The Downgrade Survey

[Phil Deakins]

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16 wrote:

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Phil Deakins wrote:

 LL no longer has a business presence in the EU (as far as I know) so they no longer have to collect VAT for the EU, and they do it now out of choice. That's all I've been saying.

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just on this bit

the link that Orca provide is Her Majesty Revenue and Customs. this one:

http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm

is possible that they have it wrong and what you understand is right. it just dont seem possible that they are wrong tho

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I've just looked at the page that you linked to, 16, and I can't find anwhere that indicates that LL *has* to be registered for VAT and collect it.

Under the heading, "You supply goods to the UK from abroad, or intend to start" (the only relevant heading), and its sub-heading, "If you don't have a place of business in the UK or live here" (the only relevant sub-heading), the first thing it says is,"If you have to register for one of the reasons described above, ...". The only 3 reasons described above are:-

(1) Supplying and delivering goods from another EU country

(2) Supplying goods on which an 8th or 13th Directive claim has been made or is going to be made

(3) Supplying and delivering excise goods from another country

None of those reasons apply to LL.

So I can't see anything on that page that even suggests that LL has to be registered and collect VAT. Right at the top is says that LL can choose to do it, but that's all. And that's exactly what they now do. They did register when they had to - when they had a business presence over here - and maybe they are keeping the registration in case they want expand their operations again, but they don't have to.

[161488303349]

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Phil Deakins wrote:

This is a combined reply to your last 3 posts, 16 

The EU had it right when they said that the law they passed is unenforceable. That's because, as I've been saying, they can't make laws that people and businesses in other countries have to abide by. So, as I've also been saying, LL is no longer obliged by any law to collect VAT, and they now do it

by choice

.

As for the possibility of the businesse's employees being arrested etc. on a visit is concerned, It can't be done. Well, arrested, yes, but tried and convicted for a crime, no. That's because no law was broken in the country that has the law and where the trial takes place.

I do realise that there have been one or two high profile (here) cases where British people who have not broken any British or EU law have been extradited to the U.S. because what they did in the UK is against the law in the U.S. On the face of it, it does sound absolutely wrong to extradite people in such cases. But I believe one of them was a breach of U.S. security, and it would make sense for countries to have extradition agreements to cover some activities. On reflection, I think the UK ended up denying that particular extradition request after first granting it, but it was an example of why such things can happen, even though none of the country's own laws were broken. Collecting taxes isn't even a shadow on the type of activity that such agreements should apply to, so that sort of thing doesn't come into this discussion. I only mentioned it in case anyone wants to cite such cases in this discussion.

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then you better take it up with your lawmakers then (:

i think where the point of difference between what you are saying and what they are saying. well the HM Customs anyways on their website, is that an activity carried out by a foreign company on their sovereign territory must be conducted in accordance with their tax laws. HM Customs and that 2003 EU law regarding internet activity dont make any distinction between domiciled and non-domiciled origin of that activity

they looking at it from an activity pov. you are looking at it from an entity pov seems like

what i understand you to be saying is that LL dont have to legally pay VAT if they dont want to bc that kinda law is invalid in some way. if that was true then the law would have been tested in some EU Court way before now

and if was invalid like legally, then the tax department would even return the money to linden bc the tax department cant retain moneys which it is not legal entitled to do. even if is given to them by someone who insists on itt. the tax dept would have to treat it as an overpayment and they obliged to make a reasonable effort to return it

not unless EU/UK got some tax laws that is completely different to any other western countries

 

[Phil Deakins]

The page that you linked to is an official page of HM Revenue and Customs - they are the VAT people of the government. And there is nothing in that page that suggests that LL have to be VAT registered and collect VAT. The point of view doesn't matter because that page says that LL does not have to be VAT registered. It doesn't say it explicitly. It's because there are no circumstances listed in that page that would require LL to be registered. It does say that they can choose to be registered, and that's exactly what LL has chosen to be. They do it by choice.

