The Downgrade Survey

[Phil Deakins]

---

Melita Magic wrote:

It must be a thing. Didn't IBM dismiss the idea of the home computer? 

---

They didn't dismiss it. They produced one but underestimated the market, and that road brought us the cheap computers that we've all enjoyed for a long time.

[161488303349]

yes lol

happens quite alot that about the time

+

i say stuff like: i am in ur future and i know what is going to happen

and they say: really!!! like what??? hope is going to be good

and i say i cant say bc i am not really allowed to

and they say: why not???

and i say: bc you will maybe try to change it and will not be good if u do that

and they go: o.m.g hope is not bad !!!

and i go: nah! is quite good actual

and they go: TEEEEEELLLLLL MEEEEE !!!

and i say: gosh i have to go. i tell u tomorrow k when i log

and they go: nuuuuu!!!

and i go: i really have to go but i defo tell u tomorrow what happened to u. promise

and then they say: waaaaaaiiiitttttt !!! u u u lol

and i go: jejejjejjejee (:

 

[Deltango Vale]

Hi Celest,

I'm listening and want to understand your argument. Here is what I think you are saying:

Case 1 (2003, before LL absorbs VAT):

• Judy (UK) signs up for annual Premium membership ($72), LL makes, say, $20 profit ($52 in costs)

Case 2 (2006, LL absorbs VAT):

• Susan (UK) signs up for Premium ($72), LL makes $6 profit ($52 in costs + $14 VAT cost)
• Joe (UK) signs up for Premium, LL makes $6 profit
• Bob (UK) signs up for Premium, LL makes $6 profit
• Barbara (UK) signs up for Premium, LL makes $6 profit

Case 3 (2007, LL transfers VAT cost to customers):

• Judy, Susan, Joe, Bob and Barbara now pay L$86. LL makes 5 x $20 profit (no VAT cost)

Case 4 (2008, time to renew membership):

• Judy, Susan and Joe downgrade to Basic, Bob and Barbara stay Premium. LL makes 2 x $20 = $40 profit
• $40 is better than $30 (5 x $6)

If this is what you are saying, then it makes sense for LL to pass VAT onto its EU customers (at least in raw financial terms). What I think happened is this:

Case 5:

• Judy, Susan, Joe and Bob downgrade to Basic, Barbara stays Premium, LL makes $20 profit
• LL could have had $30 profit (5 x $6)

Needless to say, these scenarios could equally apply to the price of tier.

Here is some interesting info. Premium membership increased every single month from January 2005, peaking in June 2007 (94,607). It doesn't prove anything (VAT was applied in September 2007), but it equally undermines LL's case (expansion stopped three months before VAT was applied). To the best of my knowledge, LL stopped publishing Premium membership data in March 2008 (89,875). I'd have to comb through the spreadsheets to try and track EU participation. Sadly, I'm not a good econometrician. Perhaps Tyche Shepherd could tease it out.

Are we on the same page or have I misunderstood you entirely?

[Phil Deakins]

You make a very good point, Celestial.

The rest of this post is a reply to Deltango.

I can't agree with your theory of how LL and the users are worse off because of LL collecting VAT from EU people, because it's based on the idea that a large number of EU people stopped paying anything that VAT had to be charged on, and I haven't seen any evidence for that one way or the other. I know that some people closed their businesses to stop paying but some people doesn't constitute a large number. I also know that some people didn't close their businesses to stop paying, and I'm inclined the think that those who stopped paying aren't very many at all.

You could mean that, as well as some people opting out, many more people chose not to opt in since then. Again there is no evidence one way or the other, so I can't accept that. It seems to me that, EU people arriving since VAT has been collected would choose to pay or not according to how things are at the time. They wouldn't have had any VAT-free experience in SL, so they wouldn't have suffered the increase in costs that VAT brought.

On the whole, I'm inclined towards disagreeing with your theory, Deltango.

But that was when LL had to collect VAT. Now they don't have to.

[Czari Zenovka]

---

Phil Deakins wrote:

---

Melita Magic wrote:

It must be a thing. Didn't IBM dismiss the idea of the home computer? 

