Ministers are being urged to let EU visitors shop tax-free, reviving a debate over VAT-free retail spending that directly affects hotel, restaurant and attraction revenue across the sector.

The Times reports that the call targets the current rules, which leave EU-based travellers unable to claim back VAT on purchases made in Britain, while non-EU visitors already qualify under the existing scheme. Retailers and hospitality operators argue the gap pushes high-spending European travellers toward Paris, Milan and Madrid instead of London.

Why does this matter for hospitality?

Tax-free shopping rarely stops at the shop till. Travellers who come to spend on goods also book hotel nights, eat out and visit paid attractions. When the incentive to shop disappears, the whole spending trip often disappears with it, and competing markets capture it.

Sector bodies have consistently framed the issue as one of competitive distortion rather than a simple tax break. A tourist deciding between London and a rival European capital weighs the total cost of the visit, and a 20% effective price difference on shopping tilts that decision.

The policy also cuts the other way. European hospitality businesses watch Britain's rules closely because any relaxation would pull spending back toward UK destinations, while British operators have long complained the current setup exports spending to the continent.

What happens next?

The decision sits with ministers, and the pressure campaign now moves to Westminster. Operators and investors should watch for a government response, any consultation on extending the scheme, and whether EU visitors get parity with non-EU shoppers in future fiscal statements.