The paradox
of tax-free shopping

Tax-free shopping is meant to be a simple promise: spend abroad, reclaim the tax, and leave with a sense of reward. Yet for most travelers, the reality is very different. Queues at airports, unclear instructions, inconsistent rules, and refunds that shrink after hidden deductions — what should be a moment of delight too often turns into frustration.

This is not a small inefficiency. It is a structural issue in an industry that processes billions of euros every year and directly shapes how people experience international retail and travel. For many visitors, the VAT refund is the last interaction they have with a brand or a destination before they leave. Too often, it leaves the worst impression.

A system built for intermediaries, not for travelers or merchants

The roots of the problem lie in how the system has evolved. Instead of building open infrastructure, the industry has relied on a handful of players who constructed closed models designed for lock-in. These models are not just technical frameworks — they are economic cages. Merchants are bound into long agreements, travelers are funneled into rigid flows, and little room is left for innovation.

The misalignment becomes most visible at the point of experience. A traveler might spend thousands at a luxury boutique, carefully nurtured through a curated brand journey. Yet when it comes time to reclaim their tax, they are handed off to a third-party operator that has little to do with the store. The continuity breaks. The relationship shifts from trusted brand to unfamiliar service, from premium care to paperwork.

For the traveler, it feels jarring. For the retailer, it means losing ownership of the very last step of the customer journey. For the industry, it represents a missed opportunity to strengthen loyalty and reinforce value.

Principles for a new era of tax-free

If the industry is to regain relevance and trust, it must do more than digitize existing forms. It must rethink the fundamentals. Several principles stand out:

• Continuity of experience. Tax-free should be part of the retailer’s own service, offered in their name, not detached into an unfamiliar flow. The shopper who buys at a boutique should complete the journey with the same brand, not with a third party they never chose.
• Openness and interoperability. Infrastructure should be built in a way that allows merchants, payment providers, marketplaces, and travel partners to connect easily. No more lock-in; no more economic traps.
• Fair value distribution. The benefits of tax-free should flow primarily to those who create it: the merchants who generate sales and the travelers who spend. The model should not depend on layers of hidden fees that erode trust.
• Compliance by design. Customs and VAT rules are non-negotiable, but they should be embedded into systems seamlessly, rather than bolted on through manual steps that frustrate travelers and risk errors.
• Speed and trust. Whether refunds are instant or later, the process must feel transparent and reliable. The traveler should always understand what they are owed and when they will receive it.

From friction to growth

When viewed this way, tax-free shopping is not just a back-office process. It is a potential growth engine. A traveler who experiences a smooth, fair, and brand-owned refund is more likely to return, more likely to spend again, and more likely to recommend the destination. Retailers gain a tool to deepen loyalty. Governments reinforce the attractiveness of their markets. Airports and travel ecosystems benefit from the halo effect.

What is today a point of friction could become a source of advantage. But it requires a collective willingness to step back from legacy assumptions and rebuild with travelers and merchants at the center.

The moment for change

The industry now stands at a crossroads. It can continue down the path of incremental tweaks — slightly faster queues, slightly clearer paperwork, marginally better apps — or it can embrace a true rethink. The forces pushing for change are undeniable: digital expectations, the rebound of global tourism, and the pressure on merchants to control costs and deliver better experiences.

Travelers will not wait forever. They already compare tax-free to the ease of booking a ride, paying a bill, or checking into a hotel. Merchants, too, are questioning why such an important part of the customer journey is outsourced to systems that diminish their role. Policymakers are also moving, seeking greater transparency and fairness in flows that are both economically significant and socially visible.

The opportunity is to move from a model that extracts value to one that creates it. From an industry that travelers tolerate to one that travelers trust. From an afterthought to a differentiator.

Rethinking what tax-free can be

Tax-free shopping touches millions of journeys every year. It should not be the weakest link in the traveler experience. It should not be a process merchants feel forced into, nor one where the benefits are diluted before reaching those who matter most.

Reimagined with openness, fairness, and continuity, it could become one of the strongest links: a reason to spend more, return more often, and carry home not frustration, but loyalty.

The question is not whether change is possible. The question is whether the industry is willing to break free from the lock-ins of the past and embrace a model built for the realities of global commerce today.

The time to rethink is now.