Value Added Tax and How to Get a Refund

“V + A + T = Vulture added tax.”

 Steve Fowler

"The impulse to travel is one of the hopeful symptoms of life."

Agnes Repplier

Shopping in Budapest, Hungary

Value added tax or VAT is a tax that most European countries have on items that you purchase when visiting their country.  The residents of that country are required to pay that tax, but if you are not a resident of any European country, then you are entitled to a refund of that VAT.  Every year travelers leaving Europe leave behind millions of dollars of refundable sales tax.  For some, the headache of collecting the refund is not worth the few dollars they will get back.  For others, it is simply that they are not aware that they can get a refund.  If you do any serious shopping, it can certainly be worth your time. 

Shopping is an essential and certainly an enjoyable part of any trip to Europe.  One of the best things about shopping in Europe for non-EU visitors, is that purchases can be tax-free.  It does take a little effort on your part, it is not automatic, but can certainly be worth it.  Here are some tips on how to get your VAT refunds. 

My husband purchased this hat in Galway, Scotland

First of all the VAT varies from country to country – from a rate of 15% all the way to 25%.  Some countries require a minimum purchase amount before you can get a refund, some do not.  If you are in a country that has a minimum purchase in order to get a refund, then you benefit from buying most of your purchases from a single retailer, since you cannot add up your purchases from various shops to reach the require amount.  You cannot get a refund on the tax you spend on hotels and meals, just merchandise – those souvenirs, clothes, etc. 

How to get your refund varies from country to country, but generally you’ll need to follow these basic steps:



Shopping in Istanbul, Turkey

1.      Bring your passport along when shopping.  You will likely be asked to produce it in order to get the refund process started.

2.      Make sure the store participates in the VAT refund, not all stores do, but most tourist-oriented stores do.  It would be a shame to spend a large amount of money and then find out they do not participate.

3.      Get the documents you need from the store at the time of purchase.  The merchant will have to fill out the necessary refund document.  Make sure they have filled it out, and if there are any blanks for you to fill out, make sure you understand what they are before you leave the store.  Keep your receipt and attach it to the form.  Keep this in a safe place until you are ready to depart the country.

4.      Bring your paperwork and unused goods to the airport or border crossing and arrive a little early.  You need to get the refund processed before going home.  If you’ve traveled to several different countries within the European Union, you can do the refund process at your last stop.  So if you have made purchases in France, Belgium and Greece and are departing from Greece, you can do the refund process there.  However, if you have purchased items in non-EU countries, such as Switzerland, Norway, Croatia or Turkey then you will need to get your documents stamped in those countries, before you cross their border.

5.      Get your documents stamped at customs.  Before checking in for your flight, find the customs office and have an export officer stamp your documents.  He may ask you to present your unused goods to verify that you are indeed, exporting your purchases.  If you do not get this stamp, then you will probably be out of luck at getting a refund.

Shoppers in Mykonos, Greece

6.      Collect your refund.  If you made your purchases from a merchant who works with a refund service such as Global Blue or Premier Tax Free, you can find their offices inside the airport (after check-in and security – usually near a duty-free shop).  They will give you a refund on the spot, but they usually take a fee of about 4%,.  It does save you waiting for it, so it may be worth it.  The other choice is to use the envelope that hopefully the retailer has provided you and mail the form directly to the merchant.  Then you have to wait, and wait.  It could take months.  Look for the refund on your credit card statement, or for a check in the mail.

Shoppers in Dublin

You need to decide for yourself if this whole process is worth it to you.  Myself, I seldom spend that much in one place, so for the most part I have not bothered.  However, on my last vacation, which was to Scotland and Ireland, I did purchase a few more expensive items, and in one place in Ireland the clerk asked if I would like the new VAT refund card.  It is like a credit card and she rang it up and handed me the card.  She said I could use it at other stores and they would also put their VAT on it, and I could go online and register the card.  Once you register it, a form comes up, which you still have to get stamped as you leave the country.  And when I got home I mailed it in the envelope she gave me.  The refund appeared on my credit card in just a few weeks.  So it did work.  This is a new process, and may be the way things are processed in the future.  I did have to get the form notarized here in the states, which I can do easily at my local AAA office.



George, carrying my bags in
 Dubrovnik, Croatia

Something else that happened to me for the first time on my trip to Ireland.  A clerk asked me if I wanted to charge the purchase on my credit card in Euros or US dollars.  When you use your credit card on purchases, you will get a good exchange rate – since credit card companies make large transactions all at once, and you benefit in the process. However, When the sales clerk asked me if I wanted to charge my purchases in euros or in dollars, my first reaction was to say “dollars,” but this is not correct. Always say: “charge in euros” because you will get a much better rate of exchange in the end.