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Wendy Starfall

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The topic is about this year's changes in fees for Marketplace sales, LindeX transactions and credit processing.

The Marketplace fee per sale and the credit processing are raised by 100% compared to the previous fee, the latter also no longer has an upper limit.

To provide some context, here are the fees as they will be effective on December 2, 2019.

LindeX transaction: 3.5%

Credit Processing fee: 5%

Marketplace sales fee: 10%

As a citizen of Austria (Central Europe, EU) I have to also pay 20% of VAT whenever I transact with Linden Lab.

In order to be able to wire money from PayPal or Skrill to my bank account, I have to first exchange USD to EUR. That comes with another 4% transaction fee for the currency exchange.

Questions to ask yourself could be:

  • Is creating content for Second Life still worthwhile my time?
  • How shall we react to the ever increasing fees as a community?

You can also talk about your personal situation as a merchant and content creator. All of this is very interesting, it is worth telling and worth knowing.

Here is some Billy Bragg (for some inspiration and because I found it to be very well related to topic) that you can listen to while scrolling through responses.

Starting December 2, I would have to pay 22.5% of my earnings in fees and currency exchange (including PayPal, and excluding taxes). ❤️

Edited by Wendy Starfall
provide more context; clarify tax
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Well, seems corporate America has once again struck.....and about to price themselves out of business....at some point the average person will quit paying the high prices and live with what they have. Sure the Die Hard people will continue to pay..But $new people coming into Sl will forego any new experiences with products and services due to the prices, as well as the casual users of certain products and services. SL business owners will have a tough go of it....Lindens just not too long ago raised the price of buying L$. Won't be long till people won't . I know one for sure that spends thousands of real $.....and sees that coming to a halt in the near future....RL won't tolerate SL price increases forever.....people will, alot of them know personally will just go back to living the freebie life and no longer put RL$. SL afterall is suppose to be fun, not a mortgage payment. I do understand exactly where you are coming from,  and i think the prices will continue to increase, reason being less people will be spending L$, and lindens profits are gonna fall even further. Just my opinion. Don't care whether anyone shares it or not. Sorry for your issues withing SL Wendy. Good Luck with all you do, your products have always worked well on my end.  Have a Great day!

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All in all, it's grown a bit ridiculous at that point. perhaps regional fees to at try to mitigate situations, so no-one's losing that close to half of everything they earn - as i have to hope those rates are far reduced in the same country at least. It's just gutting development anywhere that doesn't run on USD though. For your standing up, how many have/will just silently drop the platform come December when they notice? I've seen enough stores just cease... Aye though.

In the end y'all have created incredible and complete things at this point... All involved proven their talents a dozen times over. And more than enough will still be suffering from the stack-on of the various rates...

Whatever comes, credit where its due for years upon years. I'm not sure of the odds of a reversal but otherwise... good luck to everyone, who stay and who go.
R.

Edited by Grimskull44
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What nobody seems to have pointed out yet is that those of us not in the United States also have to pay VAT and PayPal currency exchange fees.

In my case that means up to 29% extra of the earnings deducted. As EU citizens we pay more for the private regions, and we pay more fees and higher taxes.

Now, it's not as simple as just raising prices in our stores, because it would make us (EU citizens and all those who pay extra) no longer competitive, when the customer can go to another store that is not (yet) "forced" to increase prices.

To be frank, I dislike the idea to raise prices because it just passes the problem on to the customer.

If this is done at all, many creators and merchants would have to gather together and agree that starting December 2 we will all raise prices with one accord.

Right now, the cost is carried entirely by exactly those people who enrich Second Life with new content.

This is our time, our ideas, our efforts and passion being taxed with doubled fees for both Marketplace sales and for processing credit.

In that sense, it is not just us creating this world, it is also us paying for it.

I understand there will be people coming along and claiming that if we want to earn money, we even have to pay up, but make no mistake - working as a content creator on Second Life is a very stressful, and can sadly more often than not turn out to be a not very rewarding full time job. It is nothing like creating apps or app content for things sold in Google's Play Store or Apple's App Store. As a creator you are constantly exposed to the community, expected to be professional and present for all questions and technical support, and everything you do involves jumping through hoops, like technical issues with the service and an incredibly hostile subset of the community who re-populate the world with an army of alt avatar trolls.

You need to be tough as nails, and if you are speaking up, you are "causing drama".

