VAT Refunds in Europe
If we mentioned a “tax free” shopping weekend in the USA, it’d be a rush on the stores with nothing short of Black Friday level crowds.
A VAT, or Value Added Tax, refund in Europe is fairly similar to a tax free holiday in the States, except, it's only available to foreign tourists. A VAT is a surplus charge, often in excess of 25% of the total purchase that is added to most sales in countries inside of the European Union. It’s very similar to what Americans know as a sales tax.
Shopping in Europe has its perks. In addition to purchasing souvenirs and keepsakes, you can find an array of high-quality, traditional items on your trip, such as a leather jacket in Florence or sterling silver jewelry in Toledo. Best of all, you’re not responsible for paying VAT on your purchases. While you will have to pay the value added tax at the point of sale, with a little know how and a bit of patience, you can recoup much of what you spend on that tax at the close of your vacation.
What Purchases Are Eligible for Refund
That bottle of water that you purchased from a roadside vendor in Paris is not likely to qualify for a VAT rebate. But that large, luxury piece of art from Florence, that most certainly applies. While the rules of what is an eligible tax free purchase will change slightly from country to country, in general, you can count on their being a minimum purchase point to qualify. This minimum varies by country, from $0 in Germany, Ireland & the UK to an upper end of about $333 USD in Switzerland, $237 USD in France, and $210 USD in Spain. In general, this refund won’t apply to tinker shop souvenirs in most major European cities.
In addition, food, services, and film are not eligible for VAT refunds. You also cannot claim a VAT refund on purchases that you plan to ship directly to your home. If you want the refund, you’ll need to carry your purchase home with you on the plane.
Also, the refund is intended only for products that are in new, unused condition. Customs agents may check for this before stamping your sales receipt for rebate. That means if you buy high end fashions in Paris, it’s probably best to wait until you get home to wear them.
How Much Can You Save?
To keep track of how much you’re eligible to receive, always ask for a VAT refund receipt, in some cases this may be notated on a standard itemized receipt of sale, and keep track of how much you’ve spent in taxes.
The amount of money that can be recouped through a VAT refund will vary greatly based on where you’re traveling. The VAT rates vary from country to country as well as within the country, based on what you’re purchasing. Typically luxury items will carry a higher VAT percentage that items deemed necessary for daily living; items like food, clothes, and books. In general terms, VAT percentages can range anywhere from a low of 4% for some goods in Italy, to upwards of 25% in Denmark and Sweden.
Some travelers decide that the amount of money they’d be eligible to receive in a VAT refund is not worth the hassle of keeping receipts and seeking out a refund counter at the close of their trips. Others, especially those making many large purchases, could recoup hundreds - even thousands, of dollars over the course of their extended holiday.
Two Ways to Get your Money Back
Work with a Global Refund Affiliate: This is typically a pretty easy task. Most stores will have a sticker in their front window advertising their VAT affiliate. Typically these stickers read “Tax Free Shopping” or “Premier Tax Free.” Shopping with these retailers represents the simplest way to get your refund. All you need to do is save your “tax free shopping” slip from check out, and then mention having these receipts to your customs agent upon leaving the European Union. The agent will stamp your receipts, and direct you to either a refund services desk at the airport, or a border kiosk for other forms of travel. You will typically be issued a refund on the spot. Refunds can also be credited to your credit card in your home currency.
- Pro: This method is by far the easiest and most convenient.
- Con: The global retailers often charge a small commission for their ease of use, and while it’s typically a bargain, it can cost you a large amount of money on larger purchases.
Deal Directly with the Stores: If you prefer to have your refund issued directly from the store from which you shopped, all you need to do is request the VAT refund form at the point of sale, and then have it stamped by your customs agent as you leave the EU. If the store is known for managing their own refunds, all you’ll need to do is mail that stamped receipt back to the retailer once you return home to have your refund processed.
- Pro: Especially on large purchases, this method will net you the largest refund percentage possible.
- Con: Not all merchants honor this method, it’s typically reserved for large retailers only. If this is your plan, make sure you ensure the retailers policy before leaving the country, and the convenience of global refund partners.
Tips for Success
- Plan ahead. Understanding how the value added tax system works will play a key role in your understanding of how to get your refund.
- Be sure to remember to ask for your VAT refund checks from each retailer and keep them organized neatly in one place throughout your trip. This makes it easier to get each receipt stamped upon the close of your trip.
- Don’t be afraid to ask questions, if you have them. While this may be your first time navigating a VAT refund, most retailers and customs agents are professionally trained to manage this process, and won’t be upset to help you learn the ropes as well.
Finally, do your research. Looking into minute details, especially if you have a specific purchase in mind before heading to the European Union, can save you time and headaches later on. Here’s a link to two VAT refund companies who have greater detail on exclusions and policies.