Tax free shopping in EU (Spain)

[anuj]

Has anyone done any tax free shopping in EU since Brexit?

Particularly I’m interested if any countries allow you to collect the tax refunds without companies such as global blue taking a massive chunk. Apparently in Spain it’s all digitised and you just scan your DIVA receipt at the airport but I’m not sure if global blue still take a cut.

[Blair Waldorf Salad]

I think the problem may be that the retailers are so embedded into the Global Blue system, the sales assistant wouldn’t know what to do if you tried going solo on it. I’ve used Global Blue in Austria, Portugal and Spain post-Brexit. The Austrian purchases I had to have validated by German customs as I connected in Munich. Surprisingly fast turnaround; I posted the receipts in a Global Blue postbox in Munich on a Sunday night and the money appeared on my card on Tuesday.

[gtellez]

Similar in my experience, I have used it few times in Spain, but only through Global Blue (or similar), due to the retailers. The net return is about 13-14%, instead of 21%.

[Andrew J]

France is the same – usually through Global Blue – they take a cut but the whole process is very slick and efficient, with money back in your account a couple of days after arriving home. At CDG the shop price for passengers leaving the EU is around the same as if you shopped in the city and got a tax refund, so you still don’t get the full 20% tax off. The other thing to note with Global Blue is the refund is processed through USD, so you get hit by exchange rates as it goes from EUR to USD and back to GBP on your card and potentially a FX fee from USD for the refund, if that’s applicable on your card.

[YC]

gtellez wrote:

Similar in my experience, I have used it few times in Spain, but only through Global Blue (or similar), due to the retailers. The net return is about 13-14%, instead of 21%.

A €100 item has a €21 tax = €121. If you were to get full tax back, it would be equivalent to a €21/€121=17.4%. So it’s not as bad as global blue taking 1/3 of the pie. But it’s still a big chunk

[Chabuddy Geezy]

If you get your tax refund in cash in BCN airport get it in Euro, for GBP they will try and give you a terrible rate.

[yonasl]

Let me try to explain how this works:

– you go to the shop and if they offer tax free will usually be told it is through one of two companies

– tax in Spain is 21% but the companies take a nice 7-10% cut themselves for “their services”

– at the shop you are given a piece of paper with all the details, your receipt and an envelope

– when you get to the airport you can scan the barcode on the paper they gave you. This is done before you pass security. If all goes well the machine will simply beep and show a Green tick

– you can now ask for cash back from some of the many stands at the airport (you will get euros but they may exchange that into your local currency if you wish)

– you can also simply wait to get home, put everything (paper, receipts) on an envelope and send it back to Spain. You then get the money back on the credit card you used to pay (you can also ask for a bank transfer etc.) (you can also complete all this at the airport and mail it from Spain while you are there)

There is technically a way to get the full 21% if the shop so wishes. But they rarely know how to do it or would accept to do it.

Meanwhile this is how it works in Japan:

– you go to the shop and show your passport

– clerks make a photo and remove 10% from the final price

– … that’s it …

[JDB]

@yonasi – it’s helpful to set out the process, but you are missing one key element of which people at least ought to consider, which is the obligation to declare any goods exceeding your limits on return to the UK. While some here are very casual about terms and conditions and like to game the system in all sorts of ways, failing to declare goods is a criminal offence and, of course, in reclaiming the tax you leave a nice paper trail for HMRC. They are very nosey, have access to all this sort of information and under much pressure to collect more tax.

[TooPoorToBeHere]

They also have crippling staff shortages (or lack of producitivty for the staff they do have in enormous numbers…) and months-long backlogs dealing with the most basic of administration.

If someone can write a simple script on a computer which detects naughtiness, they’re likely to catch naughtiness (eventually!)

If it requires manual work by a human to recover a 2 or 3-digit amount…

[JDB]

TooPoorToBeHere wrote:

They also have crippling staff shortages (or lack of producitivty for the staff they do have in enormous numbers…) and months-long backlogs dealing with the most basic of administration.

