Should England residents be paying VAT after leaving EU?

[Trippie Littlepaws]

When I joined SL, England was part of EU.  So my account states that my country was subject to EU Vat when I joined.  As this is no longer the case, why am I still being charged EU Vat?

I wanted to upgrade to the Premium Plus account but pay monthly.  This means VAT will be added which I don't agree with.

Edited August 4, 2022 by Trippie Littlepaws

[Jenna Huntsman]

The UK still uses the VAT system, but rates are set by the UK Government, not the EU.

The VAT rate is the same between the 2, so yes, you're being charged correctly.

(The only way to get around paying VAT in SL is to pay for an annual premium membership. Individual L$ purchases are still VAT eligible to my knowledge).

[Phil Deakins]

3 minutes ago, Jenna Huntsman said:

(The only way to get around paying VAT in SL is to pay for an annual premium membership. Individual L$ purchases are still VAT eligible to my knowledge).

Or get VAT registered and claim it back

 

[Trippie Littlepaws]

Thank you Jenna. I think I will stick to the Premium account.

[Trippie Littlepaws]

@Phil Deakins Don't you have to be Self Employed to get a VAT Registration number?

 

[Jenna Huntsman]

3 minutes ago, Phil Deakins said:

Or get VAT registered and claim it back

 

Only if you're a business (sole trader included), and that you pay the tax at the end of the year instead of at time of sale (again, to my knowledge).

[Phil Deakins]

9 minutes ago, Trippie Littlepaws said:

@Phil Deakins Don't you have to be Self Employed to get a VAT Registration number?

 

You have to be a business, yes, and I think there may be a minimum turnover, but I don't know about that. It was a tongue-in-cheek comment

 

Edited August 4, 2022 by Phil Deakins

[SarahKB7 Koskinen]

@Trippie Littlepaws A VAT style tax in England existed before we joined the EEC(EU) in 1973, it was formerly known as the Purchase Tax and was introduced in 1940 before Value Added Tax (VAT) replaced it in 1973 as part of the UK joining the EEC(EU).

Since exiting the EU, England and the rest of the UK has merely reverted back to it's own sales tax system, but has chosen not to rename it.

Edited August 4, 2022 by SarahKB7 Koskinen

[Arduenn Schwartzman]

22 hours ago, Trippie Littlepaws said:

As this is no longer the case, why am I still being charged EU Vat?

Linden Lab just forgot to change the two letters to two other letters (EU to UK) on the website, that's all. Don't worry. Your money does not 'go to the EU'. It 'goes to the UK'.

[Odaks]

On 8/4/2022 at 2:06 PM, SarahKB7 Koskinen said:

A VAT style tax in England existed before we joined the EEC

Not quite. Purchase Tax was only levied at the final point of retail sale. Intermediate sales/purchases through the supply chain only needed a certificate issuing confirming that it was not a final retail sale.

VAT, however, is a fun system of everybody, throughout the supply chain, charging/paying tax and then reclaiming it at every point of sale. This results in massive extra accounting requirements for everyone involved, from the forester that grows the trees, to the sawmill that cuts the planks, the designers that make the plans, the software company that makes the on-screen planners....to the factory that makes the shapes, to the ironworks that make the hinges, another that makes the handles, .... the laminates....the DIY store thats sells the cabinets, the fitters that fit it all and, finally, the householder who picks up the retail cost. That's a simple example!

[Lindal Kidd]

Good grief! I'd always thought that most people in Europe and Great Britain were sensible folks. How did you ever let yourselves be saddled with a system like that?

[Quistess Alpha]

On 8/4/2022 at 8:46 AM, Jenna Huntsman said:

The only way to get around paying VAT in SL is to pay for an annual premium membership

if it works like US sales tax, you don't get charged the first purchase, but you ~Do pay when it gets renewed a year later. maybe in another 10 months or so I'll have the guts to ask/experiment to see if cancelling my premium for a few days then buying it again would save me a few dollars of sales tax. . .

[Odaks]

2 hours ago, Lindal Kidd said:

How did you ever let yourselves be saddled with a system like that?

The short answer, certainly in the case of the UK (I can't speak for other countries that use the system), is that we weren't asked.

The long answer would infringe the new forum rules, sorry!.

Edited August 6, 2022 by Odaks
spelling

[Alwin Alcott]

17 hours ago, Arduenn Schwartzman said:

Linden Lab just forgot to change the two letters to two other letters (EU to UK) on the website, that's all. Don't worry. Your money does not 'go to the EU'. It 'goes to the UK'.

most likeley because they don't know the difference between EU and Europe.
 

 

On 8/4/2022 at 2:28 PM, Trippie Littlepaws said:

why am I still being charged EU Vat?

It isn't EU VAT, it is a rule of seperate European countries, that's why it still are different rates. Also other non EU but European countries have VAT.
The only difference is that some EU rules about VAT apply to the residents/countries, but "you shall pay" is the general device.

[Tarik Darkheart]

The income raised by VAT never went into the coffers of the EU - it went into the coffers of HM Treasury. There has been a great deal of misinformation spouted by certain people about what the EU "forced" the UK to do when it was in fact nothing but nonsense and appealed to Daily Mail readers.

[Lindal Kidd]

Eek! Stop right there, everyone. I'm sorry that my rhetorical comment got us off track and into politics again.

LL will, I'm sure, continue to collect whatever taxes they're required to by law.

[LittleMe Jewell]

15 hours ago, Quistess Alpha said:

if it works like US sales tax, you don't get charged the first purchase, but you ~Do pay when it gets renewed a year later. maybe in another 10 months or so I'll have the guts to ask/experiment to see if cancelling my premium for a few days then buying it again would save me a few dollars of sales tax. . .

LL started charging Sales Tax on US Premium memberships as of March 31st of this year.  Nobody in the US paid sales tax on memberships before that and many still don't.  There is no Federal tax for online memberships like SL.  However, some States (and cities/counties/etc...) do tax many online things and in some states the SL Premium membership falls into the 'taxable' category.  If you live in one of those states, that would be why you now pay sales tax on your membership.  Cancelling the membership and renewing it won't change it's taxable status for you location.

My Premium renewed at the end of June and I did not pay sales tax on it --- memberships like SL are not taxable where I live.

Edited August 6, 2022 by LittleMe Jewell

[Quistess Alpha]

53 minutes ago, LittleMe Jewell said:

If you live in one of those states, that would be why you now pay sales tax on your membership.  Cancelling the membership and renewing it won't change it's taxable status for you location.

Actually I have 2 premium accounts, which I made the annual payment for within a month of each-other. I put in a support ticket to ask why one paid tax and the other didn't, and "first time purchases don't pay tax" was the answer I got.

[LittleMe Jewell]

1 minute ago, Quistess Alpha said:

"first time purchases don't pay tax"

Interesting.  I'm guessing that LL is covering the tax for first-time buyers to help lure them into purchasing memberships.  I don't think I've ever seen anything in any sales tax laws that exempt the initial purchase of a membership that would then be subject to tax upon renewal -- though it is possible.  

[Maitimo]

Companies are allowed to absorb the VAT/sales tax on a purchase but only by paying it themselves on your behalf.  To the end user it may look like the purchase is tax-exempt, but it isn't. This is what Linden Lab has been doing here. They may at any time decide that the taxes are too high for them to absorb and they must cease doing so.