VAT still applied to UK citizens?

[Exavor Diesel]

Hi,

I am a little confused about VAT fees still being applied by LL to users residing in the UK and I'm hoping someone can clarify what the situation should be in respect to this.

The page below states:

"Currently, only Residents who live in the European Union are charged VAT. The EU allows people and companies to register for VAT exemption, which we abide by."
https://secondlife.com/corporate/vat.php

It might be that this is simply a page that has not been updated since the UK left the EU but equally and unless I am mistaken; The requirement for US companies to charge VAT to EU citizens is a EU directive I believe and not one set by the UK. So if that is indeed the case, surely LL no longer need to charge VAT to users making purchases from the UK given they are an American company?

Is it possible for someone who knows more about VAT rules/requirements to clarify? I have read the gov.uk website regarding VAT but it seems to talk more about tangible goods/imports rather than services and I will be up all night if I am trying to make sense of it. 

Thanks

Ex

Edited January 9, 2021 by Exavor Diesel

[Adamburp Adamczyk]

better off calling billing support

[Exavor Diesel]

6 minutes ago, Adamburp Adamczyk said:

better off calling billing support

I have raised a ticket, but not fully convinced they will properly look into it (I could be wrong) unless I can make a compelling case. Hence this topic.

[Adamburp Adamczyk]

14 hours ago, Exavor Diesel said:

I have raised a ticket, but not fully convinced they will properly look into it (I could be wrong) unless I can make a compelling case. Hence this topic.

no worries matey - im way oop in north yorks so i *do* take an interest in it as we are out of the EU.  Maybe they are just updating their policy since the UK left?

 

@Patch Lindenany helpful input?

Edited January 10, 2021 by Adamburp Adamczyk
wording.

[LittleMe Jewell]

Given that Patch is VP of Product Operations, I doubt that he's the best one to know the Ins & Outs of Vat or other Billing stuff.

The UK government website still says that VAT is applicable -- based on how I read the info anyway -- so I can't see why LL would stop charging it.

https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers

 

[Marianne Little]

Norway are not in the EU either, but we are charged VAT. Norway are even mentioned by name, so I am sure Norwegians has complained and been put down. 💩

List of Countries and Areas Subject to VAT or GST

• Australia (GST)
• member countries of the European Union
• Norway

Edited January 10, 2021 by Marianne Little

[Marianne Little]

VAT is the direct reason that I go down from Premium to Basic. I know it is not LL's fault, but I have to look at the reality. I have previously had 6 Premium avatars for a land group. I can also not downgrade to one Premium and pay tier to LL (for land over 1024) without VAT applied on that. It will be Basic and renting from another resident. from now on. I do not like it, I prefer to deal directly with LL.

If LL start to charge VAT when I buy Lindens, I am well and truly f-ed. 

[LittleMe Jewell]

2 hours ago, Marianne Little said:

VAT is the direct reason that I go down from Premium to Basic. I know it is not LL's fault, but I have to look at the reality. I have previously had 6 Premium avatars for a land group. I can also not downgrade to one Premium and pay tier to LL (for land over 1024) without VAT applied on that. It will be Basic and renting from another resident. from now on. I do not like it, I prefer to deal directly with LL.

If LL start to charge VAT when I buy Lindens, I am well and truly f-ed. 

Is paying for the Premium on an annual basis not an option for you?  LL only charges VAT on the Monthly & Quarterly Premium payment plans, not on the annual.

[Marianne Little]

1 minute ago, LittleMe Jewell said:

Is paying for the Premium on an annual basis not an option for you?  LL only charges VAT on the Monthly & Quarterly Premium payment plans, not on the annual.

Is that really true? Why should annual be an exception? Link? I have not paid annual since LL had that "Pay for two years" and I am not sure if VAT was on for Norway then. Since then, I let my Premiums revert to basic. I kept two alts on, as monthly ones a short time for the Stilts.

[LittleMe Jewell]

1 minute ago, Marianne Little said:

Is that really true? Why should annual be an exception? Link? I have not paid annual since LL had that "Pay for two years" and I am not sure if VAT was on for Norway then. Since then, I let my Premiums revert to basic. I kept two alts on, as monthly ones a short time for the Stilts.

I don't recall the reasons behind the difference -- if we were ever told.  I vaguely remember it from a thread about Premium fees and VAT.  It is noted in this page:

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

[Marianne Little]

2 minutes ago, LittleMe Jewell said:

I don't recall the reasons behind the difference -- if we were ever told.  I vaguely remember it from a thread about Premium fees and VAT.  It is noted in this page:

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

Yes, I can see it... I can't understand what reasons it should be for not charging VAT for annual Premium. Maybe I must send in a ticket and ask if that's really, no, REALLY true.

[LittleMe Jewell]

24 minutes ago, Marianne Little said:

Maybe I must send in a ticket and ask if that's really, no, REALLY true.

I vaguely remember one of the Lindens specifically making the comment about Premium not getting the VAT charge -- possibly back when they were selling us the 'prepay' options.

[LittleMe Jewell]

 

Found the reference that I was vaguely remembering --- see the second bullet point.

 

 

 

I found some comments in a few other threads that said LL still has to pay the VAT on the annual Premiums, but they are covering that fee themselves.  The comments were not made by any Linden though, so not sure about the validity.

 

Edited January 10, 2021 by LittleMe Jewell

[Marianne Little]

Thank you for searching for answers to me! 🥰 

Since that thread  you found, is about paying an extra year, I took it to be for the pre-pay period, and that only. But the Wiki states we don't pay VAT for annual, no exceptions. It is a nice thought! (Tempting to continue...)

