In general; a $2 cup of coffee in north america costs 2€ in Europe. A $300 Wii U in north america costs 300€ in Europe. The only time currency conversion matters is because you are converting between two currencies, when buying a product from another country.
GOG.com sells all their games in north american prices because it only has offices in north america. You are buying a product from north america when you buy from them. Dropbox, Steam, Nintendo, Sony all have offices in Europe. So you aren't buying a foreign product and you do not account for a currency conversion as there isn't one.
Taxes are an important consideration. For example if you buy a $500 cell phone from north america and have it shipped to Europe. You will pay less for the phone but when it crosses the border you pay considerable taxes such that the "deal" is no longer worth it.
If import taxes were applied to physical as well as digital goods, as they probably should be, you would actively want to buy from a European company within Europe. You currently do for most goods, because it actually saves you money.
It's the lag on charging tax for imported digital goods. Otherwise you are earning Euros you are spending Euros, there is no currency conversion.
> A $300 Wii U in north america costs 300€ in Europe.
Which is exactly the problem considering the Euro is 30% stronger than the dollar right now. It's also wrong, the $300 Wii U[0] is 275€[1], which is roughly correct ($300 + 20% french VAT is 274€)
> GOG.com sells all their games in north american prices because it only has offices in north america. You are buying a product from north america in that case.
GOG.com sells in local currency.
> For example if you buy a $500 cell phone from north america and have it shipped to Europe. You will pay less for the phone but when it crosses the border you pay considerable taxes such that the "deal" is no longer worth it.
Mobile phones are duty-free under CCT (the common customs tariff), so you only pay the local VAT which is 15~25%. Given the phone is probably marked up 30~40% compared to the US, the deal is most definitely worth it, even paying the VAT.
Yes, kind of, but not really. The problem right now is that €1 is worth $1.3. In Europe VAT is included and is about 20% in most countries (it does vary), in US it's not.
So, a service that costs €1 in Europe, gets the provider €0.8, or $1.05. Import tax is generally the same as VAT as far as I know. Sales tax in the US is usually around 7% -> to a consumer, a $1 service costs $1.07.
This means that if you import a $1 thing from the US to Europe, and don't have to pay shipping, you are saving some 13% of the price as the consumer, and the seller gets 5% less money than the equivalent price in European currency.
That is today. The difference varies, I've seen as high as 1.5 dollar per euro.
This explains why everyone is suddenly asking me to bring them iPads and Macbooks and whatnots because I'm coming back from the US in a month.
> Import tax is generally the same as VAT as far as I know.
There's no import tax on software, on services, on cell phones or on laptops. I could find no such thing on TARIC anyway. It does list consoles with 0% import tax.
There are no customs, but you still have to pay import tax of the same amount as VAT would have been if you had bought the item locally as a consumer, at least that was the case last time I bought something in the US.
You have to pay the VAT, which is just that, the VAT. The fundamental problem with locally sourced electronics or "1€ = $1" services is not so much the local VAT as the extra 10-20% on top of the VAT.
It's the lag on charging tax for imported digital goods.
We do in the UK, if you're a VAT-registered business.
For example, let's say my business pays $100/month for Web hosting in the US (or even the £40/month I pay to Adobe for Creative Cloud). I then have to "reverse charge" $20 of VAT to my accounts but then also claim back $20 of VAT from the tax authorities.. so it's a net zero result, but we still "paid" it.
I don't believe this applies to regular citizens though, but I could be wrong.. if it does, I know no-one who does it.
A $1300 Macbook costs £1,000 here in the UK which is roughly 30% more expensive than a direct currency conversion would have you expect. If you take that $1300 Macbook, add 30% and convert that to Euros it just happens to be that it works out at about €1300 which is what they charge in Germany. Someone posted about that here earlier.
Most of that 30% is due to VAT at around 20% for much of Europe, plus another 10%. It's that last 10% that's the real price difference of the goods.
Personally, I think the main cause of that is the generally higher cost of doing business in Europe (UK included). Everything costs more here. Petrol (Gas) and hence transport, wages, property, corporate tax rates, etc. It's hard, if possible at all, to find anything that's cheaper over here and all of that feeds in to the cost of doing business. The first time I visited the US I was shocked at just how much cheaper _everything_ seemed to be. Frankly, I'm surprised it's only another 10%.
