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It's time we stand up against LL and tell them they need to make SL far for everyone


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Cully Andel wrote:

'The US' and 'Linden Labs' are 2 different things and I dont see anyone blaming the US. YES we get charged VAT but there are ways around it to make sure they don't lose money OR customers. That's all that's being said. 

As for blaming the US - I'm referring to comments made on the forums for six years and running, although more prevalent lately...not just on this thread.

And it's Linden Lab - singular. ;)

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Ceka Cianci wrote:

that's why the whole us and them comparison is silly really..

each place will have it's pro's and cons..and both  sides arguing usually end up using someones else's information to go on to back themselves up about someplace they really don't know much about in person..

really the bottom line is england wanted this awesome land and are just pissed because they messed up and trusted the ones that were left incharge over here..

either way..us first americans..we're pissed at all of you bastages just for showing up LOL

 

As someone with a grandfather who is 1/4 Cherokee I say...

WINNER of the thread goes to Ceka!!!

 

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GoldxRazer wrote:

At the end of the day they should not be changing us the 20% VAT as they do not pay VAT to the UK.

Please read and understand... http://www.designsondata.co.uk/kb/tax/VAT.htm

Value Added Tax (VAT) is a tax which is levied in all countries of the European Union. It is charged on most goods, the main exceptions being financial services; these are classed as being exempt.

It is called Value Added Tax because it is charged on the Value which a merchant adds to his merchandise i.e. the difference between the selling price and the cost price or cost of materials if manufactured. To achieve this aim, the merchant charges VAT at the appropriate rate on Sales (Output Tax) and pays this to the Customs and Excise after deducting the VAT which he has paid on his purchases (Input Tax). The exception to this rule is that VAT paid on the purchase of cars may not be deducted as Input Tax.

Customs and Excise publish a leaflet called ‘Should I be registered for VAT ? (VAT Notice 700/1). This gives a very full explanation of the regulations regarding registration. Traders with a turnover above the Registration Threshold (£52,000 in 2000/01) MUST register for VAT; those with a turnover lower than the threshold may register if they wish.

Most businesses must register, and it will almost certainly be to your advantage to register even if you do not have to; Independence™ will do all the donkey work for you, including the Cash Accounting Scheme. Your clients will probably be VAT registered themselves so will be able to reclaim the VAT which you charge them, and you will be able to reclaim any VAT which you pay on office equipment and supplies, petrol etc.

You should only consider not registering (if you do not have to) if your customers are mostly members of the public (your prices will be lower) or financial institutions who cannot reclaim VAT. In this calculation you need to estimate what proportion of your sales are represented by taxed purchases and what proportion by labour. This is definitely a question to discuss with your accountant. There are special rules about reclaiming VAT on goods bought for the business just before it was registered.

The main rules which govern the administration of VAT are contained in ‘The VAT Guide’ (VAT Notice 700).

Registered traders are referred to as merchants, and on registration are issued with a VAT Registration Certificate VAT4. This assigns a unique number called the VAT Registration Number e.g. 477 7139 05. This number must be quoted on all sales invoices.

Merchants must charge VAT on all their sales at the appropriate rate and account to Customs and Excise for the amounts charged quarterly according to the cycle advised on the VAT Registration Certificate. At the end of each quarter a VAT Return must be completed and sent with a cheque for the appropriate amount to HM Customs & Excise at Southend.

VAT is charged at several different rates depending on the type of goods and services. A large class of goods, mainly food but also children’s clothes, books and exports are zero rated (in the UK). There is a significant difference for the merchant between goods which are exempt (financial services) and those which are zero-rated, although the sale price may, at first glance, appear the same. Suppliers of exempt goods will frequently not even be registered for VAT; this means that they are unable to reclaim the VAT on the goods that they buy and it therefore forms part of their costs. Merchants supplying zero-rated goods such as food retailers, can reclaim the VAT that they have paid on fuel,

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Czari Zenovka wrote:


Ceka Cianci wrote:

that's why the whole us and them comparison is silly really..

each place will have it's pro's and cons..and both  sides arguing usually end up using someones else's information to go on to back themselves up about someplace they really don't know much about in person..

really the bottom line is england wanted this awesome land and are just pissed because they messed up and trusted the ones that were left incharge over here..

either way..us first americans..we're pissed at all of you bastages just for showing up LOL

 

As someone with a grandfather who is 1/4 Cherokee I say...

WINNER of the thread goes to Ceka!!!