@Grumpity Lindencan you clear up this about the UK, and also about annual Premium?

[Grumpity Linden]

It's definitely for realz true: no VAT on annual membership fees. 

There are no changes to UK VAT charges, but we will update the language to Brexit it out of the who-gets-charged-what descriptions.  Thanks for the nudge! 

[K9Mark]

40 minutes ago, Grumpity Linden said:

It's definitely for realz true: no VAT on annual membership fees. 

There are no changes to UK VAT charges, but we will update the language to Brexit it out of the who-gets-charged-what descriptions.  Thanks for the nudge! 

I think we'd prefer it if you left the language as it is and stopped charging us VAT    🙂

[LittleMe Jewell]

20 minutes ago, K9Mark said:

I think we'd prefer it if you left the language as it is and stopped charging us VAT    🙂

Of course you would, but VAT is still applicable to the UK.

[K9Mark]

12 minutes ago, LittleMe Jewell said:

Of course you would, but VAT is still applicable to the UK.

It was supposed to be a joke

[LittleMe Jewell]

6 minutes ago, K9Mark said:

It was supposed to be a joke

Though I thought it was funny -- I did laugh -- I wasn't really sure about that.

[bigmoe Whitfield]

2 hours ago, Grumpity Linden said:

It's definitely for realz true: no VAT on annual membership fees. 

There are no changes to UK VAT charges, but we will update the language to Brexit it out of the who-gets-charged-what descriptions.  Thanks for the nudge! 

I will pay you in cookies!  wait, I'm not in the uk, so is it considered a bribe then? lol

[Marianne Little]

16 hours ago, Grumpity Linden said:

It's definitely for realz true: no VAT on annual membership fees. 

There are no changes to UK VAT charges, but we will update the language to Brexit it out of the who-gets-charged-what descriptions.  Thanks for the nudge! 

Now you made me happy, and keep me as Premium! 😘

[Blush Diavolo]

I was so hoping we would become exempt from VAT upon leaving the EU - Land fees VAT breaks my heart every month 😅 but alas, we still get to pay it.

[Exavor Diesel]

On 1/12/2021 at 9:24 PM, Grumpity Linden said:

It's definitely for realz true: no VAT on annual membership fees. 

There are no changes to UK VAT charges, but we will update the language to Brexit it out of the who-gets-charged-what descriptions.  Thanks for the nudge! 

Thanks for the reply but I think you’re shooting yourself in the foot as a business.

Evidently people don’t know about the VAT relief on annual premium memberships. LL should really make this more well known and you will no doubt increase the number of subscriptions with little effort from your marketing teams.
 

The continuation of VAT on private regions is disappointing though. For me they’re  not viable because the extra 20% means I cannot compete against sim owners based in the USA if I were to resell the land in full or in part, I’m not alone.

In comparison and to put the issue into perspective, people could pay a mortgage on a small apartment in real life for the price of a full region and make a profit. I know which I’d rather do.

Full regions are just too expensive moreso for those who pay VAT.  It would be great if LL could find a compromise in such a way that benefits everyone because the current pricing just seems a little unfair.

 

 

 

 

 

Edited January 13, 2021 by Exavor Diesel

[LittleMe Jewell]

9 minutes ago, Exavor Diesel said:

Thanks for the reply but I think you’re shooting yourself in the foot as a business.

Evidently people don’t know about the VAT relief on annual premium memberships. LL should really make this more well known and you will no doubt increase the number of subscriptions with little effort from your marketing teams.
 

The continuation of VAT on private regions is disappointing though. For me they’re  not viable because the extra 20% means I cannot compete against sim owners based in the USA if I were to resell the land in full or in part, I’m not alone.

That aside, I could pay a mortgage on a small apartment for the price of a full region and make a profit. I know which I’d rather do. 

Full regions are just too expensive moreso for those who pay VAT.  It would be great if LL could find a compromise in such a way that benefits everyone because the current pricing just seems a little unfair.

 

There is a big dollar difference in LL picking up the VAT on $99.00 per year for Premium memberships versus LL picking up the VAT on $229 per month (current region cost, I think) for regions. I doubt they can afford to do so.  

VAT is a tax administered by your government, thus it seems to me that your government is who made the pricing of things unfair when dealing with things outside your country.

 

[Exavor Diesel]

43 minutes ago, LittleMe Jewell said:

There is a big dollar difference in LL picking up the VAT on $99.00 per year for Premium memberships versus LL picking up the VAT on $229 per month (current region cost, I think) for regions. I doubt they can afford to do so.  

VAT is a tax administered by your government, thus it seems to me that your government is who made the pricing of things unfair when dealing with things outside your country.

 

Yes but that argument works both ways. I’m sure if LL were to absorb the VAT, the revenue incurred from the increase in region sales will offset the cost of absorbing VAT. I could be wrong and I trust someone at LL has run the numbers recently. 

If that’s not possible then some kind of incentive would be better, such as LL absorbing VAT if a region is paid for on a quarterly basis. 

Or make it so people can purchase a homestead without owning a full region with the same VAT discount if paid quarterly. 

Basically any options to make region ownership more accessible and fairer to those liable for VAT would be welcome. 

That aside, the requirement for US companies to pay VAT for purchases made from within the EU is a EU directive and NOT a UK one. As such it is still questionable as to whether or not **LL** is still obliged to pay VAT for transactions originating from the UK. Nobody has given a definitive answer to this although I appreciate we now know LL’s stance on the matter.

Edited January 14, 2021 by Exavor Diesel