It is my opinion that as content creators we must be rewarded, and not taxed higher and higher! 

Edited by Wendy Starfall
clarify tax
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The real problem for everyone is how the real word governments keep reaching deeper and deeper into our pocketbooks, not matter which country you live in. My empathy is with everyone who pays VAT. I'm sure if it were an actually-feasible thing to do, many would move out of that taxable zone if they could.

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The problem with Linden Lab is that they aren't directly invested in SL. No longer do you see Lindens in world at play, or if you do, they're working.. and even then, they are low men on the totem pole. What LL seems to be doing is robbing resources for SL to fund the Sansar project... which, I think, is dead on arrival.

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1 hour ago, Wendy Starfall said:

What nobody seems to have pointed out yet is that those of us not in the United States also have to pay VAT and PayPal currency exchange fees.

i get that any increase in costs this week places on us a burden that we never had last week. Which can be quite painful to adjust to, when we live on a week to week basis

looking at this tho from a wider perspective

a question about VAT. Do european creative/sellers have to pay VAT on money cashed out of SL? Or is it just treated as income for european tax purposes ?

another thing from the wider perspective, about foreign currency exchange rates

for european people who create and sell in SL then their cashouts are denominated in USD.  And then converted to Euro. When look at the USD/Euro currency exchange rate over the last 10 years then the Euro has depreciated against the USD. Which works to the benefit of the european creator/seller in SL on a numerical currency exchange basis, and to the detriment of the european buyer of SL market content

10 years ago 1 USD would buy 0.66 Euro. Today 1 USD buys 0.92 Euro. So the european creative/seller gets about 26 more Euros per USD100 of SL sales than they did a decade ago. About September 2016 the exchange rate got up 0.96 Euro, it then fell to about 0.82 end of 2017. From which it rose to 0.92 today

so I think when looking at the cost/fee to exchange currencies then we also have to look at the amount of money (euros) we do get in exchange. Which in the case of the european creative/seller their income from SL is numerically substantially greater than what it was 10 years ago, just thru exchange rate movement

a currency exchange histogram is here: https://www.xe.com/currencycharts/?from=USD&to=EUR&view=10Y

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I quit making items to sell, just make for myself now. I cut out with the breedables. I gave up renting a region. in 2015 I quit 2 regions. I gave up with the currency exchanging as this was just making money from money they already made money from. This is the effects of the exorbitant fees (costs) that are being laid down by Linden Laboratories. In March 2020 I am due to renew my annual membership with SL and this is now looking less likely. Being in Europe, as Wendy said, is costing a fortune in taxes and the current VAT rate is disgusting, especially for "make-believe" items! SL supporters are leaving because of the pricing structure, new people are being chased away by the expense, and those that remain are trying to re-coup their loses by increasing their prices to ridiculous levels, which drives away more people. This is a downward spiral and needs to be taken back to the table for a serious rethink.

 

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1 hour ago, Mollymews said:

a question about VAT. Do european creative/sellers have to pay VAT on money cashed out of SL? Or is it just treated as income for european tax purposes ?

We pay VAT when we transact with Linden Lab. Here is an example:

34218390_Annotation2019-11-23003038.png.074dd4bdbde1092fe3cd187466536cf6.png

In Austria we pay income tax varying on how much we earn, that would be up to 25% for me (as artist/coder), and if I would earn enough to actually make a normal living, it would be 35%. That means with the PayPal currency exchange fee of 4% another 29% on top of the fees of 22.5% that I'd have to pay to Linden Lab (not counting any VAT I pay for recurring island fees because that's money I pay and not money I earn), so I'm left with less than half of what I earned.

I think the tax situation is a bit different in the United States, I think there the tax varies by state.

Edited by Wendy Starfall
clarify tax
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55 minutes ago, Eva Ryan said:

The problem with Linden Lab is that they aren't directly invested in SL. No longer do you see Lindens in world at play, or if you do, they're working.. and even then, they are low men on the totem pole. What LL seems to be doing is robbing resources for SL to fund the Sansar project... which, I think, is dead on arrival.

The Sansar side of LL just let 30 staff go ... 

Edited by CoffeeDujour
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59 minutes ago, Eva Ryan said:

The problem with Linden Lab is that they aren't directly invested in SL. No longer do you see Lindens in world at play, or if you do, they're working.. and even then, they are low men on the totem pole. What LL seems to be doing is robbing resources for SL to fund the Sansar project... which, I think, is dead on arrival.

