Count Burks
-
Posts
4,870 -
Joined
-
Last visited
Content Type
Forums
Blogs
Knowledge Base
Posts posted by Count Burks
-
-
20 minutes ago, Sid Nagy said:
That is exactly what LL has been doing for a long time already as far as VAT is concerned.
You pay the VAT for premium, you pay the VAT on tier for mainland.
It is because it is a transaction directly with the provider.When I lease land with Count, than it is a user to user transaction and I don't pay VAT over that transaction.
Now Count leases that land from Linden Lab. That is a provider - user transaction, so count has to pay VAT for his sims.Real question is, is the L$ still a game token, now you can buy a service directly from the provider or is it to be seen as a money transaction? Than VAT payment is needed, just as Count and the article he is pointing to describe.
There is no VAT being charged on the purchase and sale of Linden Dollars because the Linden Dollar is a synthetic instrument used to transact in and out of a real world currency the USD$.
The Linden Dollar is merely a tool to transact RL currency value. It is not because it is "play money" or declared as "worthless tokens" that they do not represent actual hard currency value.
In the USA people need to pay tax on their gambling winnings and here is also a "fake currency" being used to transact in and out of real world hard currency the USD$.
Bob goes to the casino, he enters the casino and gives 2000 USD$ to the casino and receives 2000 USD$ worth of "play chips". The play chips are the fake currency of the casino, they only have value in the casino.
Bob used his "play chips" inside of the casino where he played blackjack. Bob won 400 USD$ worth of "play chips" and cashes them out when he leaves the casino. The "play chips" did represent RL currency value the entire time.
By law Bob needs to declare his "play chips" winnings on his US tax return and pay tax on them.
The Linden Dollar is a digital version of casino playchips. A temporary synthetic instrument to represent RL currency value.
-
1
-
1
-
-
28 minutes ago, Ceka Cianci said:
There is no VAT on play money or we all would be getting tax forms for every purchase we made in the world because they are all mostly user to user..
The user gives Linden lab the play money because inden lab had a perk in a membership.. From what we learned, Linden lab now takes the lindens themselves.. they have the play money and are now the owners of it and they put the play money on the exchange.. They don't pay any over seas taxes on that money made from the play money.. they would pay U.S. taxes, not the user that never used the exchange.
They don't tax play money.. they only tax money that can be used for real world outside of second life world purchases..
Linden lab used the exchange and not the user.
I encourage you to read this post below, also the source of the post which originates directly from the Europa.eu website submitted by Baker McKenzie who's an international law firm specializing in these matters Baker McKenzie | Company Profile | Vault.com The entire argument of "there is no tax because the transactions happen with play money" is not valid in my opinion.
Understand the difference between C2C and B2C and C2B transactions inside of electronic gaming platforms and virtual worlds and metaverses. If the overseas tax authorities want their VAT on the sale of products to customers subject to VAT it doesn't matter if those products were sold for play money which is then later converted to real money IF the transaction was a Business To Consumer transaction.
The reason why you are not paying VAT or the company is forwarding VAT on purchases you are making in Second Life is because they are all C2C transactions which are exempt from VAT. Linden Lab on the other hand is not a consumer but the platform provider.
12 hours ago, Count Burks said:Feedback from: Baker McKenzie (europa.eu)
Interesting information confirming my theories. This article VAT in the digital age speaks about selling skins inside of video games between users and why such transactions are outside the scope of VAT but also how the VAT should be handled once the online gaming platform starts to sell skins to players inside of the game.
Replace skin with sim and you might understand how I come to my point of view on this topic and my reasoning.
For those who do not know C2C= consumer to consumer transaction
B2C = Business to Consumer transaction
If you read this carefully it explains how even in a world without reseller rules where trades take place in a consumer to consumer setting the Sale of the digital item (skin, sim, boat, car, land, rocket ship) should be subject to VAT IF the sale is made by the online platform.
To make it simple: If Bobby buys 3000 golden twinkle coins for 50 USD$ on the website of Game Company X Bobby will not pay VAT on top of the purchase of these golden twinkle coins.
When Bobby buys a virtual house or piece of land using his golden coins from another player in the game or virtual world or metaverse this is a C2C transaction and no VAT applies.
When a player or Bobby cashes out his golden twinkle coins and converts them back into USD$ currency no VAT applies.
When the gaming platform sells a skin to Bobby for golden twinkle coins this is a B2C transaction (business to consumer) and this transaction is inside the scope of VAT which seems logical as the gaming platform purchased and sold the digital good as a taxable person.
But Linden Lab doesn't buy the sim they make it themselves ? ....
