March 27th 2019, Madrid – Global Blue unveiled during a conference exclusive data around Spanish Tax Free ShoppingA number of countries offer VAT/GST refunds to international... More (TFS) market for the year of 2018.

Boom and bust Tax Free Shopping pattern

Amidst a mitigated macroeconomic context in Europe, Spain follows the similar negative trend affecting its neighbouring countries, posting an overall -5% decline of its TFS spend. Elsewhere, both Italy and the UK posted a -4% decline of their TFS spend and Germany -12%. Only France managed to register positive results with a +2% increase.

However, out of all European countries observed, Spain is the only country to increase its number of TFS forms, by +6% in 2018. In comparison, over the same period, the number of TFS forms emitted in Europe dropped by -6%. For Spain, this performance is largely attributed to the drop of its Minimum Purchase Amount (MPA) implemented in August 2018.

The decision to remove the 90,16€ MPA threshold at which international travellers could claim their refund back on goods bought in Spain aimed to increase spending in the country and include new sectors in the TFS market such as small businesses and pharmacies. As a result, and in contrast to its positive TFS transaction number increase, Spain saw its average TFS spend per transaction decline by -10% where European average sat at +2% in 2018.

Spain is the only country to increase its number of TFS forms, by +6% in 2018

Need to attract more affluent nationalities and big spenders

Much like the rest of European countries, Chinese globe shoppers are Spain’s #1 most important nationality both in terms of tourist refunded (15%) and overall share of TFS spend (35%). Their average TFS spend seats at 2,465€.

European best performing TFS countries, such as France and the UK, have 2 common characteristics. Firstly, they welcome a greater share of affluent nationalities. France, the UK, Italy or Germany for example, can count on Gulf Countries, Americans or Russians’ important spending power to boost their TFS performance. Secondly, a closer look at travellers’ segmentation, shows that Elite globe shoppers* account for a great share of these countries’ TFS spend, 26% in the case of France and 21% in the case of the UK.

Spain is a little different than the rest of its European neighbours. Argentinians are Spain’s #2 nationality, both in terms of tourist refunded (13,5%) and overall TFS spend (7%). However, this nationality registers a lower than European average TFS spend at 607€, which undermines Spain’s figures. On the same level, Elite globe shoppers only represent 11% of Spain’s TFS performance.

Going forward, for Spain to gain greater competitive margin against neighbouring European countries should include tourism and shopping promotion in affluent countries or target specific group of globe shoppers through digital marketing campaigns, Chinese millennials for example.

*Individuals who have spent >40,000€ over the past 2 years.