The UK is leaving the European Union for good at midnight on December 31, 2020. Which means tons of new rules affecting all aspects of life and business… and tax-free shopping has not been spared. Whether you are a UK resident traveling to the EU or a foreign visitor traveling to the UK, these changes will affect you.
The dawn of a new tax-free shopping era for UK residents traveling to the EU
Brexit will mean a nice windfall for UK residents visiting EU countries and bringing back goods to the UK. Indeed, starting January 1st, 2021, 68 million UK residents will be eligible for tax-free shopping in all EU countries. And that is GREAT news.
Only one short tunnel trip away from London, Paris is definitely a top-notch shopping destination for UK residents. And if shuttling back and forth between the two capitals might involve a bit more administrative hassle than before (although… remember, the UK was NOT part of Schengen before Brexit), the money saved thanks to tax-free shopping in France will cheer travellers up.
At international airports such as CDG and Orly, tax-free shopping has been a well-oiled machine since decades. But the process of validating tax-free forms will be brand new for the Paris North Train Station (also called Gare du Nord, where the Eurostar leaves for London) and for the Calais Ferry Port (where the Calais-Dover ferry line departs from France to the UK). For now, even if French Customs officers are already present at these exit points, they do not yet validate tax-free forms issued in France or in other EU countries (they will as of 1/1/2021!). But we sure do know that PABLO kiosks, the self-serving booths allowing travellers to electronically validate their tax-free form without queuing, have already been set up and are eagerly waiting for their first users !
The end of tax-free shopping in the UK?
In early September, the UK Treasury announced that, alongside leaving the EU, the existing tax-free shopping scheme would be withdrawn as of January 1st, 2020. This decision may still be reversed however, as the whole tax-free shopping industry (high-end retailers, tax-refund operators, airports…) is deeply opposed to it, saying that it will have a tremendous negative impact on their business.
The UK government on its side claims that tax-free shopping does not benefit the whole of the UK, as it is largely concentrated in and around London, and that it should be scrapped altogether.
Revoking tax-free shopping could cost the UK billions of pounds by disincentivizing tourists from coming to the UK, thereby hitting the tourism, retail, luxury and leisure industries hard at a time when the whole sector is already struggling with the impact of Covid-19.
While it seems that tax-free shopping “on site” will likely disappear, the Treasury also said that “overseas visitors will still be able to buy items VAT-free in store and have them sent directly to their overseas addresses”. A cold comfort for tourists and stores though.
A big change in duty-free shopping too
To prevent fraud, the UK government also decided to change the rules for duty-free shopping. From January 1st, 2021 many goods categories will be removed from duty-free sales at airports, Eurostar stations and ports, including clothing, fragrances and electronics. Only alcohol and tobacco will remain eligible.
The government justifies this decision by the fact that “in some instances these tax-free goods are brought back into the country by UK residents, putting high street retailers at a disadvantage”.
For sure, Brexit comes with its share of unanswered questions, but what ZappTax can guarantee you is that we will refund your VAT for all your purchases made in the UK before December 31st at midnight. And if you happened to be a resident of the UK, we will be there on January 1st to process your refunds for your purchases in France, Belgium and Spain!
Stay tuned for more news on the impact of Brexit on tax-free shopping!