The good, the bad and the ugly: How Brexit has reshaped the UK-EU duty and tax free business – The Moodie Davitt Report

UK/EUROPE. Twenty years and six months since intra-European Union duty free shopping was abolished, it made a return for travellers between the UK and EU member states on 1 January 2021.

UK consumer media The Daily Express welcomes back duty free shopping. But outside liquor and tobacco, it is a different story for travellers from the UK. Click on the image to read the full article.

A transition period that followed the UK’s earlier departure from the EU ended on 31 December, 2020, clearing the way for the new rules to be introduced the next day.

The new regulations, however, are a mix of the good (the return of duty free shopping on liquor & tobacco in either direction); the bad (the removal of the tax free allowance for travellers departing the UK); and for many British retailers at least, the ugly (the near elimination of the VAT Retail Export Scheme – refunds are now only granted if purchased items are shipped directly abroad and are not transported in a person’s luggage).

The good: Duty free shopping returns for passengers travelling between the UK and the EU

Travellers departing England, Scotland and Wales for EU countries can now purchase duty free liquor & tobacco.

According to the European Travel Retail Confederation (ETRC), the EU allowances are as follows:

  • Alcohol: a) 4 litres of still wine; and b) 16 litres of beer; and c) a total of 1 litre of spirits over 22 % vol. OR 1 litre of undenatured alcohol (ethyl alcohol) of 80% vol. (or over) OR 2 litres of fortified or sparkling wine.
  • Tobacco: 200 cigarettes OR 100 cigarillos OR 50 cigars OR 250 g tobacco;
  • Other goods up to a value of €300 per traveller or €430 for travellers by air and sea [however, this is the EU allowance; see next section for the scrapping of the tax free allowance for travellers departing from the UK]

The allowances for passengers ENTERING THE UK are:

  • Alcohol: a) 18 litres of still wine; and b) 42 litres of beer; and c) a total of 4 litres of spirits and other liquors over 22% alcohol OR 9 litres of fortified wine (for example port, sherry), sparkling wine and alcoholic drinks up to 22% alcohol
  • Tobacco: 200 cigarettes OR 100 cigarillos OR 50 cigars OR 250 g tobacco OR 200 sticks of tobacco for heating.
  • Other goods worth up to £390 (or up to £270 when arriving by private plane or boat). If a single item IS worth more than the allowance, duty or tax must be paid on its full value, not just the value above the allowance.

Northern Ireland (part of the UK), however will operate under EU single market rules, meaning no duty free allowace for travellers to the EU (or other UK destinations).

The bad: Tax free sales scrapped for UK passengers bound for EU states (and anywhere else)

Despite a vociferous and broad-based campaign to rescind the measure, the British government scrapped tax free shopping for passengers leaving the country (to any destination including the EU), also effective 1 January. Industry campaigners have warned that in London airports alone, the combined impact of COVID-19 and the removal of the VAT airside exemption will result in losses of over £1 billion in operating profit and threaten thousands of jobs. The government decision is still being challenged.

The ugly: VAT refund changes mean crippling blow for UK retailers selling tax free goods to international visitors

From 1 January, the VAT Retail Export Scheme, which previously offered VAT refunds on landside sales of goods to non-EU travellers, has been scrapped, other than if goods are shipped directly abroad (i.e. separately from the traveller). Analyst Global Blue has calculated that the move will end up costing the UK economy £6 billion (US$8.2 billion) a year in lost tourist spending.

Retailer reaction: EU retailers promote new shopping opportunity for UK-bound travellers; World Duty Free vows to maintain saving on majority of previously tax free categories in the UK

Dublin Airport retailer The Loop (Aer Rianta International) is quick off the mark in advising passengers (via an excruciatingly bad pun – ‘See EU Later Taxes’) that they can now buy duty free en route to the UK

In updating the allowance information on its UK shopping web page, Dufry-owned World Duty Free noted: “On product categories including Beauty, Food, Sunglasses, Watches, Jewellery and Souvenirs, which are not duty free products, we have always offered great year round value; which we intend to widely maintain. From 1st January 2021, the UK Government has removed the benefit of VAT relief which allowed tax free sales on goods purchased in UK airports.

“However, as far as possible we want to continue to offer the same value that we have previously (up to December 31st 2020) been offering to all our customers across these product categories. Therefore, the majority of these products will continue to show a 20% saving versus the UK average high street price and we will still offer some of the more popular fragrances at 40% saving versus the UK average high street price. However, as with any retail business, our ability to do so will be determined by a number of factors (e.g. cost price, rents, price increases in domestic market etc).”

Dufry-owned World Duty Free announces the key changes on its UK airport shopping website. Note that the retailer has withdrawn its collect on return service from 1 January 2021. “We are keeping this under review, and may re-instate this service during 2021,” the companys says. Click on image to enlarge.

(Above and below) World Duty Free spells out the difference between duty free and tax free goods and also explains its pricing policy on previously tax free goods post 1 January. Click to enlarge.


World Duty Free can now live up to its name by selling pure duty free items from its shops onboard P&O Ferries (above and at Eurostar St Pancras (below). Click to enlarge.

What will the scrapping of the outbound tax free allowance for travellers departing the UK from airports such as Gatwick (above) and Manchester (below) mean? World Duty Free says that “as far as possible” it wants to continue offering the same value to consumers as it did before 1 January on categories such as beauty, food, sunglasses, watches, jewellery and souvenirs.


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