---

They didn't dismiss it. They produced one but underestimated the market, and that road brought us the cheap computers that we've all enjoyed for a long time.

---

I can testify to that.  When the first IBM PC came out in 1981, a former co-worker of mine who was a computer engineer at NCR purchased a franchise that sold these new PCs and asked if I would come work for him as a sales rep.  That was my first introduction to computers, besides selling components for point-of-sale terminals with NCR.

A basic IBM PC in 1981 - single 5 1/4 disk drive - 128K RAM (memory foggy on that...but not much) - and sold with a third party amber text monitor instead of the IBM brand to bring down the price a bit sold for....ready for this....approximately $7,000.00 USD!  The people who purchased them were primarily business owners who wanted this for the prestige of being amongst the first to own one.

I MUCH prefer teaching to selling, so I left marketing to teach application software, including DOS, for this new devices at a Jr. College.  When the clones began hitting the market for $2,500.00-$3,000.00 USD that opened the market to the average person - who still wanted to shell out that much money, but WAY better than 7K.

*Edited for grammar

[Phil Deakins]

Yes, they (IBM) estimated they'd sell about 1.5 million units and that would be the end of it. So they didn't lock down the architecture or the operating system, and that allowed other companies to make IBM clones/IBM compatibles. A few years later, when they realised how wrong they'd got it, they tried to close the stable door and produced machines with a different operating system - OS2. But the horse had bolted by then and it was too late.

And that was good for all of us because IBM was a manufacturer that normally tied its customers to its own products with things like unique connectors/cables, add-ons, etc., and charged a lot for them, If they'd had any idea how popular PCs would become they would have tied it all down in those ways, and we wouldn't have had the cheap computers that we've had since then. There were alternatives at the time, such as Apple (IBM followed others. They didn't lead the way), and I'm sure we would have got them via another route but maybe it would have taken a lot longer as the alternatives fought it out for domination. But IBM was *the* name in computers at the time so the world went for IBM compatibles, and the computers that most of us use now are directly descended from those compatibles.

[Celestiall Nightfire]

---

Deltango Vale wrote:

Are we on the same page or have I misunderstood you entirely?

---

Del, we're mostly on the same page.  Except, you surmise a different conclusion, than I.   

[Celestiall Nightfire]

---

Phil Deakins wrote:

But that was when LL had to collect VAT.

Now they don't have to.

---

---

Deltango Vale wrote:

I tend to agree with you that Linden Lab is no longer required to collect and remit VAT.

---

Hmm, Phil, I'm reading the information about LL having to charge VAT differently than you and Del.   

Here's what LL says on their VAT information page: 

"Is the Second Life billing office based in an EU country?

No. Linden Lab has registered as a non-resident EU business, meaning that we do not have sales offices in Europe. Non-resident EU business that provide "Electronically Supplied Services" such as hosted applications, downloadable software and downloadable music, must charge each of its customers VAT according to the VAT rate of the country where the customer resides."

http://wiki.secondlife.com/wiki/Linden_Lab_Official:Value_Added_Tax_%28VAT%29_Frequently_Asked_Questions

 

Then for clarification, I looked up the actual verbiage from the EU Commission: 

".....adopted on 12 February 2008, these VAT arrangements were extended until 31 December 2009. As far as electronically supplied services are concerned, these measures are explained below.

......Under these new rules, EU suppliers are no longer obliged to levy VAT when selling on markets outside the EU, thereby removing a significant competitive handicap. Previously under tax rules drawn up before, EU suppliers had to charge VAT when supplying digital products even in countries outside the EU....." 

BUT, that is for those companies that are "EU suppliers", which LL is not.  They are located outside of the EU, so they must follow the next stated section in the VAT electronic services taxes which says: 

"The VAT rules for non-EU suppliers selling to business customers in the Union remain unchanged, with the VAT paid by the importing company under reverse charge arrangements."

LL is a non-EU supplier, selling to customers in the EU, so must charge VAT.

http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/index_en.htm

 

Here's further information provided by a UK gov site, that explains that although normally, a business's "place of supply of service", indicates whether they should charge VAT, there is a special "scheme" that is set up for "electronically supplied services".  (i.e. : Internet services)

 

"If the place of supply of your service is not in the EU, then your supply of services is outside the scope of VAT. You don't have to charge EU VAT or include the sale on your VAT Return.

