Tax-free purchases reached a record high this year, with over €8BN within the first 5 months of 2019, which marks a 13% increase on last year. This is relevant news because it highlights a new trend in international tourism, specifically a growing influx of tourists from non-EU countries. While Italy was always a favourite travel destination, popular with different demographics all over the world, over the past decade the tourism industry has been fuelled mostly by travellers from other European countries.
China and Italy: a special relationship getting stronger by the day
Chinese tourists are responsible for almost 30% of the increase in tax-free purchases in Italy. According to a recent study by the national association of SMBs, over 6 million Chinese tourists are expected to visit Italy this year, over a million more than in 2018, with an average tax-free expense of almost €1500 per person. This impressive figure often includes purchases that are made on behalf of friends and family at home – or through apps that specifically allow users to arrange this kind of transaction. Italian fashion brands, in particular, are hugely popular in China and it is common practice to take advantage of a loved one’s trip to Italy to get hold of a tax-free Armani handbag or a Zegna suit. Dolce & Gabbana, on the other hand, are still not doing especially well on the Chinese market.
Tax free purchases in Italy: who is buying?
Where do the other tax-free purchases being made in Italy end up? Russian tourists are the second largest group, responsible for approximately 12% of tax-free transactions, followed by American tourists with 8%. While these are the largest groups from individual nations, there is also a growing trend of tourists coming from Middle-Eastern Countries such as Qatar, Kuwait, Saudi Arabia, and the UAE.
Tax free purchases in Italy: how do they work
Residents of non-EU Countries can claim the VAT back on any purchase over €155. The claim can be made at a special desk at the airport and it only covers certain classes of products. It was designed as a way of encouraging tourists to shop for certain products and it is regulated by international law. Italy ranks third among EU member states for the highest volume of tax-free purchases, accounting for almost 16% of the total, following the UK (which, at the moment of writing, is still technically a member of the Union) and France. The vast majority of tax-free shopping involves luxury items such as designer fashion, accessories, and shoes. Tourists get to save 22% on their expenses, which translates into significant amounts on goods that can cost upwards of €1000. The idea was considered, in the last year, of extending tax-free benefits to other categories of goods, such as furniture, that are not currently covered because they can’t be carried on the flight home.