Linden Lab why are you charging VAT to one customer while waving this tax for other customers?

[Count Burks]

1 minute ago, Ceka Cianci said:

Magic is usually what people call something when they don't understand it, so I understand.

 

Tell me with certainty where and how the tax office receives the VAT owed by Customer B who pays his tier using Linden Dollars?

Explain to me why Linden Lab would pay 500 US$ a year out of their own pocket to fund the VAT or GST on a region with the only benefit of selling a Premium+ package on which they are earning 109 US$.

Explain to me the following:

Anyone who earns Linden Dollars in world can sell 57475 L$ on the exchange at 244L per 1 USD and receive 223.79 USD$ net from the sale.

In this scheme Linden Lab offers users to pay 57475 L$ to them for their region that costs 209 USD$ generating a loss of 14.79 USD$

What is the point of this scheme? To let customers pay extra for the benefit of not selling their Linden Dollars on the exchange to pay for their region and instead letting them pay a kiosk in world?

Since you understand so well please explain, I am curious to hear answers.

[Sid Nagy]

4 hours ago, Count Burks said:

There is because Linden Lab receives 209 + 20% VAT or 41.8 US$ Per month or 501.6 US$ annually in tax from Customer A but not from customer B unless Linden Lab pays the 501.6 US$ for customer B out of their own pocket. Why would Linden Lab become so generous and pay 501.6 USD$ per year out of their own pocket so they can upsell a Premium+ membership package that makes them 109 USD in a year?

This has been the case for years already.
When I got land from you or any other private estate I payed in L$ and no VAT was added ever.
When I would have gotten mainland, LL would have to charge VAT.
On inworld L$ transactions there is no VAT to be payed.

And as you already (should) know... If you run a RL business that operates in SL you can get your VAT payments back in your own country.

Edited March 8, 2023 by Sid Nagy

[Jules Catlyn]

8 minutes ago, Count Burks said:

Since you understand so well please explain, I am curious to hear answers.

Multiple people have offered explanations but most sensible ones are being ignored.

[Aparoidedation]

It's not the digital good itself that is getting taxed, but rather the acquisition of the digital good with real currency.

When you buy or sell $L with real money, you are charged tax on that transaction.

When you buy land directly with real money, you are taxed on that transaction as well.

In both cases, you are exchanging real currency for a digital good.

The error comes when you think of $L as currency. $L is NOT currency. It is a digital good.

So, when you pay for something with $L, you are trading digital goods for other digital goods, not trading currency for digital goods. Those digital goods were ALREADY taxed when they were purchased. The value was added when the L$ was purchased, and that transaction WAS taxed.

The whole reason internal $L transactions are not taxed is because the $L themselves were ALREADY taxed.

The value add occurs when the $L enters or exits the SL economy, and that is where the taxation occurs with $L related transactions.

In your example, yes, the fake coin transactions themselves would not be taxable, but the part where the customers buy the fake coins IS taxable and you would be expected to pay VAT on that transaction.

It's not dodging taxes at all, the taxation just occurs at a different part of the chain.

Think of an old school video arcade. You would go in and buy a bunch of tokens to play the games. You would be charged VAT on buying those tokens. You then play games with the tokens and win some tickets. You exchange the tickets for a toy at the front counter. That exchange of tickets for the toy was not taxed because you ALREADY paid the tax when you bought the tokens. It's the same thing with $L.

Now consider this: If I go to the exchange and buy enough $L to pay for a sim, I would be charged tax on that. If I then used that $L that I just bought and paid tax on to pay for a sim, should I be taxed AGAIN? In such case I'd then be paying DOUBLE the tax compared to someone who simply paid for the sim with real currency. Is that fair?

[Count Burks]

17 minutes ago, Sid Nagy said:

This has been the case for years already.
When I got land from you or any other private estate I payed in L$ and no VAT was added ever.
When I would have gotten mainland, LL would have to charge VAT.
On inworld L$ transactions there is no VAT to be payed.

And as you already (should) know... If you run a RL business that operates in SL you can get your VAT payments back in your own country.

That is correct yes. There is no VAT on inworld transactions between users. Selling your Linden Dollars directly to Linden Lab is not the same as user to user transactions.

