Linden Lab Reduce Cost Of Monthly Premium Membership For Second Life And End VAT Charges On All Premium Plans

The Taxman’s taken all my dough and left me in my stately home, lazing on a sunny afternoon.

In a pleasing but rather bizarre announcement, Linden Lab have blogged; Cheaper Monthly Premium & the End of VAT Charges. First of all let’s take a look at those cheaper monthly premium charges :

Now, we’re reducing the standard cost of a monthly Premium subscription to just $9.50 a month. Enjoy all the benefits of Premium Membership for less!

The price of a monthly Second Life premium membership has been reduced by 45 cents a month, down fro $9.95 to $9.50. The quarterly plan remains $22.50 for three months and the yearly plan remains $72.00 a year.

On a month by month comparison the quarterly plan works out at $7.50 a month and the yearly plan works out at just $6.00 a month, so they both offer better value than a regular monthly plan but some people prefer a monthly fee, there’s a good choice for different use cases here. The rates and other Second Life related costs can be found here.

Premium Membership in Second Life offers some perks, including :

• A personal and private home or free 512m tier if you want to buy a plot of mainland.
• Expanded support, including Live Chat.
• Exclusive Experience: Magellan’s Grid Hunt.
• Exclusive Activites: Dune Buggy Racing in Racer’s Gulch.

For more details on Premium Membership perks in Second Life, go here.

Where the blog post gets bizarre is with the next part of the announcement :

We will also no longer charge VAT for Premium subscriptions. If you live in a region where VAT applies, this means an effective savings in some countries of more than 20% below what you would have previously paid!

I’m not sure what exactly Linden Lab mean by this. Are they really saying the aren’t charging VAT or are they actually absorbing the VAT? Let’s go into speculation mode and look at a couple of scenarios.

Scenario 1

Linden Lab may have discovered that Premium Membership is not an electronic service. A Premium Membership gives you perks but in itself, is it actually construed as an electronic service? Land tier costs are an electronic service as you’re paying a fee to use more land hosted by Linden Lab, but is a membership an electronic service, even if comes with perks related to an electronic service? I have no idea!

However I would say that this is an unlikely scenario.

Scenario 2

Linden Lab have decided to take a hit on their income and are absorbing the VAT costs. This scenario is far more likely. In this scenario a Premium Membership subscriber in the UK would pay $84.40 for a Premium Membership on the yearly plan, that would be made up of $72.00 for Linden Lab and then $12.40 for the tax man at a VAT rate of 20%. Now if Linden Lab are absorbing that cost that would mean someone in the UK paying $72.00, that would be made up of $60.00 for Linden Lab and $12.00 for the tax man at a VAT rate of 20%. In this scenario Linden Lab lose $12.00 of income and the tax man loses 40 cents.

This is a more likely scenario.

Whatever reason is behind this change, it’s going to be welcomed by a lot of customers who see their Premium Membership bills drop. Please note that VAT still applies to other Linden Lab products and services, such as mainland tier and private region tier.

As for VAT, it remains a regressive tax that the trough snouting politicians and bureaucrats in the European Union keep extending and raising without any sort of consideration to the mayhem they leave in their wake.

Technology moves fast, the European Union move like a snail. The world has moved on since 2003 in terms of electronic services, the European Union still fail to grasp virtual world commerce and why their VAT on electronic services hinders rather than helps people who live in European Union countries. VAT was originally a luxury goods tax, the ways it has been extended and raised over the years is truly shameful. There’s a method to this of course, VAT is largely hidden in the small print on bills, people don’t notice it anywhere near as much as they do income tax, which appears as clear as day on a wage slip.

People do notice it when other people point it out, such as the 5% VAT on female sanitary products in the UK. This was reduced from a higher rate in 2001, after much campaigning but I still don’t think many people would describe such items as luxury goods.

VAT also stands for Value Added Tax, just what value gets added by the overlords in the European Union when Linden Lab provide an electronic service, which in turn is received on an internet connection that is already subject to VAT, remains one of the EU’s great unanswered mysteries.

However enough of that, this is good news for Linden Lab’s customers, even if it is a tad bizarre.