Linden Lab buys the sim by paying their developers their wages, data center, cloud hosting etc.... That is how Linden Lab buys the sim.
So I stick with my views and conviction regarding this topic.
-
1 hour ago, Arielle Popstar said:
That is talking about buying items whereas I thought we actually are buying a license for as long as the Game or Virtual world exists. It really is more of a service. The moment the servers have their plug pulled, it all goes away and residents no longer "own" the products that they supposedly "bought".
What do you think that you are buying when you buy a sim from Linden Lab? You buy a license on the use of a digital good as long as you are paying the lease for said digital good. This transaction between buyer and seller remains as long as the service exists.
What are you buying when you buy a skin or any other object inside of a video game or virtual world? Again you are buying a license for the use of the digital good or digital property which remains intact for as long as the service exist.
A simulator or region is a digital good, it is in essence a 3D virtual object or mesh and doesn't differentiate itself from any other virtual object inside of a video game or virtual world.
When a person buys a skin in a video game such as Fortnite using their currency V-bucks, they do not have to pay VAT on the purchase of the V-bucks. When a player in Fortnite purchases a skin he is purchasing a licence for the use of the skin inside of the video game Fortnite. The player pays for a license to use the skin inside of the video game for as long as the service exists.
When one player sells a skin for V-bucks to another player this is a Consumer To Consumer transaction. When Epic Games sells a skin inside of the game to players this is a Business To Consumer and Consumer To Business transaction for the license of the use of the skin inside of the video game and Epic Games needs to charge VAT on the sale because Epic Games is a taxable person.
Now we apply the same thing with Epic Games as what Linden Lab is doing and trying to do.
Epic Games sells Fortnite skins on their website to players all over the world. If you are from a country subject to VAT you can buy a skin from Epic Games to use inside of Fortnite but you also get charged VAT on the purchase of the skin. This is exactly what Linden Lab is doing.
When players buy skins inside of Fortnite for V-bucks again Epic Games needs to charge VAT on the sale of the skin as it is a Business To Consumer transaction inside of a digital platform for the sale of a licence of a digital good inside of a video game.
Linden Lab on the other hand claims there is no VAT to be paid while they are also selling a digital good for a virtual currency inside of a virtual world or gaming platform.
There is VAT on the sale of digital goods or licenses for the use of digital goods on gaming platforms and inside of video games or virtual worlds when this happens in Business To Consumer Transaction but not if it happens in a Consumer To Consumer Transaction.
This makes perfect sense to me. Forget it there is no VAT because people pay with golden twinkle coins and the transactions happen in a game.
When you study about the reseller rules for ESS you will find that gaming platforms and platform providers need to use IP and GEO Location tracking data and other means to determine the country of origin where they player is situated. So the VAT needs to be charged based on the location of the player in the real world. Linden Lab can easily do this as they have the Payment Info of their users and are able to determine the RL location of their customers.
You can perfectly apply these regulations by switching the word skin which is a license for the usage of a digital good inside of a video game with the word sim or region as they are the exact same thing.
-
Feedback from: Baker McKenzie (europa.eu)
Interesting information confirming my theories. This article VAT in the digital age speaks about selling skins inside of video games between users and why such transactions are outside the scope of VAT but also how the VAT should be handled once the online gaming platform starts to sell skins to players inside of the game.
Replace skin with sim and you might understand how I come to my point of view on this topic and my reasoning.
For those who do not know C2C= consumer to consumer transaction
B2C = Business to Consumer transaction
If you read this carefully it explains how even in a world without reseller rules where trades take place in a consumer to consumer setting the Sale of the digital item (skin, sim, boat, car, land, rocket ship) should be subject to VAT IF the sale is made by the online platform.
To make it simple: If Bobby buys 3000 golden twinkle coins for 50 USD$ on the website of Game Company X Bobby will not pay VAT on top of the purchase of these golden twinkle coins.
When Bobby buys a virtual house or piece of land using his golden coins from another player in the game or virtual world or metaverse this is a C2C transaction and no VAT applies.
When a player or Bobby cashes out his golden twinkle coins and converts them back into USD$ currency no VAT applies.
When the gaming platform sells a skin to Bobby for golden twinkle coins this is a B2C transaction (business to consumer) and this transaction is inside the scope of VAT which seems logical as the gaming platform purchased and sold the digital good as a taxable person.
But Linden Lab doesn't buy the sim they make it themselves ? ....
Linden Lab buys the sim by paying their developers their wages, data center, cloud hosting etc.... That is how Linden Lab buys the sim.
So I stick with my views and conviction regarding this topic.
-
1
-
1
-
-
Beautiful island available. IM Count Burks directly in world today.