And yes I receive my VAT payments back in my own country. However in order to be eligible to receive these VAT payments back I need to be a VAT registered business, pay thousands a year in compliance fees and business taxes. Then I am complaint and am able conduct business and compete with other businesses who are not subject to VAT. 

That is why I have an issue with the fact that suddenly certain merchants or anyone who earns enough Linden Dollars can now just sell these to Linden Lab without any need for compliance. There is a form of discrimination between those who pay in Lindens and those who pay in USD. 

Like I wrote earlier if this system would take VAT into account that would be more fair and transparent. Hence the reason why I am asking this question in the first place.

[Paul Hexem]

Imagine a land baron complaining about one of the few big changes that overwhelmingly benefits land barons.

[Count Burks]

12 minutes ago, Aparoidedation said:

It's not the digital good itself that is getting taxed, but rather the acquisition of the digital good with real currency.

When you buy or sell $L with real money, you are charged tax on that transaction.

When you buy land directly with real money, you are taxed on that transaction as well.

In both cases, you are exchanging real currency for a digital good.

The error comes when you think of $L as currency. $L is NOT currency. It is a digital good.

So, when you pay for something with $L, you are trading digital goods for other digital goods, not trading currency for digital goods. Those digital goods were ALREADY taxed when they were purchased. The value was added when the L$ was purchased, and that transaction WAS taxed.

The whole reason internal $L transactions are not taxed is because the $L themselves were ALREADY taxed.

The value add occurs when the $L enters or exits the SL economy, and that is where the taxation occurs with $L related transactions.

In your example, yes, the fake coin transactions themselves would not be taxable, but the part where the customers buy the fake coins IS taxable and you would be expected to pay VAT on that transaction.

It's not dodging taxes at all, the taxation just occurs at a different part of the chain.

Think of an old school video arcade. You would go in and buy a bunch of tokens to play the games. You would be charged VAT on buying those tokens. You then play games with the tokens and win some tickets. You exchange the tickets for a toy at the front counter. That exchange of tickets for the toy was not taxed because you ALREADY paid the tax when you bought the tokens. It's the same thing with $L.

Now consider this: If I go to the exchange and buy enough $L to pay for a sim, I would be charged tax on that. If I then used that $L that I just bought and paid tax on to pay for a sim, should I be taxed AGAIN? In such case I'd then be paying DOUBLE the tax compared to someone who simply paid for the sim with real currency. Is that fair?

Thanks for your explanation except there is a big hole in it.

Example:

 

Bob from the UK has a region for which he needs to pay 209 USD$ a month + VAT.

On his region Bob has his home and a furniture store which allows him to earn Linden Dollars enough to pay the cost of his region each month.

 

Where does Bob get the Lindens from? Well 90% of Bob's customers are from the USA.

These customers do not pay any VAT on the purchase of their Linden Dollars they just pay the normal 10% tax Linden Lab is charging to them. These customers did bring Linden Dollars into the system on which no VAT was paid. 

Now these Linden Dollars go to Bob and Bob can now sell these Linden Dollars directly to Linden Lab to pay for his region without paying any VAT. No VAT ever got paid on these Linden Dollars when purchased and entered the system.

Hence the Tax office never received their 20% VAT as they require each month on Bob's region.

Bob is not paying VAT for his region while other UK residents are. Who is paying the VAT on Bob's region to the tax office and where does it originate from?

Your above example would be valid if every single person in Second Life would be subjected to the exact same VAT percentages. This isn't the case at all since you have an international customer base in world.

[Caeruleiae]

6 hours ago, Count Burks said:

There is because Linden Lab receives 209 + 20% VAT or 41.8 US$ Per month or 501.6 US$ annually in tax from Customer A but not from customer B unless Linden Lab pays the 501.6 US$ for customer B out of their own pocket. Why would Linden Lab become so generous and pay 501.6 USD$ per year out of their own pocket so they can upsell a Premium+ membership package that makes them 109 USD in a year?

Ll doesn't receive the VAT, it goes to the proper authority, not ll, they don't keep that, I don't know why you think they do. You still don't get the difference between someone using real money, as defined by pretty much every authority on such around the world, and not real money, which is what lindens are until or unless turned into real money. 

You're still making my, and everyone else's point.