In the US it is not common to show a price after sales tax, like it is in Europe with VAT.
Also, not all states have the same amount of sales tax and some have no tax at all. It would be impossible to show the prices with sales tax when there are 50 different states with differing sales tax laws.
> It would be impossible to show the prices with sales tax when there are 50 different states with differing sales tax laws
Heck, the state level sales tax rates are even the easy part. Within states there are counties which often levy additional sales tax, and then cities within the counties do it as well. These county and municipal tax rates are additionally often comprised of a variety of "temporary assessments" which appear and expire seemingly at random. Knowing which rate is charged at a given location devolves into a very difficult problem once you realize there's no centralized address-to-jurisdiction database, nor a centralized jurisdiction-to-tax-rate database.
Funny thing (or not so funny, if you are small company), beginning next year you are required to do so in Europe. Amazon (AWS), Dropbox and alike have to indicate the tax (VAT) of the country the buyer is in and not anymore where the company is in-cooperated.
Current practice is, that the tax of the country, where the company is in-cooperated applies.
With that move, the EU wants, that every country is getting their share, and not like is now, that some countries are getting it. But this added bureaucracy is making it much harder for smaller companies.
When my sister went to a backpack trip.visiting lots of countries in Europe ( she visited England, Holland, and lots of countries.between.there and Croatia, Hungary, etc...) she was surprised.about how much everything was.cheaper than Brazil, government efficiency is always impressive, the more efficient your government is, the lower the prices compared to other countries,.nevermind.comparing to your own income ( ie: despite Europe having lower prices.than Brazil, salaries, even after all taxes, are much, much higher )
That sounds off. What kind of prices? Brazil has high import taxes, so stuff like iPhones will be much more expensive, but I frankly don't believe that "everything" is cheaper in the UK or Netherlands.
It's more complicated than OP says, but not too far off. In big cities like São Paulo or Rio, the prices of services have skyrocketed in the past 5 years or so. The only thing that can be considered cheap in Brazil currently is electricity, and that is only if we compare with Europe. And this is due only to most of Brazil having a tropical climate, which eliminates the need for residential heating.
If you go for groceries, and you see that staple food hasn't increased much, but meat/poultry/fish has gone up in prices due to local producers increasing their prices to match the exporters - so now a kilo of decent beef steaks is around R$35 (~US$15,50), when it could be had for R$10 in 2008.
Entertainment is expensive: movie tickets for US$15. Paul McCartney played in São Paulo a few years back and the cheapest tickets were going for US$300. Nightclubs all have a cover charge of at least US$30. A bus ride from São Paulo to Rio (which is equivalent to Boston-NYC) costs +/- US$30. Any passable restaurant will cost at least US$35/person. I went to visit my parents last year, we went out for a nice pizza place by the beach - R$75 each pizza.
Taking a look at these things, if you are a Brazilian tourist visiting any European/North American city, most of the things you will see are not related to basic cost of living - mostly entertainment and general shopping - and these are indeed cheaper compared to Brazil.
I take it you don't live in Europe. That's actually how it happens: when something costs $300 in the USA, you can bet it will cost 300€ here in Europe.
I understood his point to be rather the opposite, that the real price (if you had an absolute global unit) of the product in one place does not necessarily correlate to other places. The fact that the numbers he used were both 300 is irrelevant. The point he is making is that the cost in Europe is higher for reasons beyond the physical cost of the product.
There are a handful of things like videogames where that's true as part of the region-based market segmentation, but I haven't found it to be true in general. Cloud services in particular are usually priced so that the dollar and Euro prices are approximate conversions of each other. Look at, say, the $ vs € pricing for Azure, or for OVH.
Do not buy GSM stuff blindly in the US, some phones might not be used in some countries. The iPhones have different part numbers and different frequency ranges depending on the country.
Along the same lines, some high power radio devices in the US would be illegal in Europe because they're in the wrong band. XBee radios are happy at 900MHz in the US, however this is GSM band in most of Europe and we use 863MHz for sub GHz radio instead. And almost vice versa, US GSM is 850MHz I believe.
It's a real pain for electronics work because you can't buy off the shelf things from the big hobbyist stores.
If you are in Europe I recommend hubiC instead of Dropbox. They are much cheaper and have servers in Europe (France - they are child company of OVH). Dropbox only has servers in America [1], so its slower.
