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.

Global Blue Tax Refund

Global Blue Form that I got from Rimowa

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!