This post comes as I’m literally about to board a plane bound for Europe. I’ll have some exciting new content to share in about two or three weeks time. Looking around the airport, however, I have been inspired to do a quick post about shopping and VAT in Europe.
What is VAT?
In Europe, almost every item your purchase is the price the tag or sticker says it is. The tax on the purchase has been included into the price; VAT thus stands for Value Added Tax. It is much different from the United States where depending on where you are shopping, a tax is added to the sticker price. In California, for example, our sales tax is on the higher end at over 9%.
Do I Have to Pay VAT?
If you are a citizen of a European Union country, yes. If you are not, you may be eligible to receive a refund. Everything comes down to the type of item you are purchasing, where it is being purchased and the amount you are paying on the item. If you are purchasing say a 20 Euro sweater from a street vendor, there will be no refund for any VAT. If you are spending 2000 Euros on a diamond ring at a high end department shop, odds are you are be eligible.
How Will I Know If My Purchase Is Eligible For A Refund?
Any vendor that qualifies will typically advise you that you are eligible. Look for signs in the shop indicating they offer tax free shopping. It never hurts to ask!
What Do I Need For a Refund?
The most important item you will need for a VAT refund is the receipt from the vendor. You usually have to show proof you are not an EU citizen. The shop receipt will have some pre-populated information filled out on it for you and will give you an envelope to keep your receipt in. That envelope will have information about how to claim the refund at the end of your trip at the airport or train station. If you are unsure of what paperwork you are going to need, keep everything together just in case. You are technically not allowed to use the item you are claiming the VAT refund on until you leave the EU and will need to make sure it stays in your carry on bag. Keep reading for why.
How Does the Refund Process Work?
You may have multiple items and receipts to claim a VAT refund for. When you are ready to depart the European Union, make sure you have everything with you; you will need to find the tax refund customs officer to ensure your receipts are stamped. Without the stamp, you will not receive a refund. The customs official can ask to see the item so that is why it is key to show it hasn’t been used and is with you. If you check the item, you can be refused a refund. After your receipt is stamped, sometimes they will issue you an immediate refund on the spot, other times you will need to enclose whatever paperwork they give you into the post box and it takes a few days to weeks.
Will I Receive Everything I Spent Back?
Usually no. Most tax refund companies are third party companies and will collect a small handling fee. If you are set to receive a 20% refund, at the end of the day, the refund is typically about 12%. A refund, however, is a refund.
What About Import Duties?
Depending on where you are from, you may have to pay those when you arrive home. In the US, for example, you are allowed to bring in $800 per person of goods without paying a duty. If you spent more, you MUST declare it! Do NOT try to get around it, everything is linked to your passport and will get you in BIG trouble. After immigration, you will more than likely have to show the customs officer what you purchased upon arrival. It is up to them what they will charge you. From my past experience, it’s not bad.
What If I Ship The Item Home?
It again depends on the country and what the item is. I would say most likely yes, but not always. If you ship an item home, you will probably have the import duties included in the price for shipping when you send it home though.
If There a Maximum I Can Receive?
I wasn’t able to find any information on this, but it looks like the minimum is 175 Euros for a baseline purchase. Keep in mind if you buy a variety of items to reach the 175 Euro minimum that won’t work. It has to all be one purchase.
Is There a Time Limit on Getting a Refund?
As long as you have everything stamped, you have until the end of the third month of the day you leave the EU to submit your VAT refund form.
Can I Submit Paperwork Between Each EU Country I Visit?
No. The only exception is say you are entering a non-EU country and then returning to the EU.
I hope this quick guide helps give you a basic understanding of VAT and how obtaining a refund works. This is by no means comprehensive and is just a quick reference. Until next time, happy travels!