-
Island available. IM Count Burks directly in world today.
-
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?
-
1
-
-
Beautiful island available for Spring Season. IM Count Burks directly in world today.
-
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.
-
1
-
1
-
-
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?
-
1
-
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.
-
1
-
-
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.
-
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.
-
2
-
1
-
-
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.
-
1
-
-
1 hour ago, Ceka Cianci said:
Nobody has to pay the VAT if they aren't charging real world money for the service or paying real world money for the service..
Not linden lab and not the players..
And again the magical wormhole where VAT goes up in thin air.
Every business on the planet should start to print their own coin, sell it to their customers and let their customers pay for the service with their fake coins that have no value to then sell those fake coins to the next customer that comes along so they do not have the charge VAT. It's genius, why didn't anyone else came up with this idea before?
-
1
-
-
20 minutes ago, Rowan Amore said:
No...regardless of how many times you say it...No.
Whether YOU think it's fair that LL is allowing people to pay with Ls therefore avoiding the VAT, is irrelevant when it's perfectly within the laws as I (and obviously LL's legal team) understand them.
My question remains (see the thread title) as to why Linden Lab is setting up this scheme. Even if Linden Lab is paying the VAT out of their own pocket for some reason and everything is legal.
And yes I have strong doubts how it is fair to let one person pay more than the other by using this kind of scheme. Nice signal to give to your customers. I think this is a shady construction no matter how you twist or turn it. I am also bothered by this graph as it does not properly display the correct market value either of the currency rate (again manipulation and shifting of value).
Region Type
Price US$
Price L$
Event Elite
$599
L$164,725
Event Pro 30k
$479
L$131,725
Event Pro
$449
L$123,475
Full 30k
$239
L$65,725
Grandfathered Full 30k
$209
L$57,475
Full
$209
L$57,475
Grandfathered Full
$179
L$49,225
Homestead
$109
L$29,975
Grandfathered Homestead
$95
L$26,125
If Linden Lab would like to accept L$ for region payments and it is all legal they should allow anyone to pay for their regions using Lindens if they would like to offer this and at the normal exchange rate and also respect the VAT payments and VAT status on the account.
-
1
-
1
-
-
11 hours ago, Toothless Draegonne said:
If you spent $600 during that buy-down period, you already got your money's worth. Why are you complaining that other people get a little bit of a discount now? You're still paying less. Complain if the regular price drops below GF rate and you're still paying more.
As for educator discounts, what's wrong with having a Student & Teacher rate? You know those regions come with limitations, right?
"Land Barons" I would have thought would be jumping with joy at the chance to charge the same amount of rent for parcels on regions that they're paying less for.
It is very simple why I complain about this. If I pay 600 USD to buy down from 279 to 179 I pay 600 USD$ for a 34.85% reduction in tier I expect that 34.85% will remain respected upon further reductions of the product price especially when it remains respected for other customer types like Educators.
Seems pretty logical if Linden Lab can maintain the reduction in tier for educators they can honor it for the ones who paid hefty sums to buy down their regions.
Other people can get their little bit of a discount as long as Linden Lab honors their deal they made with me.
First coming to ask for 600 US$ to then let the value of that melt away without any compromise it very shady.
Also it is very stupid from a business perspective to let the value of grandfathered regions erode as there is no longer much incentive to keep such a region online. Now people with grandfathered regions will keep these islands online even if they are just breaking even because the region has value. Once that value vanishes it just becomes junk and a burden not worth the time and hassle so then it just gets dumped.
-
1 minute ago, Rowan Amore said:
The thing is, LL is not buying your Ls when you cash them in, other residents are. The only thing LL collects is the transaction fee for the exchange. As far as LL is concerned, Ls are a non fiat currency. If LL WERE buying your Ls for RL money, that would be entirely different.
This is not about the Lindex or how the Lindex functions or how the system has been functioning for the previous decades.
This is about Linden Lab now accepting directly Linden Dollars for payment of private regions. Linden Lab is in fact now collecting Linden Dollars for payment which they will transact for USD currency through their own exchange or will destroy but then just print the same amount and sell that on their own exchange.
Linden Lab is now accepting Linden Dollars as an equivalent for RL money and by doing so demonstrating the Linden Dollar has RL value.
My issue is certain people need to pay VAT or GST on their regions while others do not because of this scheme. So it is discriminating towards certain users.
-
1
-
1
-
-
50 minutes ago, Caeruleiae said:
You answered yourself right there.