The first customer is responsible for paying their own vat, which only goes through the hands of ll. but doesn't stay there, as they are the designated temporary collector of that money-which gets passed on to proper authorites. They only have to pay this vat because they are using real money from the start-this is literally how all laws surrounding it, and governments that put those laws into place, say that it should happen.

The second one is not responsible because they are not using real life money from the start so there are no laws that cover that type of payment until or unless it's converted to real money-all those laws literally spell this out for you, real money is the keypoint. The second customer does not convert it to real money, therefore, no vat. The is no vat required for customer b, the laws say this, financial authorities say this and government entities say this, it doesn't matter what you, I or even ll think, the laws are already in place and ll has to follow them-so they do. They have a pretty invested legal team and financial advisors, they'd know if it's illegal.  It's not as complicated as you're making it sound and I don't know why you're going round this carousel to try and make a circle become a triangle. 

[Caeruleiae]

3 hours ago, Count Burks said:

Tell me with certainty where and how the tax office receives the VAT owed by Customer B who pays his tier using Linden Dollars?

Nowhere, because there is no vat required from customer b for their transaction, it doesn't involve real money, at all, at any point. Vat is for real monetary transactions, not in world transactions-something you already posted yourself but apparently forgot you posted in one of your posts. 

That's the piece you're missing, or ignoring that is. There is no vat for that customer, period, no one is paying it for them because it's not required for that kind of transaction by any law anywhere in the world. Yes, I know this with absolute certainty and you should too, since you already posted at least one link that proves it when you thought you were using that case as an example of why vat needs to be applied. It actually disproved your theory that customer b owes vat too. 

[Rowan Amore]

4 minutes ago, Caeruleiae said:

Ll doesn't receive the VAT, it goes to the proper authority, not ll, they don't keep that, I don't know why you think they do. You still don't get the difference between someone using real money, as defined by pretty much every authority on such around the world, and not real money, which is what lindens are until or unless turned into real money. 

You're still making my, and everyone else's point.

The first customer is responsible for paying their own vat, which only goes through the hands of ll. but doesn't stay there, as they are the designated temporary collector of that money-which gets passed on to proper authorites. They only have to pay this vat because they are using real money from the start-this is literally how all laws surrounding it, and governments that put those laws into place, say that it should happen.

The second one is not responsible because they are not using real life money from the start so there are no laws that cover that type of payment until or unless it's converted to real money-all those laws literally spell this out for you, real money is the keypoint. The second customer does not convert it to real money, therefore, no vat. The is no vat required for customer b, the laws say this, financial authorities say this and government entities say this, it doesn't matter what you, I or even ll think, the laws are already in place and ll has to follow them-so they do. They have a pretty invested legal team and financial advisors, they'd know if it's illegal.  It's not as complicated as you're making it sound and I don't know why you're going round this carousel to try and make a circle become a triangle. 

Someone is just mad because one has to be premium plus first and then only one region can be paid for using Ls.  If ALL the regions you owned as a NON premium member could use Ls to pay LL thus avoiding VAT, then life would be FAIR. They would probably do away with the PayPal option for paying rent at that point.

[Caeruleiae]

1 hour ago, Count Burks said:

These customers do not pay any VAT on the purchase of their Linden Dollars they just pay the normal 10% tax Linden Lab is charging to them. These customers did bring Linden Dollars into the system on which no VAT was paid. 

Those transactions didn't require vat. But once those USD are converted to lindens they are no longer real life money. They become an inworld toke used for inworld transactions. No authority, again you said this yourself a page or two back, requires vat-or any tax-to be paid on inworld transactions. 

 

1 hour ago, Count Burks said:

Now these Linden Dollars go to Bob and Bob can now sell these Linden Dollars directly to Linden Lab to pay for his region without paying any VAT. No VAT ever got paid on these Linden Dollars when purchased and entered the system.

Because those lindens never became real money, never left the closed inworld system, and therefore aren't taxable by any nation or any entity anywhere in the world. I'd trust what authorities on the matter have said about it, they're a lot smarter than us. 

1 hour ago, Count Burks said:

Hence the Tax office never received their 20% VAT as they require each month on Bob's region.

No vat is required per region, why do you think it would be? It's required on the purchasing of lindens using real life money and the conversion of lindens to real life money. It is not required on anything that happens anywhere between those two things. It is also not required based on what those lindens are used for between those two transactions-whether its a region tier payment or a really nice pair of baby elephants. Real life authorities have set these laws rules and regulations in place that you think you're touting. They have determined you're wrong, and I'm going with their authority on the matter. 

