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Ishtara Rothschild

Does changing my country of residence affect my VAT payments?

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I just saw that I can now change my country of residence on my account page. Apparently it was added to allow residents to switch to different local payment options when travelling, which doesn't really make sense imho. Now I wonder, would this affect my VAT settings? I can't imagine why else this would have been added.

In other words, if I were to switch my home country from Germany to the USA, would I no longer be charged 19% VAT? And would this be a matter between me and the German tax authorities, or would I risk a ban for incorrect RL information from LL's side?

 

PS: I just went ahead and changed it to the United States. Of course I intend to change it back to Germany right away, but my account page now shows "Subject to VAT: No"!!!! Wow. Geez. Phew. I'm so excited! That could save me $74 a month. It would also allow European residential land owners to compete with their US competitors, and I really can't imagine that it was added for any other reason, since my means of payment don't change when I travel. I'm just worried that I misunderstood LL's intent and that this could be grounds for a ban :(

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With 20% here I can certainly see the attraction of that idea lol...But surely it can`t be that simple. For one thing when you login your IP will nail your country, but whether its set to detect that as part of the checks I have no idea.

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Wow!  Good question, Ishtara.  My guess -- and this is purely a guess -- is that you have more to worry about from the German government than from LL.  LL covered themselves by asking you where you live. I suspect that LL's own liability for passing appropriate VAT to Germany is satisfied if they can just say, therefore, "Hey, we did our best.  It's not our fault if she's lying."  On the other hand, if the German goverment finds out that you are not a US resident, you'll be in a heap of trouble with them.  And they know where to find you.

Who has the bigger police force?

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Well, Linden Lab says this:

 

How does Linden Lab determine who to charge VAT for?

When you registered your account, you told us what country you live in. If that country is in the EU, then VAT is applied.

So, does LL rely on people's honesty when joining? Personally, I'm inclined to think LL double checks this by IP address.

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I just went ahead and changed it to the United States. Of course I intend to switch back to Germany right away, but my account page now shows "Subject to VAT: No"!!!! Geez. That could save me $74 a month. It would also allow European residential land owners to compete with their US competitors, and I really can't imagine that it was added for any other reason, since my means of payment don't change when I travel. I'm just worried that I misunderstood LL's intent and that this could be grounds for a ban :(

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aha...

 

Can't I just say that I live outside the EU?

If you falsely claim that you live in a country that doesn't charge VAT, it's very likely that discrepancies between your IP address and your declared country will prompt us to flag your account for review or even suspend it.

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

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The "Choose New Billing Country" page reads:

"You may update which country's billing options you chose to have available to you. You shouldn't need to make this change, but if you are travelling, or we have not successfully identified your country of origin, you may change this below."

 

This leads me to assume that LL accept the altered information and trust it over their automatic identification by IP address. But I really don't want to risk my account over this....

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Thanks, I guess that answers my question :( I won't risk my account over $74. Alas, I can no longer change my home country back to Germany now. Perhaps they allow only so many changes during a certain time period. I guess I'll have to contact support and have it changed back.

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You're probably right, but suppose that you are in fact a German resident but happen to have signed up for SL while you were visiting in the US. How would their double check of your IP address catch you if you lied about being a US resident? Or suppose that you are a US resident, but you sign up for SL while you are visiting in Germany. How does LL know that you aren't a German resident, lying about being a US resident? The IP address might help, but it won't always give a reliable answer.

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I`m sure you won`t be the only one that tries it, all of sudden all the residents live in non VAT countries lol :D

Obviously LL can check from the IP, but that statement Nyll posted makes it sound manual, so it may not get noticed unless something else makes them look at your account first, like submitting any ticket etc so totally not worth the risk of being banned. I would think that someone changing location may be enough to have them check it.

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I think so too. I guess my account was flagged for review as soon as I changed it, that's probably why I couldn't change it back anymore. But I've contacted live chat and it's all sorted out now. Back to 19% VAT and a sound night's sleep for me :)

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The fact is that the people paying the most VAT are exactly the same people that can`t afford to risk losing their accounts. Glad you got it sorted it :)

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I created my 1st account in the USA and lived there, but moved to Australia a few years later.  My 1st account had USA but my second one I was honest and put AU.  The thing is my credit card for sl is based in the USA and in USD.  So when I went to buy Lindens, I was charged a conversion fee from GB to USD (yet I had AU listed in sl not GB???) on my credit card!!!  That was not acceptable as my credit card is US and USD so I changed my location back to US to avoid this in the future.  I was not even concerned about VAT because in either case it did not apply to me at the time.  And my IP has not been flagged!  I did contact LL about this and I do not recall the results but I do know the fix was to change my location to match my bank account and not my physical location.

Edited by ElSolLaLuna
make more clear

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I'm sure that real life governments would consider things like misstating your country of residence to be illegal schemes for tax avoidance.  If you don't like VAT, vote those money-sucking politicians out of office.

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When you using some VPN service, example Im using pureVPN for my mailserver (2.88 usd month for VPN itself), then I think you can set also USA as your contry and set your VPN through USA. But I still dont use it, because network speed and latency through VPN is not as good as direct connection. So, I still use my VAT. I dont know, maybe Im stupid.

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Posted (edited)

The topic is UP again! And this is interesting - where I live in real life, but virtually?  Go from virtual real-life to virtual second-life. 

Edited by Ernesto Perez

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