VAT rule shifts land ownership away from Europeans
By Eric Reuters
Linden Lab CFO John Zdanowski (aka Zee Linden) shared new details on Monday about Value Added Tax (VAT) for Second Life customers residing in the European Union.
“We can’t really pick and choose which laws we want to comply with and which we don’t,” Zdanowski said at the opening of the hour-long presentation, held at the intersection of several sims to maximize avatar capacity. Although the talk was interrupted by frequent failures of Second Life’s voice feature, Zee pledged to respond to in-world instant messages asking questions about the tax.
Zdanowski acknowledged that VAT could send ripples through Second Life’s fragile economy. “It might drive people who own land now to rent land from people who don’t have to pay VAT,” he said. “There may be a reconfiguration of ownership.”
Brazil Comet, a land baron based out of Athens, Greece, is calling it quits. “I’m cashing out and reducing my land holdings to zero by the end of my tier,” said Comet, who declined to give his real-life name. “The land business is not for Europeans anymore.”
Comet and other Greek citizens pay a 19 percent VAT on Second Life fees. He’s already cut back his holdings from 20 sims to 7 since the announcement.
Pablo Cartier (Second Life: Pablo Sienkiewicz) of Madrid, Spain, had 65,000 m2 of mainland, an island, and a company listed on the World Stock Exchange. He’s sold off all of his mainland holdings and downgraded his account from premium to free. “Will you buy from me 16 percent more expensive or someone that has the exact product 16 percent cheaper?”
But neither Cartier nor Comet plan on leaving Second Life altogether. Cartier hopes he can run his business on just his island, and Comet is looking for new business opportunities.
While large European businesses downscale, some smaller EU-based operations, although unhappy about VAT, say it won’t affect them much. “It depends on how much land they own,” said Welody Lyne, an avatar from the south of France. “For someone who just has 1024 square meters for US$10 a month, adding 19.6 percent isn’t too much.”
