Have you ever wondered if purchasing a Louis Vuitton item in Paris would be more affordable than buying it elsewhere? Well, wonder no more, as in this article, we will delve into the question that has been on the minds of most luxury shoppers at least once: Is Louis Vuitton cheaper in Paris? We’ll explore the factors that contribute to the price differences, from taxes and import duties to exchange rates and retail markups. So, if you’re contemplating a trip to the fashion capital of the world to snag a Louis Vuitton piece at a better price, read on to discover if dreams of a Louis Vuitton deal can become a reality in Paris.
Why Are Luxury Brands Typically Cheaper in Paris?
Paris, often regarded as the fashion capital of the world, is home to numerous luxury brands, including Louis Vuitton. And as many of you probably already know, any brand is typically the cheapest in its home market. This is basically due to the fact that the brand does not incur as many costs when selling at home. These include an array of export related expenses, such as transportation costs, import fees and customs duties. Obviously, these are only incurred when the brand sells its products overseas. Furthermore, these costs also vary from country to country. Hence the reason why we see price differences across regions. However, this is not the only reason for why Louis Vuitton is cheaper in Paris.
In fact, the biggest reason for why Louis Vuitton and other luxury brands are usually cheaper in Paris is due to VAT refunds. VAT is a consumption tax applied to goods and services in the EU countries, including France. However, non-EU residents are usually eligible for a so-called VAT refund on purchases they make while visiting the region. This refund typically ranges between 12 and 21 percent (depending on a country), significantly reducing the final price of the goods for the foreign buyer.
In France specifically, the VAT refund rate is 12%, meaning that a non-EU shopper can get 12 percent of the paid price back. As you may have guessed, this is a huge incentive for foreigners to come to shop in France. But actually, it’s not only VAT refunds. In fact, last year a lot of foreign shoppers were flocking to Europe and particularly to France, because of the weakening euro, which has made shopping significantly more affordable for foreigners. Basically, in July of 2022, you were able to exchange $1,000 for €1,000 instead of less than €900 in January. What this essentially means is that the total amount of your savings can vary based on the current exchange rates. You are going to save more when the dollar is stronger and less when it’s weaker. Hence why it’s critical to check on the foreign exchange rates prior to your trip.
How the VAT Refund Process Works in France?
As mentioned earlier, the VAT refund rate is France is 12%. But, how can you get this mysterious deduction?
Well, first of all, you must be at least 16 years old to apply. Then, make sure to ask for a VAT refund form when making your purchase. The form will need to be filled out with your personal information and the details of the purchase. Keep in mind that there is a minimum purchase requirement of €100.01 per transaction to be eligible for the refund (the minimum purchase requirement may vary from country to country).
Next, before leaving France, you will need to present the VAT refund form along with the purchased items at the customs office at the airport or border crossing. The customs officer will verify the form and may ask to see the items. Once the form is stamped, you can proceed to the VAT refund counter to collect your refund. The refund can usually be received in cash or credited back to your credit card, depending on the refund service provider.
It’s important to note that there may be administrative fees associated with the VAT refund process, which can reduce the total refund amount. Additionally, the refund process can be time-consuming, so make sure to allocate sufficient time before your departure to complete the necessary procedures.
Potential Savings by Purchasing a Louis Vuitton Handbag in Paris
Now that we’ve learned everything about why luxury brands are typically cheaper in Paris and how the VAT refund process works in France, let’s go ahead and apply this in the real life example.
Let’s say we are looking to purchase the Louis Vuitton Speedy 25. In the U.S., the bag currently retails for $1,490 plus tax. Sales tax in the U.S. differs from state to state, but for the sake of this example, let’s assume that we are shopping at Louis Vuitton in New York City, where the sales tax is 8.875 percent. This gives us a total price estimate of around $1,622.
The current retail price for the Speedy 25 in Paris is €1,300 (pricing as of July 2023). At the current EUR/USD exchange rate this is about $1,425 (at the time of writing this blog post 1 Euro trades for 1.10 USD), which already implies $197 savings by purchasing the handbag abroad.
However, let’s not forget that if a foreign shopper spends over 100.01 Euros in a single transaction in France, they are also eligible for a VAT refund, which in France is 12 percent. So, in our case, we will be getting an extra €156 Euros back (12% of €1,300). At the 1EUR=1.10USD exchange rate, this is about $170. So, our total savings will be going up to over $360.
Of course, we will have to pay some duties when back to the U.S. (you do have to declare your purchases when coming back from abroad). However, to put it into the perspective, the first $800 spent abroad is tax-free and the rest is usually taxed at a rate of about 3-3.5 percent. So, in our case, we are looking at a customs duty of around $15. This leaves us with around $350 in savings. See the exact numbers below:
|Louis Vuitton Speedy 25 in Paris
|Price of the bag in New York
|$1,622 ($1,490 retail price + sales tax of 8.875 percent)
|Price of the bag in Paris
|VAT Refund (12% in France)
|Price of the bag in Paris after VAT Refund
|Final EURO price in USD
|$1,253 (1EUR=1.10 USD)
|US Import Duty
|Final price of the bag in USD
|Total Savings by purchasing in Paris
Extra Tips for Maximizing Your Savings
If you decide to shop Louis Vuitton in Paris, to maximize your savings, here are a few tips to keep in mind:
- Research the current exchange rates to understand the impact on your home currency. Favorable exchange rates can further enhance the savings you’ll enjoy when shopping in Paris.
- Travel to Paris during the low season (November to March). Prices for flights and hotels are usually the cheapest during the low season. Use this opportunity to save even more!
- Have a clear shopping plan. This will help you stick to your budget and avoid impulse buys.
So, is Louis Vuitton Really Cheaper in Paris?
As you can see from the analysis above, yes, Louis Vuitton is indeed cheaper in Paris. This is due to an array of factors, but mostly the VAT refund that a foreign (non-EU) person can get for shopping in France. Start planning your trip to Paris today to take advantage of this asap!