I have seen a fair few Lindens out and about on my travels of the grid. That and the Sansar side just fired 30 people, and they are currently hiring for more people on the SL side. I think they are still investing time and effort into it. You have them investing time and effort into the Bellissaria regions, the yearly events and many other things. I think they are highly invested in SL as a whole.

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1 hour ago, Alyona Su said:

My empathy is with everyone who pays VAT. I'm sure if it were an actually-feasible thing to do, many would move out of that taxable zone if they could.

That and the exchange rate on top of it. Like that really adds up. I live in Canada, and the exchange rate is pretty high up there.

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30 minutes ago, CoffeeDujour said:

The Sansar side of LL just let 30 staff go ... 

I'm really sorry to hear that. I hope that the people who had to go can find new employment soon. 🙁

I clarified some of the tax stuff in my posts. A few years ago I had to sign a document called W-8BEN.

The VAT is something we pay when we transact with Linden Lab (not when trading with other players with L$).

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I cant speak as a content creator and I know I am in the minority but this years pricing changes as an private region owner has/will save me $192 a year (From $199/mo to $179(buy down region) + 28/yr (yearly premium increase from $72 to $99/yr)$30 for extra 10k prims stays the same). 

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1 hour ago, Wendy Starfall said:

I clarified some of the tax stuff in my posts. A few years ago I had to sign a document called W-8BEN.

The VAT is something we pay when we transact with Linden Lab (not when trading with other players with L$).

thanks for what you posted before. It gives me a better picture of where your thinking is

we are kinda in the same RL situation I think

i live in NZ where we have GST, which is the same as VAT. Here the GST rate is 15%.  I am self-employed, meaning that for business and tax purposes I trade on my own account. I could set myself up as a limited liability company but is a waste of time, as people who supply me stuff on credit, and the bank with overdraft and loan when this occurs, won't let me limit my liability to my company shareholder capital, i.e. $NZ100

they all want a personal guarantee from me as the only owner/beneficiary of such a company, that I will personally pay them back for any money that I/company owes them. A personal guarantee which means that they can seize all my stuff if not repaid. So my liability is effectively unlimited up to personal bankruptcy, whether I have a $100 company or not

(as an aside. there are some tax benefits around business assets which NZ company ownership can confer better than personal ownership, but I don't have any business assets of sufficient value to justify the hassle of the paperwork involved)  

were I to extend my income earning to SL then any GST that Linden might charge me on tier payments (which for New Zealand people currently Linden don't add GST, but if they did) would be deductible from the amount of GST that I am required to charge my customers. At each accounting period then add up both columns. When I take in more GST from my customers than I paid to my suppliers, then I pay the difference to the tax department. When I take in less GST than I paid out then I get a GST credit. The tax department pays me the difference, transfers the amount into my bank account

am not absolutely sure but I think the VAT system works the same way. Any VAT that is paid by you should be deductible. VAT on tier is no different to VAT charged on any other service. Realising that we have to show a business purpose for the tier when audited by the tax department. That the region/parcel is a necessary component of our business. Like for example we can show that we make and sell trees and the tier is used to pay the rent on our tree display region/parcel. Or like we have an inworld shop which consumes the tier paid, either whole or in part. In part is similar to when we operate our business out of our RL home. Only part of the home costs are tax-deductible. and we have to be able to show this to the tax auditor

if our source of business income is derived from SL for which we don't invoice Linden for GST/VAT payments on the money cashed out, then from a tax pov then the GST/VAT activity between us and Linden should result in a deductible GST/VAT credit

like you say tho each country is a little different from others. So best always to get advice from a good accountant about all these kinds of things

 

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I'm not a creator, but I do breedables. I own a sim, where I have a store, and the lower monthly sim cost and higher prim count has saved me a lot.  

We have seen LL invest a lot in SL in the past few years, and make a real effort to fix some of the issues we were all complaining loudly about.  One of the major complaints was that land costs were just too high.  In order to address that, they have to change the revenue model to some extent.  

As more and more creators shifted stores to mp only, that meant less land income too.  We are, essentially, paying for real estate on mp. Are the fees higher than they need to be?  That I don't know.  Land costs less, and mp fees cost more, is it a wash for most creators or not?  I didn't hear anyone complaining when land costs went down though LOL.

