A refund policy written for a US customer base tends to assume three things: refunds are offered at the merchant’s discretion, the refund amount is whatever price was charged, and the money goes back the way it came without much thought about which currency it left in. None of those assumptions survive contact with an EU or UK customer. Once a store starts shipping to Germany, billing a subscriber in France, or taking cards from the UK, a US-only refund policy is missing three things that are not optional there: a statutory right to cancel that exists whether the merchant wants to offer it or not, a refund amount that has to include VAT because the price the customer paid already did, and a currency-handling rule that decides who absorbs an exchange-rate move between the sale and the refund. This guide walks through all three.
The statutory right of withdrawal, and who it covers
Under the EU’s Consumer Rights Directive and the UK’s Consumer Contracts Regulations (the UK’s post-Brexit version of the same directive), a consumer buying from a business has a right to cancel most online purchases within 14 days, without giving a reason. This is not a courtesy the merchant extends. It is a legal right the consumer holds regardless of what the merchant’s own refund policy says, and a policy that omits it, or states a shorter window, or requires a reason, does not override the statute. It just describes terms the merchant cannot actually enforce against an EU or UK buyer.
The 14-day clock runs differently depending on what was purchased. For physical goods, it starts from the day the goods are received, not the day of purchase. For services, it starts from the day the contract is concluded. Digital content delivered without a physical medium, software downloads, ebooks, streamed courses, has its own narrower carve-out: the right can be waived, but only if the customer gives express consent to begin the download or stream before the 14 days are up and acknowledges, separately, that they are giving up their cancellation right by doing so. A generic “all sales final” line at checkout does not satisfy that requirement. Our guide to refund policies for digital products covers that narrower carve-out in more depth, since it is a different, more specific problem than the general withdrawal right this article is about, which applies to essentially anything else you sell, physical goods and ongoing services alike.
Two details trip up merchants who have only ever built a policy around US expectations. First, the right applies with no reason required, a customer who simply changed their mind qualifies exactly as much as one with a defective item, which is a different standard than most US return policies are written around. Second, for physical goods, the merchant can withhold the refund until the goods are returned, or until the customer provides proof of having sent them back, whichever comes first, so the right to cancel does not mean the merchant has to refund before receiving the item back.
What the refund actually has to cover
Once a valid withdrawal request comes in, the regulations are specific about what has to be refunded, and a policy that quietly limits itself to “the price of the item” is usually leaving something out. The refund has to cover the total amount the consumer paid, including the standard delivery cost, if delivery was charged. It does not have to cover the extra cost of an expedited or premium shipping option the customer chose over the standard one, but the standard delivery charge itself is part of the refund, not an excluded fee. Return shipping, going the other direction, is the consumer’s own cost by default, unless the merchant’s policy states it will cover it or the merchant failed to properly inform the customer that return shipping would be at their expense, in which case the obligation can shift back to the merchant.
Timing has its own rule too. The refund is due without undue delay, and no later than 14 days from either the day the merchant receives the returned goods or the day the customer provides proof of having sent them back, whichever is earlier for goods, or from the day the merchant is informed of the cancellation decision for services with nothing to physically return. A policy that states a longer processing window than that for EU or UK customers is stating a number the regulation does not actually allow.
VAT-inclusive refunds: refund what was actually paid
This is the part a US-built refund policy is most likely to get wrong by omission rather than by getting the rule backwards. In the EU and UK, a business selling to consumers has to display and charge a VAT-inclusive price, the number the customer sees at checkout already has VAT built into it. When that purchase is refunded, the refund owed is that same VAT-inclusive amount, the full price the customer paid, not some ex-VAT wholesale figure the merchant might use internally for its own accounting.
This matters most for a refund policy that was originally drafted around a US sales-tax model, where tax is often calculated and displayed as a separate line at checkout and refund language sometimes only commits to refunding “the price of the item” without addressing tax at all, leaving it ambiguous whether tax comes back too. VAT does not work that way. The customer paid one VAT-inclusive number, and that is the number a compliant refund has to return, stated plainly enough that a customer reading the policy does not have to guess whether VAT is included.
US-Only Refund Policy vs EU/UK Requirements
| US-Only Policy | EU/UK Requirement | |
|---|---|---|
| Right to cancel | Merchant's choice to offer | 14-day right, no reason needed |
| Refund amount | Item price, tax often separate | Full VAT-inclusive price paid |
| Refund currency | Billing currency, rarely stated | Same currency and amount charged |
| Return shipping cost | Merchant's choice to state | Customer's cost unless stated |
| Digital content carve-out | Not applicable | Requires explicit acknowledgment |
Currency and exchange rate handling
The third gap is the one a US-only policy usually has not thought about at all, because a domestic US business never has to: what currency does the refund go back in, and who eats the difference if the exchange rate moved between the sale and the refund.
If a business bills EU or UK customers in their local currency, euros or pounds rather than US dollars, the refund should return that same currency and the same amount the customer was charged, not a dollar-equivalent recalculated at today’s rate. That sounds obvious stated plainly, but it goes wrong in two common ways. The first is dynamic currency conversion at checkout, where a card network or payment processor lets the customer’s bank convert the charge to their home currency at the point of sale, sometimes at a worse rate than their bank’s own conversion would have given them. If that conversion happened on the way in, the refund should still be calculated in the currency actually billed to the card, not re-converted a second time at the current rate, which can leave a customer with less back than they paid, purely from two separate conversions at two different rates.
The second is a straightforward timing gap. If a merchant bills in one currency and settles or refunds through a system that converts to another, the exchange rate used at the moment of refund is very unlikely to be the exact same rate as at the moment of purchase, and a currency move over even a few weeks can be large enough for a customer to notice. A policy that is silent on this leaves the customer to discover, after the fact, that their refund does not match what they paid to the last cent, and to wonder why. Stating plainly that refunds are issued in the original currency and amount charged, with the business absorbing any exchange-rate difference rather than passing it to the customer, closes that gap before it becomes a support ticket or, worse, a chargeback dispute over an amount that looks wrong but technically is not.
- Refunds are issued for the purchase price paid.
- Approved refunds are processed within 5 to 10 business days.
- All sales are final once the order ships.
- EU and UK customers may withdraw within 14 days of delivery, no reason required.
- Refunds include the full VAT-inclusive price, plus standard delivery.
- Refunds are issued in the original currency and amount charged.
- Return shipping is the customer's cost unless this policy states otherwise.
Building both versions into one policy
None of this means a US business needs two separate refund policies, one document can state the general terms that apply everywhere and then carry a clearly labeled section for EU and UK customers covering the 14-day withdrawal right, what it does and does not include, and how VAT and currency are handled on a refund. What it cannot do is stay silent on all three and rely on the general “refunds handled at our discretion” language to cover a right that discretion does not apply to in the first place.
Our Refund Policy Generator builds that regional section for you when you tell it you sell to EU or UK customers, stating the 14-day withdrawal right, the VAT-inclusive refund amount, and the original-currency refund commitment as their own clearly labeled terms rather than leaving them to be inferred from a policy written with only a US customer in mind. Getting the refund amount and currency right also does double duty against disputes generally, the same specificity that satisfies EU and UK law is the kind of clear, checkable commitment that keeps a routine refund request from escalating into a chargeback in the first place.
The information in this article is for informational purposes only and should not be construed as legal advice on any matter, and does not create a lawyer-client relationship.
