The Leica 30% offer really detriments non-EU persons

[michael friedberg]

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I’ve been a supporter of Leica throughout the M8 debacle, including on the value of the 30% off a lens deal. I expected it to be a fair deal and applauded Leica for its generosity.

 

But reading the text of Mark Norton’s letter, posted earlier in separate string, the math doesn’t add up. The problem is one sentence at the end, in the fine print:

 

“In the event of a delivery to a non-EU country the given prices include the respective import turnover tax”.

 

In other words, the net price is the same for a EU person including VAT and a non-EU person without VAT, apparently on the theory that the “respective import turnover tax” equals VAT.

 

I can tell you, that at least in the U.S. there is no “import turnover tax”. There are customs duties on imports, but if I read correctly the U.S. Harmonized Tariff Schedule of the United States, camera lenses are classified as item 9002.11.95 and assessed a duty of 2.3%. Even with a custom’s broker’s fee, it’s nowhere close to the 19% applicable in January 2007 to German VAT.

 

To put the matter simply, in order to create uniform pricing, Leica snuck in a bogus charge that decreases hugely the value of the discount to a U.S. purchaser. I do not know the import duties elsewhere, but I suspect few if any equal to the German 19% VAT.

 

The net result is a small savings, if any, to a U.S. purchaser. Here’s what I compute on a Summicron 75/2 lens shipped to the U.S.:

 

Leica 30% off-price ------------------------------------------------2213.64 USD

US discounter (“gray”) price------------------------------------ 2307.07 USD +shipping

UK discounter price, less UK VAT---------------------------2421.44 USD

German retailer price, less 2006 16% VAT---------------2746.66 USD

 

These figures are probably low since I used an exchange rate of 1 Euro = 1.32 USD and 1 GBP = 1.96 USD, and assumed no bank charges (except a 2% premium requested by the German retailer). In addition the UK and German (non-Leica direct) prices do not include US import duty.

 

I appreciate the desire for uniform pricing, but at the same time claiming a 30% discount and having a fictitious 19% charge for a “respective turnover tax” that doesn’t exist is to say the least questionable. I don't want to call it deceptive, but perhaps Leica will clarify their pricing or reconsider matters.

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[robsteve]

Michael:

 

I think it is just another lost in translation. They are probably saying the applicable import/sales tax will be charged. In the case of the USA and Canada, we will probably get our own price list in due course.

 

In the case of Canada, there is a 14% Vat in some Provinces, plus what ever duty may be charged.

 

It would be nice to know these North American prices prior to December 31st for the fence sitters to decide whether to buy now and get the discount. I doubt we will see an North American prices as Leica NJ is on Vacation until January 2,2007.

[michael friedberg]

I think it is just another lost in translation. They are probably saying the applicable import/sales tax will be charged. In the case of the USA and Canada, we will probably get our own price list in due course.

 

It'd be great if you're right. I'm not a cynic, but I suspect you're wrong since (a) except possibly for shipments to New Jersey there shouldn't be any State sales tax in the U.S., and even that might not apply for a shipment from Germany depending on Leica's coporate structure, and ( the letter also already states "...all additional costs for possible import customs duty will be borne by Leica Camera AG".

 

In other words, there should be no "import/sales" tax other than what's included in the quoted prices. So there's no reason for a separate list for any country. In fact, the form already references U.S. orders on page 3 and also Japanese orders on that page.

 

Ouch,

Michael

[robsteve]

Michael:

 

I think I am suggesting the letter is for countries other than the USA and Canada. I would bet the taxes in non EU countries would be similar to the EU VAT. For example, what is the VAT in Australia?

 

Don't forget Leica NJ is a "Company shop", owned by Leica AG. They would just deal with this through their inventory in NJ.

[robsteve]

I could be wrong and if the listed price is tax included, it is no deal for the USA, probably still a good deal for Canada as our VAT is 14% plus what ever duty there is on a German lens.

[cbretteville]

We do better than %19: Norway has a VAT/Sales tax of 25% () added to the bottom line on the invoice after a curreny conversion has been applied. If there are shipping charges listed on the invoice/customs papers that is included in the basis for the tax too. And there will be a handelling fee added as well: anywhere from $13-$40 depending on the shipper used and the value ammount. We want the value on the forms as low as we can...

 

- C

[marknorton]

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If I were you, I'd wait until you receive the actual letter from which you can order. We've seen German and English versions of the EU offering and I expect there will be an equivalent one for US based buyers. You should base your judgment on those prices.

[stephengilbert]

I'm in California and got a letter today. The prices are not very attractive. For example, both Tri-Elmars (without viewfinder) are 2,170 Euros, the Noctilux is 3,495, and the 75mm Summilux is 2,307. At the current exchange rate, you can buy a US Noctilux for less, and grey market lenses for quite a bit less.

[michael friedberg]

If I were you, I'd wait until you receive the actual letter from which you can order. We've seen German and English versions of the EU offering and I expect there will be an equivalent one for US based buyers. You should base your judgment on those prices.