Electronically supplied services

There are special arrangements for electronically supplied services."

http://www.hmrc.gov.uk/vat/managing/international/exports/services.htm

 

"This new scheme is being introduced alongside the changes to the EU place of supply rules for electronically supplied services, which also take effect from 1 July 2003. From that date, these services, when supplied by non-EU businesses to EU consumers, will be subject to VAT in the Member State where the customer belongs."

 

 

From the EU Commission FAQ:

"Council Directive 2002/38/EC, in force from 1st July 2003, changes the EU rules for charging Value Added Tax (VAT) on the supply over electronic networks (i.e. digital delivery) of software and computer services generally, plus information and cultural, artistic, sporting, scientific, educational, entertainment or similar services. From now on, these services will be taxed in the country where the customer resides rather than where the supplier is located."

http://ec.europa.eu/taxation_customs/taxation/vat/traders/e-commerce/article_1610_en.htm

 

Here's the crux: 

"This information sheet explains the special electronic registration and VAT accounting scheme for non-EU businesses which provide electronically supplied services to EU consumers and how it operates in the UK."

"This new scheme is being introduced alongside the changes to the EU place of supply rules for electronically supplied services, which also take effect from 1 July 2003. From that date, these services, when supplied by non-EU businesses to EU consumers, will be subject to VAT in the Member State where the customer belongs."

http://webarchive.nationalarchives.gov.uk/20110202144320/http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000922

So, it does not matter if LL no longer has an office in the UK or EU, it only matters where the customers are located.  If a customer resides in the UK or EU, they LL must charge VAT.  

[Phil Deakins]

I can understand you thinking that, Celestiall, but it's not true because of one simple reason that I've stated quite a lot of times in this thread - no country can make laws that people in other countires have to abide by. They EU just can't do it, and neither can any country. The best that a country can do is make rules or laws that they hope people in other countries will abide by and, in some cases, such as LL, they get away with it.

Some years ago, when LL registered for VAT, they had to register because they were physically operating within the EU. E.g. the billing office was in the UK and there were other physical presences in the EU. It was back in the day when LL fancied themselves as being a global company so they opened offices in several parts of the world so they could pretend. Because of that, they had no choice about being VAT registered at that time. Now they have no presence within the EU, so they no longer have to be VAT registered. They can be registered by choice but they don't have to be registered.

Sometimes one country makes an agreement with another country so that people in the other country have to abide by the first county's rules but I haven't seen anything to suggest that the EU has such an agreement with the U.S. regarding the collection of VAT. So, if no such agreement exists, the EU simply cannot tell U.S. companies, that don't have any presence within the EU, how to conduct their business.

The EU's problem is that EU people buy things from abroad and the EU doesn't get any VAT on the deal. If the things had been bought in the EU, then the EU would get same VAT. The EU's problem is with their own people not paying that tax. They can't make a foreign company collect it for them, so they should be targetting the buyers. But there's no way they can do that with electronic services because they aren't physical and can't be intercepted at the border. So they made some rules for foreign companies, in the hope that some of them will collect some money for them. But they can't make foreign companies do it. All they can do is hope.

[Solar Legion]

Phil - they can, and do all the time under trade agreements. End of story.

Reality is what it is - you don't like the reality, and that's perfectly fine.

Stop presenting your view as if it is a fact.

It's been explained to you numerous times and in a rather polite manner by several people.

I'm not going to be polite any further.

Engough is enough.

[Perrie Juran]

I don't understand Phil why you are having so much trouble wrapping your head around the idea that this whole issue may be and most likely is subject to tax treaties.

Other than the fact that you just don't like it.

I pointed out above other American MMO's that collect VAT.  I just checked and World of Warcraft, owned by Blizzard, another American company, collects VAT also.

Can the EU force Linden Lab to collect VAT? Most likely, NO.

Could the EU block Second Life?  Absolutely.

