Background:
On my recent visit to Europe, I purchased a new Rimowa luggage as it was cheaper in Europe than in the United States. It is due to the currency exchange rate, as well as the Global Blue tax refund you can get.
My Purchase:
I got my luggage in Amsterdam and the Rimowa Store is also partnered with Global Blue to receive your tax back. The Netherlands has a 21% VAT rate, and with my purchase, I was told that I would end up getting 75 EUR back on my credit card on a 685 EUR purchase, which is a little less than an 11% refund. Transaction costs and fees from Global Blue eat up a lot of the refund.
I was fine with that, but I noticed on my credit card that I only received $73 USD back? How could that be? Currently, the Euro is stronger than the dollar. Since it seemed fishy, I asked Global Blue to clarify.
They essentially pointed me to their website which states:
If you want to receive your refund to Visa, MasterCard, and Diners, your credit card account will be credited in the billing currency of your credit card. In case of UnionPay card and Amex, it will be credited in US Dollars (USD).
So the terms and conditions essentially force you to receive the refund in your billing currency, which in my case is in US Dollars. I do not need them to refund me in US Dollars, as I have a no-foreign transaction fee card. I rather them refund me in Euros and have my credit card company do the conversion.
Alternatively, it would be totally fine if they refund me in US Dollars with a favorable exchange rate conversion, but no. Here is what their terms say.
In case the billing currency of your credit card differs from the original purchase currency, a currency conversion takes place.
In such situation an amount up to EUR 1.00 will be deducted from the tax refund per each Tax Free Form due to the scheme fee applied on Visa or Mastercard transactions.
Additionally, a currency conversion fee of 3% to 5% of the refund amount in original currency will be deducted in case your currency differs from the currency of the purchase.
Yikes. Fees galore. So this is how my 75 EUR refund was turned into just 73 USD.
Original refund amount: 75 EUR
Scheme fee: 1 EUR
Currency conversion fee applied: 5 %
Currency conversion fee applied: 3.75 EUR
Amount to convert (excluding the fees): 70.25 EUR
Daily conversion rate: 1.043 (EUR to USD)
Payment amount: 70.25 * 1.043 = 73.28 USD
If they had just refunded the 75 EUR to my credit card, I would have probably seen closer to 80 USD at the time of the refund, as their daily conversion rate was also worse than my credit card. So, being $7 USD short makes the overall refund about 1% less as a whole.
Considering anyone buying tax-free goods probably has a different billing currency from the original purchase currency, a conversion is practically always going to be taking place…thus Global Blue makes more money.
The Verdict:
Overall, this is an annoying business practice. On top of the large commissions they already charge, now forcing a tax refund to be in my home currency and charging extra fees on top of it eats away at the tax savings when shopping abroad.
Have you used Global Blue for your tax refund purchases when abroad? Have you experienced a similar situation? Share your experience below!
Cheers,
Ty
Have any questions? Comment below or email me at takeofftotravel@gmail.com. I’ve also started working with a travel agency, Fora Travel, and can assist in booking hotel stays or planning trips. You can also view all my other posts here! Thanks for stopping by!
Same thing just happened to me in August 2023. My large Euro refund turned out to be much less in US $, even though the Euro is stronger than the US$ and it should have been the reverse. Purchased a Louis Vuitton bag in Vienna, but exited the EU out of Munich. After the scheme fee, conversion fee and their dishonest conversion rate (which is lower than Forex or any bank!) I lost about 6-8% which is a large sum when you are spending 2,150 Euro on a handbag! It is a scam and they make a fortune on not only a fee when calculating the VAT back, but then their ‘conversion’ fee for not giving you the funds back in the original currency and then there is a small processing fee. I wish Louis Vuitton adopted Rolex’s process and took care of the refund in the store as it would be fair and easier. Perhaps in another 10 years we will see this. That being said, I still saved US $647 versus the price the handbag would have cost me in the USA, so it is still worth the effort although it does leave a bitter taste in the mouth.
Totally agree! I wish some sort of competition would make them change their ways. But for now, we’re stuck. Thanks for sharing.
Just back from Australia. The TRS – Tourist Refund Scheme – at Perth Airport was very efficient. There’s an app to enter your details beforehand and save time. Told us it could be up to 60 days to get refund but it has been processed within 5 days of return. Full 10% GST refunded by Australian Border Force and it appears Global Blue have only deducted the 3% commission in converting it and crediting my card. Pretty content with that result.
Thanks for sharing! Did they give you a favorable exchange rate?
Similar experience in my recent trip to Paris in May 2023. Expected more from Global Blue and Planet Tax, but in the end lost several % points due to their fees. Rolex, which does their own tax refunds, gave me a true exchange rate, and the expected total tax refund per the tax free form.
Thanks for sharing! The fees are definitely annoying. Thanks for the Rolex data point, that is good at least!
that is a steep amount that the Global Blue takes from all and they probably are a monopoly!! giving you no choice
Very true! They do process most of the tax refunds. Thanks for reading!
Can’t you get your VAT refund at the airport with no fees?
I don’t think so sadly!