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Duty Free vs. Tax Free: What’s the Difference?

The terms duty free and tax free are often confused by international travelers. However, these two systems operate differently and apply to different shopping situations.

Understanding the difference is essential not only for travelers but also for merchants looking to attract international customers.

Duty Free: Tax- and Duty-Exempt Shopping in International Transit Areas

Duty free refers to products sold without taxes or customs duties in international transit areas, such as airports, seaports, and border crossings. The exemption is applied directly at the time of purchase. These stores are typically located after security checkpoints, near departure gates.

The most common product categories include:

  • Alcohol,
  • Tobacco,
  • Fragrances,
  • Cosmetics,
  • Luxury accessories

Duty-free shopping is often driven by impulse purchases made by travelers waiting for their flights. However, this retail model is limited to international transit areas.

Tax Free: Claiming a VAT Refund on In-Store Purchases

Tax free, also known as the tourist VAT refund, allows travelers who reside outside the European Union to reclaim the VAT (Value Added Tax) paid on eligible purchases made in stores within a participating country. Unlike duty-free shopping, tax-free purchases are made in regular retail stores located in city centers or shopping districts, and the VAT refund is processed when the traveler leaves the country.

Typical tax-free purchases include:

  • Electronics
  • Fashion and accessories
  • Cosmetics
  • Watches and jewelry
  • Leather goods

For many travelers, the opportunity to reclaim VAT makes shopping abroad more attractive and cost-effective.

An Opportunity for Merchants

Offering tax-free shopping helps merchants attract international customers and increase sales.

International tourists tend to:

Spend more than local customers

Significantly increase the average transaction value

Prefer stores that offer tax-free shopping

For retailers located in tourist destinations or popular shopping areas, tax-free shopping has become a powerful driver of customer acquisition and business growth.

To fully capitalize on this opportunity, merchants need a process that is simple, fast, and reliable—for both their business and their customers.

How SolPay Simplifies Tax-Free Shopping

At SolPay, we help partner merchants simplify the tax-free process for international travelers.

Our solution enables merchants to:

  • Deliver a smoother shopping experience for travelers
  • Simplify tax-free processing and administration
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Result

A simpler shopping experience for tourists and increased sales opportunities for merchants.

Discover our solutions

Frequently asked questions

Find answers to all your questions.

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  • What documents do I need to request to process a tax-free sale?

    The customer’s original passport is required to verify eligibility and issue a compliant tax-free form. Where applicable, Proof of residence outside the EU may also be requested. The information entered must strictly match the documents presented.

  • Which customers can I offer tax-free sales?

    🇫🇷 In France, you can offer tax-free shopping to travelers aged 16 or older who reside outside the European Union and are staying in France for less than 6 months.
    🇧🇪  In Belgium, you can offer tax-free shopping to travelers who reside outside the European Union.

    These criteria must be verified at checkout before any tax-free form is issued.

  • What does the government say about tax-free shopping?

    For more information on the tax-free process, consult the official Service-Public page: https://entreprendre.service-public.gouv.fr/vosdroits/F20558.

    For more information on the tax-free process, consult the official FPS Finance page: https://fin.belgium.be/en/private-individuals/international/travel-luggage/traveling-outside-eu/vat-refund.

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