- 25GB free
- 100GB 1€/m
- 10TB 10€/m
Yes you read that right, its TEN TIMES the space of Dropbox Pro, for the same price.
Im not affiliated or anything, just a satisfied customer.
I considered hubiC, but all download syncs (from the website and application) for now are limited to 10mbit (even from the UK). There are several posts complaining about this on hubiC's forums.
If you don't care about this, it's a really great deal, but to me it is a deal breaker.
Dropbox uses Amazon S3, therefore servers are located in Europe as well.
EDIT: maybe my statement was a bit premature. I was confident Amazon was keeping mirrors, but it seems they only do this in the same region. Dropbox runs its own infrastructure network and uses AWS for storing files, both solely in the US.
Dropbox transfers everything to the USA even if you are in Europe (I checked that with Wiresharks and traceroute). Because of that my main issue with Dropbox was always speed: Uploads and downloads were almost never higher than 500-700 kB/s even though my connection can do much more.
Do you know if they offer 2 factor authentication? I've been so annoyed with Dropbox support for the past 2 months I'm actively looking for a replacement, but it needs to have 2 factor auth.
hubic syncs to my pc everything uploaded to it. assuming I have 10tb of files hosted on it, does it mean I need 10tb of hard disk space to keep them synced? kinda defeats the purpose of having so much storage online..
- You don't know that hubiC doesn't turn data over to their government or whether it's shared with allies.
- You don't know whether either of them have bugs which can be exploited by a MITM – or will in a coming update…
Government spying requires political changes to establish a culture of oversight and accountability. You're fooling yourself if you think that choosing one company over another is anything other than an exercise in distraction when the attacker has the power to compel access with a gag order.
They've certainly given me no reason to think they don't, and enough circumstantial evidence to believe they probably do. We know for a fact they are targeted by the NSA, because they were specifically mentioned in the PRISM documents as the probable next target for cooperation with that program. So they're on the NSA's radar, and everyone knows it, and they know everyone knows it. In spite of this, a few months later, they bring onto their board Condoleezza Rice, a woman who, while she was in the Bush administration, went to bat for their warrantless wiretapping program a dozen times. She hasn't recanted - she's still a huge fan.
This is pretty much the exact opposite of what you would do to address privacy concerns with your company.
And in the whole time, they've addressed none of this. They spam HN with their stupid blog posts, and when somebody brings up the privacy issues, the poster gets downvoted, and Dropbox goes silent until their next blog post about whatever wonderful technology they've developed to make it easier for the US government to snoop on your data. At the very least, they clearly aren't very concerned about their image with respect to customer privacy, and they don't care if you know it.
It's not like providing a service like Dropbox and providing provable security isn't a solved problem. And they don't do it. Yet they are the biggest player in this market. My, a clean site design and engineering blog really do go a long way.
Anyway, this isn't a court of law. I'm not a judge or a jury and I'm not in a position to put anyone in jail. Requiring that level of proof to decide not to do business with someone, or whether to associate with them professionally, is not reasonable. They have not been forthright about privacy issues over the past year, they have acted in a way that shows they don't regard the legitimate privacy concerns of their users at all, and they have put someone on their board who stands in direct opposition to all that, anyway. That's more than enough.
There was a lot of big talk last year around here about how people who work at the NSA ought to be ashamed, about how "the community" needs to ostracize these people. Soul searching about what kind of person you would have to be to create those kinds of systems, what delusions you would have to buy into, etc etc. Yet that's exactly what has happened at Dropbox - exactly those kinds of people are working there right now - and every week they post some bullshit from their blog and every week this board lines up to congratulate them. You're all a bunch of hypocrites.
> They've certainly given me no reason to think they don't, and enough circumstantial evidence to believe they probably do. We know for a fact they are targeted by the NSA
Quite true, also very different from the claim I was responding to. We have no reason to believe that they're willingly cooperating beyond what the US government has the power to compel.
> They spam HN with their stupid blog posts, and when somebody brings up the privacy issues, the poster gets downvoted, and Dropbox goes silent until their next blog post about whatever wonderful technology they've developed to make it easier for the US government to snoop on your data.
Alternative theory: people get downvoted for repeating uniformed conspiracy theories.
> It's not like providing a service like Dropbox and providing provable security isn't a solved problem.
