Wealthy tourists from overseas are increasingly choosing to shop in France, Italy, and other European nations instead of the UK. The driving factor? High tourist taxes in the UK. These visitors are taking advantage of continued tax breaks available in Europe, which encourage spending.
Popular European tourist destinations are enjoying a significant financial upturn as they attract affluent travelers seeking to indulge in luxury goods without the burden of heavy taxes. Recent data from Global Blue, a company that specializes in tourism tax refunds, reveals that international spending in mainland Europe has surged by approximately 36% since 2019.
Europe Lures Big Spenders Away from the UK
Fresh insights from the New West End Company, a key advocate for London’s retail sector, show that while international visitor numbers to London’s West End have risen by 3% since the onset of the pandemic, actual spending dropped nearly 12% in the first half of 2024 compared to the same period in 2019.
The allure of Europe’s tax incentives, which allow tourists to save 20% on luxury purchases, is a significant factor in this shift. While UK Chancellor Rishi Sunak eliminated the 20% tax relief in 2020, the expectation was that it would not detract from the UK’s appeal to visitors. However, many businesses, including luxury fashion brand Mulberry and upscale department store Selfridges, believe the absence of this tax incentive has discouraged wealthy shoppers from parting with their cash in the UK.
UK Retailers Face Multi-Million Pound Losses
The New West End Company has calculated the financial consequences of the tax removal, estimating that retailers in the capital lost out on £220 million (€260.4 million) in sales during the first half of 2024 and £400 million (€475 million) throughout 2023. This trend raises concerns over an expanding “spending gap” between the number of international visitors and their spending levels.
Supporting this concern, data shows that in 2019, when the UK still offered tax-free shopping, the correlation between visitor numbers and spending was strong. In stark contrast, Global Blue reports that 34,000 tourists have shifted their tax-free shopping from the UK to Europe, increasing their average spending from €2,900 (€2,438) in 2019 to €3,800 (€3,195) in 2023.
France and Italy are reaping the most benefits from this trend, attracting over two-thirds of these spenders, while Spain’s retail sector also witnesses positive effects from this change.
Photo credit & article inspired by: Euronews
