“VAT-free shopping does not directly benefit Brits — it lets foreign tourists who buy items in the UK to claim back VAT as they return home,” a UK Treasury spokesperson told Vogue Business. “The scheme could cost British taxpayers around £2 billion a year at a time when we’ve already had to take difficult decisions to get debt falling and fewer than one in 10 non-EU visitors used the previous scheme, showing it’s not a significant attraction for tourists.”
Planet’s report showed that, generally, tax-free sales are recovering well following the Covid-19 lockdowns, though they are still 10 per cent below pre-pandemic levels. In June, tax-free sales in Europe rose by 18 per cent month-on-month — the fourth consecutive month of growth. France led the way with a 22.3 per cent surge. “A full recovery in tax-free sales across Europe this summer is now within reach,” the report predicts.
American and Asian tourists are leading the growth. In France, tourists from the US drove the most growth in the region, accounting for 27 per cent of all retail sales in the country, followed by China at 14 per cent, Korea at 5 per cent and Taiwan and Hong Kong at 4 per cent. Similarly, in Italy, US consumers led spending in the market, accounting for 33 per cent.
The report predicts that demand for travel from US and Canadian nationals will surpass pre-pandemic levels this year by 11 per cent and 4 per cent respectively, as ticket sales figures for international flights show an uplift in European travel.
Despite the surge in US shoppers, Asian tourists continue to dominate the market, accounting for 36 per cent of all European tax-free sales. They are also the highest spenders: the average transaction value for Asian consumers is €1,046, rising to €1,341 for Chinese shoppers. North American consumers spend on average €978.
“We’re delighted to see the recovery of tax-free sales across the continent accelerating as we approach the main summer travel and tourism season,” said Cassina.
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