[Caeruleiae]

Just now, Rowan Amore said:

Someone is just mad because one has to be premium plus first and then only one region can be paid for using Ls.  If ALL the regions you owned as a NON premium member could use Ls to pay LL thus avoiding VAT, then life would be FAIR. They would probably do away with the PayPal option for paying rent at that point.

Yes it seems this bug has crawled itself pretty deep of a crevice alright. It's an awfully weird thing to get hung up on, but I guess we all have our things. 

I mean, I'd be mad if I had to pay vat at all on things, I'm mad for the people that do, so I can understand the frustrations of just having that tacked on to costs. There's just nothing that can be done about it and certainly nothing sinister on the part of ll or residents here. Maybe something sinister on the parts of governments that require it but they're naturally sinister anyway. 

[Count Burks]

10 minutes ago, Caeruleiae said:

No vat is required per region, why do you think it would be? It's required on the purchasing of lindens using real life money and the conversion of lindens to real life money. It is not required on anything that happens anywhere between those two things. It is also not required based on what those lindens are used for between those two transactions-whether its a region tier payment or a really nice pair of baby elephants. Real life authorities have set these laws rules and regulations in place that you think you're touting. They have determined you're wrong, and I'm going with their authority on the matter. 

That is interesting to hear from you. So how should this be interpreted then?

Like this:

Taxman to Linden Lab: Hello I see you have been selling two regions to different UK customers.

Linden Lab: Yes that is right!

Taxman: But I see you only forwarded the VAT on one of your product sales to us?

Linden Lab: Yes correct, we forwarded the VAT on one region.

Taxman: And the other one, why did you not forward the VAT on the sale of the product?

Linden Lab: Well because we accepted space bucks for it.

Taxman: Interesting and what exactly are these space bucks?

Linden Lab: Well they are worthless game coins we print out of thin air.

Taxman: And what did you exactly do with these worthless coins once you received them?

Linden Lab: Well we just sold them to another customer so we got our money of course, duh!

Taxman: And where is the value added tax for the product you sold for that fictional money.

Linden Lab: Well since it is not real money that is involved there is no tax to be paid.

Taxman: But you have sold this product so you are obligated to hand over the value added tax on the sale.

Linden Lab: Sorry man there is no tax on space bucks transactions so you ain't getting any, the law is the law, be glad you got your VAT at least on one sale. Here at Linden Lab we are very bright with these things you know. 

 

Nobody is paying VAT when converting Linden Dollars to RL currency, you pay a 3.5% now 5% fee that goes to Linden Lab.

Most customers in Second Life are not subjected to VAT and receive Linden Dollars which are put into the system without any VAT payments on them, only a 10% buy fee which again goes to Linden Lab.

This also means that people who received Linden Dollars as form of payment most likely received Linden Dollars where no VAT was paid on.

I said this before and I will say this again, there is no VAT on transactions that happen between platform users in virtual worlds. There is of course VAT when the company that owns the platform is charging for sales to the users. 

I strongly disagree when you mention there is no VAT required per region, region sales are Linden Lab their main product.

[Solar Legion]

It has been explained to you in several different ways, several different times now. You have further been shown a web page with quite a bit of information on this pilot program.

Sit down, stow the faux outrage.

If it is actually problematic, it will be handled by the relevant authorities and because said authorities reached out. Not because some random end user threw a hissy fit.

[Rick Nightingale]

-

Edited March 9, 2023 by Rick Nightingale
decided not to get involved

[elleevelyn]

7 hours ago, Count Burks said:

What is the point of this scheme?

Prokofy Neva touched on this in another thread.  At the rate Linden have set, it costs about $US10 more to pay in L$. Prokofy also touched on that an audience/market for this are those who earn L$ inworld and are unable to have a cashout account (Paypal/Skrill) due to their countries RL banking/credit systems restrictions (non-acceptance by Paypal/Sof of that person's RL currency etc) Global South countries for example

another suggested audience are those who never cash out even if they could. And another person commented that they have a VAT compliant SL business presence already and will take advantage of this to more simply separate out their SL leisure use from their SL business use from an accounting pov.  A simplification they suggested that is leaning toward getting another region for purely leisure reasons

[Chaser Zaks]

Because the L$ that is in-world has already been taxed. Simple as that.

