VAT Rules change in Europe

[arabellajones]

For many years, customers in Europe have been charged VAT on their fees to Linden Lab for their Premium Account.

The rules on the place of supply of digital goods are changing on 1st January. As merchants, we have never had to worry about VAT, but the changes may affect us. Here in the UK, I doubt any Second Life merchant does enough business to require VAT registration under the current system. Under the new system, it seems I might have to pay the tax. And the rate depends on where the customer is.

I don't think I understand the rules, but it looks as though the tax collection system, and the required record keeping, would contradict the TOS on collecting the identity of other players. If Second Life merchants have to pay the tax, they will need to keep records of customers that we are not allowed to collect. and Linden Labs may not themselves be collecting sufficient data on Premium Accounts.

Yes, there are companies which already act as agents for creators. Amazon do this, and I am not sure what exactly they will do to prices or what they charge Kindle Direct authors when they have to oay 20% VAT rather than 2%. They're not talking.

I think I may just close down my store.

Linden Lab do act as though buying L$ isn't VAT-liable, and what we spend those L$ on has no liability, even as they collect the VAT on the Premium payment. I can see how it might be that the legal place of supply for an item is in the USA. We can only ever use it on their computers so, while we are in Second Life, we are in the USA for text purposes.

Oh dear...

But the EU is changing their rules, and I really would like to know that we are safe from this suffocated bureaucratic overload. Here in the UK, the HRMC only told people who were registered for VAT, not realising that so many businesses were below the UK threshold for registration. And so I wonder who else they have not told. I know the changes are coming, do Linden Lab?

 

[Perrie Juran]

It would be helpful if you linked to some information about these changes, don't you think?

[Freya Mokusei]

My guess is that it's this:-

Kotaku - VATMOSS

My interpretation (not legal advice) is that it won't be enforced below some tens-of-thousands threshold. Just another way to criminalise the population while (presumably) leaving loopholes for corporations.

My interest in tax is low. Better sources and explanations likely exist.

[Perrie Juran]

---

Freya Mokusei wrote:

My guess is that it's this:-

Kotaku - VATMOSS

My interpretation (not legal advice) is that it won't be enforced below some tens-of-thousands threshold. Just another way to criminalise the population while (presumably) leaving loopholes for corporations.

My interest in tax is low. Better sources and explanations likely exist.

---

that link didn't work for me but i did find this

http://www.kotaku.co.uk/2014/12/17/new-eu-tax-law-screwing-indie-developers

thanks

and ouch, that looks like a mess

[Freya Mokusei]

Glad you found the article I planned on linking to. Have fixed my own link, thanks.

Having sleep debt troubles and my browser of choice likes to strip http:// from copypasted links - Lithium then prepends community.secondlife.com/blahblah and breaks everything. Sorry.

[irihapeti]

VATMOSS only applies to direct sales/receipts relationships. The only entity you have a direct relationship with (for tax purposes) is LL

except when you maybe have a relationship conducted outside of LL. Like a direct Paypal arrangement with another SL user, etc

the big questions are:

Can LL claim a VAT credit on cashouts to EU-based SL residents?  And if so then to get a cashout do EU residents have to be VAT registered?

 eta:

Or if you are VAT registered then can you invoice LL. Amount of cashout + VAT ? Given that LL invoiced you Tier + VAT