 

i just want to say..i was just being silly trying to lighten people up in here,,

SL showed me one thing for sure..there are good and bad people all over the world..

i'm very fortunate to have met many of them..

 

 

 

 

 

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Maelstrom Janus wrote:

Funny I can pay in sterling to other games companies not based in the uk.....if lindens are proferring their services here I should be able to pay in sterling, the japanese in yen, people in
europe the euro.....

Perhaps the other games have facilities in Europe and accounts with Euro banks making it easier or less expensive for them to do this.  LL only has offices in the US now.
  I don't know if banks over there require a presence in the country to be abe to open an account or not. In any case I am sure if this were a profitable way to go for LL they'd be doing this already.  

Of course Lindens dont seem to promote them selves as a big international company since the swingeing staff cuts a year or two back.... In any event a massive tier cut for everyone regardless of global location would be a massive boost. Of course the current way Lindens have of dealing with abandoned land means not as much of the map is as yellow as it used to be.
;)

Lower tiers for everyone gets my vote.


 

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GoldxRazer wrote:

VAT can only be changed if the company is being billed for it witch there not as they not got a office in EU so they can't change for VAT so LL is taking money that is not there's.

they don't have to have an office there..

 

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.

 

Why should European Residents pay more for everything in Second Life for no additional benefit?

The EU Commission implemented the VAT rule about Electronically Supplied Services by non-EU resident entities in order to level the playing field for EU-based providers of services. The aim is to enable European providers of competitive services to Second Life to compete equally with non-EU-based providers as regards customer taxation.

Why is Linden Lab discriminating against Europeans?

We are not discriminating against Europeans. We are merely trying to abide by the laws that are applicable to all non-EU based providers of Electronically Supplied Services.

 

Doesn't this distort the market within Second Life to an extent?

All taxes distort markets in some way. The aim of this one is to enable EU providers of virtual worlds to compete fairly with Linden Lab. Its impact on EU entrepreneurs within Second Life appears to be a side effect.

 

Did Linden Lab implement VAT to avoid having to make income tax declarations to the IRS for Second Life users?

No. Charging EU Residents VAT and remitting it to the Residents' home European country is required by EU Law. 

 

Does Linden Lab charge any US sales tax to people in the EU?

No. There's no double taxation.

 

Do your prices already include VAT, or is VAT added on?

VAT is added on top of the prices that we quote.

Does Linden Lab charge additional VAT in L$ for uploading animations?

No. At present VAT does not apply to any inworld transactions.

When I purchase L$ on the LindeX, is there a VAT applied?

No, because you are purchasing L$ from another Resident, not from Linden Lab.

 

 

Special circumstances

----------------------------------------------------

Can I be billed to my company's name?

I own a business in real life that has a VAT ID but my Second Life account is listed in my personal name. How can I make sure all my bills from Linden Lab will be made out to my company?

Invoices from Linden Lab will be made out to the information that we have on file. If that address is in the EU, taxes are required. If you need to change the information that we have on file for you, please visit your Dashboard. Please be aware that if your billing information does not match the address you've provided us, you may have trouble paying and if the country of the IP address with which you regularly log into is different than your billing address our system may hold your account for potential fraud.

What if I've moved from the EU?

I lived in the EU at the time I registered my account and now I don't. How do I change the information that you have on file for me?

Invoices from Linden Lab will be made out to the information that we have on file. If that address is in the EU, taxes are required. If you need to change the information that we have on file for you, please visit your Dashboard. Please be aware, if your billing information does not match the address you've provided us, you may have trouble paying and if the country of the IP address with which you regularly log into is different than your billing address our system may hold your account for potential fraud.

How do I handle taxes for European customers?

I have European customers who are renting/buying land from me sometimes with L$ and sometimes through Paypal--how do I handle tax?

We recommend that you consult a qualified tax advisor.

What if I live in an area of the EU where VAT isn't charged, like the Canary Islands?

We are reviewing our records for these locations and will ensure that we do not charge VAT where it is not required.

Am I required to pay VAT on Land Maintenance fees if I pay for it using credits on my account from selling L$?

Yes. The requirement to charge VAT is determined by the SKU of the product that is purchased not the source of the funds.

How does VAT apply to group-owned land, when some of the members reside in the EU?

We determine VAT by reviewing the billing information and address on the account and we periodically review primary IP address of log on in addition to other forms of diligence from time to time. If the group's information indicates it is an EU group, then VAT will be applied.

