Thousands of shoppers swapped London for EU since ‘tourist tax’

Brussels: Thousands of tourists who used to come to Britain for tax-free shopping are now visiting stores in Paris, Milan and Madrid after the UK scrapped the incentive in the wake of Brexit.

New analysis shows that 162,000 tourists from outside the European Union sought refunds on VAT – a sales tax – exclusively in Britain in 2019. One-fifth of those tourists are now claiming rebates in other parts of the EU, where the tax break still applies.

The UK ended the tax incentive in 2021 and has resisted strong lobbying from retailers and other companies linked to the tourism sector.

The 34,000 tourists who have shifted their tax-free shopping from Britain have also ramped up their spending from an average of 2,900 euros (S$4,224) per person in 2019 to 3,800 euros in 2023, according to Global Blue, a Switzerland-based tax rebate provider that tracks passport numbers.

France and Italy are benefiting the most, attracting more than two-thirds of these travellers, with Spain’s retail sector also getting a boost.

“The continued absence of a tax-free scheme is certainly impacting international sales at Selfridges,” said Andrew Keith, chief executive officer of the chain of upmarket UK department stores.