If someone can write a simple script on a computer which detects naughtiness, they’re likely to catch naughtiness (eventually!)

If it requires manual work by a human to recover a 2 or 3-digit amount…

Whether or not they catch you is hardly the point. If people want to break the law, deprive the Treasury/taxpayer of revenue etc, that’s up to them, but they should do so advisedly. This sort of tax evasion, along with Amazon/eBay sellers and certain trades is actually very easy to detect with minimal HMRC manpower and good returns on investment.

Anyway, let’s hope the tax free Prada suit makes the tax dodgers look smart in the dock.

[lollyfry]

yonasl wrote:

Let me try to explain how this works:

– you go to the shop and if they offer tax free will usually be told it is through one of two companies

– tax in Spain is 21% but the companies take a nice 7-10% cut themselves for “their services”

– at the shop you are given a piece of paper with all the details, your receipt and an envelope

– when you get to the airport you can scan the barcode on the paper they gave you. This is done before you pass security. If all goes well the machine will simply beep and show a Green tick

– you can now ask for cash back from some of the many stands at the airport (you will get euros but they may exchange that into your local currency if you wish)

– you can also simply wait to get home, put everything (paper, receipts) on an envelope and send it back to Spain. You then get the money back on the credit card you used to pay (you can also ask for a bank transfer etc.) (you can also complete all this at the airport and mail it from Spain while you are there)

There is technically a way to get the full 21% if the shop so wishes. But they rarely know how to do it or would accept to do it.

Meanwhile this is how it works in Japan:

– you go to the shop and show your passport

– clerks make a photo and remove 10% from the final price

– … that’s it …

Thanks for this explanation, it’s really helpful. Could I ask, where do you have to go in the airport to scan your paperwork? Is there a customs area prior to going through security? I only ask as I’ve never noticed one!

[Erico1875]

JDB wrote:

TooPoorToBeHere wrote:

They also have crippling staff shortages (or lack of producitivty for the staff they do have in enormous numbers…) and months-long backlogs dealing with the most basic of administration.

If someone can write a simple script on a computer which detects naughtiness, they’re likely to catch naughtiness (eventually!)

If it requires manual work by a human to recover a 2 or 3-digit amount…

Whether or not they catch you is hardly the point. If people want to break the law, deprive the Treasury/taxpayer of revenue etc, that’s up to them, but they should do so advisedly. This sort of tax evasion, along with Amazon/eBay sellers and certain trades is actually very easy to detect with minimal HMRC manpower and good returns on investment.

Anyway, let’s hope the tax free Prada suit makes the tax dodgers look smart in the dock.

This guilt trip for people maybe evading £100 or £200 of tax is a diversion set up by the super rich to divert attention away from them as the evade £100s of millions in tax with the full permission of this corupt UK government.

[yorkieflyer]

I’m pretty sure those who moralise about tax evasion are often those who max out tax avoidance schemes. I can’t help but have a big grin when such folk have come a cropper when dodgy tax avoidance schemes have been ruled un lawful and the poor dears claim hardship and are unable to pay back the tax and blame the sharp suited fellas who told them it was all kosher

[yonasl]

lollyfry wrote:

Thanks for this explanation, it’s really helpful. Could I ask, where do you have to go in the airport to scan your paperwork? Is there a customs area prior to going through security? I only ask as I’ve never noticed one!

There are plenty of kiosks across the airport. They are basically a large screen with a camera to scan the receipts. You won’t have trouble finding them

For instance you can find a couple on T4 just before you cross the glass bridges that take you to security. There is also some on T1 (on the departures/check-in floor).

[yonasl]

For those mentioning tax evasion. I have used this plenty of times to get refunds from places like Zara and similar. You get ~15% back so £20-30 depending how much you bought.

I know a couple that used it on a £60,000 piece of jewelry. When they landed in LHR a border official was waiting for them, took them to a room and demanded they pay UK tax on the item.

[NorthernLass]

Interestingly, defrauding HMRC often results in much more severe penalties than you’d associate with more traditional crimes. I once dealt with a man who had a 2-year prison sentence on his record – because it was a Revenue and Customs case the full details weren’t on our system.

