VAT Refunds
A VAT refund, or Value Added Tax refund, is one of the best hacks for saving money while traveling. If you buy something overseas, especially in Europe, you likely paid a value added tax, and you may be able to get a refund on that tax!
However, many travelers don’t bother to apply for the refund. I know I will penny pinch on flights, try to save as much as I can on hotels and meals, so why would I want to miss out on a pretty decent size refund on some items I may buy?
If you plan on traveling to the EU, don’t skip out on this opportunity.
What is a VAT?
In the EU, the VAT is somewhat similar to the sales taxes imposed in the United States. However, the VAT rates are much higher than those you pay in state and local sales taxes. The EU’s minimum standard VAT rate is 15%, but goes up to 27% in Hungary.
What are the rules?
Prices in the EU have the VAT included. Typically, when you pay for an item, you pay that price, including the VAT, and get your refund after the fact. There are a few other requirements:
You must take your new item(s) home with you within three months of purchase
You cannot get VAT refunds for large goods like cars, hotel stays, and meals.
In some countries, your purchase must exceed a certain amount to be eligible for a refund. This varies country to country, so be sure to look up what the minimum is for whatever country you’re visiting.
Also, the goods must be new and in their packaging when you leave Europe. They can’t be unpacked, consumed, or worn.
How to Get Your Refund
Most stores in Europe accommodate tourists seeking refunds. They usually have signs saying “tax-free” or “VAT-free”. As you pay for your item, inform them that you’re an EU visitor and that you intend to get a VAT refund.
The store will have some paperwork for you to fill out. Make sure you have your passport ready to prove your visitor status!
Sometimes the store will refund your VT, but you’ll most likely have to take your forms and get your refund processed somewhere else. Some major department stores have facilities there to get your refund, but most likely you’ll have to get these forms processed when you leave the EU at the airport.
Customs may inspect your purchases, so make sure they’re in your carry-on and not checked luggage.
If either the store or a third-party refund agency has already given you your refund, you’ll need to mail the stamped form back to them to prove you left Europe.
Countries Involved
Check here for a list of which countries offer a VAT refund and how much.
Extra Tips
Consider shipping - If you don’t want to deal with any of the additional work for the VAT refund, you can have the store ship your items directly to you and they won’t charge you VAT. However, you still have to pay for the freight.
Allow extra time at the airport - the lines for refunds can be long! Allot extra time to ensure you get your refund AND make your flight.
Pay for your items in the local currency - Usually when you pay for an item with your card, you’ll be prompted to pay for it either in US Dollars or the local currency. ALWAYS pick the local currency!
Buy designer/luxury items in the country of origin - If you plan on buying luxury items, they are usually significantly less expensive in the country of origin, and you also get the VAT refund. For example, I found a Prada purse for $4,100 in the US and it was 2400euros in France… Plus a 12% refund on VAT.