Actually, it is. Anyone who understands security can explain to you both the usability tradeoffs which those security changes would by necessity entail and, more importantly, how none of this matters in practice given the threat in question. They could spend a ton of money making their product more secure and harder to use and in practice it would have no effect on a nation-state level threat which can either compromise your system with an automated MITM attack or compel a US company to ship a trojan update.
This problem requires a political solution, not magical thinking about technology.
>Quite true, also very different from the claim I was responding to.
Not really, you just quoted one part and are acting as though that's my entire claim. If you're just going to strawman my arguments here then, fuck it, I don't want to talk to you. Like I said, it's circumstantial evidence, since their cooperation would have come after the Snowden documents were released, but it's still evidence. We know they're being targeted, they have people on their board who love this shit, and their silence - in stark contrast to most other PRISM targets - is deafening. Again, this isn't a court of law, the burden of proof is lower, and if you're not open about what you're doing, then it isn't unreasonable to assume you're in bed with the bad guys.
This isn't birther or truther or whatever else, conspiracy theory territory. I'm not making any leaps of tortured logic here, so don't paint me with the same brush. It's pretty straightforward and at any rate, all I said initially is that they hand over data to the US government. You appear to agree with me on this after all, you're just giving them more benefit of the doubt with regard to their level of cooperation.
Just to be clear, let's draw a distinction between mere complying with NSLs to the extent required by the law, and cooperating with the NSA on these illegal spying programs. They are not the same thing, and Dropbox is likely doing the latter. Yes, they certainly receive NSLs like anyone else, and some level of cooperation is required by law, but they are also likely to be designing their systems with ease of access for the NSA in mind. It is not unreasonable to think the NSA has automatic access to their data. Other PRISM targets have been pretty open (at least in comparison to Dropbox) about what their cooperation entails, what they are required to do, and what steps they take to safeguard their data. Dropbox has been utterly silent, and that's the most damning thing. Perhaps this would not be a fair conclusion to draw, had they not made the utterly stupid and incomprehensible decision to allow Condoleezza Rice to join their board of directors, but they did, and it is.
No, you are foolish if you think Dropbox is not giving their customer data to the NSA. That's nothing but wishful thinking. Absolutely foolish and naive. Much more so than if, in 2012, you thought the NSA wasn't snooping on emails, et cetera. At least back then the scale of what they are up to would have been something of an extraordinary claim - that's not the case anymore.
Again, we have no evidence that there is willful cooperation. You're free to think that and it certainly isn't beyond the realms of possibility but so far all of the public data suggests that the only companies which are cooperating above the legal compulsion level are the phone companies who sold access to private fiber.
You keep talking about circumstantial evidence but there isn't just anything beyond Condoleeza Rice joining the board and, while I'm less than thrilled about that, rich politically well-connected former Standard provosts do end up on corporate boards for reasons other than mass surveillance.
Even for cloud-based services like dropbox, the cost of doing business in all countries is not the same. There are different laws/regulations to deal with, costs for having foreign-language support people, costs for internationalizing parts of the UI/etc.
Personally, I think it's kind of odd to expect that something will cost the exact same amount anywhere in the world.
It might be that the added cost for dropbox to do business in Europe just happens to be very close to the exchange rate, so they just change the currency symbol and call it "close enough".
There are plenty of things that are more expensive in the US than they are in Europe.
Products are not priced by cost. They are priced at the highest point the market will tolerate.
Moreover, a European employee is generally way cheaper than an American one, the corporate tax is often cheaper, if they were really driven by costs, they would simply have relocated (at least outside of Silicon Valley).
The simple fact of operating from California means they don't care about operating costs.
> Products are not priced by cost. They are priced at the highest point the market will tolerate.
This is a very simplistic view: product pricing also takes into account things like psychological thresholds (e.g. why it's 9.99/month rather than 10) and the likelihood of a competitor entering the space if your profit margins are too high. Amazon is famous for keeping low margins because they're willing to trade the short-term profits in exchange for making it harder for someone else to enter the space which would hurt their profits long term.
> The simple fact of operating from California means they don't care about operating costs.