Don't blame LL for VAT.  I realize it's a factor in decision making, but to suggest LL has anything at all to do with that is ridiculous.  We all have tax structures we have to deal with, some on the front end, some on the back.  It's an issue for every person in SL that takes cash out of the system.

My two cents.  Peace!

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3 hours ago, Wendy Starfall said:

We pay VAT when we transact with Linden Lab. Here is an example:

34218390_Annotation2019-11-23003038.png.074dd4bdbde1092fe3cd187466536cf6.png

In Austria we pay income tax varying on how much we earn, that would be up to 25% for me (as artist/coder), and if I would earn enough to actually make a normal living, it would be 35%. That means with the PayPal currency exchange fee of 4% another 29% on top of the fees of 22.5% that I'd have to pay to Linden Lab (not counting any VAT I pay for recurring island fees because that's money I pay and not money I earn), so I'm left with less than half of what I earned.

I think the tax situation is a bit different in the United States, I think there the tax varies by state.

re: the USA -- Depending on how you set up your tax situation in the USA (S Corp, etc) the taxes are generally quite minimal. If you're doing it all personal, then it's all just ordinary income for federal (For the average person this is gonna run in the 15-20% range), and state is whatever rules the state has. I'm in an income tax free state, and am setup as an S Corp for all my SL things, so the overall tax burden is less than what you pay in just VAT and all the tools I use to create content (Software purchases, computer cost, etc) are all expenses and thus not income that is taxed.

You can get around the VAT problem with your region if you'd rent it from someone else. You'll pay more in rent than the region cost, but you'll pay less when you factor in VAT.  I rent out several regions to people for this very purpose (but I'm not a land baron, I only rent to friends!).

I am very sympathetic to you in general here since I'm a content creator myself have paid well into 5 figures of "fees" to the lab and feel the lab isn't really thinking this change through, but just being blunt here, your personal tax burden (35% income rate, and also the VAT rate) really isn't the fault of the lab. I mean, all us creators pay taxes (Assuming everyone is doing the right thing and reporting/declaring your income), some are going to pay more than others. For VAT, they have to follow the rules of your country, so the path to changing it starts with the people who legislate where you live.

Anything that impedes further content in Second Life from being created is a stupid move on the part of the lab.

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There is many things to factor I believe.

First, they are probably right that while it pay for the servers, that 5% is probably not enough to hire anyone to make improvement to mp and clean up the ever growing pile of old deprecated stuff that really reduce the usability of mp. On medium to long run, if a part of that new 5% goes to the staff in charge on mp, it could actually be an increase in income for the creators. We need to wait and see I guess.

Then i think it's interesting to factor that the inworld shops just get an effective 5% income boost. A shirt at 250L in a 1 land impact sell board just got an improvement of 12 month of shelf life. It will have a positive side effect on sims financial health. It's very hard to quantify, how far this effect could go ? The inworld shop have potential for DJs, roleplay and brand awerness that mp, as a internet page can just dream off. Will the increase of traffic in inworld shop counteract the loss in sell in mp ?

Finally, it's safe to say that lindens lab income is directly dependent on the content creators success and they will do all they can to support them.

This being said, 5% tax is 5% tax and no one will rejoice of that.

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1 hour ago, Mollymews said:

i live in NZ where we have GST, which is the same as VAT. Here the GST rate is 15%

In Canada, at least in Ontario. We have something here called an HST(Harmonized Sales Tax), basically we took our PST(Provincial Sales Tax) and GST(Goods and Services Tax) and combined them as one. Now over here in my lovely province of Ontario, our HST is 13%(basically 13 cents on every dollar). So I can definitely say, Canada has a VAT. Just called something totally different. Honestly didn't know that at first. But hey, you learn something new everyday.

EDIT:

Also cool little tidbit of info, I know it's probably useless. Since we combined both of our sales taxes in 2010. Before then, we use to have to pay PST: 7%  and GST: 8%. Yeah Ontario had a pretty high sales tax at one point in time. Anyways, since the HST. The sales tax actually dropped from 15% to 13%. I know a 2% drop, but I like the fact that I am able to save 2 extra cents on every dollar. Stupid piece of info I know, but I just wanted to tell you guys.