I asked him what he’d done to warrant 2 years’ custody and he replied, “I brought some cigarettes back from Turkey without paying duty.” Me, “How many cigarettes, exactly?” Him, “Well, it was a warehouse full …”

[Gavin454]

yonasl wrote:

Meanwhile this is how it works in Japan:

– you go to the shop and show your passport

– clerks make a photo and remove 10% from the final price

– … that’s it …

I love how simple the Japanese system is, but I’ve read that it’s been abused and they are considering changing it to something more like other countries systems (claim tax back after).

[Chabuddy Geezy]

Interestingly it was in the press recently that border force were having to minimise customs checks at airports as staff were having to be deployed to process people entering the country. The most border force agents I have seen is maybe 9 coming back from Dubai in 2021. Similar to Anna’s comments I think this is due to cheap cigarettes coming in from UAE.

[PeteM]

JDB wrote:

They are very nosey, have access to all this sort of information and under much pressure to collect more tax.

HMRC have access to the tax systems of other countries?

[JDB]

PeteM wrote:

JDB wrote:

They are very nosey, have access to all this sort of information and under much pressure to collect more tax.

HMRC have access to the tax systems of other countries?

Yes, there is automatic information sharing between the tax authorities of virtually every country which has been in place for some years.

[Michael C]

PeteM wrote:

JDB wrote:

They are very nosey, have access to all this sort of information and under much pressure to collect more tax.

HMRC have access to the tax systems of other countries?

Yes, found this out when purchasing a house in the UK when we moved here
a few years ago and was wondering if we qualified as first-time buyers,
but properties in other countries counted and HMRC had access to those details.

[John]

Gavin454 wrote:

yonasl wrote:

Meanwhile this is how it works in Japan:

– you go to the shop and show your passport

– clerks make a photo and remove 10% from the final price

– … that’s it …

I love how simple the Japanese system is, but I’ve read that it’s been abused and they are considering changing it to something more like other countries systems (claim tax back after).

I think you are supposed to hand in the receipts at the airport when departing or something and in theory they check that you haven’t used any of the consumables, but I bought a new luggage tax-free and checked it in, and nobody cared, so I could have given it to a Japanese resident who is liable for the sales tax. There were no checks in my handful of trips and my flight attendant friend says she hasn’t encountered any checks in hundreds of trips. If they have no manpower to spot check the current system, how can they make it more complicated?

[yonasl]

I forgot to mention something important for Spain:

– BEFORE you check in, scan the documents for the tax free

– if for any reason one of them flags. You need to go see the Hacienda stand (our HMRC). They are located at arrivals where the luggage arrives

– so you need to walk downstairs, and ask the police to let you enter a secure area. They will understand what that is for but it is obviously very complicated specially if your flight is late or very early

– I have only seen this happen for 1) people like me with a Spanish passport but foreign residency 2) if you are trying to pass with a £30,000 Rolex tax free (not a personal story). For most people with a foreign passport the system just checks it is not EU and then will give you no trouble

Obviously there is always the risk they may randomly want to check you are indeed taking all the items out of the country. So do this BEFORE you check your luggage.

There is no real risk here. If this doesn’t work you already paid the tax. Just won’t get the ~15% back. So nobody is going to jail or being fined here if you miss a step or left an item or two with a friend.

[JDB]

@yonasl – none of the above changes the basic premise that your tax refund data is shared with HMRC. They will in most cases simply sit on the data as they do with all the vast quantities of reciprocal data they receive from other tax authorities. They carry out high level analysis to assess the risk/quantum of tax loss and to identify anomalies. It can take years for them to pursue but the data is there. People also often get caught when they report a theft and/or make an insurance claim for items illegally imported.

[PeteM]

JDB wrote:

Yes, there is automatic information sharing between the tax authorities of virtually every country which has been in place for some years.

Indeed, in relation to financial accounts and investments, but in relation to VAT refunds? I’d love to see some sources for this @JDB, because I can’t find any.