Swiss crossing the border to save money

Taking francs on trips to eurozone for shopping sprees

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But since the Swiss live outside the EU’s economic union, they’re eligible for refunds on the 19 percent to 20 percent value-added tax they pay in German, French, Italian and Austrian stores. They come out ahead even after paying the 8 percent VAT that Switzerland requires on items brought over the border.

For evidence of what the strong currency is doing to Swiss business, consider the plight of a new 120-store shopping mall in Basel, Switzerland, close by Germany and France.

All the Swiss have to do is drive a few minutes past the Stuecki Shopping Center to get to the eurozone, where their potent franc can buy the same trousers, detergent, contact lenses, stoves and magazines for half the price.

“The Swiss people are doing a little bit of cherry-picking. Of course, we feel it,” said Jan Tanner, the mall’s director and board president of the Swiss Council of Shopping Centers and director of the mall.

Inside the mall, which cost more than a quarter-billion francs to build and boasts climate-friendly heating and cooling, the lunch crowd swelled the fast-food court, but there were few other customers wandering its stylish glass and steel corridors, where new BMWs were parked on display.

Zurich-based Location Group declared the mall a “disgrace” in a retail market study earlier this year, saying at least one-third of all tenants would move immediately if they could because sales “fall well short of the worst-case hopes.” It partly blamed the franc.

“It’s really a very, very serious moment for some of those retailers,” said Mr. Rudolph, the professor at St. Gallen. “Some of the stores will be killed. Probably the smaller ones. If you’re near the border, and the price difference was 10 percent, and now it’s 30 percent - it’s not going to work.”

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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