Again, simplistic analysis: a business like Dropbox doesn't need to scale their employment at the same rate as they add customers so individual costs matter less than, say, a fast-food restaurant because each employee's work benefits as many customers as you can convince to signup. If you're making a profit on someone's labor their salary isn't as significant as, say, the opportunity-cost of not being able to hire someone at all or hiring the wrong person because most of the top people have been lured elsewhere. Being in business means weighing all of those factors not just looking at a single number and trying to lower it.
Adding 30% to the price and selling the thing to 27 countries all having a different tax policy in the name of "languages" (wait, I thought salaries were not at issue) or "taxes" (wait, vat is different in every country, and nowhere it is 30%), do you think it's worth anything more than simplistic analysis? Do you think anything more than simplistic thinking leads to changing the dollar sign to the euro sign?
The problem isn't just paying more. I'm aware of how tax-heavy europe is, and how much harder it is to support the wide variety of languages and laws. In most cases, I would be fine paying a bit more for a service.
The problem is the way the mark-up happens. They're not calculating the difference and marking that up, they're literally just equating US dollars with euros. $99 and €99 might sound similar, but the difference is over 30%. There is no way the additional support costs run that high, so it comes across as just an attempt to pull a fast one on europeans.
I'm sure if they did a proper calculation and gave a realistic number, nobody would complain about the increased cost.
Netflix and Spotify are the same. Spotify is £9.99 here in the UK, €9.99 in most of Western Europe and $9.99 in the US. Admittedly they have to deal with record labels so it's a bit different, but it's not really an excuse.
Strangely Dropbox here is showing the price as $9.99.
Who is to say they didn't do a "proper calculation" and result in something close enough to €99 that they just rounded up/down to keep things consistent?
That's ofcourse possible, but there are many many services that pull this trick, and I would be surprised if dropbox was the only one that did the honorable thing here. And even if that's what they're doing, they should realize it gives a very bad impression and maybe round up/down to a different price. Literally anything else would be better.
I'm perfectly ok to have an English only product with a 30% discount, but I can't find the option.
(That said, looking at the streets in Seattle, I'm not trading my 20% VAT for potholes, crumbling sidewalks and aerial electric wires in a storm prone region, thanks)
those are valid points, but then why don't they calculate the price they should be asking and ask that? As it stands, they don't give the impression that they do that, they seem to try to screw us over. Hell, if they had gone for €97 instead of €99, a lot less people would be complaining, because it wouldn't look like an arbitrary price hike but a calculated price.
Just a reminder in this case: EU prices include the VAT (near 20% in many cases), while in the US the state tax (often 10%) is not included in public prices.
Except 1 EUR = 1.31 USD right now, so even with a 19% VAT, the EUR value should be lower than USD: $649 + 19% VAT is 588€ not 699. 19% european surcharge on top of the VAT.
How about import taxes then? I can imagine Apple is a US company and thus pays either no or very little import tax when they get their shipments from the production facilities in China, but to get it to Europe costs more money. I can imagine. I know nothing.
My hypothesis has always been that Apple charges the whole country-wide infrastructure (retail, marketing, etc.) on products, while in US (where it would be harder/impossible to split nation-wide efforts from world-wide efforts) this is not being done.
This also accounts for different prices in different European countries; e.g.: the cost of making business is very high in Italy (high salary taxes, high network costs, impossible to fire/sack people, etc.) so they make their products cost more in Italy to account for the additional costs of running operations there.
There is no state sales tax that is 10%. If you combine city, county, and state sales tax, you get 10% in just two cities in the entire United States (both in Alabama).
Yeah I hate it when I have to pay more for a service as a European.
It might seem silly but that's the reason I cancelled my Spotify account, I didn't want to pay a 'European' premium. I hate it when they check from which country your creditcard number is - Netflix is nice that they allow you to register in a different country with a VPN & don't check the credit card country.
Don't move to Australia then. Software prices are routinely jacked up for us. At least with conversion to the euro, there's a large amount of laziness in it. With Australian software, we're often paying 50% more to double the price. At one stage it was cheaper to buy Photoshop by flying across the Pacific ocean, buying a copy in the US, and flying back to Australia.
Every time I see this I feel compelled to point out that Europe gets it worse than you, despite your complaints.
Say 100 AUD for a game. That's roughly 70 euro (which is the cost of a new PS4 game in Ireland). The median household income in Australia is 66k (AUD) or 47000 euro. The only source I can find for a median income in ireland states it at around 27000 euro. The purchasing power of an Australian in that case is far higher than an Irish person for instance.
