VAT Refund

VAT Refund is the value-added tax refund available to non-resident tourists when purchasing luxury goods in countries with VAT systems. Effective refund rates after operator handling fees are typically 10-13% in France, 11-13% in Italy, 8-10% in Japan, 7-9% in South Korea. Significantly improves the math for cross-border purchases — see our regional arbitrage tool for current effective rates.

Price impact

Drives French/Italian retail to be ~10-12% cheaper than US retail for tourists. This is the structural reason behind the popularity of Paris Hermès flagship visits for international buyers.