Tax free shopping means that if you buy goods in an EU country, and bring them back to the UK, you can have the VAT you paid refunded.
When it comes to more expensive items such as designer clothing and high tech gadgets, this can result in some serious VAT savings. This is however, different to the duty-free shopping you might pick up at the airport, as these items are free of excise duty, as opposed to VAT.
The question is which countries and products have the best tax free shopping savings?
If you’re planning a European spending spree in the near future, be sure to compare credit cards before you go!
1. Croatia
Standard VAT rate: 25%
Average VAT refund saving: 17.12%
The country with the greatest tax free shopping savings is Croatia, at 17.12%. The country has one of the highest VAT rates on the continent, which lets you claim a significant portion of your purchase back when you return to the UK and complete your airport tax refund.
The highest savings come from the most expensive items analysed. A TAG Heuer watch and a Cartier Love bracelet allow you to claim the maximum refund of 17.9%, equivalent to over £3,000 and £1,000 respectively.
2. Hungary
Standard VAT rate: 27%
Average VAT refund saving: 16.80%
The nation with the second-highest average VAT refund amount is Hungary, at 16.8%. However, it also has one of the highest minimum spending requirements, as you’ll have to spend 54,001 HUF (around £120) to qualify for a refund. This means that some goods analysed in the research weren’t eligible for a VAT refund.
As with Croatia, you’ll save the most when buying high ticket items like a luxury watch or bracelet. These items, along with a Burberry suit, all qualify for a 19% refund.
3. Sweden
Standard VAT rate: 25%
Average VAT refund saving: 15.22%
Completing the top three is Sweden, with a standard VAT rate of 25%, and an average refund saving of 15.22%.
As well as allowing you to make huge VAT savings (around £3,750) on a TAG Heuer watch, it also has some of the lowest spending requirements. Here you’re able to claim back on purchases as low as 200 SEK (around £16).
The worst countries for tax free shopping
1. Luxembourg
Standard VAT rate: 17%
Average VAT refund saving: 10.44%
Luxembourg is known as a tax haven, which is great for those living there, but when it comes to tax free shopping, it doesn’t offer shoppers that much of an advantage.
With a standard VAT rate of 17%, the average amount you can claim back is 10.44%, which, as an example, equates to a saving of around €109 on a €1,122 new iPhone.
2. Cyprus
Standard VAT rate: 19%
Average VAT refund saving: 11.64%
Cyprus is a popular destination for British travellers, but if you’re looking to do some tax free shopping, you may be better waiting for a different trip, as the average saving here is just 11.64%.
As is the case elsewhere, the cheapest items offer the lowest VAT savings, with a pair of classic Ray-Ban Wayfarers earning you a refund of just 10.34%.
3. Germany
Standard VAT rate: 19%
Average VAT refund saving: 11.97%
Like Cyprus, Germany also has a standard VAT rate of 19%, amongst the lowest on the continent, but has a slightly higher average VAT refund saving, at 11.97%.
Germany is one of the most popular countries for tourists in Europe. Another extremely popular destination, France, is not too far behind, with an average saving of 12%.
1. TAG Heuer Carrera
Average saving: 15.49%
Of course, the items where you stand to make the greatest VAT savings are those with the highest price tags, as these will have higher discount rates.
This means that amongst the very best products to claim tax back on are luxury watches, such as the TAG Heuer Carrera, which currently retails for £18,250 in the UK and you can save around 15.5% across the continent.
2. Cartier Love Bracelet
Average saving: 14.98%
Expensive jewellery is another high ticket item that affords great VAT savings, with the Cartier Love Bracelet being a great example.
These bracelets generally cost over £5,000, but the average amount that you could save by shopping in the EU and claiming back is just under 15%.
3. Chanel Classic Handbag
Average saving: 14.84%
Not far behind high-end jewellery, if you want to buy an expensive designer handbag, you can expect to save around 15% when claiming back your VAT refund.
A Chanel Classic Handbag is worth around £6,500, meaning that you could potentially be saving hundreds of pounds.
The cheapest countries for duty-free shopping
Another way that you can save money when travelling is at duty-free, with most major international airports almost resembling shopping centres these days.
Duty-free shops allow you to buy goods without paying local taxes. But just how good of a deal do you get, and which countries are the best?
The cheapest country for chocolate
Spain & Malta (average price £7.12)
Toblerone: £7.99
Ferrero Rocher: £9.21
Milka Alpine Milk Tablet: £4.16
Looking at the cost of three common sugary duty-free purchases, it’s Spain and Malta that come out as the cheapest. Both countries charge the same price for all three products.
A bar of Toberlone is a classic item to buy as a duty-free gift, and at airports in these countries you can pick one up for just £7.99. On the other hand, some airports from long distance destinations in Africa, South America and the Middle East often charge over £10.
