Destination Wednesday: Get Your VAT Tax Back, America!

You can get a refund on your VAT tax even if you're back home. All you need is the right paperwork.
You can get a refund on your VAT tax even if you’re back home. All you need is the right paperwork.

By Lisa Bellavin

Here’s something you might not have known: As a visitor to Europe, you don’t necessarily need to pay sales tax while traveling. If you live outside the EU and will be returning to your home country, you’re eligible for a refund on a lot of the sales tax you’ve paid during your trip.

What we call sales tax is commonly referred to in Europe as VAT, or Value Added Tax. VAT is a flat-rate tax added to the price of many consumer goods. It ranges from 8 percent in Switzerland to 27 percent in Hungary, and averages around 20 percent in the 28 European countries that use VAT. (A list of the standard VAT rates and the minimum amount you need to spend to qualify for a refund can be found here.)

The advantage of VAT is that unlike the United States, where the sales tax isn’t included in the sticker price of certain products, in Europe when you go shopping you’ll know exactly what you’re being charged – which is great!

What’s not so great is that you have to navigate through a fairly extensive process to get your VAT refunded. Did you buy a box of candy, a few postcards and a T-shirt at various stops during your travels? If your purchases don’t go much beyond that level you’ll probably not want to embark on this arduous refund journey. But if you’ve made multiple purchases at a single store or bought fine clothing, art, jewelry or other valuable items, your refund could be substantial and very well worth your time.

Here are the steps you’ll need to take before, during and after your purchase to get some of those hard-earned vacation dollars back in your pocket.

  1. Bring your passport or state I.D. to present to the cashier. You’ll definitely be asked for proof of citizenship, and most of the time, your U.S. driver’s license will work just fine. We recommend you leave your passport locked securely in your room while you’re out and about.
  2. Look for a “VAT Refund” sign on the door or near the cash register. While most store employees are savvy and helpful in regard to the refund, not all stores participate in the VAT-refund program. If you’re planning on doing some serious shopping, make sure the location where you’re dropping big bucks will be able to give you the proper documentation.
  3. At checkout, ask your cashier for a “Tax-Free Shopping Cheque.” You’ll then be given a form to present to the customs agent when you exit the EU.
  4. Gather your items together and don’t open them; instead, present them and your “cheques” to the customs agent when you leave the country. The agent will ask a few questions, examine your items and stamp your forms. IMPORTANT: The items must be unopened and unused to qualify. So make sure you keep seals, packaging, tags and labels intact.
  5. Turn in your forms. On each form, the refund service company used by your retailer should be indicated. Usually it will be Global Blue or Premier Tax Free. Take your stamped forms to that refund service’s airport desk or a border kiosk for an immediate refund. The airport’s information desk can tell you where these stations are located if you can’t find them.

You can also mail stamped forms to the refund service’s nearest office after you return home. Your refunds can either be credited to your credit card or mailed to you in your country’s currency.

Don’t wait until you get home to get educated on your tax-refund options. Although the process is complicated, when you know the steps, serious savings can be yours. For more information, research your specific destination’s rules prior to departure, and don’t hesitate to ask questions of retailers and airport staff; they’re there to help. Good luck from your friends at BHTP!


Editor’s Note: As long as you’re thinking European thoughts, consider ExactCare from Berkshire Hathaway Travel Protection. It’s easy-to-understand protection for all your big trips.Get it here