Some people think that because they pay their tier cost to the private sim owner in L$, that they won’t be affected by the new tax regulation. They are correct when just glancing at the issue, but if you take a better look, you can clearly see the problem :
A resident rents or “buys” land on a private estate. They pay their “landlord” in L$. That’s a transaction between two avatars in L$, and not taxable. So far so good.
The sim owner “owns” a private island and is located in the EU. For this example, lets give them a residence in Denmark. The sim owner pays USD295 a month to Linden Lab in tier. That amount has now become taxable so …BOOM… a 25% tax is added to their monthly cost.
New monthly tier cost is USD368.75. Will the sim owner eat that 25% cost increase or pass some or most of it on to his residents/renters? Let me tell you : they will pass it on. Hence, in most cases tiers will be higher on European based sims, as on non-EU owned sims.
Possible solution from a renting or buying resident point of view? Move all your belongings to non-EU based sims, but that would mean that you may have a (very) hard time selling your current assets as it has become less wanted.
Possible solution from a EU sim owner point of view? Eat the extra tax and try to compete with the sim owners that are not affected by it, or back your SL business by a RL company that is tax exempt. Both options are pretty expensive…
September 30, 2007 at 1:43 pm
The Stamp Act of 2007
With Linden Labs latest changes that include charging residents of the European Union a Value Added Tax (VAT), it seems that it’s only a matter of time before the dominoes start to fall and they’ll be following up by charging taxes to resid…