Heathrow Terminal 3

The watch in the top left is priced at £4,141, which at today's exchange rate of $1.26 to £1.00, converts to $5,218.

The current list price of this watch in the US is $6,550, before any US state or local sales taxes. Therefore, before any US customs or state taxes, there is a 25.5% savings from the US MSRP.

I'm not going to comment on what taxes should be paid when you return to the US. That's between you, Uncle Sam and your local governor and mayor.

Not too shabby.
gatorcpa

A very good point. I also never received a VAT refund once from Austra when I travelled through London and got the stamp at Heathrow — it was at least $200. The other point is that a third (for profit) party usually handles the VAT refund and takes a portion of it as a fee. That can be up to 25%, based on my experience. You don’t get it back immediately.

I still think buying directly in a duty free shop at the airport with a credit card that has no foreign transaction fees AND a favorable exchange rate can be a good choice — if you were already planning on buying the watch and do your homework.

Otherwise, you probably will regret it.

I've bought many watches over the years from Switzerland and Australia and never failed to have the Sales Tax or VAT refunded to me. Just this last February I spent a month in Australia and ended up buying an Omega ST2 and Seiko Spring Drive watches, plus an Omega strap from a boutique. When I flew out of Tullarmarine (Melbourne) I just stopped at the TRS (Tourist Refund Scheme) desk after going through security, showed them the receipts, the items and my boarding pass. The agent even commented about the price of the strap ("That's one expensive strap") to which my wife said "It's cheaper than having a boat". Gave him my AMEX card and in less than a week I had the 10% GST credited to my card account, no issues whatsoever and certainly no processing fee deducted. I'd be pretty ticked if I jumped through all the hoops and then not receive the refund especially on an expensive item like a watch. Usually there is a way to contact them if you don't get the refund (phone or email) but have never had to use it.

Buying at a Duty Free shop at the airport would be the most seamless way since the tax is removed at the point of sale but you are putting faith in them having the watch that you want in stock and there really is no way to check what they have in stock before getting there.