IRELAND. The Irish government has confirmed that airport duty & tax free sales to UK-bound travellers will return from 1 January under a bill that is currently going through Parliament.
Last year, as reported, the Department of Finance had cast doubt on whether it would permit a return to a duty free regime with the UK, citing potential losses to the exchequer. But now the department has confirmed that it plans to permit duty free shopping between the two states, in line with EU policy.
ETRC Secretary General Julie Lassaigne said: “The Irish government is in the process of passing its 2020 Brexit Preparedness Bill which will ready the country for the change to its relationship with the UK. The Bill as published, will allow for duty and tax free sales for all travellers to the UK, which is in line with EU legislation as confirmed by the European Commission to ETRC several times during the Brexit process. Obviously the Bill has not been fully adopted yet, but we are not anticipating any last minute changes.
“This is really good news as the Irish government were initially very sceptical of the impact of duty and tax free and thought that it could present a threat to government finances. Thankfully the industry in Ireland, which joined together under the banner of the Irish Duty Free Alliance, was able to show the clear benefits of duty and tax free sales to UK passengers. ETRC was delighted to assist this effort.
“It is now clear that all EU Member States will be able to sell duty and tax free to UK passengers from 1 January, and retailers should take good note of the new allowances for passengers on GB destinations. The situation in the UK is still unclear with regard to tax free sales (duty & tax free alcohol & tobacco sales have been approved), and we repeat our call for the industry to stay mobilised and fully back UKTRF and the UK travel industry in their continued engagement with the UK government.”
As noted above, the Irish Duty Free Alliance has been working hard to present a possible return of duty free as a silver lining to legislators. It countered heavily an argument from the Department of Finance in July 2019, which warned the Irish economy would stand to forego €350 million (US$386.71 million) in excise duty receipts from a return to a duty free regime. This estimate was based on 50% of total passengers arriving in Ireland from the UK using their tax-free allowance.
Separately, as in the UK, Irish retailers that target overseas shoppers are concerned about changes to the VAT rules.
Planet Payment is a leading Irish business that enables tax refunds for non-EU visitors. Country Manager David Daly told The Moodie Davitt Report that UK visitors will be disincentivised from shopping in Ireland due to the imposition of new tax free thresholds.
He explained: “The spend threshold above which tax free sales are available will rise to €175 for all. UK tourists therefore can only shop on sales over €175 and their average shopping spend in Ireland currently is €32.”
Even availing of the scheme for UK visitors will be unwieldy, he added. “UK tourists can’t use the standard departure authorisation process. UK tourists have to go through the red channel when they return home and ask UK Border Force to qualify any import VAT or duty needed to be paid, pay this, attach proof of payment to their claim, ask UKBF to stamp their form to confirm importation of goods and then post the claim to Ireland to obtain a refund.
“Also VAT and import duty must be paid on goods over £390 so effectively the value opportunity is only between €175 and £390. This will be confusing for tourists who are likely not to bother with the process and staff in stores who’ll find the process difficult to offer.”
The raised threshold could also deter around 80% of other visitors from availing of the tax free refund scheme, he added, as most spend under the €175 figure to which tax free spend would apply.
Retailers are lobbying to change the rules and hope for movement from government in the coming weeks.
