Sony Reader on pre-order at the Fnac (France) ; ebooks coming soon too !

[zelda_pinwheel]

Originally Posted by DaleDe

And you would have to add tax to the US price. They amount varies depending on the state but would likely eat up the $7 and then some.

Dale

is the 299$ before VAT then ? how much is VAT in the US ?

[Nate the great]

Originally Posted by zelda_pinwheel

is the 299$ before VAT then ? how much is VAT in the US ?

The USA doesn't have a VAT. We have a local sales tax. In my area it is around 5% or 6%.

BTW, a VAT of 20% is equal to a sales tax of 25%.

[HarryT]

There is no VAT in the US, Zelda. Most states have a sales tax, but it's much lower than European rates of VAT - less than 5% in most states. Prices in the US (even the prices marked in stores!) always exclude tax. Also, if you buy an item "mail order", you don't pay the sales tax if the store you're buying from doesn't have a "physical" store in your state. In that circumstance, you are supposed to repay the "owed" tax in the form of what's called "use tax", but it appears to be socially acceptable to evade the payment of this tax.

[HarryT]

Originally Posted by Nate the great

BTW, a VAT of 20% is equal to a sales tax of 25%.

I beg your pardon? How do you reckon that?

[zelda_pinwheel]

Originally Posted by Nate the great

The USA doesn't have a VAT. We have a local sales tax. In my area it is around 5% or 6%.

BTW, a VAT of 20% is equal to a sales tax of 25%.

i don't understand the last sentence.

and if your sales tax is only around 5% or 6%, then even if the 299$ price is before tax and our 299€ is including VAT, there is still a HUGE difference in price which seems to me pretty abusive ("common practice" doesn't seem too convincing as a justification to me, sorry Sony / la Fnac).

[HarryT]

The price difference is €38, at today's exchange rate. Is that "huge"? I guess that's a matter of personal opinion. There are many items with much larger price difference than that - not that that's an excuse.

Your cheapest option really is to buy one from the UK or Ireland.

[HarryT]

Sorry, but I don't understand you.

VAT is always added to the price of an item to get the price that it's sold for - you never "subtract" it unless you want to reclaim the VAT (eg if you're a tourist). VAT is just like sales tax as far as the customer is concerned (although it works differently from the point of view of a business).

If the VAT rate is 25% and an item costs €200, including VAT, then the price of that item without tax is €160. The VAT is 25% of €160, or €40.

[Nate the great]

The standard way to implement a VAT is to say a business owes some percentage on the price of the product minus all taxes previously paid on the good. If VAT rates were 10%, an orange juice maker would pay 10% of the $5 per gallon price ($0.50) minus taxes previously paid by the orange farmer (maybe $0.20). In this example, the orange juice maker would have a $0.30 tax liability. Each business has a strong incentive for its suppliers to pay their taxes, allowing VAT rates to be higher with less tax evasion than a retail sales tax.

from:
http://en.wikipedia.org/wiki/Value_added_tax

[HarryT]

I see your error. You're thinking that the VAT is calculated on the "tax-inclusive" price. It isn't - although the price is always quoted including tax, VAT is always calculated on the price excluding tax, just like sales tax is. The only difference is that we quote prices including tax, and you quote them excluding them. The tax is calculated the same way in both cases, despite that.

[HarryT]

Originally Posted by Nate the great

The standard way to implement a VAT is to say a business owes some percentage on the price of the product minus all taxes previously paid on the good. If VAT rates were 10%, an orange juice maker would pay 10% of the $5 per gallon price ($0.50) minus taxes previously paid by the orange farmer (maybe $0.20). In this example, the orange juice maker would have a $0.30 tax liability. Each business has a strong incentive for its suppliers to pay their taxes, allowing VAT rates to be higher with less tax evasion than a retail sales tax.

from:
http://en.wikipedia.org/wiki/Value_added_tax

That's correct. VAT is only paid on the value that you "add" to the product - hence the name.

If you buy widgets wholesale at $10 and sell them retail for $15, you (the seller) only pay VAT on the $5 between the buying and selling price.

The way it works in practice is that, right the way up the "chain" from the manufacturer to the retailer, each person pays to the government the VAT that they charge to the person they've sold the item to, and reclaims from the government the VAT on the money they've paid to their supplier. The net result is that everyone pays VAT on the difference between their purchase and selling price for an item.

It's a lot easier in reality than that probably makes it sound .

[tompe]

Originally Posted by HarryT

I see your error. You're thinking that the VAT is calculated on the "tax-inclusive" price. It isn't - although the price is always quoted including tax, VAT is always calculated on the price excluding tax, just like sales tax is.

Actually, special taxes like petrol tax are added first.

In Sweden from a consumers point of view we say that the VAT is 20% and that is the VAT part of the price including VAT. From the sellers point of view or from a companies poit of view the VAT is 25% which is what he adds to the price without VAT. A consumer never have to add the VAT since it is always included in the price.

[HarryT]

Originally Posted by tompe

In Sweden from a consumers point of view we say that the VAT is 20% and that is the VAT part of the price including VAT. From the sellers point of view or from a companies poit of view the VAT is 25% which is what he adds to the price without VAT. A consumer never have to add the VAT since it is always included in the price.

How interesting - we don't look at it that way; we regard our VAT rate as being 17.5% from the viewpoint of both the consumer and the business.

As long as you do the maths right, it all works out the same, of course.

[igorsk]

Another thing influencing the price is warranty - in EU all consumer has a two-year warranty, while in US Sony offers one-year limited warranty.
http://www.wak-tt.com/tt/2yearwarranty1.htm
BTW, here's a passage which should be interesting to all EU buyers of Cybook with broken screens.

If a defect appears during the first six months following purchase the consumer will not have to prove the product was defective at the moment of delivery. The onus will be on the seller to prove the product was without defect. A consumer will have up to two months following the discovery of the fault to inform the seller.

[Jellby]

The thing with taxes is that you don't actually add or subtract them, you have to multiply or divide:

160 (price without tax) x 1.25 (25% tax) = 200 (price with tax)
and of course:
200 / 1.25 = 160

[tompe]

Originally Posted by HarryT

How interesting - we don't look at it that way; we regard our VAT rate as being 17.5% from the viewpoint of both the consumer and the business.

As long as you do the maths right, it all works out the same, of course.

In formal setting we do it the same way as you to avoid confusion but informally the concept the percentage of the actual price that is VAT exists in peoples mind. And the actual price for consumers always includes VAT. I think there is a law about this. So web sellers selling to companies display the price without VAT and sellers selling to consumers must display the price including VAT.