Avoiding Global Blue and their rip-off fees on VAT reclaims for non-EU residents

[Deleted User]

Hello! I am British but living outside the EU at the moment. Therefore I don't have to pay VAT on my shopping on my visits back to the UK (hurray!).

However - I have discovered a VERY nasty sting in the tail - most retailers charge you VAT and then you have to claim a refund at the airport as you leave, using a provider called "Global Blue" or "Premier Tax Refund".

The sting in the tail is that Global Blue takes 50% (or more!!) of your VAT refund once you take all their charges into account (including service fee, currency conversion fee, payment fee, etc etc). And there is no mention of this at ANY STAGE. Even the tax calculator on the Global Blue website does not admit they will charge you, presumably because they do not want you to realise how much of a rip off their service is (I guess most people are just happy to get something back). :mad: :mad: :mad:

Example - if you buy a PC costing £2000 (pre-tax), you'll pay £400 VAT. Global Blue will then process your £400 VAT refund at the airport, but in exchange for doing this they keep £200 of your VAT refund for themselves (simply for stamping a bit of paper and arranging a refund onto your card...)

This seems to me a *total rip off*. What makes me particularly mad (apart from the outrageous % and the fact that it is clearly disguised) is that there is no cap - so if you reclaim £5,000 VAT, Global Blue will happily take half of that! And similarly if you reclaim £50,000 VAT (taking things to the extreme...) Global Blue would happily charge you £25,000 for five minutes work stamping a bit of paper.

I do not want to fall victim to this scheme, so I have discovered what seems to be an alternative way of reclaiming the VAT yourself and avoiding the need to use Global Blue or Premier Tax Free (or any other similar provider, if there are any).

It's a little bit more work. You need to ask for "VAT Form 407" from the retailer when making your purchase. The retailer then gives you a form which you need to get stamped when leaving the country by a random customs official. You then post the form back to the retailer, and they refund you the VAT direct.

Please note I haven't actually tried this myself (yet). So it is not guaranteed to work (although it does seem official i.e.: http://www.hmrc.gov.uk/helpsheets/vat407notes.pdf)

If anyone here knows that this scheme will work, please feel free to post below and let me know. In any event, I will be trying this approach on my next trip back to the UK (and I will update this post if it works out). :beer:

booksurr

half of something is better than all of nothing
you get a 50% rebate
we get to pay 100%
no sympathy here

antrobus

Deleted_User wrote: »

........If anyone here knows that this scheme will work, please feel free to post below and let me know. In any event, I will be trying this approach on my next trip back to the UK (and I will update this post if it works out).

As far as I'm aware there is only one scheme on offer, and a form 407 is almost certainly what you got from the retailer concerned.

VAT free shopping for overseas visitors isn't some kind of automatic 'right', it's an incentive offered by some retailers. You buy the goods, and get the form 407 from the retailer. You then get it stamped when you leave the country (to prove that you've actually exported the goods), return the form to the retailer, who can then refund the VAT amount to you, because it can now prove to HMRC that no VAT was due on the sale.

Retailers are free to charge for this service. If a retailer charges for this service, then you can't really get out of paying it, as it's the retailer that is stumping up for the refund. The only thing you can do is ask the retailer what charges they do make for the service before you buy the goods, and then go elsewhere if you think it's OTT.

[Deleted User]

antrobus wrote: »

As far as I'm aware there is only one scheme on offer, and a form 407 is almost certainly what you got from the retailer concerned.

There is only scheme but some retailers make you use Global Blue (presumably because of the secret kick back GB gives them) whereas some are happy to let you process the refund yourself.

It's more hassle for the seller and they don't get any secret commission to use a "DIY" scheme, hence why more sellers don't do this (I assume).

In any event, I am yet to test the waters. Am hoping to buy some electronics today using the scheme. I'll update this thread once done.

antrobus

Deleted_User wrote: »

There is only scheme but some retailers make you use Global Blue (presumably because of the secret kick back GB gives them) whereas some are happy to let you process the refund yourself. ....

I believe you misunderstand. You can't "process the refund yourself". All you can do is get the VAT form properly stamped on your exit from the EU, after which the the refund is processed, either by the retailer, or their appointed agent.

Have a read of the VAT notice on 'Tax free shopping in the UK'

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageImport_ShowContent&id=HMCE_CL_000141&propertyType=document

It says;

In most cases, the shop or refund company will charge you a fee for using Tax Free Shopping. They will take the money out of your VAT refund.

Deleted_User wrote: »

...In any event, I am yet to test the waters. Am hoping to buy some electronics today using the scheme. I'll update this thread once done.