So most likely, under advice of Legal Counsel, They have chosen to collect the VAT. 

If this really does violate our treaty agreements with the EU, given the huge number of suppliers involved and the fact this practice is well known, why hasn't any one appealed to the U.S. State Department to interceed?

Might I suggest that you write the State Department and ask them why they haven't?

 

ETA:  I think it's a sucky situation too.  Taxes and Tarriffs and Trade Agreements have become a total zoo.

[Phil Deakins]

---

Solar Legion wrote:

Phil - 

they can, and do all the time under trade agreements. End of story.

Reality is what it is - you don't like the reality, and that's perfectly fine.

Stop presenting your view as if it is a fact.

It's been explained to you numerous times and in a rather polite manner by several people.

I'm

not going to be polite any further.

Engough is enough.

---

What trade agreements? I already said that it would be different to what I'm saying if a trade agreement for U.S. companies to collect VAT existed between the U.S. and the EU, but where is it?

You say that it's been explained it to me numerous times but it hasn't. The idea of a trade agreement has been mention quite a few times and I've agreed that it would be different if one exists, but, unless one actually exists - so that U.S. companies must collect VAT from EU customers - then it's just been nothing more than possibility and imagination. So show me this trade agreement. If you can't, I'll continue to believe that no such agreement exists and that what I've been saying is true.

Incidentally, if no such agreement exists, then what I'm saying about one country imposing laws and rules on other countries IS fact. So show me the trade agreement or accept that you've either been mistaken all along, or you just don't know one way or the other.

ETA: There's no reason for to you become impolite. It's no good getting nasty with someone just because they don't agree with you. Nobody is always right, including you. Anyone doing that just shows themselves up. Either continue to discuss politely, or discontinue, but don't become impolite when someone doesn't agree with you. In this case, if you can't show a trade agreement, then you've lost the discussion anyway, so becoming impolite would be really silly.

[Phil Deakins]

---

Perrie Juran wrote:

I don't understand Phil why you are having so much trouble wrapping your head around the idea that this whole issue may be and most likely is subject to tax treaties.

---

I don't have any trouble with that. None of my posts have had any trouble with that. But all the trade agreement / tax treaties stuff is mere imagination. Nobody has shown any that covers VAT being collected by U.S. companies for the EU. If it can be shown, I would have been mistaken, and I certainly wouldn't hang on to my current thinking. But it hasn't been shown and it remains in the relams of mere possibility and imagination.

You said it yourself, Perrie:- "the idea that this whole issue may be and most likely is subject to tax treaties". No facts there. Only possibilites and imaginations because you just don't know one way or the other. So, until that possibility is shown to be facl, then what I've been saying stands.

[Solar Legion]

---

Phil Deakins wrote:

---

Solar Legion wrote:

Phil - 

they can, and do all the time under trade agreements. End of story.

Reality is what it is - you don't like the reality, and that's perfectly fine.

Stop presenting your view as if it is a fact.

It's been explained to you numerous times and in a rather polite manner by several people.

I'm

not going to be polite any further.

Engough is enough.

---

What trade agreements? I already said that it would be different to what I'm saying if a trade agreement for U.S. companies to collect VAT existed between the U.S. and the EU, but where is it?

You say that it's been explained it to me numerous times but it hasn't. The idea of a trade agreement has been mention quite a few times and I've agreed that it would be different if one exists, but, unless one actually exists - so that U.S. companies must collect VAT from EU customers - then it's just been nothing more than possibility and imagination. So show me this trade agreement. If you can't, I'll continue to believe that no such agreement exists and that what I've been saying is true.

Incidentally, if no such agreement exists, then what I'm saying about one country imposing laws and rules on other countries IS fact. So show me the trade agreement or accept that you've either been mistaken all along, or you just don't know one way or the other.

ETA: There's no reason for to you become impolite. It's no good getting nasty with someone just because they don't agree with you. Nobody is always right, including you. Anyone doing that just shows themselves up. Either continue to discuss politely, or discontinue, but don't become impolite when someone doesn't agree with you. In this case, if you can't show a trade agreement, then you've lost the discussion anyway, so becoming impolite would be really silly.

