Paris is the destination for savvy shoppers who are shunning Britain in favour of duty-free

Last week, on a busy afternoon, the Galeries Lafayette department store in Paris was filled with shoppers from around the globe who came to buy designer clothing, shoes, and handbags. One of the most popular spots in this temple of fashion was not Chanel or Dior, but the brightly lit “Detaxe”, where tourists could take advantage of European law to get a large duty-free refund.

Scott Wilford, aged 62, was one of them. He had traveled from London to Paris for business. He had bought nearly £1,000 of designer goods from Hugo Boss, Vanessa Bruno and other upmarket designers. He grinned. “I have around £100 back,” he said.

Wilford is among the thousands of Britons that now prefer to shop in Paris over the UK due to the new VAT rules post-Brexit. As a result of Britain leaving the EU, British residents can now claim the VAT they paid on their shopping in Paris, less the 9% commission taken by service providers.

The “Detaxe” website allows British shoppers to claim VAT back on their purchases

There is no two-way road: since Britain has decided to abolish duty-free shopping for UK visitors, the French are not encouraged to spend at Harrods and Selfridges.

The UK’s retail hotspots, such as London and Edinburgh, are suffering while Paris is booming.

Michael Ward, managing director of Harrods said that he and other rivals are losing customers to Europe. In 2023, the UK will spend £780 millions in France. “That’s an opportunity for all those people who would have spent in Britain,” he said. “I will buy my bag and pay the VAT in France while I am there.” This is the common belief in the UK.

If Downing Street were reintroduced duty-free shopping, Europeans would most likely come to Britain to shop. One retail deputy chairman stated: “It could instantly open up a huge new market with 750 million Europeans coming to the UK and spending their money.”

The shops in Paris are enjoying a boom as many people now shop outside the UK.

The impact of the new VAT regulations on British retailers is clear.

Brian Duffy, the CEO of Watches of Switzerland, is an Omega-to Rolex retailer. He claimed that the government’s decision not to allow duty-free shopping in UK had resulted in a significant drop in business. In 2019, tourist shopping accounted for about 30% of our sales; today it is only about 5%.

He continued: “We have missed this enormous, consumer-driven element of economic growth in tourism. Especially Americans. “They came from nowhere, and became very big shoppers. But it’s all gone to Europe, and none of it will be coming to the UK.”

Jonathan Akeroyd said that the UK’s “significantly” underperformed compared to continental Europe because of “the lack of tax-free retail”. He predicted that if nothing changed, “the UK would continue to miss out” on obvious post Brexit benefits.

Global Blue, an international tax-rebate provider with headquarters in Switzerland, reported that 34,000 British tourists only did duty-free shopping in 2019. These same tourists now shop duty-free in France, Italy, and Spain.

Wevat also handles refunds of VAT. Alexander Gibbs said the company’s head of partnerships that although Chinese tourists are the primary customers — and there were a lot milling about Galeries Lafayette – British travellers have now overtaken them. He said that “lots of Brits” were shopping in France.

Paris is advertising its newfound appeal in the UK. This trend is growing rapidly. Wevat data showed that British tourists made duty-free purchases in France by 10 percent more this year than the year before. British men tend to spend more on technology (the Paris Apple Stores are thriving), whereas women prefer to claim for high-end clothing and make-up.

The shops in Paris are enjoying a renaissance.

Valerie Lazic was 54 years old and taking a rest on a bench near the Sandro clothing store. She was in France on a trip from Serbia. Her shopping bags were so numerous, they bordered on absurdity — Ralph Laurens, The Kooples’, Max Maras, Boss and Coachs. She was a clear shopaholic, and had just returned from a duty-free trip to Switzerland. She said that the shopping in France is now “much more enjoyable” than it was in England. She said that it’s not only about duty-free. “But of course, tax refunds are good because they make my shopping cheaper.” This means that I will have more money to spend.

Lazic, who had spent around €7,000 was entitled to a refund of about €800.

Paris has tried to make the process of duty-free shopping as easy as possible to attract tourists.

Rasha Khayat from Saudi Arabia had just purchased shoes from Repetto & Chloe, and expected to receive an €60 refund. It’s easy — just fill out a form and return it at the airport to get your money.

The process is now even easier for Britons. Eurostar Terminal in Paris Gare du Nord offers duty-free refund machines for those who forgot to claim it in the city. A group of Brits returning home quickly scanned their passports and receipts, and received their refunds.

Eurostar passengers can use the duty-free refund machines at Gare du Nord, Paris. However, HMRC is doing spot checks when they arrive back in England.

Amanda Parker, a 38-year-old New Yorker, sat on the terrace at the Menu Palais café and was very clear about the rebate. She was eating a caesar and gushed about how she had been on a tour that stopped in London for Buckingham Palace, Big Ben. “That was so cool”, said Parker. “But we were forced to go to Paris to shop.”

She admitted that the wide boulevards of the city and its historic fashion houses had an irresistible “I don’t know what” but added, “The tax refund is a nice addition.”

There are a few things to keep in mind before you plan your Paris duty-free shopping trip.

First, while the VAT in EU countries is typically around 20%, the majority of shops will refer you an agent who will administer the refund and take a fee. You will usually get about 10% back.

If you’ve claimed the VAT back on more than £390 worth of purchases, you must declare this at UK customs upon your return.

You will then be required to pay the VAT back in full, perhaps at a rate of 20 percent. There may also be additional import duties added on top.

For an Apple iPhone 15 Pro you would have to pay €1,229 before receiving a refund of €135 as VAT. According to the HM Revenue & Customs site, the taxes in the UK will amount to £209.83. The final price will be €1,337, which is €108 higher than the non-duty-free price.

Levies are different for each purchase. A VAT is charged on an iPhone, but a traveller purchasing a €11,100 Chanel black calfskin bag would also have to pay £189 as customs tax, in addition to the nearly £2,000 VAT.

The Treasury has a problem when British citizens avoid paying the tax upon their return home. They may do so unknowingly, unaware that they are supposed to be paying it back, or deliberately by removing the price labels and pretending that they purchased the goods prior to going abroad.

HMRC is performing spot checks at Eurostar stations on those who do not declare their income.