Burberry CEO calls for return of VAT-free shopping to help UK reclaim luxury crown

Joshua Schulman, CEO of Burberry, has urged the UK government to reinstate VAT-free shopping for international tourists – a move he says could help Britain reclaim its position as Europe’s top luxury shopping destination.

International consumers are still “not shopping in the UK to the extent that we would like due to the lack of a VAT refund scheme”, the CEO told The Telegraph.

The VAT-free shopping scheme was scrapped in 2021 following Brexit. While countries like France and Italy continue to benefit from tax-free retail offerings, UK luxury players have been at a disadvantage, with both tourism and retail spend affected.

The decision to remove the scheme, which allowed international shoppers to reclaim 20 per cent VAT on purchases, proved deeply unpopular among the UK’s retail and hospitality sectors.

Although Burberry’s Boss admits most of the company’s recent problems were of its own making, he made clear that the lack of a VAT refund has contributed to international shoppers choosing other fashion capitals over London. He said it would be “a real lever for growth” and a “great opportunity for the UK to become the No 1 shopping destination in Europe”.

Joshua Schulman, CEO at Burberry

However, Treasury officials remain unmoved. A spokesperson said there are “no plans to introduce a new tax-free shopping scheme in Great Britain,” noting that VAT relief is still available for goods shipped overseas.

Meanwhile, industry figures remain critical of the scheme’s removal. Helen Brocklebank, CEO of Walpole, has previously called it a “crazy, wrong-headed decision”.

The last Conservative government had argued that reintroducing it would cost the Treasury around £2 billion by 2025-26 – a number based on Office for Budget Responsibility projections from 2020.

In February, data revealed that London’s West End retailers have lost an estimated £640 million across FY24, up from £400 million in FY23, thanks to unrealised international visitor revenue.

Dee Corsi, Chief Executive Officer of New West End Company, said: “International visitors are eager to spend, at a time when domestic spend is declining, but without a robust tourism strategy, we are losing out to our European competitors – to the tune of £640 million in a year.

“If the Government is serious about protecting high streets and driving investment, now is the time to act before the growth window narrows even further.”

Despite ongoing government resistance, Schulman and others argue that the cost is outweighed by the long-term benefits of revitalising tourism and the luxury sector. A government spokesman responded: “We are supporting the continued growth of this industry and will be launching a national visitor economy strategy this autumn to help meet our ambition to welcome 50 million international visitors a year to the UK by 2030.”

The VAT debate comes amid a brighter-than-expected earnings update from Burberry. Shares in the British heritage brand rose nearly 6% on Friday, following its strongest sales performance in 18 months.

Festival-goers helped drive demand for seasonal staples. “We are appealing to a much broader range of luxury consumers,” Schulman said, noting the company is attracting “younger, high-spending extrovert consumers who want to stand out from the crowd” alongside its loyal core clientele.

But the path ahead is still far from smooth. “It’s a tough macro [environment] out there and we are taking things step by step,” Schulman said.

The company did not issue full-year guidance, citing ongoing macroeconomic uncertainty.

In May, the company announced plans to cut a potential 1,700 jobs worldwide as part of efforts to slash staff costs and return the luxury fashion brand to sustainable, profitable growth. It was also revealed that Shulman cashed out nearly £2.6 million in his first nine months at the helm of the British heritage brand.

Though Burberry is still in the early stages of its turnaround, the UK’s retail future hinges on the bigger picture. Whether the government will listen to pleas of reintroducing tax-free shopping remains to be seen.