Phil Deakins

It may have been the same here, 16. It's a long time since I was VAT registered and I don't remember the details but I seem to recall paying at regular intervals, which may have been quarterly or annually. I also remember gettting away with quite a lot of VAT Every 2 years a VAT inspector would come round to collect and examine the books. I used to use standard invoice books that are bought from a stationers, and a rubber stamp. On one occasion she took all the books and later phoned me to say that I owed them a few thousand pounds. I gave a letter to each book - a, b, c, etc. and the invoices were designated a1, a2, etc. (100 invoices to a book). She said that I had 2 'D' books but I'd only declared the invoices from one of them. When I got the books back I really did have 2 D books and i hadn't declared them both. It was genuine mistake that I hadn't noticed. If I'd known, it was stupid to give her both D books. And that's the last i ever heard of it. I've no idea why they didn't ask me for the money, but they never did.

@everyone. On the disparity between the costs of EU customers and everyone else. As an EU customer, I don't think that LL did it wrong at the time they started to make EU customers pay VAT. They had to collect VAT from me because they operated within the EU at the time. Because of the law, they had to choose to receive less from EU customers or EU customers had to pay more. Even if the cost of the VAT was split between LL and the customer, it would still more or less amount to the same choices. There could not be parity. So the question was, why should the company receive less from each EU customer than from everyone else? It may seem a hard point of view but I don't think the question, why should EU customers have to pay more than everyone else?, arises because, if I want to use a system, I simply have to pay what it costs for me to use it. I'm sure that LL did their sums at the time and decided that, although some EU people would stop paying anything, the company would be better off if EU people paid the VAT. I find no reaon to argue against that. It did mean that the way that EU people can use SL became slightly different to the way others can use it, but that's all. It means that EU people pay more for land than other people and that's all it means. It could price landlords who don't have many tenants out of the market. It wouldn't price those with a large number of tenants out of the market - it would just mean they make less profit, and that's not a good enough reason for LL to make less money by swallowing the VAT, imo. But those who can't compete in the landlord market can still compete in all other markets, not many of which require land ownership. For businesses that require land, renting was a way of having it without paying VAT - and still is. Most SL businesses run close to the edge. They make anywhere from a loss to a small profit, so to suddenly have VAT added to the costs would certainly have caused some to close down at the time. But I don't see that as a reason why LL should swallow all the VAT. There are still plenty of ways to enjoy SL by running a business in it, including needing land for it, that EU people can do perfectly well, and compete perfectly well with non-EU people. I may be swimming against the tide of EU users' overall opinion but I'm an EU user and it really is my opinion. One more thing. I've seen it written many times that U.S. people pay taxes in other ways, so why should LL pay EU people's taxes for them. I think the idea is that U.S. people pay purchase tax (I've seen that written in the forum). But, as far as I know, they don't pay purchase tax for the services provided by LL. I would be interested to hear of any taxes that U.S. customers pay that tends to balance the VAT that LL collects from EU people.

My replies are in blue. 16 wrote: yes. thats pretty much how it works here as well. the threshold here is $30,000 (about?) you dont have to a registered company to be GST-registered. can just trade on your name if you want. actually most self-employed do that way anyways It's the same here. It's why I often use the word "business" instead of "company". Here a company has limited liability and is an entity in its own right - very different to a business. It sounds like it's the same where you are. am pretty sure you was make a general point at one time. the point that is not the business of anyone to have to be a tax collector for the State. not sure if you did. but even if you didnt then i am agree anyway (: is what VAT/GST/sales tax registered businesses are. like tax collectors the business dont actually pay the tax money themselves. is a tax that their customers pay. but the State makes the business collect it for them. i think thats wrong in principle. the State should collect its own taxes and concentrate on getting it off me direct. and not waste heaps and heaps of money enforcing you (like your business) to get it off me for them There was a huge outcry for exactly that reason when VAT was first introduced here. Businesses did not accept being tax collectors. But it didn't change anything. A bad aspect of the new system was highlighted in a popular soap here (Coronation Street). A one-man business invoiced a customer and charged VAT. The customer didn't pay straight away but the business man had to pay the VAT to the government. He couldn't do it because he hadn't been paid by the customer. I did come up with a nice little workaround a very long time ago when I was VAT registered, that involved my wife who wasn't VAT registered. I owned the stock so I claimed back the VAT I paid on it. Then I rented the stock to my wife and I delivered the stock the the end users on her behalf. In that way, I, as the wholesaler, claimed back the VAT I paid out, and I charged my wife, the retailer, a nominal amount to rent the stock. I had to charge her VAT of course, but it was tiny. Then my wife, the retailer, who was not VAT registered, rented it out to the consumers and couldn't charge VAT so all the money received was kept. And I was the delivery boy. In practise, only I was involved. The wholesale and retail aspects, and who owned and who rented the stock, was only on paper. I don't think she even understood it. It was all above board too. The VAT collector at the time liked idea and cleared me to do it. He was a person who liked legal workarounds. Anyway, that's just a little aside from the thread's topic - as is this whole VAT discussion