[Phil Deakins]

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16 wrote:

i think where the point of difference between what you are saying and what they are saying. well the HM Customs anyways on their website, is that 

an activity carried out by a foreign company on their sovereign territory

must be conducted in accordance with their tax laws. HM Customs and that 2003 EU law regarding internet activity dont make any distinction between domiciled and non-domiciled origin of that activity 

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Just as aside here. LL doesn't carry out activities on UK or EU soil. They collect VAT from EU people when we pay tier or when we buy land from them (sims). That's us carrying out activities on U.S. soil - not the other way round - if "activities" is the right for it.

It's the same as me renting server space, or a server, from a U.S. company that has its servers in the U.S. They wouldn't charge me VAT, of course. If they have servers or offices in the UK, it would be different.

[161488303349]

k then i look it up on the interwebz myself

just on the basis that if is not the English then must be some other heathens European lawmakers that making linden pay the VAT bc it not make any sense at all to me that linden or anyone else would volunteer to pay taxes when they not legal obliged to q; (:

you have very complicated lawmaking you do over there

but anyways. here goes

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/vat_on_services/index_en.htm

"Electronically supplied services, provided by suppliers established in a third country to non-taxable persons (B2C) established in the EU, must be taxed at the place where the customer resides or has a permanent address [Article 58 of the VAT Directive]

Example 44: If a private person residing in Sweden makes use of a Japanese on-line library, Swedish VAT will have to be paid on the amount the Japanese company charges."

 

[Ciaran Laval]

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16 wrote:

thats quite interesting

so if i was a UK land baron and linden charge me VAT then i can claim it back on my return? and bc any L$ i might get off my tenants is not a VAT-rateable acivity?  then i end up with quite a big tax credit?

is how that would work here where i live. so just wonder if is the same in UK? or not?

if so then if under the old ways when linden was sell/rent sims to EU/UK  inclusive of VAT then that be quite a big advantage to a EU/UK land baron

if it works the same way as here that is

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No, you can't claim any VAT back because your goods and services are outside the scope of VAT. The UK land baron, if they were only working in Linden Dollars inworld, would foot the VAT bill, the VAT chain would end with them.

[Perrie Juran]

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Phil Deakins wrote:

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Deltango Vale wrote:

Phil, read the article. All the quotes, links and math are in the article (and followup comment).

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I don't need to read the article. I know that one country cannot make laws that people in other countries have to abide by. It's that simple.

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But they can write laws that regulate how and if I can do business in their Country.

Example 1:  Cars manufactured overseas for sale in the United States must meet U.S. emission control standards.

Example 2:  A Japanese firm selling cars in the U.S. must pay taxes to the U.S. on profits earned from sales here.

Example 3:  Microsoft, a U.S. registered corporation must comply with EU monopoly regulations in order to sell their software there.  The licensing must be compliant with EU regulations.  Remember, MS got sued over this in the EU.

So simply put, if Linden Lab wants to do business with someone in the EU, the EU can regulate that business transaction.

 

[Phil Deakins]

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16 wrote:

k then i look it up on the interwebz myself

just on the basis that if is not the English then must be some other heathens European lawmakers that making linden pay the VAT bc it not make any sense at all to me that linden or anyone else would volunteer to pay taxes when they not legal obliged to q; (:

you have very complicated lawmaking you do over there

but anyways. here goes

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/vat_on_services/index_en.htm

"Electronically supplied services, provided by suppliers established in a third country to non-taxable persons (B2C) established in the EU, must be taxed at the place where the customer resides or has a permanent address [Article 58 of the VAT Directive]

Example 44: If a private person residing in Sweden makes use of a Japanese on-line library, Swedish VAT will have to be paid on the amount the Japanese company charges."

 

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The point is that nobody is making LL collect VAT. EU law made them register and collect it when they had a business presence in the EU but they don't have any presence now and they are free to deregister - but they choose not to.