---

If you had bothered to actually read what others have said, you'd not be asking me "what trade agreements". Go back, read. I'm not going to do your legwork (and reading comprehension brush up) for you.

And yes, there is a need to be impolite atthis point. You're plugging up your ears and saying "lalalalalalala".

Enough. Linden Lab collexts VAT - if there were no laws being influenced by trade agreements and other coalitions (which have been linked in by others earlier in this bloody thread) then Linden Lab would not be collecting it anymore. Honestly ... if they could get out of it, they would have by now.

It is that simple. Linden Lab has shown they're not going to do any more than hte bare minimum when it comes to covering themselves in any given legal situation. The moment collecting VAT becomes "voluntary" - they'll cease collection. They will have no reason to collect it anymore, seeing as any that is collected leaves their pockets at once.

Frankly, I'm rather sick and tired of people making assu,ptions concerning the enforcement of laws from one country to the next. The simple fact is this: It happens all the time. If you have an issue with it, take it up with the UN.

[Perrie Juran]

---

Phil Deakins wrote:

---

Perrie Juran wrote:

I don't understand Phil why you are having so much trouble wrapping your head around the idea that this whole issue may be and most likely is subject to tax treaties.

---

I don't have any trouble with that. None of my posts have had any trouble with that. But all the trade agreement / tax treaties stuff is mere imagination. Nobody has shown any that covers VAT being collected by U.S. companies for the EU. If it can be shown, I would have been mistaken, and I certainly wouldn't hang on to my current thinking. But it hasn't been shown and it remains in the relams of mere possibility and imagination.

You said it yourself, Perrie:- "

the idea that this whole issue

may be

and

most likely

is subject to tax treaties

". No facts there. Only possibilites and imaginations because you just don't know one way or the other. So, until that possibility is shown to be facl, then what I've been saying stands.

---

I did a search for 'tax treaties' and turned up 100's of pages of documents and I personally do not have the umption to read them.  But I also turned up evidence of companies that are larger and probably more profitable than Linden Lab who are collecting the tax.  So while I am unable to cite a specific line in a specific treaty, I find it very compelling evidence that these companies, who I am certain sought the advice of Legal Counsel, have chose to comply.

If that is insufficient evidence for you that the possibility exists that they may need to comply, that is your privilege. 

But if you really think it is wrong that the EU is trying to impose this on U.S. companies, then write your Representatives and the State Department and take them to task on this matter.

 

 

[161488303349]

---

Perrie Juran wrote:

Can the EU force Linden Lab to collect VAT? Most likely, NO.

Could the EU block Second Life?  Absolutely.

So most likely, under advice of Legal Counsel, They have chosen to collect the VAT. 

---

i like merry-go-rounds (:

+

the EU VAT Directive is a EU Treaty provision. same like all the other EU directives

can read it here

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2006L0112:20070101:EN:HTML

sections 22 and 23 the actual text of the directive that says exactly what is the requirement of the EU nations party to the Treaty and why

+

the thing is tho that EU Directives are not laws all by themself, they are reasonings. each EU nation that is party to the EU Treaty encodes/legislates the directives into their own law

so in the case of UK (same the others) then that was done by UK Parliament

the fact is (bc it is a fact that UK did this and is actual in the UK tax code) that any 3rd-nation company wanting to sell e-services to UK residents must pay the VAT or be in breach of UK law

is indisputable that this is a fact

+

this EU VAT directive is about removing the trade disadvantages that EU companies have when competing with 3rd nation companies. not only in EU itself but in other countries as well

the EU VAT directive also remove the previous requirement that EU companies selling e-services to 3rd-nation residents had to charge their foreign customers VAT. which was the case upto then

from trade perspective then this is right. so EU change. made the directive. and each EU country mod their laws accordingly

+

the VAT directive (again like every other directive) also says that it cannot be legal enforced in another country outside the EU. bc that would breach the Convention between sovereign nations

like no nation can pursue a resident/citizen of another country in the citizens own country courts for unpaid taxes. can only do that in the sovereign nation itself, unless there is a Treaty that specifically permit this