This isn't a reply to you, Amethyst. It's just a general reply. I don't understand how some people here can actually believe that one country can make rules and laws that people in other countries must abide by, when the people in the other countries don't operate in the law-making country. How anyone could actually believe that is completely beyond my comprehension but clearly some people do believe it. Incredible. Someone said that continually repeating it doesn't make it real. But I haven't tried to make it real. It's been real from the start. Repeating it is simply trying to get some people here to understand. It's perfectly simple, but some people prefer to believe that the Britain can make laws that U.S. citizens, living in their own country and having nothing to do with Britain, have to comply with. All I can say is that you believe what you want. It doesn't change the facts or reality. It doesn't change anything at all.

16 wrote: you have to go back to the EU VAT Directive to see the requirement. i forget the number now but is in my other post if want whole more background on it can go here http://www.official-documents.gov.uk/document/hc0506/hc10/1051/1051.pdf is the official UK National Audit Office audit on HM Customs and e-service VAT etc. Part 4 explains it for non-EU companies It's not necessary to go through it. The fact that no country can make a law that people in other countries have to abide by, unless the other country makes a law to make their citizens abide by it, is self-evident. There's nothing more.

Your bottom line is correct, but your fist paragraph is rubbish. LL is not required by any law that they have to abide by to collect VAT. They choose to do it. That's the "end of story".

Maybe not but "Linden Lab spam" is accusatory in the way that it was written, and still is in the content of your posts, whereas "Linden Lab advert" isn't

Sorry 16, but the very first paragraph on that document states:- "VAT On e-Services are a special Value Added Tax (VAT) scheme for non-EU businesses providing electronically supplied services to EU consumers (that is, private individuals and non-business organisations). The scheme provides an optional, simplified means of registering and accounting electronically for EU VAT with effect from 1 July 2003. To prevent the need for such non-EU businesses registering in every EU member state where they supply customers, this special scheme allows them to register and account for EU VAT in a single EU Member State of their choice." The page is not about a law or rule. It's about a way for foreign businesses to register for VAT to cover the whole of the EU instead of registering in each EU country. It says nothing about a requirement for foreign businesses to register.

Again we are back to the absolute fact that no country, or group of countries like the EU, can make rules/laws/directives that people and businesses in other countries, that have no business presence in the law-making country, have to abide by. No amount of EU documents can get around that simple fact, and therefore LL does it voluntarily. If there is a trade agreement, then the company is subject to the rules/laws about that in its own country.

It's not spam any more than those Google ads that appear in so very many websites are spam. Placing ads on websites is not spam, and neither is placing ads on the login page of SL. Not only that but LL owns Patterns, don't they? If they do, it can hardly be considered spam to advertise on your own page. Spam is unsolicited. When you open the SL login page, you solicit it, and whatever is on it. Just like you solicit each ad-containing webpage that you choose to get.

