Why are Lego products so expensive in Europe? Comparing a few Lego products at the official online store, I found U.S. prices seem to be consistently around 70% of those in Europe given current currency exchange rates. That's a surprising difference. Given that U.S. import tariffs apply to products manufactured in Europe (such as Lego), one would expect the price difference to be the other way around.

Edit: Found a relevant quote in a book written by Alex Stewart:


  America is by far the cheapest country in the world for buying Lego;
  believe it or not sets are much more expensive in other countries.


What is the primary reason for this price differentiation? Better competition in the U.S.? Lower taxes? More wealthy Lego fans in Europe?
To answer this question, we must first check the accuracy of your observation that "U.S. prices seem to be consistently around 70% of those in Europe given current currency exchange rates."

Using data provided by Brickset, which pulls data from the online listings at shop.lego.com, we can compare the prices of sets released in 2014 that are listed with prices in both USD and EUR.

I downloaded this data and used a spreadsheet to analyze the prices. Using the 2013 average USD to EUR exchange rate of 1.3282465 I converted retail prices from EUR to USD. On average, the retail prices on the US site are 77.06% of the retail prices on the sites where prices are listed in EUR.

So your observation is close to the apparent actual difference in listed prices, although it is closer to 80% than 70% on average. 

The member states of the EU each set a value-added tax (VAT) on items sold in those countries. This rate currently varies from 15% (Luxembourg) up to 27% (Hungary). LEGO includes the VAT in the listed price in countries where it is collected. This means the listed retail price is higher than the actual base price of the set. If you assume a VAT rate of 25% and adjust the list prices accordingly, then comparing the USD prices to the EUR prices shows that US list prices are actually about 96% of EUR prices. This is an average - many sets sell at a similar or lower actual base price in Europe than in the US (when expressed in USD).

For example Set 60045 Police Patrol sells for $44.99 USD in the US. It sells for 39.99 EUR in Germany. The VAT in Germany is 19% and today's exchange rate is 1.3398. To get the base price of the set in EUR, divide the list price by 1.19. That gives us a base price of 33.60 EUR. Multiply that by the current exchange rate and the USD price you would pay in Germany for this set is $45.02 - just three cents more.

Here is the data I use in a spreadsheet format, sorted by their prices in USD. The calculated columns on the right show the EUR prices converted to USD and the bases of EUR list prices assuming 25% VAT.