Analytics, Financial Services, Latvia, Markets and Companies, Retail, Taxation, Tourism

Tax Free Shopping (TFS) or value-added tax refund after exporting goods from the country has been available in Latvia already for two decades. Since Latvia joined the European Union in 2004, the Tax Free system in Latvia is maintained by the TFS creator and global leader Global Blue, and citizens of non-EU countries can be refunded money for purchases close to the amount of VAT rate. Celebrating the 20^th anniversary of the TFS system in Latvia, Global Blue has summarized the most interesting facts about the Tax Free shopping.

The most expensive purchase during these twenty years was made in a clothing store in Riga where a foreign tourist paid 85,372 euro for five pieces of clothing. In turn, the most expensive single purchase was a watch worth 67,423 euro.

“During these twenty years, Latvia has become a popular shopping place for visitors from the East, but it is also loved by people of a dozen other countries. Tax Free purchases are made mostly in Riga and Jūrmala, and mainly wealthy people and business people on business trips or on vacation are shopping in the capital of Latvia. This makes Latvia different from Lithuania and Estonia where the border‑shopping model is very popular with Belarusians and Russians coming by car to purchase everyday products. In Latvia, Tax Free buyers mostly come through Riga International Airport, and their origin is greatly defined by destinations chosen by airlines,” explains Global Blue Latvija Manager Vineta Kalmane.

Clothing is the most popular Tax Free product in Latvia - this year 74% of all goods purchased by foreigners in Latvia were clothing. 7% of all purchases are electric appliances and smart devices, while 6% - watches and jewellery. List of the countries represented is very long, and the share of tourists from Asian countries is constantly growing.

In 2004, when our shops still had a very small offer of brand clothing and electric equipment, tourists bought works of folk craftsmasters more often - linen products, amber jewellery and similar souvenirs. Latvia was more visited by residents of neighbouring countries at the time, and some of the most active buyers were Norwegians. However, at that time clothing already dominated making up 48% of all purchases. The second most popular group with 33% of the total volume was watches and jewellery, while the third place was taken by sports goods with 7%. 

Especially rewarding group for merchants is tourists from the Far East. For example, the Chinese spend 58% of the whole travel budget in shops. Arrival of the first charter flights from Korea in 2019 and opening of more and more new flights from other Asian countries in the nearest future would be great news for retailers since shopping, especially purchases of products of famous brands, is an important part of travelling for tourists from these countries