Ciaran Laval wrote: Perrie Juran wrote: International Business Law is a very complex subject. You are dealing with, among other things, trade agreements (treaties) between Nations, etc. It is a specialization all of it's own. For a simple example, consider the Barbary Treaties. You would be correct in saying that the EU would have no right to regulate HOW Linden Lab conducted business with someone here in the U.S. or with someone in another nation. But the EU would and does have a right to stipulate terms, subject to the Trade Agreements we have with the EU, in order for a Company to transact business with a citizen of the EU. Bottom line, it would take getting the U.S. government putting its foot down, by way of a trade agreement, to stop the EU from mandating that a company collect VAT in order to transact business in the EU. Sort of. Linden Lab can't be made to follow the EU directive on electronic services, but as a company who want to stay in good standing, it's in their interests to do so. The US and Europe are good trading partners, with the exception of the odd tariff war, so the US would want their companies to comply with directives such as this one. Although the EU can't do much if Linden Lab don't comply, I'm sure there would be some sort of leaning on Linden Lab in the background were they to not comply, along with a bit of political sabre rattling. According to the official document pointed to in this thread, there is no EU directive on VAT for LL to "follow". There is no part of that document that says that LL should collect VAT. Also, even if there were such a directive, I don't agree that it's in LL's interests to comply with it. What interests could there be?

This is for Perrie but it was easier to quote your post than to find where he wrote what you quoted 16 wrote: Perrie Juran wrote: I think that there is no question that the VAT created a disparity. I'm puzzled that anyone would question this. Now I do not live in a country with VAT so whether or not a person can get a refund from their taxing authority I have no idea. If someone can get a full refund of that money, outside of the hassle of the initial out lay, then the disparity does go away I'm sure it's the same in all EU countries but here in the UK, only businesses can register for VAT, and only those who are registered can claim back the VAT they paid out. A business can be a single person of course, and then it is the person (name) who is registered. So the vast majority of people (almost all) cannot register for VAT and can't get the VAT they pay out back. Also, a registered person cannot claim back all the VAT that s/he has paid out. The only VAT that can be claimed back is that which is paid out for the actual business. So almost all of the individuals who are registered would not be able to claim back the VAT that LL collects from them. The ones who would be able to claim it back are those whose business is actually in SL and those who manage to convince the VAT people that SL is a part of their business. E.g. an RL house renovations business could try to claim that advertising in SL is part of their business - but I don't think they'd get away with it. So there may be a few people who can claim the VAT that LL collects back but so few that bringing the idea into this sort of discussion is pointless. The threshold where you have to be VAT registered these days is £77,000 (US$123,000) turnover. How many people in SL sell that much stuff in SL in a year? Very few indeed. And how many of the few are in the EU? Any? But those are the only ones who have to be registered for VAT and, without being registered, VAT can't be claimed back. Of course, a business that turns over less than the threshold can register voluntarily but then they have to charge VAT to customers and they are much worse off because of that. The threshold allows smaller businesses to avoid being worse off. Very few people would register voluntarily and suffer the financial penalty. Consider an SL business that sells US$100,000 worth of stuff in SL. That's below the threshold so they don't have to be VAT registered. Suppose that the owner wants to claim the VAT that LL charges them back, and s/he registers for VAT. S/he'll be able to claim back the VAT on the cost of newly bought land, tier and premium membership BUT... s/he will have to pay 20% of that US$100,000 sales to the VAT collector. So s/he can claim the tiny back but has to pay out US20,000 in VAT. In other words, no big SL business owner in their right mind would volunarilty register for VAT. All in all, the idea of people being able to claim the VAT back doesn't really come into this topic. There may be an odd few people who fiddle it through their RL business that has to be registered, but only an odd few.