Edited March 9, 2023 by Chaser Zaks

[Count Burks]

1 hour ago, Chaser Zaks said:

Because the L$ that is in-world has already been taxed. Simple as that.

Interesting, can you explain exactly where VAT is being paid when users purchase Linden Dollars? I myself have not heard anything ever where users pay 20% VAT when they order their Linden Dollars.

This comes from the Second Life Wiki

Linden Lab Official:Value Added Tax (VAT) Frequently Asked Questions - Second Life Wiki

What are the items for which Linden Lab charges VAT or GST?

Most services that you pay Linden Lab directly for have VAT or GST applied. This includes:

• Monthly & Quarterly Premium membership fees
• Purchases from the Land Store
• Mainland Land use fees (tier)
• Private Region maintenance fees
• Land auctions
• LindeX transaction fees

What are the items for which Linden Lab doesn't charge VAT or GST?

Transactions in L$ between individual Residents, that do not involve Linden Lab as a direct party, are not subject to VAT or GST.

 

Now where does the wiki article mentions Linden Lab is charging VAT on the purchase of Linden Dollars and where exactly is the VAT being paid? The Wiki mentions VAT is charged on Lindex Transaction FEES not on the ordered total of the Lindens being purchased in the system.

 

Also the wiki mentions this:

What are the items for which Linden Lab doesn't charge VAT or GST?

Transactions in L$ between individual Residents, that do not involve Linden Lab as a direct party, are not subject to VAT or GST.

 

In this scheme Linden Lab is a direct party so the transaction should be subject to VAT from what understand. 

Where have the L$ in world been taxed?

Edited March 9, 2023 by Count Burks

[Jules Catlyn]

And here we are, three days into this thread. I already stated before that in a closed eco-system such as SL any compensation is not of interest to the tax office. So why should this be any different? If i make currency inworld and spend it inworld, why should it (under the current laws) be of any interest to the government? The Linden Dollar as it is inworld is not a recognized currency in any other place than Second Life. So why should the tax office even know how i spend them? I cannot use Linden Dollard to buy bread or pay my electric bill. As long as the whole thing takes place inworld, taxes should not play any role.

[Rowan Amore]

25 minutes ago, Count Burks said:

Interesting, can you explain exactly where VAT is being paid when users purchase Linden Dollars? I myself have not heard anything ever where users pay 20% VAT when they order their Linden Dollars.

This comes from the Second Life Wiki

Linden Lab Official:Value Added Tax (VAT) Frequently Asked Questions - Second Life Wiki

What are the items for which Linden Lab charges VAT or GST?

Most services that you pay Linden Lab directly for have VAT or GST applied. This includes:

• Monthly & Quarterly Premium membership fees
• Purchases from the Land Store
• Mainland Land use fees (tier)
• Private Region maintenance fees
• Land auctions
• LindeX transaction fees

What are the items for which Linden Lab doesn't charge VAT or GST?

Transactions in L$ between individual Residents, that do not involve Linden Lab as a direct party, are not subject to VAT or GST.

 

Now where does the wiki article mentions Linden Lab is charging VAT on the purchase of Linden Dollars and where exactly is the VAT being paid? The Wiki mentions VAT is charged on Lindex Transaction FEES not on the ordered total of the Lindens being purchased in the system.

 

Also the wiki mentions this:

What are the items for which Linden Lab doesn't charge VAT or GST?

Transactions in L$ between individual Residents, that do not involve Linden Lab as a direct party, are not subject to VAT or GST.

 

In this scheme Linden Lab is a direct party so the transaction should be subject to VAT from what understand. 

Where have the L$ in world been taxed?

Perhaps this blog post will explain...

Sales tax on U.S. purchases - Featured News - Second Life Community

Specifically, this...

We will continue to absorb the taxes at point-of-sale purchases such as one-time L$ buys, first-time premium subscriptions, and name changes. At some point in the future we will need to begin passing those taxes on to you. We will make another announcement when those charges are phased in.

One can wonder if they include your VAT taxes as well?