+

so while is true that linden can get away with not paying VAT they will break UK law when they do

and if they do then UK can pursue them in the UK. UK can also fine/penalty them under UK laws. can sanction them even and block them from trading. not only in UK but also thru the EU processes and block them out of EU altogether

thats the choice for linden

is a academic interwebz fweedoom choice tho for a company this. companies like linden dont choose to be lawbreakers

[161488303349]

you wrote a good explanation of the linden viewpoint i think

[Pussycat Catnap]

An early case in American law - pre-1800, involved an American failing to show proper deference to a European noble walking on the streets of one of the American cities. A crime in Europe at the time - the man was convicted of that crime, in a US court.

Driving me nuts trying to remember the case...

We do honor 'international laws and obligations' as a part of our Common Law tradition - save for where the US Constitution gives us a specified way out.

In the modern era, we have extradition treaties with a number of countries. And in business, treaties regulating trade. Within both of these - its common to honor judgements of the courts of other countries unless there can be found a reason under principles of justice not to.

- Ie: Assuming the country in question is one we recognize as having rule of law; you have to win an argument that the foreign court is operating outside the bounds of 'civilized norms on justice'. There's a specific "term of art" that labels this, but its been a few years and I don't recall it offhand.

 

[Celestiall Nightfire]

---

Phil Deakins wrote:

The best that a country can do is make rules or laws that they

hope

people in

other

any country will abide by ....

---

Sure, just like here in the US it's against the law to commit murder, arson, or theft...yet those things happen all too frequently.      Because, no one, not even one's own country, can "make" someone abide by the rules or laws.  

 

 

---

Phil Deakins wrote:

 

....but I haven't seen anything to suggest that the EU has such an agreement with the U.S. regarding the collection of VAT.

---

Phil, it's probably complex.  Something like this:

“In a Verbal Note dated November 27, 2009, that was transmitted to the Government of the United States of America, the Council of the European Union and the Commission of the European Communities stated in part:

The Treaty of Lisbon amending the Treaty on European Union and the Treaty establishing the European Community will enter into force on 1 December 2009. …[A]s from that date all agreements between your country and the European Community/European Union, and all commitments made by the European Community/European Union to your country and made by your country to the European Community/European Union, will be assumed by the European Union.”

 

See page 88 for list of US "Treaties in Force" :  

http://www.state.gov/documents/organization/169274.pdf

Via, US Department of State:   http://www.state.gov/s/l/treaty/tif/index.htm

So, the "Verbal Note" amended the Treaty of Lisbon.  (which means the EU takes assumes responsibility for treaties with the US)

 

Then the WTO and GATT & GATS are probably also a factor.

http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm6_e.htm

http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm

http://www.wto.org/index.htm

Now, I'm pretty sure that the US has a Department of State for a reason Phil.  One of those reasons is to facilitate trade, and the US is signatory to many treaties and trade agreements.   There are multiple federal agencies that monitor and enforce US companies and individuals, to ensure that trade agreements are followed.  I'm pretty sure that a company like LL, which operates internationally, has a legal team that understands the risk of monetary fines, and protracted legal battles.  Why would the Lab choose to take that risk?  

So, technically...no...the Lab probably doesn't "have to" abide by the trade agreements and international laws of commerce. 

Just like you don't have to technically pay your taxes.  You can always decide to take a gamble, and hope that governments & lawyers have something better to do...than go have tax money!   (Ok...have to stop now...as that last line I typed, has me laughing too hard! 

 

 

[Celestiall Nightfire]

---

16 wrote:

you wrote a good explanation of the linden viewpoint i think

---

Yes, I'm fluent in Corporatese.  ; )

 

[Phil Deakins]

---

Solar Legion wrote:

If you had bothered to actually read what others have said, you'd not be asking me "what trade agreements". Go back, read. I'm not going to do your legwork (and reading comprehension brush up) for you.

I've read what others have said in this thread, and what they've said is that it probably comes under a trade agreement. The reason they've said that is because the links that were provided in this thread gave no indication that LL 

has to

collect VAT or break a law, so people started to suggest trade agreements, but no evidence was provided. Nobody has stated that there IS such a trade agreement. All that anyone has said is that 

there probably is

, or

there may be

. So you expect me to believe the imaginings of people like you just because you write them? Do try to be serious. This is a serious discussion.