Perrie Juran wrote: Last thoughts (I hope) on the subject. 1. The EU passed laws (questionably) requiring Linden Lab collect VAT. 2. Linden Lab presumably on advice of Legal Counsel chose to comply. 3. In order to challenge this Linden Lab would either have to challenge these laws in EU Courts (very expensive to do) OR get the U.S. Gov't to challenge them based on the Trade Agreements we have with the EU. 4. If the U.S. Gov't believed that these VAT laws violated our Trade Agreements the only way of stopping attempts by the EU to enforce them would be then to place trade sanctions against countries in the EU. 5. Short of this, if Linden Lab failed to collect VAT, the EU could simply (though we know it would be difficult), block access to SL and/or prohibit EU based financial institutions from sending money to Linden Lab. On your points 1 and 2:- Linden Lab had to collect VAT when they started doing it. They had no choice because they had a business presence (offices and employees) here in the EU at the time. They were operating physically within the EU and they had to comply with the laws where they were physically operating - and collect VAT. That was never in dispute. So your points 3, 4 and 5 didn't come into it. Since then, they have closed their EU operations and no longer have a presence here, so they are no longer required by any laws to collect VAT. The official document that was pointed to shows that, even by EU laws (that attempt to govern people in other countries) LL does not fall within any category where the EU would want them to collect VAT. The only part in that document that allows LL to collect VAT is right at the top where it says that foreign companies can choose to do it volunarily, and that's exactly what LL does.

@Perrie and Pussycat. Yes, it's possible that the EU has a trade agreement with the U.S. that force a company that's doing what LL is doing to register for VAT and collect it from EU citizens. But I don't believe for one second that that's the case. Not for one second. When LL started to collect VAT they had a prsence here in the EU, and that's the reason why they had to do it. It wasn't because of any trade agreements. When a person gets a domain name from a U.S. company that doesn't have an EU presence, such as GoDaddy, or pays for hosting to a U.S. company that doesn't have an EU presence, or simply buys some goods from a U.S. company that doesn't have an EU presence, no VAT is collected. If there is a trade agreement between the EU and the U.S., that forces the likes of LL to register for VAT and collect it, then I would have no argument or opposition to LL doing it, of course. I don't believe any such trade agreements exists, or I'm sure I would see it (I do buy physical goods from the U.S.). If there is such an agreement, please show it. If there isn't one, LL simply chooses to collect VAT, without any laws or rules making them do it.

Perrie Juran wrote: Phil Deakins wrote: Deltango Vale wrote: Phil, read the article. All the quotes, links and math are in the article (and followup comment). I don't need to read the article. I know that one country cannot make laws that people in other countries have to abide by. It's that simple. But they can write laws that regulate how and if I can do business in their Country. Example 1: Cars manufactured overseas for sale in the United States must meet U.S. emission control standards. Example 2: A Japanese firm selling cars in the U.S. must pay taxes to the U.S. on profits earned from sales here. Example 3: Microsoft, a U.S. registered corporation must comply with EU monopoly regulations in order to sell their software there. The licensing must be compliant with EU regulations. Remember, MS got sued over this in the EU. So simply put, if Linden Lab wants to do business with someone in the EU, the EU can regulate that business transaction. You are right but only up to a point. Of course a country can write laws to regulate how companies in other countries do business within their country. But that's not the point. LL doesn't do business anywhere within the EU. Some EU people pay LL for virtual land and 'membership' of the U.S. system - things that never leave the U.S. - but that's not LL doing business IN the EU. Your conclusion about LL wanting to do business with someone in the EU and, therefore, the EU can regulate the transaction, does not follow from your examples. The first 2 examples are about non-U.S. companies trading within the U.S. and the 3rd example is of a U.S. company selling its goods within a foreign country. They are quite different to a U.S. company taking payments for things that stay within the U.S. from people in other countries. Actually, the fact that LL's goods stay within the U.S. is irrelevant because they can't be made to collect the EU's taxes for them when mailing goods from the U.S. to EU customers.