Median income isn't the whole story. Disposable income is a better story (particularly for entertainment), and Ireland in US$24k, Australia $31k. In Germany (the most populous European country that no-one questions is in Europe) it's US$30k. France is US$29.5k. (stats from OECD). Norway, with the same size population as Ireland, is more than Australia at US$32k. Australia isn't really as far ahead of Europe as you paint it. Picking one of the poorest countries in Western Europe and using that as the baseline isn't really playing fair.
These links have the country's median household disposable income listed in the first paragraph.
Yes, if you're in Germany your programming is for Germany whether or not you have a US or German account.
The bad news is that you'll have to use a VPN to pretend to be from some other country (US) in order to get some of the shows not offered in your own country (Germany).
The good news is that you can use a VPN to register for Netflix (and pay less!) and get the same content as you would get if you registered in Germany.
The last time I checked some Netflix features (watch list?) were disabled if you are 'traveling' outside your region.
How can you see German programming in Netflix when it doesn't even exist yet in Germany? They're supposed to launch here in two weeks, but as far as I know nothing is available yet.
Same concept. You can't have the price of good fluctuating all the time in Europe because the relationship between the dollar and euro have changed. They fix the price, it accounts for VAT and sometimes a little more, sometimes a little less.
In Dropbox example both include VAT. You can see this tendency clearly in digital games. When I worked with games pricing for MacOS, I asked why such a huge difference? Boss replied: "It is the easiest to force Europeans into premium costs".
There is even a chrome extension which shows how much a game costs in different countries on Steam website:
Buy Sid Meier's Civilization V
US: $29.99 (18.04 GBP)
RU: 249 pуб. (4.01 GBP) (78% )
CIS: $14.99 USD (9.02 GBP) (50% )
BR: R$ 44,99 (12.11 GBP) (33% )
UK: £19.99 (11% )
EU: 29,99€ (23.7 GBP) (31% )
AU: $69.99 USD (42.11 GBP) (133% )
-----
Also not long time ago there was an article about Spotify pricing [1]. It simply is a many years ongoing Europe rip-off.
One of the neat things about this is that it sometimes produces arbitrage that people leverage if the game does not have geo-restrictions built in. People will purchase in bulk and then trade.
For services like Spotify you do have to account for different delivery costs they may have in Europe. Bandwidth is more expensive over here (partly because it just is, and partly because in many places we are not as well served so it is a more contended resource) which they will have to factor in.
There may be differing costs for payment processing too, and if they have any sort of tech support and documentation there will be larger internationalisation costs in Europe too.
These things are unlikely to explain all the difference (probably not even close to half of it) but we need to consider these thing to make sure we are being fair when shouting "rip off!".
Bandwidth is cheaper in Europe. See the Cloudflare article recently.
Also, regarding i18n for Europe: most of the time, it is localized only for FIGS (France, Italy, Germany, Spain). Other 20 or so (for EU, not Europe) countries get shown a finger. So why should they pay for that?
The whole area of VAT in the EU, for companies like Dropbox, changes on January 1, 2015. Dropbox will not be able to state that they don't pay VAT in the EU after this date as the rules will have changed. They will have to start paying VAT based on where their customer is located in the EU, e.g. German Dropbox customers will have to pay German VAT (19%). Hungarian Dropbox customers, meanwhile, will have to pay Hungarian VAT (27%). Dropbox will have to decide whether to pass on the price differential or absorb it. Interesting times.
The affected companies will have two options. Register for VAT in each EU country in which they have sales, or avail of what is called a mini One-Stop Shop, commonly known as MOSS. MOSS, effectively, allows a company register with one EU tax authority for the filing of all their VAT. That tax authority will then distribute the VAT due to other EU member states. MOSS will eliminate the need to register in every EU member state that an affected company has sales (could be all 28 of course).
For some clarity try these sites:
http://www.hmrc.gov.uk/posmoss/http://blog.taxamo.com/moss-system-eu-vat/http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_wo...
I'm interested in how this would work. Where would the VAT go in the case of a German person who primarily lives and works in the UK? Is it based on their IP address at the time of signing up? Or where their banking address is registered?