That quote, including the example, may be from an official document but nobody outside Japan can make the Japanese company collect the Swedish VAT and pay it to Sweden. Whether or not the Swedish government can collar its citizen and make him/her pay up is something that's internal to Sweden and nothing to do with the Japanese company.

They can bluster all they like with those rules and laws but they can't make a business in a foreign country abide by them. As you said, they admitted that the laws concerning it are not enforceable, so all they can do is hope. And hope works a little. There are daft companies, such as LL, that will pander to them when they don't have to, and at the expense of their own paying customers.

I'm sorry, 16, but no country, or group of countries can make laws that people in other countries have to abide by. They have no juresdiction in other countries. They can write what rules and laws they like but they have juresdiction so they cannot enforce what they write. It's self-evident.

[Phil Deakins]

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Perrie Juran wrote:

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Phil Deakins wrote:

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Deltango Vale wrote:

Phil, read the article. All the quotes, links and math are in the article (and followup comment).

---

I don't need to read the article. I know that one country cannot make laws that people in other countries have to abide by. It's that simple.

---

But they can write laws that regulate how and if I can do business in their Country.

Example 1:  Cars manufactured overseas for sale in the United States must meet U.S. emission control standards.

Example 2:  A Japanese firm selling cars in the U.S. must pay taxes to the U.S. on profits earned from sales here.

Example 3:  Microsoft, a U.S. registered corporation must comply with EU monopoly regulations in order to sell their software there.  The licensing must be compliant with EU regulations.  Remember, MS got sued over this in the EU.

So simply put, if Linden Lab wants to do business with someone in the EU, the EU can regulate that business transaction.

 

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You are right but only up to a point. Of course a country can write laws to regulate how companies in other countries do business within their country. But that's not the point. LL doesn't do business anywhere within the EU. Some EU people pay LL for virtual land and 'membership' of the U.S. system - things that never leave the U.S. - but that's not LL doing business IN the EU.

Your conclusion about LL wanting to do business with someone in the EU and, therefore, the EU can regulate the transaction, does not follow from your examples. The first 2 examples are about non-U.S. companies trading within the U.S. and the 3rd example is of a U.S. company selling its goods within a foreign country. They are quite different to a U.S. company taking payments for things that stay within the U.S. from people in other countries.

Actually, the fact that LL's goods stay within the U.S. is irrelevant because they can't be made to collect the EU's taxes for them when mailing goods from the U.S. to EU customers.

[Czari Zenovka]

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Deltango Vale wrote:

 

My own personal experience was to witness a large sell-off by other European landowners (including the downgrading of alts and even primary accounts from Premium to Basic). There was no SL Marketplace at the time, so, they closed their businesses when they sold their land. I myself dumped land the instant I verified the announcement (Linden Lab subsequently apologized for the way the announcement was made).

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I had the same experience - the first land my former partner and I rented was on a lovely mainland sim.  I have no idea how much land our landlord had but we received a notice after living there about 6 months that he was selling off all his land due to VAT.  That was the first I had heard of VAT and headed to the forums to check it out.

As you say, I read reports of many people in the EU selling off land.  One of the reasons I heard was the other option was for EU landlords to charge higher rent but then they would not be competitive price-wise for similar rentals.  The only thing I know about VAT is from SL, but that was my one experience - and we loved that sim.  On the plus side (for us and now me) having to leave that sim is how we found the sim where I still live.

 

[Czari Zenovka]

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Pussycat Catnap wrote:

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Just want to say that I think a -lot- of us see potential in SL, but whatever LLs sees in it, is not what we users see in it... and that stymies the thing.

<snip>

- They feel we are lesser for it. Just read what they've said about us being a bunch of losers, loners, and unimaginative people in cookie cutter beach houses...

 

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Yeah, what is this LL animosity toward the beach and beach houses?  Apparently the current Lindens don't get in world to explore much.  I see amazing sims of recreations of European cities, complete with apartments, villas, etc. that fit the theme, places like 1920s Berlin that also offers apartments, absolutely gorgeous home builds of all types, Greenwhich Village, London - all offering in theme apartments and residences, etc.  That's not even taking into account large rp areas such as Victorian/Steampunk, etc., etc.