And yes, there is a need to be impolite atthis point. You're plugging up your ears and saying "lalalalalalala".

Immature minds resort to impoliteness and other such things when their views are disagreed with. Mature people don't find it necessary, but if that's what you want to do, go ahead.

I read a book a long time ago. It was about funny things that happened in the church. One example was a vicar's sermon notes. In the margin of one section he'd written, "

shout for all you're worth - argument very weak

". That's very similar to being impolite with someone because they disagree with you. You chould try shouting at me (typing in caps). You never know. It might work

Frankly, I'm rather sick and tired of people making assu,ptions concerning the enforcement of laws from one country to the next.

You mean like the assumption that you have? - that, regardless of the lack of presented evidence, there must be a trade agreement? Your assumption doesn't make me sick and tired, but do feel free to be sick and tired by it lol.

Enough. Linden Lab collexts VAT - if there were no laws being influenced by trade agreements and other coalitions (which

have been linked in by others earlier in this bloody thread

) then Linden Lab

would not be collecting it anymore.

Honestly ... if they could get out of it, they would have by now.

You are wrong. Before you wrote this post, no links were posted in this thread that linked to trade agreements between ther EU and the U.S.  that covered the collection of VAT. You ought to have followed all the links yourself instead of accusing me of not doing so. I did follow them and they were EU rules, directives, call them what you will, but not agreements between the EU and the U.S. The words "pot" and "kettle" spring to mind

---

Note: This reply was written at a time when I first read your post. Since you wrote it, others have provided some links to documents that I haven't checked out yet. Perhaps there is some evidence in those links for what you imagine, and perhaps there isn't.

[Phil Deakins]

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Perrie Juran wrote:

I did a search for 'tax treaties' and turned up 100's of pages of documents and I personally do not have the umption to read them.  But I also turned up evidence of companies that are larger and probably more profitable than Linden Lab who are collecting the tax.  So while I am unable to cite a specific line in a specific treaty, I find it very compelling evidence that these companies, who I am certain sought the advice of Legal Counsel, have chose to comply.

If that is insufficient evidence for you that the possibility exists that they may need to comply, that is your privilege. 

But if you really think it is wrong that the EU is trying to impose this on U.S. companies, then write your Representatives and the State Department and take them to task on this matter. 

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If larger companies than LL are collecting VAT, and if they don't have a physical presence within the EU, then it could well be that there is a trade agreement between the EU and the U.S. that makes U.S. companies collect VAT on behalf of the EU. Do you know whether or not any of those larger companies have presences within the EU? That matters. It makes all the difference in the world.

Note. As with my last post, this reply was written before I've checked out the links that were posted after you wrote the post.

[Phil Deakins]

I won't quote your long post, 16. It's on the previous page if anyone wants to refer to it.

Sections 22 and 23 of the document you  pointed to state that it "should be taxed at the place of establishment of the customer." I am the customer. LL is the supplier, not the customer.

What you then wrote about it being the UK law is no doubt correct, but that's UK law and not U.S. law.

Near the end you wrote, "so while is true that linden can get away with not paying VAT they will break UK law when they do". That's UK law that LL would break, and you are right. But LL isn't under the juresdiction of UK law, so they wouldn't be breaking the law of the juresdiction they are in.

 

[Phil Deakins]

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Celestiall Nightfire wrote:

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Phil Deakins wrote:

The best that a country can do is make rules or laws that they

hope

people in

other

any country will abide by ....

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Sure, just like here in the US it's against the law to commit murder, arson, or theft...yet those things happen all too frequently.      Because, no one, not even one's own country, can "

make

" someone abide by the rules or laws.   

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Notwithstanding the case that Pussycat mentioned, no country can make a law that people in other countries have to abide by or risk being charged in their own country for breaking it in their own country. For instance, suppose the UK government decided that we need to keep our parks in tip-top condition, so they make a "keep off the grass" law. Anyone found on the grass would be breaking the law and be charged with an offense. And suppose they include in it that people in other countries have to abide by it too. What would happen to a person who is seen walking on the grass in Central Park?

