What: UK will no longer offer tax-free shopping to tourists.

Why it is important: UK will be the only country in Europe not to offer a tax rebate.

Before Brexit, tourists would claim back 20% of the purchase price of all goods over GBP 135 (USD 185). Worried that visitors from the EU, who are now third-party nationals, would start claiming back VAT, the British government scrapped the VAT rebate.

In 2019, foreign visitors bought GBP 3 billion worth of goods from fashion and other luxury stores in the UK – and spent another GBP 3 billion staying in hotels and eating in restaurants. “These people – who mostly come from China – have contributed a huge amount to the British economy but will simply make the choice not to shop in the UK because it is less advantageous to them,” says Paul Barnes, the CEO of Association of International Retail.

“We are now the only country in Europe offering no VAT rebate, so why would tourists not go to Paris instead, if they can save thousands of euros on luxury goods there and nothing here?” French officials are already rubbing their hands at the prospect of tempting Chinese customers across the channel. France has recently dropped its minimum spend required to recoup VAT from EUR 175 (USD 210) to EUR 110 and is said to be investing in new luxury space in central Paris and at the city’s Charles de Gaulle airport. It is also looking into making visas for Chinese nationals easier to obtain.

Brexit may kill London as a luxury shopping destination (...)