So what is this myopic view of theirs with beaches? 

 

[Czari Zenovka]

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Eve1209 Quintessa wrote:

I just had the same thing happen to me, getting my account suspened because of a problem on LL's side and losing inventory items.

<snip>

I contacted LL support and was told it was because my account was suspended and that inventory will begin to disappear after a suspension. 

They told me that they aren't responsible for any of it, but if I had downgraded to Basic before I left, my inventory would have been absolutely fine!

I kept trying to tell the support  person I didn't make a decision to leave, I was out because I had been sick, but they refused to do anything to help me recover my items or even reimburse me.

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(Emphasis mine)

I am so sorry that happened to you, Eve, and thank you for sharing your situation.  So this is apparently still happening.  What I just don't comprehend is the part I bolded - one is penalized for being Premium if something unforeseen happens - and life DOES happen:  people get ill, have family emergencies, etc.  What about someone who lost their home in Hurricane Sandy and couldn't even get to a PC to downgrade their account (like this would be a top priority to begin with in that situation...geez!)?

Stories like your's and the one I heard of years ago may be in the minority, but the fact that it happens at all is inexcusable and especially when you HAD the funds available for LL to access.

 

[Perrie Juran]

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Phil Deakins wrote:

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Perrie Juran wrote:

---

Phil Deakins wrote:

---

Deltango Vale wrote:

Phil, read the article. All the quotes, links and math are in the article (and followup comment).

---

I don't need to read the article. I know that one country cannot make laws that people in other countries have to abide by. It's that simple.

---

But they can write laws that regulate how and if I can do business in their Country.

Example 1:  Cars manufactured overseas for sale in the United States must meet U.S. emission control standards.

Example 2:  A Japanese firm selling cars in the U.S. must pay taxes to the U.S. on profits earned from sales here.

Example 3:  Microsoft, a U.S. registered corporation must comply with EU monopoly regulations in order to sell their software there.  The licensing must be compliant with EU regulations.  Remember, MS got sued over this in the EU.

So simply put, if Linden Lab wants to do business with someone in the EU, the EU can regulate that business transaction.

 

---

You are right but only up to a point. Of course a country can write laws to regulate how companies in other countries do business 

within

their country. But that's not the point. LL doesn't do business anywhere 

within

the EU. Some EU people pay LL for virtual land and 'membership' of the U.S. system - things that never leave the U.S. - but that's not LL doing business

IN

the EU.

Your conclusion about LL wanting to do business with someone in the EU and, therefore, the EU can regulate the transaction, does not follow from your examples. The first 2 examples are about non-U.S. companies trading

within

the U.S. and the 3rd example is of a U.S. company selling its goods

within

a foreign country. They are quite different to a U.S. company taking payments for things

that stay within the U.S.

 from people in other countries.

Actually, the fact that LL's goods stay within the U.S. is irrelevant because they can't be made to collect the EU's taxes for them when mailing goods from the U.S. to EU customers.

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International Business Law is a very complex subject.  You are dealing with, among other things, trade agreements (treaties) between Nations, etc.  It is a specialization all of it's own.

For a simple example, consider the Barbary Treaties.

You would be correct in saying that the EU would have no right to regulate HOW Linden Lab conducted business with someone here in the U.S. or with someone in another nation.  But the EU would and does have a right to stipulate terms, subject to the Trade Agreements we have with the EU, in order for a Company to transact business with a citizen of the EU.

Bottom line, it would take getting the U.S. government putting its foot down, by way of a trade agreement, to stop the EU from mandating that a company collect VAT in order to transact business in the EU.

[Pussycat Catnap]

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Phil Deakins wrote:

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16 wrote:

thanks (:

+

so looks like linden have to register in UK for VAT. am assume that linden doing more than 70,000 pounds business in UK

+

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Wrong. The EU can make any rules/laws they want to but they can't enforce them on citizens and companies in other countries. It really is that simple.