I made a change to my account information, but I'm still being billed at the old rate

Different countries charge different VAT rates; if you've moved to a new country and need to reflect that change in your account, it can take up to ten minutes for that change to take effect due to technical considerations. Any payments you make during that time will be subject to the old VAT rate.

If you've entered your VAT registration ID for VAT exemption, be aware that it may take up to two hours for this to take effect due to technical considerations.

32px-KBwarning.png Warning: Please be aware that tax evasion is considered a serious crime in most countries, and that falsification of information to evade payment of VAT may result in fines and/or criminal prosecution. Linden Lab will cooperate with government authorities in cases involving potential falsification of information to evade payment of VAT.

 

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GoldxRazer wrote:

VAT can only be changed if the company is being billed for it witch there not as they not got a office in EU so they can't change for VAT so LL is taking money that is not there's.

Did you even read how VAT works? Companies are not Billed for it. Consumers are billed it! As in any sales tax structure, the companies selling goods and services that fall under the VAT regulations have to collect the VAT charges and forward the collected monies with a VAT Tax statement quarterly to he regulating authority in the EU.  

 

For a little more information regarding the VAT read http://en.wikipedia.org/wiki/Value_added_tax

Since Linden Research is doing business and providing qualifying services to individuals and businesses in the EU, it has to  comply with VAT collection & reporting requirements.

Please read this information from SecondLife for detailed clarification. [i'd post it here but that is specifically prohibited. - LOL oh well Ceka Cianci posted it above :D]

http://wiki.secondlife.com/wiki/Linden_Lab_Official:Value_Added_Tax_(VAT)_Frequently_Asked_Questions

Linden Research doesn't; need to show YOU it's quarterly payments and reporting to the various VAT administrating agencies in the EU.

P.S. Linden Research is in with some good company like GoDaddy, Yolasite and the like as they provide "access to servers" - and they all need to collect VAT from EU customers.

BTW - VAT is suppose to provide a level playing field for EU based businesses allowing them to offer competitive services, not that this actually works. For many people in the EU it simply feels like a regressive tax, pricing services out of the normal competitive scale when in fact there are no competitors in the EU.

 Note: I'm a semi-retired accountant in real life. I've had to deal with corporate taxes for most of my career.

 

 

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There are far too many 'new' posts in this thread for me to bother reading, but I do have a comment about one little sub-topic that's come up...

All you U.S. citizens did NOT free yourselves from British rule, so almost all of you can completely forget that idea. Why do I say that? Because very very very few of you had ancestors in North America at the time. Almost all of you were still over on this side of the pond, as it were. So when you think about the war of independence, remember that your ancestors didn't win it. They lost it ;)

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Phil Deakins wrote:

There are far too many 'new' posts in this thread for me to bother reading, but I do have a comment about one little sub-topic that's come up...

All you U.S. citizens did 
NOT
free yourselves from British rule, so almost all of you can completely forget that idea. Why do I say that? Because very very very few of you had ancestors in North America at the time. Almost all of you were still over on this side of the pond, as it were. So when you think about the war of independence, remember that your ancestors didn't win it. They lost it 
;)

I disagree Phil; most of them weren't British, but subsequently emigrated to the US from Europe/Asia (voluntarily) and Africa (less voluntarily).

Which might explain some of their continuing problems with English comprehension.

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That's true. I did say "on this side of the pond" to cover non-British nationalities, but I also said "you lost" which only applies to those with British ancestry (which included Ireland and that time).

Nevertheless, most of those in the U.S. today don't have ancestors who were there during the war of independence, and yet they often claim they won that war - erroneously, of course :)

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@ everyone

Again and again, people are missing the point.

The REAL issue has nothing to do with tax.

The REAL issue is about costs, prices and markets. See earlier post.

In 2007, Linden Lab had a choice:

  1. absorb VAT as a cost of doing global business, have lower profits in the short term, grow the European market, have bigger profits in the long term
  2. charge VAT, have bigger profits in the short term, shrink the European market, have lower profits in the long term

If the word 'VAT' drives you crazy, substitute any other cost instead: electricity, office rent, wages etc. The issues is not about VAT, it is about costs of doing global business and strategies for success. Linden Lab made the classic mistake of sacrificing long-term growth for short-term profits.

Bottom line: Linden Lab has no vision, no ambition and no business sense. The company has repeatedly made strategic errors that have severely reduced Second Life's potential growth and profitability.

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Deltango Vale wrote:

@ everyone

Again and again, people are missing the point.

