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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.

Retailer’s commission

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 CountryDuty De Minimis ThresholdTax De Minimis Threshold (VAT/GST)
EU (Euro area only)EUR 150EUR 22
AustraliaAUD 1000AUD 1000
CanadaCAD 150CAD 50
ChinaCNY 50CNY 50
DenmarkDKK 1150DKK 80
Hong KongN/AN/A
IndiaINR 1000INR 0.00
IndonesiaUSD 30
JapanJPY 10,000JPY 10,000
MalaysiaRM 5000
MexicoUSD 50USD 50
New ZealandNZD 1000NZD 1000
NorwayNOK 350NOK 350
Russian FederationEUR 200EUR 200
Saudi ArabiaSAR1000.000
SingaporeSGD 400SGD 400
South KoreaKRW 150,000KRW 150,000
SwedenSEK 1500SEK 1500
SwitzerlandCHF 5CHF 5
TaiwanTWD 2000TWD 2000
ThailandTHB 10000
TurkeyEUR 30EUR 30
United Arab EmiratesAED 1000AED 1000
United StatesUSD 800USD 800