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Unless there are treaties and other international agreements that say otherwise.

 

It is actually quite common for litigation to be cross border - whole bodies of law have developed to cover international business within the scope of both treaties and contracts.

One can easily find oneself in a New Zeland court, arguing a case of a Nigerian company suing a Japanese one over a violation in Brazil.

- And getting a judgement that would be upheld in all four countries, and those who honor recognizable judgements - including such far away places as China, Russia, Iceland, the US, and the EU.

Such cases -do- usually begin with an analysis of whether the legal rules in place are considered 'just and fair' by the standards of either/some combo of A) "the choice of law the parties contracted to", B) "the law where the complaint occurs", C) "the law as understood by where the parties are situated," and/or D) "understood norms within International Comparative Law."

 

While human rights law dates to the end of WWII - though was largely developed out of the older international law regarding piracy (to show a basis upon which universal jurisdiction can apply), business and contract law have much older histories as being recognized across borders. Particularly in the western world.

 

Depending on the facts, the EU might very well be able to get a judgement in either a US or EU court, but then have it enforced by a US court. It would take one heck of an argument to persuade an American court that the EU's laws regarding conduct within its borders were beyond the pale of norms in international justice and abhorrant to the point of being unenforcable.

 

The idea that you can take your contract and escape across the Rio Grande as the film credits roll and a mariachi band marches out has not been true since at least the first decade of the 20th century - over a hundred years - if not longer.

 Enforcement might get complicated, but not impossible. Whole bodies of law and legal scholarship exist to handle these concerns.

[Perrie Juran]

To add another example of how complicated these things can be, in order to protect U.S. Citizens from International libel suits, Congress had to pass regulations clarifying U.S. Law.

Federal

The Free Speech Protection Act of 2008 and 2009 were both bills aimed at addressing libel tourism by barring U.S. courts from enforcing libel judgments issued in foreign courts against U.S. residents, if the speech would not be libelous under American law. These protections were passed in the 2010 SPEECH Act which passed unanimously in both the House of Representatives and the Senate before being signed by US President Barack Obama on August 10, 2010.[16][17]

http://en.wikipedia.org/wiki/Libel_tourism

 

What was happenning was, under the prior laws, Individuals were trying to collect judgements issued in other Nations in the U.S. Courts against U.S. citizens.

[Pussycat Catnap]

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Czari Zenovka wrote:

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Pussycat Catnap wrote:

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Just want to say that I think a -lot- of us see potential in SL, but whatever LLs sees in it, is not what we users see in it... and that stymies the thing.

<snip>

- They feel we are lesser for it. Just read what they've said about us being a bunch of losers, loners, and unimaginative people in cookie cutter beach houses...

 

---

Yeah, what is this LL animosity toward the beach and beach houses?  Apparently the current Lindens don't get in world to explore much.  I see amazing sims of recreations of European cities, complete with apartments, villas, etc. that fit the theme, places like 1920s Berlin that also offers apartments, absolutely gorgeous home builds of all types, Greenwhich Village, London - all offering in theme apartments and residences, etc.  That's not even taking into account large rp areas such as Victorian/Steampunk, etc., etc.

So what is this myopic view of theirs with beaches? 

 

---

To be fair, my comment about that comes from a comment from Phil - wherein he was quoted as being suprised that given all this power, most users just go in for the same Malibu beach house.

- This actually seems to imply that they see more potential in SL than they think we see. And I believe that is correct... They think we are unimaginative.

 

But I then think their own idea of the potential here is a lot more limited than both what the residents have actually built (beyond those beach houses) and more limited than what SL could actually do.

 

- And I get that from looking at things like Patterns and Creatorverse, the LLs history with promoting sandboxes, Linden Realms, Linden Homes, even the limited ethnic choices (one) on homepage graphics, and etc...

