VAT: Is ‘tax-free shopping’ taxing?

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VAT: Is ‘tax-free shopping’ taxing?

By Andrew Needham, February 2020

Andrew Needham looks at what happens when a retailer sells to an overseas customer.

The VAT retail export scheme - also known as ‘Tax-free shopping’ - allows overseas visitors to claim a refund of VAT on goods they buy and export from the EU in their personal luggage. 

The scheme cannot be used for services supplied to customers such as hotel accommodation, meals, and car hire; it’s for the sale of goods only.

Overseas visitors

The term ‘overseas visitor’ has widened since the scheme was introduced to include migrating EU residents; as a result, there are complicated rules for students and workers from overseas who come to live in the EU for limited periods. Also, it is not always easy to determine whether a traveller is an overseas visitor

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