has in this case...

 

(edited for typo)