 

[Perrie Juran]

---

Perrie Juran wrote:

---

---

International Business Law is a very complex subject.  You are dealing with, among other things, trade agreements (treaties) between Nations, etc.  It is a specialization all of it's own.

For a simple example, consider

the Barbary Treaties.

You would be correct in saying that the EU would have no right to regulate HOW Linden Lab conducted business with someone here in the U.S. or with someone in another nation.  But the EU would and does have a right to stipulate terms, subject to the Trade Agreements we have with the EU, in order for a Company to transact business with a citizen of the EU.

Bottom line, it would take getting the U.S. government putting its foot down, by way of a trade agreement, to stop the EU from mandating that a company collect VAT in order to transact business in the EU.

---

Last thoughts (I hope) on the subject.

1.  The EU passed laws (questionably) requiring Linden Lab collect VAT.

2.  Linden Lab presumably on advice of Legal Counsel chose to comply.

3.  In order to challenge this Linden Lab would either have to challenge these laws in EU Courts (very expensive to do) OR get the U.S. Gov't to challenge them based on the Trade Agreements we have with the EU.

4.  If the U.S. Gov't believed that these VAT laws violated our Trade Agreements the only way of stopping attempts by the EU to enforce them would be then to place trade sanctions against countries in the EU.

5.  Short of this, if Linden Lab failed to collect VAT, the EU could simply (though we know it would be difficult), block access to SL and/or prohibit EU based financial institutions from sending money to Linden Lab.

 

[Ciaran Laval]

---

Perrie Juran wrote:

International Business Law is a very complex subject.  You are dealing with, among other things, trade agreements (treaties) between Nations, etc.  It is a specialization all of it's own.

For a simple example, consider

the Barbary Treaties.

You would be correct in saying that the EU would have no right to regulate HOW Linden Lab conducted business with someone here in the U.S. or with someone in another nation.  But the EU would and does have a right to stipulate terms, subject to the Trade Agreements we have with the EU, in order for a Company to transact business with a citizen of the EU.

Bottom line, it would take getting the U.S. government putting its foot down, by way of a trade agreement, to stop the EU from mandating that a company collect VAT in order to transact business in the EU.

---

Sort of. Linden Lab can't be made to follow the EU directive on electronic services, but as a company who want to stay in good standing, it's in their interests to do so. The US and Europe are good trading partners, with the exception of the odd tariff war, so the US would want their companies to comply with directives such as this one. Although the EU can't do much if Linden Lab don't comply, I'm sure there would be some sort of leaning on Linden Lab in the background were they to not comply, along with a bit of political sabre rattling.

[Perrie Juran]

---

Ciaran Laval wrote:

---

Perrie Juran wrote:

International Business Law is a very complex subject.  You are dealing with, among other things, trade agreements (treaties) between Nations, etc.  It is a specialization all of it's own.

For a simple example, consider

the Barbary Treaties.

You would be correct in saying that the EU would have no right to regulate HOW Linden Lab conducted business with someone here in the U.S. or with someone in another nation.  But the EU would and does have a right to stipulate terms, subject to the Trade Agreements we have with the EU, in order for a Company to transact business with a citizen of the EU.

Bottom line, it would take getting the U.S. government putting its foot down, by way of a trade agreement, to stop the EU from mandating that a company collect VAT in order to transact business in the EU.

---

Sort of. Linden Lab can't be made to follow the EU directive on electronic services, but as a company who want to stay in good standing, it's in their interests to do so. The US and Europe are good trading partners, with the exception of the odd tariff war, so the US would want their companies to comply with directives such as this one. Although the EU can't do much if Linden Lab don't comply, I'm sure there would be some sort of leaning on Linden Lab in the background were they to not comply, along with a bit of political sabre rattling.

---

That is why I was careful to say "subject to the trade agreements."

The devil would be in those details.  Either the EU has deliberately chosen to ignore something in the agreements or they feel that based upon the current agreements that they can do this.

