Maccast 2010.05.19 – The International iPad

Written by: Adam Christianson

Categories: Podcast

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A podcast about all things Macintosh. For Mac geeks, by Mac geeks. A special episode of the Maccast. I grab international Mac Geeks Paul Shadwell and Pat Mahon, who I met at last years Macworld Expo, and we chat about their thoughts on the iPad’s pending release outside the US borders.

@paulshadwell (Twitter)
@patmahon (Twitter)

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  1. Christian | May 22 2010 - 05:13

    Thank you for this episode! Being a long-time European listener from Germany, it was a pleasure listening to your talk with Pat Mahon and Paul Shadwell. And I have to applaud you: all of you did a very good job pointing out the situation in Europe.

    I want to chime in with only a few corrections or different opinions.

    Concerning taxes, customs and stuff like that: I am a tax accountant and I deal with importing and exporting on behalf of my clients. The first thing you need to understand is that the U.S. have a very different system of taxation in comparison to the EU. Among the EU countries, there are also some differences. In the U.S. you don’t have VAT. But at the same time you have something like a sales tax in some regions of the U.S. Basically the sales tax is quite similar to the VAT. There is only one difference: if you sell something in Europe, you HAVE to advertise the product with the price including VAT. This is being meant as a means of protection for the customer. The customer should know, how much the product will cost, when he takes it home out of the store. This fact leads to many misconceptions when comparing prices. Because the prices over here are including taxes, the prices in the U.S. are excluding potential taxes.

    The European VAT is quite high. But… in Germany – for example – we have only one income tax. In the U.S., you have the federal income tax, you might have a state income tax and you may even have a city income tax. If you compare the tax levels of all nations on our planet, you will get to an average of 49.3%. Germany has a total tax rate of 50.5%. This is everything combined. In comparison: the U.S. have a total tax rate of 42.3% – and those 42.3% is an average for the U.S. (keep in mind those different taxation rules within the U.S. states and cities!). If you want more boring numbers:$File/Paying_Taxes_2009.pdf ;) So, this relatively high VAT is being balanced out in some form. Eventually, the VAT in the EU will be the same all over Europe. The countries are working on that, but it will take time. Now you could say that Apple has to deal with the significantly higher VAT while dealing with the high “income tax” in the U.S. Well, no! ;) This is the reason why Apple has branches in many countries, like everybody else. If I buy a Mac online, I buy it from Apple Sales International. It is a company that is located in the lovely Republic of Ireland, which is part of the European Union. There are no commercial borders between most of the countries of the European Union. When I buy music in iTunes, it is being sold to me by iTunes S.A.R.L. located in the lovely tiny country of Luxembourg. With means like that, international companies “benefit” from local tax laws. Once again: even with those high VAT numbers, the total tax rate is not significantly higher in comparison to the U.S. With all this number crunching it comes down to the point that the taxation systems are quite complex. In almost every country this is the case.

    And be careful with customs! It is a crime to smuggle a laptop and customs officers are not stupid (my German experience). If you visit New York and if you come back with a shiny new Apple product, you might end up paying some money (or some more if you tried to fool the authorities). And how do you intend to explain the customs officer the English keyboard layout (being a German) and the date of purchase that can be easily checked at I am just saying… ;) But even if you pay some money for your legal import, it might eventually still be a good deal (if there is a weak Dollar and a strong Euro). Nobody rips you off. Basically, Paul did mention the system, when he was talking about buying a Mac in Germany and bringing it into Switzerland. Well, it is the same with buying a Mac in the U.S. and importing it into Europe.

    Ok, changing the topic. Apple’s pricing scheme in Europe is fair. But I still have to say that they are definitely not giving anything away. What I want to say with this is that they tend not to make use of lower exchange rates. I might be wrong, but this is my impression. If a Apple product is being priced at 999 USD, eventually it will be priced at 999 Euro. Hopefully, they will stick to this pattern, when the Euro might lose value like it is happening right now. ;)

    Apple in Germany. This is a very interesting topic. Actually, I don’t get it. We have 82 million inhabitants. We have… Well, 3 Apple Stores… ;) There is no Apple Store infrastructure in place. Apple entered Germany with the iPod. Yes, there was always a tiny little group of Apple users in Germany, but it was a very tiny group. With the iPod, things began to change. Apple started showing up on the main stage. Only recently, Macs started to show up in chains that can be compared with Best Buy in the U.S. There are almost no TV advertisements (Apple that is) in Germany. This is beginning to change right now, too. I think, there is a huge, a very huge potential for Apple to enter this market. I don’t get it, what took them so long doing that. Legal issues? Laws? I don’t think so. There is no anti Apple law! ;) And all the other companies are here, too. It seems as if Apple is dipping their toes into the German market. Very slowly, Apple Stores begin to open in Germany. I think there is much money lying on the streets that could be picked up by Apple.

    I could go on and on and on. But I will stop here! :)

    Again, thank you for the show. I appreciate it a lot!

    P.S. My iPad 32 GB 3G will arrive on Friday (at least I hope so)! Yay! :)