EDIT - Just found this, which suggests it's up to the company themselves to decide in which country the service is being 'consumed', and they need to store evidence which shows how they make that decision.
http://www.hmrc.gov.uk/news/one-stop-shop.pdf
Correct, the burden of proof is on the company that is supplying the electronic service. But it is not that they 'decide'. They need to collect required types of evidence (that do not conflict with each other) in order to prove where their end customer is. Accepted evidence includes the customer's IP address; their fixed landline; their mobile phone SIM card country code; and credit card billing address. VAT is based on where the service is 'consumed'. That German person who resides in the UK will have to pay UK VAT on any electronic service that they consume in the UK. There are a whole host of other rules if that person goes on holiday in the EU.
EDIT: If some of the evidence above 'conflicts' with the other, e.g. UK fixed landline but a German credit card billing address, then more evidence will be required until the merchant is satisfied as to the customer's precise location.
Dropbox should be charging VAT in the EU. There is an 2003 EU law that states companies selling "e-services" into the EU must charge the VAT rate of the country of the EU customer.
Dropbox stating the following doesn't remove them from paying EU VAT.
https://www.dropbox.com/help/971
Usually a little more, so those Macbooks are actually about 10% more expensive than in the US once you account for VAT, but it's not unusual for the exchange rate to vary by up to 10% in any given 12 month period.
Most goods are typically more expensive in Europe than in the US for all kinds of structural reasons. Transport costs are higher, labor costs are higher, power and real estate costs are higher. It just costs more to do business over here. The first time I went to the states I was shocked at how cheap _everything_ seemed to be.
> They fix the price, it accounts for VAT and sometimes a little more, sometimes a little less.
Never seen less, always seen more. Significantly more. Take the top-of-the-line MBP without options, 2500€ is $3286, the german VAT is 19%. So a VAT-including US price would be $2975. There's a 10% ($311) surcharge for living in Germany.
All companies of a reasonable size deal with fluctuating exchange rates by hedging on the currency futures market. It's what those markets are for, and it works very well.
I call it the "Apple pricing",where 1$ == 1€ .Why do businesses do that ? I'm pretty sure they'd ajust their pricing if 1€<1$.
I get that one needs to adjust with local regulations,the cost doing business,localisation,... but still 1$ != 1€. (a few years ago, 1€ ~= 1.50$ , so much that people just flew to USA to buy expensive Apple gear,and it was still cheaper than paying the € price).
With Apple's market it seems inconsistent. There are some iPhone apps that are $0.99/€0.99/£0.99 or $9.99/€9.99/£9.99, but also many that are $0.99/€0.89/£0.69 or $9.99/€8.99/£6.99. Not an exact conversion, but not just swapping out the signs either. I think the app author gets to choose which of those two pricing schemes they want.
I was going to sign up for this on Friday, but it makes you buy a minimum of 5 licenses, so the lowest monthly payment is $75. I thought that was pretty lame so I started looking for something else. I tried ownCloud but it was not very happy with my PHP configuration so I quit that and ended up using Synology's Cloud Station and port-forwarding it. Costs $0 extra to me since I already have a Synology NAS, local storage, easy configuration that doesn't interfere with any existing services, and clients for mobile, Mac, and Linux (GUI only unfortunately).
All of that would've been avoided if I could've just paid Dropbox $30/mo, but I guess I'm glad they priced themselves out by trying to force me to pay for 3 users that I'm not going to have for a long time.
Not unique to Dropbox but most software. This is why I have various Apple IDs. I purchase most, if not all, of the apps via the US iTunes store with my US Apple ID, given that many devs stills use $4.99 = €4.99.
I only use a non-US Apple ID to download region specific apps: banking, local TV apps, etc.
Or it could just be a standard pricing trick where you let the customer think they're getting a great deal by "working the system" when it's actually what you intended them to do all along.
Dan Ariely has some good examples of this in his talks/books.
That's a possibility, but it has to be weighed against the ill-will you generate among the customers who realize that they are given/have been paying a higher price.
This article is a perfect example. It certainly doesn't boost my opinion of dropbox.
Very true. In this case I imagine it's just a VAT issue, it's usually included in the price by default in the EU.
But whenever someone points out weird pricing and gets excited about a "great deal!", I usually have to check and think - is it really weird? Or is this entirely what is meant to happen?