The cheapest country for alcohol
Cape Verde (£15.56)
Jack Daniel's 1L: £22.18
Smirnoff Red Label Vodka 1L: £11.98
Tanqueray London Dry Gin 1L: £12.53
If you’re stocking up on alcohol during your trip abroad, then Cape Verde is the best place to get a good deal. Here a litre bottle of Jack Daniel’s costs just over £20.00, but you can pick up a litre of vodka or gin for around £12!
These prices vary quite considerably around the rest of the world, with the average for these three products reaching almost £35 in the Dominican Republic.
The cheapest country for fragrance
Morocco (£68.96)
Dior J'adore Eau De Parfum: £78.21
Lancôme La Vie Est Belle: £59.71
Excluding countries for which prices were only available for one product, the cheapest nation for fragrances is Morocco, at £68.96.
Morocco is the joint cheapest country when it comes to a bottle of Lancôme’s La Vie Est Belle, as well as the second cheapest for Dior’s J’Adore fragrance.
With a handle on the best counties for duty-free products, it is also good to know which countries are the most expensive.
The most expensive countries for chocolate
Ghana (£11.57)
Toblerone: £12.37
Ferrero Rocher: £15.96
Milka Alpine Milk Tablet: £6.38
However, duty-free prices can be considerably higher in other parts of the world. For example, when it comes to chocolate, the average price of the same three items was over £11.00 in Ghana.
In particular, a bar of Toberlone here would cost £12.37, while it’s also the most expensive nation for a box of Ferrero Rocher, at £15.96.
The most expensive countries for alcohol
Dominican Republic (£34.73)
Jack Daniel's 1L: £24.74
Tanqueray London Dry Gin 1L: £44.73
The most expensive country when it comes to alcohol is the Caribbean island of the Dominican Republic, at an average of £34.73.
Here, a litre bottle of Tanqueray gin costs an incredible £44.73 duty-free, which is over three times as much as in Cape Verde.
The most expensive countries for fragrances
Kenya (£90.58)
Dior J'adore Eau De Parfum: £83.00
Marc Jacobs Daisy: £98.16
Perfume is usually amongst the most expensive duty-free purchases, but that’s especially true when it comes to Kenya, with an average cost of £90.58.
In fact, when it comes to Marc Jacobs Daisy, the price is just shy of £100, while the same product can be bought for just £63 in Australia.
How to reclaim VAT
So, how can you make the most of these savings next time you’re on holiday? Firstly, it’s important to clarify that you can only claim a VAT refund if you’re shopping in an EU country and you’ll be taking your goods back to a non-EU country (such as the UK).
It’s also important to know that you don’t simply have the VAT removed from your purchase in the shops.
Instead, you’ll pay full price, before having the VAT refunded once you’ve proven that you’re exporting it out of the EU.
You should ask the shop staff to provide you with a refund form and invoice. To get these, you will need to provide proof that you are just a visitor to the EU, such as your flight ticket.
The next step comes at the airport, where you’ll need to present all the relevant documents to the customs officer who will stamp your form.
The final step, claiming your refund, will vary depending on the retailer. In some cases, you’ll be granted it there and then at the airport, but for others, they will provide you with the address to send your forms off to.
FAQ's
How does tax-free shopping work?
Tax-free shopping revolves around the sales tax that you pay on goods when shopping abroad. These taxes are different in each country, and while you’ll always be charged this tax by the retailer, some countries allow you to claim it back as a refund.
The exact terms of these refunds vary between countries and they can only be claimed when you’re exporting goods out of the country.
Also, tax-free doesn’t mean that you pay no tax at all on goods, it just applies to sales tax. You may still have to pay certain taxes on what you buy.
Which countries have tax-free shopping?
Out of the 130 countries that levy a sales tax, 54 currently offer some form of tax-free shopping.
They are: Argentina, Armenia, Australia, Austria, Azerbaijan, Belgium, Bulgaria, China, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Mexico, Morocco, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovenia, Slovakia, Spain, South Africa, Sweden, Switzerland, Taiwan, Thailand, Turkey, and Vietnam.
Is there tax-free shopping in the UK?
Tax-free shopping used to be available to visitors to the UK, under the VAT Retail Export Scheme.
However, this scheme ended on January 1st, 2021 when the UK left the European Union.
What do you need for tax-free shopping?
Firstly, you will need to have some proof that you are just a visitor to the country you are shopping in, such as a passport or other form of ID, which you need to present at the shop. You may also need to present a return travel ticket at this point.
Next, you’ll receive a tax-free form which will be filled in by both you and the shop staff.
You’ll then also get an invoice for the goods, which you’ll need to present, along with the form and the goods themselves to the customs officers at the airport. Here they will give you the final thing that you need, a stamp on your form, which acts as proof of export.