The
REAL
issue has nothing to do with tax.

The
REAL
issue is about costs, prices and markets. See earlier post.

In 2007, Linden Lab had a choice:
  1. absorb VAT as a cost of doing global business, have lower profits in the short term
    , grow the European market, have bigger profits in the long term
  2. charge VAT, have bigger profits in the short term, shrink the European market, have lower profits in the long term

If the word 'VAT' drives you crazy, substitute any other cost instead: electricity, office rent, wages etc. The issues is not about VAT, it is about costs of doing global business and strategies for success. Linden Lab made the classic mistake of sacrificing long-term growth for short-term profits.

Bottom line: Linden Lab has no vision, no ambition and no business sense. The company has repeatedly made strategic errors that have severely reduced Second Life's potential growth and profitability.

By absorbing VAT, LL wouldn't have had lower profits; i.e. their profits wouldn't have gone down at that point in time. They had been absorbing the VAT before that point. You are right in that they would have lower profits relative to after they started to collect VAT from users, of course.

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Deltango Vale wrote:

@ everyone

Again and again, people are missing the point.

The
REAL
issue has nothing to do with tax.

The
REAL
issue is about costs, prices and markets. See earlier post.

In 2007, Linden Lab had a choice:
  1. absorb VAT as a cost of doing global business, have lower profits in the short term, grow the European market, have bigger profits in the long term
  2. charge VAT, have bigger profits in the short term, shrink the European market, have lower profits in the long term

If the word 'VAT' drives you crazy, substitute any other cost instead: electricity, office rent, wages etc. The issues is not about VAT, it is about costs of doing global business and strategies for success. Linden Lab made the classic mistake of sacrificing long-term growth for short-term profits.

Bottom line: Linden Lab has no vision, no ambition and no business sense. The company has repeatedly made strategic errors that have severely reduced Second Life's potential growth and profitability.

Out of interest, how many major companies based outside the EU adopt the business strategy of absorbing VAT as a cost of doing business worldwide (e.g. Microsoft, Apple, Google)?     

More usually, in my experience,  US-based companies seem to adopt, if anything, a pricing policy that discriminates against EU-based customers, in that they seem to price items at $100, €100 or £100 (as opposed to the equivalent of $100 in Euros or Pounds), depending on where they're delivering to.    

I've recently been pricing netbooks and tablets, and, at least for a new one, it seems to me I'd find them far cheaper if I were ordering in the US.    But maybe my experience is atypical.

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Deltango Vale wrote:

In 2007, Linden Lab had a choice:
  1. absorb VAT as a cost of doing global business, have lower profits in the short term, grow the European market, have bigger profits in the long term
  2. charge VAT, have bigger profits in the short term, shrink the European market, have lower profits in the long term

If the word 'VAT' drives you crazy, substitute any other cost instead: electricity, office rent, wages etc. The issues is not about VAT, it is about costs of doing global business and strategies for success. Linden Lab made the classic mistake of sacrificing long-term growth for short-term profits.

Deltango makes the classic mistake of seeing a localized TAX, specifically designed to give businesses in that same locale [The EU] a competitive financial advantage over external [foreign] businesses, as a cost of doing business. Call it VAT, call it a Tariff, it shouldn't; exist at all in a World Economy. It is a regressive tax to stifle competition or to punish those who want to use a foreign solution provider.

Oh Yes, Absorbing this as a Cost would make Linden Research less profitable and would cause a general price increase across the product line paid for by all the Linden Research customer base. Absorbing this as a Cost is also not a sound accounting practice. In all cases Linden Research would still need to collect the VAT, and file tax reports along with a check with all the various EU  VAT regulatory agencies. There is not an accepted accounting principle by which that can be booked as a 20% discount for EU customers with a follow on 20% tax which is what you are suggesting. On top of that, VAT Registered persons and businesses in the EU can file for and get their VAT payment back. The end result is an Institutionalized class of SL Customers in the EU that realize an effective 20% discount for services from Linden Research if your your suggestion to absorb the cost was even workable accounting-wise.

Linden Research did the correct thing any multi-national Service Company would do. It passed that Cost back to the region that imposed it. The EU is not the arbiter of competition. The VAT is is an exclusionary regional tax. Tariffs should not be a part of the World Economy. Linden Research made a sound Business and Accounting decision.