That's a frivolous theoretical example, of course. but it does show how ludicruous the idea is that one country can make laws that people in other countries have to abide by or be found guilty of an offense.

Suppose the UK government decided to create a new tax, over and above the taxes that already exist. Purchase tax, for instance. So, by the new law, UK people pay both VAT plus the new purchase tax on everything we buy. Just to make it slightly more realistic, let's suppose that the UK government reduces VAT to, say, 15% instead of the current 20%, and the purchase tax is 5%. So we won't pay more. It'll just be that the tax is a combination of VAT and purchase tax.

Would a company like LL be required to collect both the VAT and the new purchase tax? Of course not, because the UK cannot make laws that LL has to abide by. LL would still collect the VAT because they've opted in to that, but they'd only be allowed to collect the new amount - 15%.

Now I'm off to wade through the rest of your post and its links. There may be relevant trade agreements indicated there

[Phil Deakins]

The WTO documents that you linked to don't really come into it as far as I can tell. It seems that the WTO is all about fair international trade and nothing to do with the collecting of taxes between countries.

The first of your links is very interesting indeed, as it contains a list of all the trade agreements between the U.S. and everywhere else, including the EU. Only 2 of the EU agreements could have anything to do with collecting VAT but, unfortunately, those 2 aren't linked to pages that contain the actual agreements, but we do have those listings:-

 

Agreement for the conclusion of negotiations under GATT article XXIV:6, with annexes and related letter.

Signed at Washington and Brussels January 30, 1987.

Entered into force January 30, 1987.

 

Agreement for the conclusion of negotiations between the European Community and the United States under Article XXIV:6, with annexes and exchanges of letters.

Signed at Geneva July 22, 1996.

Entered into force July 22, 1996;

 

Those are the 2 as they are listed, and they amount to just 1, because the second is the same as the first, which was presumably modified. All the other agreements are to do with very specific things like grapes, beer, and other such stuff.

 

Following the above trade agreement listings, GATT article XXIV:6 states:-

6. If, in fulfilling the requirements of sub-paragraph 5 (a), a contracting party proposes to increase any rate of duty inconsistently with the provisions of Article II, the procedure set forth in Article XXVIII shall apply. In providing for compensatory adjustment, due account shall be taken of the compensation already afforded by the reduction brought about in the corresponding duty of the other constituents of the union.

and sub-paragraph 5 (a) states:-

5. Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of a free-trade area; Provided that:

(a) with respect to a customs union, or an interim agreement leading to a formation of a customs union, the duties and other regulations of commerce imposed at the institution of any such union or interim agreement in respect of trade with contracting parties not parties to such union or agreement shall not on the whole be higher or more restrictive than the general incidence of the duties and regulations of commerce applicable in the constituent territories prior to the formation of such union or the adoption of such interim agreement, as the case may be;

So the agreement appears to be about duties charged on goods supplied across borders - import duties - and not anything that would cover the collection of VAT.

Since that document contains all the trade agreements between the U.S. and the EU, there must be no trade agreement that covers LL's collection of VAT. So trade agreements are out of it. It doesn't mean that there is no other type of agreement to cover it, of which we've seen nothing yet, but it does appear that those who suggested 'trade agreements' were mistaken. It was an interesting possibility but it seems to have been a wrong one.

If anyone still thinks that the reason LL collects VAT is probably because of some agreement between the EU and the U.S., and if you want it to be accepted, then it's up to you to find and show it. It's only possible to prove that something exists. It's not possible to prove that something doesn't exist. So, if it exists, it's up to you show it. If you can do that, then we'll all agree. In the meantime, I'll continue to believe that LL do it purely by choice and not because there is a legal requirement for them to do it, like there was when they started doing it.

 

ETA: I would actually like there to be an agreement between the EU and the U.S., such that LL is legally bound to collect VAT from me, because I'd prefer to know that it's mandatory, and that there's nothing that LL can do about it. I'd prefer that than LL continually taking money from me voluntarily and, therefore, unnecessarily.