Export costs of VAT-free shopping goods explained
New post Brexit rules will apply to tax-free shopping in the UK. From 1 January 2021, VAT Retail Export Scheme (VAT RES) will be replaced with VAT-free shopping for all tourists to the UK, including visitors from the EU. Participating retailers will be able to sell goods tax-free and arrange for them to be shipped directly to your overseas home address, see here for more details. However, make sure to understand what costs are involved before making tax-free purchases as the benefit of not paying 20% VAT in the UK may turn out to be less than the overall charges associated with the service.
Each participating store offering VAT-free shopping may charge an admin fee for providing the service. The process does require extra paperwork and handling so it is understandable that some retailers may require compensation for their time.
Shipping and insurance costs
Retailers may charge additionally for the shipping cost of delivering of the VAT-free goods to your overseas address. This cost may vary according to your destination country, goods weight, and value.
Your destination country import taxes and duties
International shipments of goods above a certain official value (de minimis threshold) attract additional import duties and taxes. Even though you are getting a VAT refund in the UK, your VAT-free goods might still incur import charges in your home country if your shipment value is above your destination country’s de minimis thresholds.
A good rule of thumb is to try to keep each individual shipment value below these thresholds in order to actually benefit from a VAT refund in the UK. Otherwise, it might be cheaper to just pay the full price in-store and carry the merchandise in baggage or purchase the goods directly online when you arrive back home.
De minimis values are calculated in local currency and include the goods price as purchased from a UK store plus the extra cost of shipping and insurance. Some countries such as the USA and Australia have a relatively high de minimis threshold, or as in the case of Hong Kong none at all, making them quite favourable destinations for posting your UK shopping to.
De minimis thresholds vary from country to country and below table shows a few examples. Be sure to understand what your local duties and taxes would be if you exceed the thresholds and who would be responsible for these extra costs. If the UK retailer does not pay the destination country import costs, your VAT-free goods would be held by the shipping company until you settle them. The courier would also likely apply a further handling fee for settling these costumes charges on your behalf before releasing the goods to you.
|Destination Country||Duty De Minimis Threshold||Tax De Minimis Threshold (VAT/GST)|
|EU (Euro area only)||EUR 150||EUR 22|
|Australia||AUD 1000||AUD 1000|
|Canada||CAD 150||CAD 50|
|China||CNY 50||CNY 50|
|Denmark||DKK 1150||DKK 80|
|India||INR 1000||INR 0.00|
|Japan||JPY 10,000||JPY 10,000|
|Mexico||USD 50||USD 50|
|New Zealand||NZD 1000||NZD 1000|
|Norway||NOK 350||NOK 350|
|Russian Federation||EUR 200||EUR 200|
|Singapore||SGD 400||SGD 400|
|South Korea||KRW 150,000||KRW 150,000|
|Sweden||SEK 1500||SEK 1500|
|Switzerland||CHF 5||CHF 5|
|Taiwan||TWD 2000||TWD 2000|
|Turkey||EUR 30||EUR 30|
|United Arab Emirates||AED 1000||AED 1000|
|United States||USD 800||USD 800|