I myself wouldn't even know where to begin looking in the agreements for this.

Linden Lab has chosen at this time that it is in their best interest to comply.

 

[161488303349]

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Ciaran Laval wrote:

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16 wrote:

thats quite interesting

so if i was a UK land baron and linden charge me VAT then i can claim it back on my return? and bc any L$ i might get off my tenants is not a VAT-rateable acivity?  then i end up with quite a big tax credit?

is how that would work here where i live. so just wonder if is the same in UK? or not?

if so then if under the old ways when linden was sell/rent sims to EU/UK  inclusive of VAT then that be quite a big advantage to a EU/UK land baron

if it works the same way as here that is

---

No, you can't claim any VAT back because your goods and services are outside the scope of VAT. The UK land baron, if they were only working in Linden Dollars inworld, would foot the VAT bill, the VAT chain would end with them.

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yes. i can understand/agree your conclusion on that

i also find on the europa website. like i was say to Phil

seems that online services provided by  foreign companies is only a VAT-ratebale activity when trading with private EU citizens. so therefore no company/trading credit is obtainable and so my whole question on the credit part is moot

+

altho it do raise the question of what happens if a company was charged VAT on this and linden did hand it over to the tax dept?

but if so then linden say that only a person can have a SL account. not any company or org

so altogether would seem that a EU land baron is stuck with the VAT bc linden and the EU tex depts would see the account holder as a private person in terms of their tiers payments

altho tax accountants can be pretty craftly. so maybe some clever ones found a way round it. dunno

 

 

[161488303349]

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Phil Deakins wrote:

---

16 wrote:

k then i look it up on the interwebz myself

just on the basis that if is not the English then must be some other heathens European lawmakers that making linden pay the VAT bc it not make any sense at all to me that linden or anyone else would volunteer to pay taxes when they not legal obliged to q; (:

you have very complicated lawmaking you do over there

but anyways. here goes

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/vat_on_services/index_en.htm

"Electronically supplied services, provided by suppliers established in a third country to non-taxable persons (B2C) established in the EU, must be taxed at the place where the customer resides or has a permanent address [Article 58 of the VAT Directive]

Example 44: If a private person residing in Sweden makes use of a Japanese on-line library, Swedish VAT will have to be paid on the amount the Japanese company charges."

 

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The point is that nobody is making LL collect VAT. EU law made them register and collect it when they had a business presence in the EU but they don't have any presence now and they are free to deregister - but they choose not to.

That quote, including the example, may be from an official document but nobody outside Japan can make the Japanese company collect the Swedish VAT and pay it to Sweden. Whether or not the Swedish government can collar its citizen and make him/her pay up is something that's internal to Sweden and nothing to do with the Japanese company.

They can bluster all they like with those rules and laws but they can't make a business in a foreign country abide by them. As you said, they admitted that the laws concerning it are not enforceable, so all they can do is hope. And hope works a little. There are daft companies, such as LL, that will pander to them when they don't have to, and at the expense of their own paying customers.

I'm sorry, 16, but no country, or group of countries can make laws that people in other countries have to abide by. They have no juresdiction in other countries. They can write what rules and laws they like but they have juresdiction so they cannot enforce what they write. It's self-evident.

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yes can understand the broader argument you making. like what value do unforceable laws have. what value do trade treaties have if they never observed. by what right does a government  dictate to another country and their citizens. and so on and on

+

just on the whole VAT thing. i just like to know stuff really. like why. when i dont/cant know then it makes me a bit crazy and i cant let stuff go until i knnnnooooww !!!

am not always happy with the answers sometimes. but is ok. at least i know more afterwards than before i start going ? and ? and ? and ? and ?????????  (:

 

[161488303349]

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Phil Deakins wrote:

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16 wrote:

my understanding of the EU legislation is that a foreign company wishing to do business in the EU with EU citizens has to have a legal presence in the EU (in some EU countries) for tax purposes even if they not have any physical assets or staff even

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A foreign country wishing to business with EU citizens does not have to have any form of representation within the EU. Actually, I should say that a different way because I suppose that some countries may prohibit their citizens from buying stuff from foreign companies unless the foreign company is represented within their own. I very much doubt that any EU country has such laws but I can't guarantee it. What I can say is that no foreign company needs to have a business presence in the UK in order to supply UK people with goods.

