The shopping in Europe is world renowned and it’s one of the most fun things about traveling there. Maybe you want to add some European fashion to your wardrobe while you’re in France. Or bring back some cool artwork and unique decorations from Italy or Spain. But did you know you can actually save money when you shop in Europe by claiming the VAT back on your purchases?
When I was in Europe last year, I spent $1,953.87 at the Gucci store in Milan and received a refund of $231.92!
Yep. If you’re not from an EU country and you’re taking your new purchases home with you, you’re eligible for a partial refund of what you spend… as long as you follow the right steps! Here’s how to collect your refund.
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WHY DO PEOPLE BUY LUXURY ITEMS IN EUROPE?
When I bought the Gucci Soho small leather disco bag in Milan in November 2017, it was €890 with tax (about $1031.65). The VAT refund was $129, making the Gucci bag only $902.
If you bought the Gucci Soho bag in the U.S., it would cost you $1,288.18 with tax.
I saved $386 on the Gucci Soho bag by buying it in Europe with the VAT refund!
Here’s my VAT Refund receipt that I got at the Milano Airport. I did buy other stuff at Gucci – Gucci Soho bag, 2 Gucci belts, and a Gucci men’s wallet.
What is the VAT refund?
VAT stands for “Value Added Tax” and it’s basically a tax on consumption. Unlike sales tax in the United States, which is added on top of the amount you see on the price tag, VAT is already included in the price of goods. In Europe, this amount usually ranges anywhere from 15 to 25%, but it varies by country. If you’re a tourist who’s shopping abroad, you can usually get this amount back if you prove that you’re taking your new goods out of the country.
How much is the VAT refund?
Most countries in the EU have a standard VAT percentage rate for goods as well as a certain minimum amount that tourists must spend in order to qualify for a VAT refund. You must meet this threshold amount in each shop. (That means you can’t add up all your purchases from different stores to meet the minimum threshold.)
Here are the different rates and minimum amounts you need to spend in order to qualify for a VAT refund in several European countries:
France – VAT is 20%* and you must spend €175.01 on the same day in the same store (must spend at least €154.94 in Milan)
Germany – VAT is 19%* and you must spend €25
Greece – VAT is 24%* and you must spend €50
Italy – VAT is 22%* and you must spend €155
Netherlands – VAT is 21% and you must spend €50
Portugal – VAT is 23%* and you must spend €63.35
Spain – VAT is 21%* and you must spend €90.16
United Kingdom – VAT is 20%* and you must spend £30
* EU VAT standard rates are set by member countries and can fluctuate. Your refund might be less than the rate listed above, especially if it’s subject to processing fees.
What items qualify for a VAT refund?
First off, if you’re planning to claim back your VAT, be sure to purchase goods from shops that provide the appropriate paperwork for VAT refunds. These stores will usually display a “VAT-free” or “tax-free” notice in the door, but confirm with the merchant before you make your purchases! Remember to bring your passport when you go shopping because you’ll have to prove that you reside outside the EU.
Keep all your receipts and tax-free forms from these shops.
The goods you purchase must also be new and unused items that you can carry home in your luggage. That means (unfortunately) you’re not allowed to wear your new Italian sandals in Rome or stroll around Paris in your new sundress if you want to claim your VAT back on those purchases!
If you ship items home from a store, however, you can usually avoid paying VAT altogether.
Things like food and drink in restaurants may also have VAT included (at a lower rate), but they don’t qualify for a refund because you’re consuming them in the country rather than taking them home.
How do you claim your VAT refund at the airport?
If you didn’t get your refund instantly in the shop, bring all of your VAT paperwork and receipts with you to the airport when you exit the EU. Get there early because you may have to wait in line!
When you check-in for your flight and get your boarding pass, tell the airline agent that you need to claim a refund for your tax-free items. He or she can likely show you the way to the customs offices and let you know whether or not you’ll be able to check the suitcase which contains your purchases. The customs agent will want to see the goods before he or she stamps your VAT refund documents, so you may need to keep your purchases with you.
You’ll need a stamp from customs to get your refund. Their office may be located before or after security (or there may be multiple offices on either side) depending on how big the airport is.
Once you’ve visited customs and gotten your documents stamped, you may be able to receive your refund right there, especially if it’s a larger airport. Find the cash refund or VAT refund operator’s desk. Typically, these are companies like Premier Tax Free, Innova Tax Free, Global Blue, Tax Free Worldwide, or Travel Tax Free. For a fee, these agencies will verify your forms at the counter and give you an immediate refund in cash, check, or via your credit card. You may also place your forms in a submission box at one of these agencies if you don’t mind receiving your refund via check or credit card after you get home.
Alternatively, some stores where you shopped may require you to mail in your stamped forms in a pre-paid, pre-addressed envelope. After you receive your stamp from customs, you can mail the forms for free from the airport and then wait for your VAT refund to come in.
HOW LONG IS THE REFUND PROCESS?
I received my refund about 4 weeks later back onto my credit card.
For answers to other questions about how to receive your VAT refund, check out this guide by the European Commission.