 

Edited March 9, 2023 by Rowan Amore

[Count Burks]

24 minutes ago, Rowan Amore said:

Perhaps this blog post will explain...

Sales tax on U.S. purchases - Featured News - Second Life Community

Specifically, this...

We will continue to absorb the taxes at point-of-sale purchases such as one-time L$ buys, first-time premium subscriptions, and name changes. At some point in the future we will need to begin passing those taxes on to you. We will make another announcement when those charges are phased in.

One can wonder if they include your VAT taxes as well?

 

I did find that blog post, yet it speaks about US tax. I do not believe Linden Lab has been absorbing 20% VAT or GST all these years on the purchase of Linden Dollars. That would be a staggering amount of money. Also VAT has always been around while this new US tax ruling has only been introduced recently. 

As you might now finally start to understand this is a complicated issue where certain things are hidden, shifted, manipulated, ignored ..... Linden Lab should clearly explain what is going on with this. 

Maybe you start to understand now why I bring this up. Why I question the legality and validity of this scheme not to even mention its fairness. 

[Alwin Alcott]

4 minutes ago, Count Burks said:

Linden Lab should clearly explain what is going on with this. 

As said before you have to be at your IRS/Belastingdienst or the tax department of your country.

LL is under no circumstance obligated to inform you about their businessmodel, bookkeeping proesses and tax agreements.
(as you aren't either to your customers)
 

[Ceka Cianci]

21 hours ago, Count Burks said:

Tell me with certainty where and how the tax office receives the VAT owed by Customer B who pays his tier using Linden Dollars?

Explain to me why Linden Lab would pay 500 US$ a year out of their own pocket to fund the VAT or GST on a region with the only benefit of selling a Premium+ package on which they are earning 109 US$.

Explain to me the following:

Anyone who earns Linden Dollars in world can sell 57475 L$ on the exchange at 244L per 1 USD and receive 223.79 USD$ net from the sale.

In this scheme Linden Lab offers users to pay 57475 L$ to them for their region that costs 209 USD$ generating a loss of 14.79 USD$

What is the point of this scheme? To let customers pay extra for the benefit of not selling their Linden Dollars on the exchange to pay for their region and instead letting them pay a kiosk in world?

Since you understand so well please explain, I am curious to hear answers.

I'll do this one last time since I'm waiting for my wash to finish so I can put them in the dryer..

The first answer is, The tax office doesn't receive VAT, because there is no TAXABLE INCOME, there is no EXCHANGE used that converted the play money to real world currency.. There was no real world purchase, there was no real world charge.. Everything remained as an IN WORLD PURCHASE. 209 dollars does not exist and never has existed inside of second life anywhere..

 No real money converted or spent, nothing for the tax man to tax.. No matter how much you dance around it..

As I also said, linden lab does not have to charge someone if they do not want to and can have special deals or offers or coupons or whatever they want for their products or services, just like any company with products and services do every day around the world..  So if they decide they are going to take play money, like they said they are going to.. then there isn't a real world exchange of real world money.. It's all confined to the world of second life..

Number 2. Linden lab doesn't cover 500 a year funding user B's VAT . Because, there isn't any VAT to cover since they are paying in lindens. which I went over in the first part.. No charge no VAT to place anywhere..

How do they make up the costs of the sim you may be asking yourself.

They increased the costs of buying and selling fee's, exactly at the very same time they introduce, Accepting Linden Dollars for land payments. They shifted user B's cost to the buy and sell market.

There has been a whole thread going on about the cost shift since before your thread ever popped up..

 

A simple answer for the last one of, why would they do that perk if it's not the best way to go..

I can't remember where I read it but, it's something a lot of users that don't cash out asked for.. It may be said somewhere in the other thread, but I can't remember off hand.. But they are testing it out and if it doesn't work out they'll probably pull it out.. I wouldn't count on a decrease on the buy and sell market though ,since that's also helping to fund other things as well..

Aaaaanyways, Something being more convenient doesn't mean it's going to be the best way to do something.. Usually doing something more convenient ends up being the easier way to do something and not better to do something.

A lot of times people choose convenience over the better way or maybe they can't cash out or maybe they don't want to get tax forms for messing around in a virtual world. It's not always about  people looking at what they could have made..

Well my wash is done..

Have a good day.