I'm in California and got a letter today. The prices are not very attractive. For example, both Tri-Elmars (without viewfinder) are 2,170 Euros, the Noctilux is 3,495, and the 75mm Summilux is 2,307. At the current exchange rate, you can buy a US Noctilux for less, and grey market lenses for quite a bit less.

 

I think Mark's suggestion has been answered by Stephen's post. The prices are the same, U.S. or U.K. recipient, as I suspected. The letter clearly references sales in various countries, including the U.S., so it was obviously written in the first instance to apply uniformly despite two different languages.

 

And regrettably my concerns appear justified, although frankly I'm not sure why recipients in any country (including the U.S.) should get a better deal. But "padding" the pricing despite no VAT, and making the 30% discount actually less due to ghost charges, seems like a strange way to go about it.

[chrism]

Duty on items imported into Canada is scandalous, and with about 15% tax on top (varying from province to province) it sounds like these prices will easily exceed Harry's Pro Shop prices. I think I'll support them rather than use this.

 

Chris

[Guest stnami]

I am sure they are more than aware of the grey market prices......Australia is 10% GST plus other duty handling charges

[jaapv]

From the official Leica letter: "The cost of shipping to your adress and all possible costs of import duties will be borne by Leica AG."

 

Clear as a bell, I would say.

[canlogic]

Perhaps us in the US and Canada should wait until we get the official letter for our market. My dealer said he figured we should save about 15% over normal selling prices.

[tbarker13]

Orlando, Florida reporting here.

Just got my official letter from Leica. I received the same price list - it is in Euros.

I was looking at the new 28 elmarit.

 

According to the price list, the lens would cost me 945 eruos, or $1,239, according to a currency converter.

B&H Photo sells the same lens right now for $1,495.

That means this discount is worth about $250 to me -- not including the fees that my credit card company is likely to charge for the currency conversion.

[bsmith]

Orlando, Florida reporting here.

Just got my official letter from Leica. I received the same price list - it is in Euros.

I was looking at the new 28 elmarit.

 

According to the price list, the lens would cost me 945 eruos, or $1,239, according to a currency converter.

B&H Photo sells the same lens right now for $1,495.

That means this discount is worth about $250 to me -- not including the fees that my credit card company is likely to charge for the currency conversion.

 

so, in other words about $200 less than "full list" or more money than you can buy a "grey"market new lens for today. Great Deal !!! ..................for Leica

 

35 f1.4 w/ 30% discount $2882 next year, or street price, today, grey market $2827

 

I can't wait for the opportunity to pay more!

[marknorton]

I think Mark's suggestion has been answered by Stephen's post. The prices are the same, U.S. or U.K. recipient, as I suspected.

 

Michael, does look like I was wrong.

 

Looks then like they've applied the 30% discount to German tax-inclusive prices and included shipping free of charge which covers the EU. For countries outside the EU, the 19% VAT element built into those prices is not payable and provides them with a "budget" to pay for additional shipping, handling, import and sales taxes and so implement a scheme of "the price you see is the price you pay", no hidden charges.

 

People living in a high tax country will likely benefit at the expense of people living in a lower tax country. I can't imagine people living in Hong Kong will be jumping for joy at this offer.

[marknorton]

One other thought is that I think this scheme will work out pretty well for people living in countries where Sales Tax/GST/VAT is levied on imported goods. When I buy from HK for example, I have to pay both import duty and VAT on the import but I understand that people in the US may not have to pay anything other than a Fedex handling charge or equivalent.

 

Paradoxically, because people in the US can routinely avoid even paying sales tax by buying mail order and because sales tax in the US is less than VAT/GST typically elsewhere, the Leica lens offer is less attractive because less of that 19% VAT "budget" is being spent getting the lens to you.

[waterlenz]

They need to figure out the cost without any tax at all. In the US it is the end buyer who pays the duty, not the seller. Also, the shipping cost will vary, it would be best to charge the actual amount, and provide documention of these costs. Leica wants the original M8 receipt, the customers should get the same in return.

T

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[marknorton]

Tom, I expect Leica will be looking to simplify the logistics of supplying lenses to a wide variety of shipping destinations and tax regimes. One of the things you can do with companies like DHL is get them to clear the item through customs, pay all taxes and charges due and charge back to the shipper. The customer gets the lens for the price they expect, Leica get an invoice which varies by customer destination for the cost of getting the lens to the customer.

 

I'm looking at a DHL Airway Bill right now and there's a check box: "Destination duties/taxes: Payable by Shipper".

[ho_co]

Mark--you speculated in another thread that the high price of the Noctilux might be error, might be price increase. I know there is a US price increase on 1 January, so unfortunately the 3495 euros may be right.

 

Also, but not to Mark--as some have noted here, unless I'm grievously in error, the US does still charge customs duty on cameras and lenses.

 

But gee, for us USAnians that 30% evaporated in a hurry, didn't it? Still, there's enough savings to buy an IR-Cut filter, no?

 

--HC