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the fiscal/VAT agent/representative bit i first read about on this website Hamburg Chamber of Commerce

http://www.hk24.de/en/international/tax/347898/fiscalRepresentation.html

 they say is voluntary to have a agent in Germany. but they say is compulsory in some other EU countries. they not say which ones tho

cant find any UK refs for this. so dunno about how that works in UK if it does.

[161488303349]

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Perrie Juran wrote:

I think that there is no question that the VAT created a disparity.  I'm puzzled that anyone would question this.  Now I do not live in a country with VAT so whether or not a person can get a refund from their taxing authority I have no idea.  If someone can get a full refund of that money, outside of the hassle of the initial out lay, then the disparity does go away

 

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i been meaning to come back to this one. so i do now (:

the disparity goes away when the VAT money is applied by the taxpayers State to a service (usually social) as a benefit for the individual or another  citizen. a benefit not available to a non-paying VAT person in another country

if the taxpayer still thinks this disadvantage them in some way (like say they not get any personal benefit out of it and so wants to not pay) then they have to change the laws of their own country thru the elective/political process

 

 

[Phil Deakins]

@Perrie and Pussycat.

Yes, it's possible that the EU has a trade agreement with the U.S. that force a company that's doing what LL is doing to register for VAT and collect it from EU citizens. But I don't believe for one second that that's the case. Not for one second.

When LL started to collect VAT they had a prsence here in the EU, and that's the reason why they had to do it. It wasn't because of any trade agreements. When a person gets a domain name from a U.S. company that doesn't have an EU presence, such as GoDaddy, or pays for hosting to a U.S. company that doesn't have an EU presence, or simply buys some goods from a U.S. company that doesn't have an EU presence, no VAT is collected.

If there is a trade agreement between the EU and the U.S., that forces the likes of LL to register for VAT and collect it, then I would have no argument or opposition to LL doing it, of course. I don't believe any such trade agreements exists, or I'm sure I would see it (I do buy physical goods from the U.S.).

If there is such an agreement, please show it. If there isn't one, LL simply chooses to collect VAT, without any laws or rules making them do it.

[Phil Deakins]

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Perrie Juran wrote:

Last thoughts (I hope) on the subject.

1.  The EU passed laws (questionably) requiring Linden Lab collect VAT.

2.  Linden Lab presumably on advice of Legal Counsel chose to comply.

3.  In order to challenge this Linden Lab would either have to challenge these laws in EU Courts (very expensive to do) OR get the U.S. Gov't to challenge them based on the Trade Agreements we have with the EU.

4.  If the U.S. Gov't believed that these VAT laws violated our Trade Agreements the only way of stopping attempts by the EU to enforce them would be then to place trade sanctions against countries in the EU.

5.  Short of this, if Linden Lab failed to collect VAT, the EU could simply (though we know it would be difficult), block access to SL and/or prohibit EU based financial institutions from sending money to Linden Lab.

 

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On your points 1 and 2:-

Linden Lab had to collect VAT when they started doing it. They had no choice because they had a business presence (offices and employees) here in the EU at the time. They were operating physically within the EU and they had to comply with the laws where they were physically operating - and collect VAT. That was never in dispute. So your points 3, 4 and 5 didn't come into it.

Since then, they have closed their EU operations and no longer have a presence here, so they are no longer required by any laws to collect VAT. The official document that was pointed to shows that, even by EU laws (that attempt to govern people in other countries) LL does not fall within any category where the EU would want them to collect VAT. The only part in that document that allows LL to collect VAT is right at the top where it says that foreign companies can choose to do it volunarily, and that's exactly what LL does.