 

 

 

 

[Count Burks]

46 minutes ago, Ceka Cianci said:

I'll do this one last time since I'm waiting for my wash to finish so I can put them in the dryer..

The first answer is, The tax office doesn't receive VAT, because there is no TAXABLE INCOME, there is no EXCHANGE used that converted the play money to real world currency.. There was no real world purchase, there was no real world charge.. Everything remained as an IN WORLD PURCHASE. 209 dollars does not exist and never has existed inside of second life anywhere..

 No real money converted or spent, nothing for the tax man to tax.. No matter how much you dance around it..

As I also said, linden lab does not have to charge someone if they do not want to and can have special deals or offers or coupons or whatever they want for their products or services, just like any company with products and services do every day around the world..  So if they decide they are going to take play money, like they said they are going to.. then there isn't a real world exchange of real world money.. It's all confined to the world of second life..

I am not dancing around it. According to your reasoning the following scheme would be perfectly legal:

Let's say I have a company that builds custom motorbikes for clients, located in the UK and need to charge VAT on my sales.

I build two custom motorbikes, identical ones.

The first motorbike is sold to a customer who buys the bike from me and pays VAT on the sale price as normal.

I also have a friend, he's a painter. I just happen to have a new house constructed almost ready to be used. The carpenters just finished their work and now it is time to have the home painted.

I have my friend the painter coming to my house asking him for an estimate of the painting work which needs to be done.

We meet at the bike shop before we go look at the home, my friend sees the new motorbike I just produced and asks me what it costs.

My friend and myself go check on the house and the costs for the  painting job which needs to be done. My friend checks the house and I ask for an estimate for the painting job.

My friend says, tell you what I will paint your house and it would cost around the same as that new motorbike I just saw as your store. I am thinking about getting a bike again for the summer so I will do the paint job and you get me the bike and we will call it even.

After I already received some estimates from other painters for the work on the house it is a good deal for me to just exchange and barter with my friend.

We do the deal, no real money gets exchanged so according to your logic there is no VAT owed and no taxable income right, special deal right, companies do this all the time right?

No VAT owed on the sale of the motorbike or the labor of the paint job to the tax office right?

 

 

[Rowan Amore]

1 hour ago, Ceka Cianci said:

I'll do this one last time since I'm waiting for my wash to finish so I can put them in the dryer..

The first answer is, The tax office doesn't receive VAT, because there is no TAXABLE INCOME, there is no EXCHANGE used that converted the play money to real world currency.. There was no real world purchase, there was no real world charge.. Everything remained as an IN WORLD PURCHASE. 209 dollars does not exist and never has existed inside of second life anywhere..

 No real money converted or spent, nothing for the tax man to tax.. No matter how much you dance around it..

As I also said, linden lab does not have to charge someone if they do not want to and can have special deals or offers or coupons or whatever they want for their products or services, just like any company with products and services do every day around the world..  So if they decide they are going to take play money, like they said they are going to.. then there isn't a real world exchange of real world money.. It's all confined to the world of second life..

Number 2. Linden lab doesn't cover 500 a year funding user B's VAT . Because, there isn't any VAT to cover since they are paying in lindens. which I went over in the first part.. No charge no VAT to place anywhere..

How do they make up the costs of the sim you may be asking yourself.

They increased the costs of buying and selling fee's, exactly at the very same time they introduce, Accepting Linden Dollars for land payments. They shifted user B's cost to the buy and sell market.

There has been a whole thread going on about the cost shift since before your thread ever popped up..

 

A simple answer for the last one of, why would they do that perk if it's not the best way to go..

I can't remember where I read it but, it's something a lot of users that don't cash out asked for.. It may be said somewhere in the other thread, but I can't remember off hand.. But they are testing it out and if it doesn't work out they'll probably pull it out.. I wouldn't count on a decrease on the buy and sell market though ,since that's also helping to fund other things as well..

Aaaaanyways, Something being more convenient doesn't mean it's going to be the best way to do something.. Usually doing something more convenient ends up being the easier way to do something and not better to do something.

A lot of times people choose convenience over the better way or maybe they can't cash out or maybe they don't want to get tax forms for messing around in a virtual world. It's not always about  people looking at what they could have made..

Well my wash is done..

Have a good day.

 

 

 

 

Psst...Here's some ice for your head.