Customer B, or whatever you want to call them, never exchanges those lindens-fake currency you keep saying, for real money. It's never turned into real money by that customer. That customer isn't obligated to pay vat, because, it's not real money, real income, or a real payment for anything. If ll wants to later turn those lindens-fake currency tokens, into real money, ll will be the one paying the vat, because they're the one now making a real transaction using real money.
You literally spelled it out for yourself the entire time. Customer a is using real money, in exchange for the same product sure, but real money. Customer b never involves real money. That's not a loophole, magic wormhole or anything like that. Yes ll does have a legal and financial team that will have gone over all of this with a fine toothed comb long before we ever heard of it, especially given the history experience and knowledge of its investors-it's in finances, in case you were not aware, so they understand the legal ramifications and intricacies better than all of us and the rest of ll combined.
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?
-
Beautiful island available. IM Count Burks directly in world today.
-
1 minute ago, Adam Spark said:
They are fine with receiving their 20% in VAT on anything bought with currency of value, which Linden Dollar tokens are not, yes. Either that or they have not yet stepped in and said they are not yet.
They are fine if these are user to user transactions inside of a virtual world or metaverse.
Here you can read about a case on this particular topic and the outcome when trades are being made between users inside of a virtual world.
Gaming & e-sports: the virtual world remains sales tax-free (for now) - Oppenhoff
In this case it is a different situation as this is not about trades made in digital currency between users but the platform provider setting up a scheme allowing certain users to use their "worthless game currency" to pay for the company product and not charging VAT while others who pay in real world hard currency are in fact being charged VAT.
This particular paragraph is most interesting in this context:
Sales tax upon exchange into real money
According to the BFH, this changes as soon as game currency is exchanged for real money. This is because a distinction must be made between the relationship between the players among themselves and the relationship between the player and the company operating the game. The game currency is basically a contractual right. This was transferred for real remuneration on the gaming company's internal exchange. Thus, this transaction was no longer confined to a mere participation in the gaming event, but took place in the real market.
-
2
-
1
-
-
4 minutes ago, Adam Spark said:
Exactly, otherwise they would not be allowed to do this.
So the VAT office is totally fine now with not receiving their 20% in value added tax anymore because Linden Lab is just accepting their worthless virtual currency they printed out of thin air?
My god I am learning so much here today, incredible. Printing turtle coins out of thin air, selling turtle coins to users and accepting them for payment and no longer having to collect taxes.
I am utterly amazed.
-
11 minutes ago, Adam Spark said:
They are not owed money from those who pay with $Ls, because $Ls have no value.
Yet they are accepted by the company as equal funds to the USD$ to pay for products and services.
A company sells their identical product to two customers.
Customer A pays in USD$ and also pays the VAT
Customer B pays in currency that has no real world value and skips the VAT payment.
And according to your logic the tax office would be ok with the fact Customer B has not paid VAT for the product because he just paid with virtual currency that has no real value?
-
1
-
1
-
-
1 hour ago, Adam Spark said:
Neither Customer A or B has legal reason to declare anything unless he cashes out his Linden Dollars, as only then does it become something of value (real world currency). At this point, he pays all the pertinent taxes. If either withdraws, then he pays taxes. With this feature, neither customer has to withdraw.
The point remains that the VAT office receives 501.6 US$ yearly in tax from Customer A and nothing from Customer B unless Linden Lab would secretly pay the VAT owed by Customer B to the tax office. And this because Customer B is earning income from virtual currencies inside of a virtual world without declaring this income and that scheme is how the VAT tax is circumvented.
I am aware there isn't any tax on user to user transactions inside of a virtual world, still in this case it is different because the platform provider Linden Lab is setting up a scheme to facilitate and bridge virtual world earnings to real world currency US$.
This scheme allows a flow of money where customer A is paying VAT tax and gets billed VAT while Customer B is not (at least not in a transparent manner).
-
1
-
2
-
Facebook
Instagram
Twitter
YouTube
Flickr
Linden Lab why are you charging VAT to one customer while waving this tax for other customers?
in General Discussion Forum
Posted
Yes because Linden Lab is the game provider and a business to consumer transaction takes place. Linden Lab is a taxable person because Linden Lab bought the sim they are now selling to the consumer and were able to deduct their purchase costs of the sim from their taxes.
When Linden Lab sells the sim license in world for their worthless game token and then converts the worthless game tokes to RL hard currency Linden Lab is generating profit as a taxable person.
If the user buys land from another user this is a C2C or consumer to consumer transaction and then no VAT is involved.
*What are Linden Lab their purchase costs for the sim? Paying programmers, paying amazon cloud hosting etc... These are all business expenses Linden Lab can deduct from their taxes. A B2C for profit transaction did take place even if it was in fake game currency.