Edited by halebore Aeon
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I don't see where I stated that Linden Lab should be blamed for VAT, or that my personal tax situation is the fault of Linden Lab. I did say no such thing. 😐

What I'm trying to point out is that many of us are now in a situation where more than half of what we earn is getting vaporized by fees and taxes.

I'm not happy about the increase in fees for Marketplace sales and for processing credit. I think that these fees are too high.

I don't think that increasing the Marketplace commission is fair toward creators, who keep jugging out fresh and interesting content for the Second Life world, and I found it to be shameless when Linden Lab talked about "...the Internet’s largest user-created virtual world Marketplace with more than 5 million items..." in the same breath.

We are not indebted to Linden Lab for making their platform attractive with our ideas and original content, because without us and our content this would be a barren ghost world.

Among other questions, one could ask themselves whether it still makes sense to invest time, energy and ideas in creating new content for the Second Life world or not, but for many of us it's not as simple as to "move on" to a different job because we already depend on our Second Life stores as a vital source of income. We sank years of work and effort into this.

I'm not talking about the brands that are ran by pro business with high revenue. I am talking about the many little indy artists and coders, like me.

The losers, misfits, school drop-outs, and all those others who worked their arses off to build all these many cool brands inside of Second Life.

I opened this topic so I could learn how others feel about all this. It would be nice if people in similar situations wouldn't have to feel so alone.

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First I think it is quite harsh to double twice costs (double fees for LindeX and double MP fees) for creators within less than a year.

Then the VAT issue:

When you pay extra VAT for sim tier this would mean:

LL pays that VAT they receive from EU residents and have to give it to the residents country tax department... And why would an american company do that for a service they sell and provide within the US?

Same applies to check out, where they deduct the VAT before the fees which is wrong?

Now you should be able to go to your countries tax department and ask to be freed from VAT for this stuff or in some cases you can asked it back. But I would really see the payment of LL to the different EU countries they collect VAT for.

 

I think the MP pricing should change by now... lets say you want to sell something for 100L$:

you put in 100, then 10% MP fees get added and the price would be 100+10 to make it transparent for the buyer where the money goes to.

Maybe it should be even 100 + 10% + 3.5% + 5% so... 100 + 10 + 4 + 6 = 120 L$ as the actual price of the product.

Keep in mind that LL does not allow you to offer the same product in world for 10% less!

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34 minutes ago, Garvin Twine said:

Same applies to check out, where they deduct the VAT before the fees which is wrong?

I don't think that is where VAT happens, but all these numbers make my head confused. 😵

There are so many things that I don't understand now.

For example, it makes no sense why this is happening right before the holiday season. I mean, how much worse could the timing be?

I don't understand why the announcement for these changes had to be so strangely, weirdly upbeat but with a giganto-knot in the throat.

Everything is called an improvement, but it all comes with a price tag? 😕

Does Linden Lab really think that we are now more inclined to pay for listing enhancements (-10%), now that we have the privilege of paying double the commission?

I don't understand nothing anymore.

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Its completely insane that they're raising these fees while ***** like land tier and private region costs have been the same forever. Server costs are a fraction of what they used to be but everything is still expensive as hell for no reason whatsoever, and they instead keep raising miscellaneous fees.

SL has been run by a ghost crew since 2011 and the actual active staff members are a fraction of what they once were. They're just siphoning off fees to fund Sansar which is, seemingly, a trainwreck.

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SL is DYING of LL's greed.

Everything goes up constantly in prices.

Everyone is leaving SL because between AFK people, increasing rents and desertification of SL, people are just BORED of SL

Have you had a look at the general map lately, focusing on big places Like Blake Sea, and other big private estates ?

EVERYTHING is becoming YELLOW (colour for "for sale" places)

People have ENOUGH to pay more and more for a worse and worse service, because ON TOP of that LL is doing PURE RUBBISH like this EPP or EEP and we CONSTANTLY still have TPs and sim crossing issues we didn't have before.

LL must be DAMN BLIND if they can't see SL is just DYING !

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And talking about SANSAR, it's like throwing the banknotes in the wind : this project is DEAD before being really born. LL should invest in SL instead of throwing their money in SANSAR !

SANSAR  just DO NOT exist really, but LL is still sleeping and dreaming it does !

NO-ONE will buy again a whole inventory to be part of SANSAR anyway, if LL ever thinks that this is gonna happen, they should go living with Alice in WONDERLAND

Edited by MALIFAX
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