16 wrote: k then i look it up on the interwebz myself just on the basis that if is not the English then must be some other heathens European lawmakers that making linden pay the VAT bc it not make any sense at all to me that linden or anyone else would volunteer to pay taxes when they not legal obliged to q; (: you have very complicated lawmaking you do over there but anyways. here goes http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/vat_on_services/index_en.htm "Electronically supplied services, provided by suppliers established in a third country to non-taxable persons (B2C) established in the EU, must be taxed at the place where the customer resides or has a permanent address [Article 58 of the VAT Directive] Example 44: If a private person residing in Sweden makes use of a Japanese on-line library, Swedish VAT will have to be paid on the amount the Japanese company charges." The point is that nobody is making LL collect VAT. EU law made them register and collect it when they had a business presence in the EU but they don't have any presence now and they are free to deregister - but they choose not to. That quote, including the example, may be from an official document but nobody outside Japan can make the Japanese company collect the Swedish VAT and pay it to Sweden. Whether or not the Swedish government can collar its citizen and make him/her pay up is something that's internal to Sweden and nothing to do with the Japanese company. They can bluster all they like with those rules and laws but they can't make a business in a foreign country abide by them. As you said, they admitted that the laws concerning it are not enforceable, so all they can do is hope. And hope works a little. There are daft companies, such as LL, that will pander to them when they don't have to, and at the expense of their own paying customers. I'm sorry, 16, but no country, or group of countries can make laws that people in other countries have to abide by. They have no juresdiction in other countries. They can write what rules and laws they like but they have juresdiction so they cannot enforce what they write. It's self-evident.

16 wrote: i think where the point of difference between what you are saying and what they are saying. well the HM Customs anyways on their website, is that an activity carried out by a foreign company on their sovereign territory must be conducted in accordance with their tax laws. HM Customs and that 2003 EU law regarding internet activity dont make any distinction between domiciled and non-domiciled origin of that activity Just as aside here. LL doesn't carry out activities on UK or EU soil. They collect VAT from EU people when we pay tier or when we buy land from them (sims). That's us carrying out activities on U.S. soil - not the other way round - if "activities" is the right for it. It's the same as me renting server space, or a server, from a U.S. company that has its servers in the U.S. They wouldn't charge me VAT, of course. If they have servers or offices in the UK, it would be different.

The page that you linked to is an official page of HM Revenue and Customs - they are the VAT people of the government. And there is nothing in that page that suggests that LL have to be VAT registered and collect VAT. The point of view doesn't matter because that page says that LL does not have to be VAT registered. It doesn't say it explicitly. It's because there are no circumstances listed in that page that would require LL to be registered. It does say that they can choose to be registered, and that's exactly what LL has chosen to be. They do it by choice.

16 wrote: Phil Deakins wrote: LL no longer has a business presence in the EU (as far as I know) so they no longer have to collect VAT for the EU, and they do it now out of choice. That's all I've been saying. just on this bit the link that Orca provide is Her Majesty Revenue and Customs. this one: http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm is possible that they have it wrong and what you understand is right. it just dont seem possible that they are wrong tho I've just looked at the page that you linked to, 16, and I can't find anwhere that indicates that LL *has* to be registered for VAT and collect it. Under the heading, "You supply goods to the UK from abroad, or intend to start" (the only relevant heading), and its sub-heading, "If you don't have a place of business in the UK or live here" (the only relevant sub-heading), the first thing it says is,"If you have to register for one of the reasons described above, ...". The only 3 reasons described above are:- (1) Supplying and delivering goods from another EU country (2) Supplying goods on which an 8th or 13th Directive claim has been made or is going to be made (3) Supplying and delivering excise goods from another country None of those reasons apply to LL. So I can't see anything on that page that even suggests that LL has to be registered and collect VAT. Right at the top is says that LL can choose to do it, but that's all. And that's exactly what they now do. They did register when they had to - when they had a business presence over here - and maybe they are keeping the registration in case they want expand their operations again, but they don't have to.

This is a combined reply to your last 3 posts, 16 The EU had it right when they said that the law they passed is unenforceable. That's because, as I've been saying, they can't make laws that people and businesses in other countries have to abide by. So, as I've also been saying, LL is no longer obliged by any law to collect VAT, and they now do it by choice. As for the possibility of the businesse's employees being arrested etc. on a visit is concerned, It can't be done. Well, arrested, yes, but tried and convicted for a crime, no. That's because no law was broken in the country that has the law and where the trial takes place. I do realise that there have been one or two high profile (here) cases where British people who have not broken any British or EU law have been extradited to the U.S. because what they did in the UK is against the law in the U.S. On the face of it, it does sound absolutely wrong to extradite people in such cases. But I believe one of them was a breach of U.S. security, and it would make sense for countries to have extradition agreements to cover some activities. On reflection, I think the UK ended up denying that particular extradition request after first granting it, but it was an example of why such things can happen, even though none of the country's own laws were broken. Collecting taxes isn't even a shadow on the type of activity that such agreements should apply to, so that sort of thing doesn't come into this discussion. I only mentioned it in case anyone wants to cite such cases in this discussion.

