Tax free shopping in Heathrow?

Bullseye1

Can someone explain how this works? There seemed to be huge savings on high end watches, running into multiple thousands. Is this only applicable to shoppers outside EU or travelling outside EU?

unkel

VAT is only chargeable within the EU

So if you buy a watch in the EU, but can show that you actually live outside the EU, you do not have to pay it

Simples

In the UK this means a £12,000 watch is yours for £10,000 (VAT Rate in the UK is 20%)

Mitch Buchannon

Yeah, book a cheap flight from LHR to Switzerland and I believe your able to get it vat free or so I'm told.

Bullseye1

Yeah I had seen Steinhart don't charge VAT to US customers. Seems strange that we don't charge US customers VAT but we charge our own people VAT/Duty on goods bought from the US.

Cyrus

Bullseye1 wrote: »

Can someone explain how this works? There seemed to be huge savings on high end watches, running into multiple thousands. Is this only applicable to shoppers outside EU or travelling outside EU?

you are all wrong lads

you dont have to travel outside the EU to get the vat free prices at heathrow, they are available to everyone.

So if a watch is 12,000 the airport price is 10,000 (i.e. 12,000 divided by 1.2 assuming vat is 20%) you save 2,000 or 16.6% of the RRP

Eoin

So are they are charging VAT, but just discounting the watch by the same amount?

Cyrus

Eoin wrote: »

So are they are charging VAT, but just discounting the watch by the same amount?

i think so, not 100% sure on that point

CarltonBrowne

From reading countless posts on TZ-UK I understand that to the consumer it doesn't make any difference; you pay the advertised, tax-free price. The retailer has to manage the risk and presumably business is not too great if all they ever get is a bunch of people traveling within the EU as in this case they are effectively giving out an automatic 20% discount. One imagines that it must make sense as Heathrow shop rents are probably amongst the highest in the world.

Interestingly I've just checked the receipt for last thing I bought in T1 and VAT is not itemised though I was only traveling to Germany. The email correspondence prior to purchase does mention both the full and tax-free price (the latter being the price I paid).

BTW, if anybody is considering a purchase at Heathrow they should be aware of the Worldpoints scheme as you can build up air miles quite easily.

https://www.baaworldpoints.com/
http://forum.tz-uk.com/showthread.php?213182-BAA-Worldpoints-airport-loyalty-scheme&highlight=worldpoints

ThebitterLemon

Eoin wrote: »

So are they are charging VAT, but just discounting the watch by the same amount?

Yes this is what is actually happening.

Try getting further discounts and you will find it almost impossible.

Under the EU 6th directive on VAT to be entitled to have the goods rated at zero VAT (Tax Free), your purchase must be made within the EU, you must not be resident in the EU, must export the goods outside the EU in your Personal luggage within 3 months of purchase and must have the goods available for inspection by customs.

Some counteries within the EU also impose a minimum purchase spend before you would be entitled to avail of he scheme (although this is not currently the case in the UK).

Therefore anyone who is resident in the EU and buys goods within the EU is not entitled to have the goods zero rated for VAT under the Tax Free Scheme.

TbL

Lex Luthor

is it the same then if say you fly from Dublin to Zurich?
Can you avail of VAT & Duty Free at Dub airport even if you are not a resident outside EU? Do you have to prove you are a resident outside EU?
All it says in the shops is "Travelling outside EU" on the sticker prices

I know the watch collection isnt that great at Dub airport but I'm sure there is a nice Hamilton there i could pick up at some stage

ThebitterLemon

Lex Luthor wrote: »

is it the same then if say you fly from Dublin to Zurich?
Can you avail of VAT & Duty Free at Dub airport even if you are not a resident outside EU? Do you have to prove you are a resident outside EU?
All it says in the shops is "Travelling outside EU" on the sticker prices

I know the watch collection isnt that great at Dub airport but I'm sure there is a nice Hamilton there i could pick up at some stage

Lex,

As you are a EU resident (I assume) you would not be entitled to zero rate the goods bought in Dublin. You would however be entitled to zero rate the goods if you export them from another country outside the EU (including Switzerland I believe). You must conform to that local jurisdictions VAT export scheme, usually involving a minimum purchase spend, have the goods exported in your personal luggage and available for customs inspection. Usually your passport is required to prove your residency.

For example if you bought a camera in Singapore and you exported in back in your luggage to Ireland you would be entitled to zero rate the goods.

There are a number of specialist companies that act as agents for retailers to provide this Tax Free service. Using the Singapre example above if you bought a watch from a merchant who was affiliated with a Tax Free agent,the merchant would give you a form which you would bring to the airport, it would be stamped by customs (to prove export), and you would get a portion of the Vat returned to you either in cash at the airport or directly onto your credit card. The Tax Free agent and merchant will charge you a fee (deducted from the gross vat you are entitled to) for providing this service.

Note that on return to Ireland you should then declare the goods to Irish customs and they will Charge you Irish VAt on the deemed value of the goods.

Most of the "Tax Free" offers you see at airports are ( as Unkel and Eoin have pointed out) not strictly part of the VAT refund scheme but are discounts marketed as Tax Free.

Hope this is clear.

TbL