Oct 5, 2020
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As UK duty-free regime to end, France targets unhappy shoppers

Oct 5, 2020

With the UK set to axe the duty-free shopping for tourists regime at the end of this year, there are already signs that rival locations will step up their efforts to attract shoppers who might have previously visited Britain.

Stores like Selfridges could suffer as UK tax-free shopping rules change and other countries target disaffected shoppers - Selfridges

The French government has reduced the value of goods on which VAT can be reclaimed from €175 (£159) to €100. This could make shoppers reconsider trips to London in favour of Paris.

The Telegraph quoted Fortnum & Mason CEO Ewan Venters, saying that “the French have spotted Britain’s irrational policymaking. Paris is the most popular shopping city in the world after London. Paris is going to seize an opportunity to sweep up as London turns away.”

The new regime in the UK, which the government said is all about falling in line with international norms (despite every other European country offering tax-free shopping) starts in January.

And there have been estimates that the UK could miss out on at least £6 billion of spending annually with potential job losses of up to 138,000, based on calculations by the Centre for Economics and Business Research.

Luxury and premium stores in key tourist destinations are heavily geared up to tourist shopping and companies such as Planet and Global Blue exist to facilitate this.

But the UK government said tax-free shopping will still be available for tourists if they buy in the UK and have goods sent to their home addresses. It also said the measures were “subject to full consultation”.

It has also highlighted how the new rules will see it being more generous on allowances for cigarettes and alcohol (both of them fundamentally unhealthy product categories), while clothing and electronics will suffer. 

Selfridges chief Anne Pitcher told The Telegraph that the UK’s EU exit “should have been a golden opportunity to make Britain one of the most desirable countries to visit” but the Treasury is causing “a catastrophe”.

And Ros Morgan, CEO of The Heart of London Business Alliance that represents 500 West End businesses landlords, added: “The savings that the Treasury predicts are illusionary. They won’t collect the £500 million in VAT that they claim because those sales will no longer take place in the UK.”

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