 

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Drake1 Nightfire wrote:

Seeing as one of my ancestors signed the Declaration of Independence, I feel safe in saying.. Sod off! Most of the people in my area can claim bloodlines back to the
revolution
. :matte-motes-wink-tongue:

Would that be the French Revolution or the Russian Revolution, or perhaps the Prague Spring, or even the English Civil War?

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Charly Muggins wrote:

Take a look at
The UK and USA are conveniently located next to each other in the table for comparison.

Where would you feel safer?

 

Your post and your question is way too broad. It is not as simple as "where would you feel safe".  I 'feel' safe in my country/city/neighborhood. But, I am speaking as an American white male (and one who has also been the victim of gun violence.)  The America of my youth is NOT the America of today.  

It has been both suggested and statistically supported that "If in America black men [were] murdered at the same rate as everyone else, the overall [homicide] rate would drop to 1.9 out of 100,000 population. That would give the United States the 147th highest murder rate in the world.” (Publius)

This raises two questions: Is that true, and, if so, what does it mean?

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Microsoft, Apple and Google are mature businesses with near-monopoly control over core products used by the majority of Earth's population. Linden Lab in 2007 was a tech startup with a niche product hitting the initial growth phase.

Because of their scale and scope, Microsoft, Apple and Google products enjoy low price elasticity of demand. That means customers are less sensitive to price fluctuations - they are more willing to accept price increases. Second Life suffers from high price elasticity of demand, which means that customers are more sensitive to price fluctuations. If the price of Windows or an iPhone were to rise 20-25%, most people would moan and complain, rant and rave - and still buy Windows or an iPhone. When prices for SL jumped 20-25% in 2007, most European customers and investors dumped virtual land and Premium Memberships like a hot potato. It took only a mouse click to give up what had suddenly become an overly expensive hobby.

The initial growth phase of a product is critically dependent on speed and reputation. Sometimes, it is only a matter of a few months whether a product will succeed or fail. It's all about catching the wave and riding it boldly. Facebook is a prime example. Love it or hate it, Facebook didn't mess around. It grabbed its chance with both hands - and won. Linden Lab fumbled the ball when it really mattered.

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Yes, yes... but can you actually name one US company I of which I might have heard that you say has succeeded because it has adopted the pricing policy you say LL should have adopted -- that is, absorbing the VAT on all the electronic goods and services it supplies to EU destinations,  so that, while US and EU customers pay the same price, the company only receives about ~70% --~80% of the funds sent from the EU?

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The comparisons of Linden Researches Virtual Services to the products from long in Business companies like Microsoft and  Apple is the worst oranges to apples example you could provide. The same with the mention of Google and FaceBook, both data collecting moguls and a Social Media Company who's primary focus is selling as much of your information as they can collect. .

Services Businesses operate on the slimmest of profit margins. This is why I offered GoDaddy & Yolysite, 2 close examples of similar "service only" businesses, as comparative examples. These two companies have plenty of competition in the EU as well.. However, even these are not perfect comparisons. Linden Research doesn't aspire to be the Global Monopoly of Virtual Services as a business objective, It has came to pass as a result of the narrowing of the existing field of VR Social Media environments by making smart [and painful] decisions. The now defunk BlueMars, WorldsAway plus so many more VR providers testify to how difficult it is to offer services in this area.

Is the playing field even, for EU owners of Linden Virtual Land?  Nope, it's not. As a Virtual Land owner, you in the EU have to charge more on your rentals to make the minimum objective of breaking even on your Virtual Region expenses to Linden Research. The imposition of the VAT by the EU changed the landscape of the whole Virtual Services market for the EU overnight.

Asking Linden Research, a services company, to have different virtual product pricing [a 20% discount] for EU customers is simply hubris.

If in the future the costs of providing world-class Data Centers drops significantly, I'm sure that Linden Research will be in a better position to examine it's services pricing - for all customers.

My take on the EU VAT is that you should be spending time getting the class of companies that have no competition in their field of endeavor on a VAT exemption list. 

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CCP Games is a very successful company. It has offices in Iceland (high costs, high tax), Georgia (low costs, low tax), New York (high costs, high tax), Shanghai (low costs, low tax) and Newcastle (low costs, high tax). It sells its product in the global market at a uniform price. All costs, including sales taxes, are included in that price. (Note, UK prices include VAT, even though it is not marked.)

CCP games sees itself as a global company in a global marketplace with global customers. Linden Lab, on the other hand, sees itself as a California company with US customers. That is one of many reasons why EVE Online is growing rapidly and Second Life is in decline.

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