It is not a VAT issue. Not only is VAT about the half of the price difference, but in addition, not everyone has to pay VAT. If you are private end-user, sure, you have to. But if you are a company, even if a small one (like startup, for example), you are surely registered VAT payer and you can get it back. But the price doesn't say whether it includes VAT or not. If you are purchasing outside of EEA, it usually does not.
I remember when Steam did this back in the day (not sure if it still happens today) and it was a total shame. Lots of people using proxies to get US pricing on the other side of the pond. Now, I don't really know how the whole taxing thing moves about, but, are foreign customers forced to pay taxes for these kinds of products since they're considered 'imported'? Or maybe, do companies feel they should get more money to keep operating abroad? I'm just trying to look for possible explanations, but we all know this is just a cheeky, greedy play from these companies.
The thing i love about Dropbox is that the more i use it the more extra space and "gigas"...they give me. As an early and heavy user (i've invited 20 friends or more so far) they want me happy and i can feel it. that's what i love. They are not charging me for anything,and they won't try it. they know what type of user i am (a happy user that invites all of its friends) so they treat me like the user i am. I am sure my extra space is billed on any friend i've invited to the platform..
"... for $99/year (or $9,99/month), which is a pretty good deal (Google Drive 1TB also costs $9,99/year). "
Should it say "/month" on Google Drive as well? Because otherwise, if those prices are correct then Google Drive is a lot cheaper, but the article implies that it has the same price.
It’s funny this is mentioned because just today I found out that the conversion rates at Asos.com from pound to euro are off by 12%. They calculate the conversion dividing by 0.70 instead of 0.79. So basically everyone buying products with prices based in euro is been ripped-off.
But there are no official exchange rates are there? So how can they be wrong? You must mean they're not as favourable as that which other companies are offering. In which case it's not a 'rip-off', it's just as good as deal as you might like it to be.
America doesn't have a VAT. Internet services seldom have any tax requirement at all. Laws vary, but the onus is on the customer to pay local and state taxes. There is federal sales tax at all.
My buddy that sold books online had to calculate our own state's sales tax (by county and city! yuck) because he has to report here. But if you were out of state he didn't charge the sales tax. Its a broken system, very weird.
Individual states can't tax interstate commerce, that's the job of the feds. Actually, they can if they have a presence in both states - they can only tax a business that has a physical presence in that state. It isn't broken, it is part of the [inferred] Constitution. The idea is to not place burdens on interstate commerce. Without it the states would be free to give their state preference in commerce - to tax commerce interstate at a high rate so nobody wants to engage in interstate commerce.
"The central rationale for the rule against discrimination is to prohibit state or municipal laws whose object is local economic protectionism, laws that would excite those jealousies and retaliatory measures the Constitution was designed to prevent"
Sure that part is right. Its the part where he had to spend Saturday calculating tax rates for every in-state purchase depending on address. That's broken; it's part of why he gave up the business.
I was under the impression it's a legal requirement to show the inc VAT price. (And, show it as the most-prominent price -- no trickery like showing exc VAT bold, and inc VAT in fine print.)
I thought that too and here in Germany I'm very certain that's the case if you are selling to individuals. However when looking at the sales pages of JetBrains[1] (a czech company) they do not include VAT even for the individual developers version (which is explicitly not available to companies) so it might be that only national law applies (EU is difficult ;) )
You can count on the iOS in-app purchase to include VAT. There is no way to bypass that without violating the apple ToS since you'd effectively be charging a different value than you're saying.
Europe tax is real with every product. Like I was going to buy Lenovo laptop for work, but as soon as I said that I was from EU the price almost doubled.
GOG.com sells all their games in north american prices because it only has offices in north america. You are buying a product from north america when you buy from them. Dropbox, Steam, Nintendo, Sony all have offices in Europe. So you aren't buying a foreign product and you do not account for a currency conversion as there isn't one.
Taxes are an important consideration. For example if you buy a $500 cell phone from north america and have it shipped to Europe. You will pay less for the phone but when it crosses the border you pay considerable taxes such that the "deal" is no longer worth it.
If import taxes were applied to physical as well as digital goods, as they probably should be, you would actively want to buy from a European company within Europe. You currently do for most goods, because it actually saves you money.
It's the lag on charging tax for imported digital goods. Otherwise you are earning Euros you are spending Euros, there is no currency conversion.