VAT refund: save money when traveling in Europe

Did you know that as a visitor to Europe, you may be eligible for a VAT refund for purchases made during your trip? According to EU legislation, every person who permanently or habitually resides outside of the European Union, can get money back when leaving the EU.

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What is VAT

The value-added tax (VAT), together with the goods and services tax (GST) is a consumption tax. The private consumer is charged VAT. It is not a revenue tax.

This tax on the added value that is provided at each step of the supply chain is included in the final price that you pay.

The Value Added Tax (VAT, a.k.a. TVA, IVA, MwST, etc.) is a sales tax, included in the commercial price and paid by the final consumer. The VAT rate varies from country to country (ranging between 5 and 25%). Both EU citizens and tourists who purchase goods and services on the territory of the EU pay VAT with the final price. 

Nevertheless, goods that are to be exported are exempt from that tax. That means, if you buy an item in Europe and want to take it back to the US or any other non-EU country, you do not have to pay the VAT and are entitled to a refund for it. 

Many tourists are not aware of that rule and never ask for their lawful reimbursement. However, the process of claiming it is fairly easy, and worth going through when you make significant purchases. We break down and explain the steps below.

The process of claiming a VAT refund

• In the shop

Present your passport or another ID as proof of residence outside the EU and ask the merchant for the refund form. Fill in the necessary details, attach the receipt, and double check all the information before you leave the shop. 

• Get your stamps

The most tedious and likely longest part of the refund process is getting the customs stamp. The customs agent might ask you to show the goods, so make sure you have everything with you. It is also important to note that you are not allowed to use whatever you bought before leaving Europe. All your purchases should be new and unopened in order to receive the refund.  

• Get your refund… or wait for it

Once you are given the green light by the customs office, you can turn in your documents. There are two scenarios for receiving your reimbursement.
Many merchants work with third-party services like Global Blue, Planet, or Premier Tax Free, since they simplify the process for both sides. They usually have offices at the airports. Sure, they take a commission (roughly 4%), but they will provide you with a cash refund on the spot. They can also issue the refund directly to your credit card.
If the merchant you bought from does not work with these refund services, you may need to mail the refund forms. You can do that when you get home or better yet, at the airport before you leave: you can find a pre-addressed and postal-free envelope.
Waiting for the refund typically takes around 3 weeks but could last months. You should check your credit card statement or your mail (for a cheque). Unfortunately, it is possible that the refund will never arrive. If you are expecting a significant amount of money, you might want to continue the process and fight for your rights by taking legal actions.

What to be careful about

Of course, there are certain restrictions and conditions to get the VAT refund. Apart from having all the necessary documentation, you need to reach a certain minimum value of purchases in order to be eligible for a refund. The threshold is usually set at €175 at one shop, but can vary in different countries. You also should export the goods by the end of the third month after the month of purchase. 

Additionally, you cannot claim reimbursement for accommodation or a restaurant visit as a tourist, since these are services “consumed” locally. Only business travelers can get a VAT refund for their hotel and meal charges but the procedure is lengthy and few companies have the resources to initiate it. 

Tax free shopping

There are some shops that offer to take care of the refund for you on the spot. They can reimburse you right away, most often to your credit card. You can usually recognize these stores by the “Tax free” stickers in front (sometimes in the local language). 

Even if you get your refund immediately, you might still be required to get the customs stamp before you leave the old continent, so be diligent, otherwise the merchant can charge you again later.

If you have any questions or concerns, you can address the national tax authorities or the national customs authorities.

Keep in mind that you are also entitled to financial compensation up to $600/€600 if your flight is delayed or canceled. Check your eligibility here and let SkyRefund’s team handle the tedious legal process!