I never see the ad because I usually manage click to login before any of those graphics appear. Also, I don't have the window at full screen so, even if the graphics appear, that ad is off the right side. But I logged out an in again to see what you are talking about. Then I clicked on the ad. I rummaged around in the website and it doesn't tell me what Patterns actually is. If I buy it, what do I do with it? It doesn't tell me that. I suspect it's just a children's drawing programme but it doesn't actually say what it is.

Pussycat Catnap wrote: (That said, in a 100 years they will remember Gates, but not Jobs - Jobs made toys for an era, Gates will be remembered for what he did -after- leaving his toy company. Think Andrew Carnegie). In 100 years time, I hope that Bill Gates will be remembered for bringing cheap computers to the world and not because he retired. It should not be forgotten that, because of IBM's gross underestimate of how many PCs would be sold (they estimated 1.5 million), causing them to leave the architecture open and not to close off the operating system, Bill Gates sold the operating system to companies that could produce the architecture. That caused huge competition for IBM, and IBM lost. We have cheap computers today because IBM failed to realise how popular home computers would be, and Bill Gates taking advantage of that. Of course, it would probably have come about a different way had IBM had more foresight, but they didn't and Bill Gates caused it. For me, that's Bill Gates' legacy to the world and that's what he should be remembered for 100 years from now.

16 wrote: thanks (: + i read on that link in section titled: "You supply goods to the UK from abroad, or intend to start" "Common examples are mail order and Internet sales. If the value of your distance sales in the calendar year from 1 January goes over the distance selling threshold, currently £70,000, you must register for UK VAT. You can also register voluntarily, if you are trading below the threshold or you intend to start trading." so looks like linden have to register in UK for VAT. am assume that linden doing more than 70,000 pounds business in UK + can understand what you saying about EUlittle black dress makers in SL and how that VAT can be an impost on them trying to earn a little bit money for themselves. even for some RL things, like to help pay their power bill, buy new computer and softwares even can only really go back to where this all started from here. and we done it all to death already i think and i just end up repeat myself i i do that. so i wont (: Wrong. The EU can make any rules/laws they want to but they can't enforce them on citizens and companies in other countries. It really is that simple. What would happen to a U.S. company that sells more than the threshold to, say, UK customers, and does not register with the UK authorities for VAT? Nothing, of course. The UK cannot take the U.S. company to the U.S. court because they haven't broken any U.S. laws, and they can't take them to court in the UK because there's nobody here to charge with anything. The best that the EU can do is prevent the company's goods from being delivered in the EU, but that's all, and it wouldn't be easy.

Deltango Vale wrote: Regarding my own personal ethical position, I believe it is unethical for companies to sacrifice long-term growth for short-term gain. In the case of Linden Lab, I believe the company did precisely that - at everyone's expense. How on earth did ethics get into it. It has nothing to do with ethics. If a company wants to shoot itself in the foot, it is free to do so. It's neither ethical nor unethical.

16 wrote: my understanding of the EU legislation is that a foreign company wishing to do business in the EU with EU citizens has to have a legal presence in the EU (in some EU countries) for tax purposes even if they not have any physical assets or staff even A foreign country wishing to business with EU citizens does not have to have any form of representation within the EU. Actually, I should say that a different way because I suppose that some countries may prohibit their citizens from buying stuff from foreign companies unless the foreign company is represented within their own. I very much doubt that any EU country has such laws but I can't guarantee it. What I can say is that no foreign company needs to have a business presence in the UK in order to supply UK people with goods. We in the EU buy goods and services from all over the world via the internet, including from the U.S., without companies in other countries collecting VAT from us. I do it myself and LL is the only foreign company that collects VAT from me. They had to do it at one time because they fancied themselves as a worldwide company and had a business presence here, but not any more. Now they do it by choice. They don't have to collect VAT any more but they do.