• VAT claim awareness among British holidaymakers

By Andrew Atkinson

A bumper 715,000 British tourists visited Spain during August 2021, representing one in every seven of the 5.2 million international tourists this summer.

Despite the renewed hordes of holidaymakers – amid the coronovirus pandemic – it fell way short of the 2.1m Brits arriving in Spain in August 2019.

The UK’s Covid-19 ‘traffic-light’ system and the testing process costs also contributed to dissuading Brits from going abroad.

British tourists in Spain are taking advantage of a perk that the UK’s exit from the EU has brought on with tax-free holiday shopping benefits.

Being non-EU residents, UK holidaymakers in Spain can claim back VAT of up to 21% on goods they buy during their visit including fashion items, cosmetics, jewellery, technology and some food and drinks.

It does not apply to services you can’t get VAT back on including restaurant bills, car rental, theatre tickets, flights or train tickets.

The tax-free agreement has opened up a wealth of possibilities for Spain’s retail and tourism sector.

From January to September 2021, British tourists who deducted VAT spent an average €1,337 (£1,139) on their purchases, higher than any other non-EU nationality and far above the 2019 annual average of €357.

According to figures from tourism shopping tax refund company Global Blue, so far this year Chinese tourists who deducted VAT have been the second biggest spenders in Spain, averaging €837 in purchased goods.

Many British tourists visiting Spain are still unaware of the Brexit-induced shopping perk.

“According to the retail stores in Spain, only 10 percent of British tourists who have bought in Spain have taken advantage of the VAT refund,” said Global Blue’s General Director in Spain Luis Llorca.

“It’s a very low percentage, since for the rest of non-EU nationalities the rate of awareness is always above 50 percent,” said Llorca.

“There’s a correlation between VAT deductions and the positive impact this has on a country’s GDP,” said Llorca.

“In general terms, for each additional euro of VAT refund, demand increases by 1.45 euros and GDP increases by 35 cents,” added Llorca.

Shop owners don’t take on the VAT cost, nor does it represent a fiscal loss for the country, as in tax-free shopping the operation is an export so it doesn’t carry VAT.

Global Blue’s study ‘Brexit and Spain as a shopping destination’ revealed that six out of ten UK tourists are willing to spend 50% of their holiday budget on shopping.

It applies to Spain’s retail sector, except the Canary Islands where there’s no tax-free system.

Spain was British holidaymakers pre-pandemic favourite destination, with 18 million in 2019.

During the summer, El Corte Inglés department stores and Iberia partnered up to raise VAT claim awareness among British holidaymakers.

“Spanish authorities have not yet made the necessary effort to publicise this possibility of return on purchases,” said Llorca.