VAT in Second Life

This morning I read an email from Linden Labs in which they claim that I am now liable for VAT payments on all transactions with Linden other than in-world Linden$ exchanges between residents. Who ever made this unilateral decision did not think this process through at all (does this seem yet another ZED fingerprint?). Or has Linden decided that having registered a new company in an EU country that now employs staff (UK) and therefore makes them liable for VAT themselves, then to simply pass all VAT liabilities to their residents instead, anything for a big fat profit margin.
Here is the issue I have with this decision – no consultation with the residents, despite the much claimed public image LL try and present of a world for its residents created by its residents bla bla bla. The effect on my own creations within SL is dramatic:
1. All land purchases from Second Life that I make here on out will have an additional 17.5% premium on top of the purchase price, INCLUDING auctioned land.
2. All premium membership charges will now cost me an additional 17.5% over and above the actual fee.
3. All land tier fees will also cost me an additional 17.5% over and above the tier value itself.
4. All currency exchanges from USD to Lindens or each time I load my account with USD will have an additional charge of 17.5% on top of the actual value.

The results from such charges are several:
1. Uneven playground – the select few EU land owners and players in SL now are disadvantages against all other residents by 17.5% over their original costs.
2. Land owners resident in the EU for example will now either have to raise their land tier fees to their customers,even those not living in the EU and therefore risk losing them to other non-VAT affected land owners, or eat the 17.5% fee and lose the profits.
3. Every time an EU resident makes a L$ purchase he or she will pay 17.5% more for each Linden they purchase, the first time ever that a ‘currency exchange’ has been taxed anywhere in the world, and a dangerous precedent!

At Bishara, I am already baring most of the costs, with a few residents living in Bahati and Mandhari paying only market related prices for their land, and the rest being paid for by myself. I am not a business and this project to me has been a hobby that I have LOVED doing and participating in. This new unilateral decision from LL means for all the tier fees in Bishara I now have to carry an additional 17.5% cost on top that I cannot charge through to my residents.
It also means I carry an extra 17.5% cost on top for all the open areas developed in Bishara for residents enjoyment and at no cost to them. LL has made NO provision for this in their plans and have not created any opportunity for discussion either. No blog entry was made and no thread opened to further the debate.

I am considering my options after what has been a hard SL year with many setbacks. This discriminating tax that I now must bare with many of my fellow EU citizens for ‘products’ that add NO value to my real life other than creative chatting, and that I cannot extract from SL to apply in real life in any way, will simply make Bishara unaffordable to me unless there is some new way to handle this. Group ownership is not the answer either as island or private sim ownership is always in the name of the original owner, so even that option leaves no open door to me.

Watch this space for more news as I will not make any decisions without consulting with my supporters, readers or residents. I promise to put out to everyone the answers I get (if any) and to allow an open debate on the issue.


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