It's entirely down to the retailer whether or not they charge you a fee. You might well be able to negotiate that down to zero. That would depend on the retailer.

gijap

VAT-free it is absolutely an automatic right in this case - it is a consumption tax, and as [Deleted User] wouldn't be using the item in the UK, he is allowed to not pay the consumption tax in the UK, but somewhere else (where presumably VAT is lower).

Imagine exporting UK-built cars outside the EU - UK HMRC cannot and do not expect you to pay UK VAT to them, because you take the goods for consumption outside the EU, where VAT is due.

The problem is that some retailers are reluctant to get your VAT back because they don't want to bother with the administration of giving it back to you. (Talk to the company accountant though, and they will admit VAT is not due on exported goods). This is where Global Blue comes in, does the admin that the retailer should be doing - and taking their nice cut out of the refund along the way.

Given many retailers don't charge for the administration of full refunds and returns when customers return goods they are unhappy with - they probably should grant VAT refunds, and not charge for it when customers buy, and do not return, their goods.

After all, they still receive 100% of the money on the sale which they would ultimately keep, which is not the case when they give full refunds to customers who change their minds!

The retailer would never be stumping up for the VAT refund itself though, as those monies don't belong to them. It is tax revenue belonging to the UK government, and they have to later remit the funds to the government on all applicable sales they make.

[Deleted User] could use Amazon.co.uk for purchases to get a fairer deal - they have a global delivery service that immediately removes UK VAT, and charges an estimate of foreign VAT and deals with the foreign customs. Doesnt apply for Amazon marketplace or partners though.

booksurr

gijap wrote: »

You'd rather he get it all back and buy in the UK - than make the purchase outside the UK, reducing the UK retailer's profit and annual corporation tax they pay on it - and paying the VAT-equivalent to another government!

I would rather that he accept people who process things deserve to get paid for their work. Whether that be the claims handling company or the retailer

the VAT refund cannot be claimed directly by the consumer for very obvious reasons and so its admin is a cost for someone else. In a free market economy that someone has a choice how to pass that cost on, overtly as an admin fee or secretly as part of their overall margin

the consumer is free to choose a UK or non UK company, where that company actually pays its tax is another question

since you are a newbie and have searched to dig up this old post perhaps you could overtly declare your interest? I note you heavily promote Amazon, do you sell on their yourself perhaps?

gijap

Deleted_User wrote: »

The sting in the tail is that Global Blue takes 50% (or more!!) of your VAT refund once you take all their charges into account (including service fee, currency conversion fee, payment fee, etc etc). And there is no mention of this at ANY STAGE.

..to be fair, they only take over 50% if you make small purchases.

If you buy £700 of good for example, they take 4.7% of £700 (16.9% of the £700 is VAT), so you get 11.9% back. Overall that's 28% of your raw VAT refund.

It seems their fee structure is £2.50 fixed fee plus 26% of the VAT you should get back.

So Global Blue still makes sense for the tourists dropping £1000s on expensive watches

Interestingly, spend £1m, and they claim to get you back £166,517 out of £166,667, so they cap their fee at £150.

gijap

By "process the refund yourself " [Deleted User] probably simply meant bypassing Global Blue. So doing the VAT refund admin directly with HMRC, the retailer, and the customs-stamper at the border.

Right, it is an admin cost for someone. So is processing customer refunds and exchanges. Likewise if someone forgets their backpack in a department store, the retailer has to hold it, may have to pick up their telephone, and an employee has to give it back.

It doesn't make complete sense to not absorb the cost of foreign buyers asking for VAT refunds directly (and bypassing Global Blue) - when these buyers bought the item and still provide the retailer with their variable profit margin.

(That is, as long as 1000s of people dont start asking for 89p of VAT back - so perhaps there should be a minimum refund).

No idea when this post was, but I was Googling about tax. No I do not sell on Amazon.

I couldn't benefit anyway - as mentioned, only goods sold directly by Amazon.co.uk - not partners or Marketplace - are eligible for their international scheme.

booksurr wrote: »

I would rather that he accept people who process things deserve to get paid for their work. Whether that be the claims handling company or the retailer

the VAT refund cannot be claimed directly by the consumer for very obvious reasons and so its admin is a cost for someone else. In a free market economy that someone has a choice how to pass that cost on, overtly as an admin fee or secretly as part of their overall margin

the consumer is free to choose a UK or non UK company, where that company actually pays its tax is another question

since you are a newbie and have searched to dig up this old post perhaps you could overtly declare your interest? I note you heavily promote Amazon, do you sell on their yourself perhaps?

netcbc

If I'm leaving from Gatwick to Maldives, will I see the customs agent after going through security and he can stamp my vat407 form?

As well if I do this manually myself does this mean I will receive the full 20% if the retailer doesn't charge some kind of fee?