Travelling abroad can be crazy. Good crazy! The packing of bags, visa stamps, money exchange – everything is just exciting. But sometimes expenses related to travel can have a dampening effect on your excitement levels. What if we told you a little secret to help you win back some of those holiday expenses? The magic words are – VAT Refund! Yes, every time you travel abroad, you can get a VAT refund on some of the things you shop for.
In this article we will talk about getting a VAT refund when travelling to Europe.
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What is VAT?
VAT stands for value added tax. It is a multi-stage sales tax on products and services, often included in the final price you pay for them. This tax is added piecemeal to goods and services during the production process, to reflect their increasing value. The VAT total is borne by the end consumer.
The European escapade
We know you are buzzing with a zillion questions; how do I apply for a refund? What is the procedure? Is there a limit on the refund amount? Phewww… just catch your breath. We’ll answer them all.
VAT has many names in Europe. Don’t get puzzled if some places call it IVA, TVA, or MwST. These are some of the local terms for VAT – absolutely legitimate. (You can find a table of VAT rates for all European countries at the end of the article.)
Am I eligible for a refund?
To be eligible for a VAT refund, you must not be citizen of any European country. This is a blanket rule for VAT refunds for both EU member and EU non-member countries. Iceland, Norway, Liechtenstein, and Switzerland are European countries not part of the European Union.
- You can apply for a VAT refund if you are in Europe as a ‘visitor’. The VAT refund rules qualify a person as a visitor if his/her permanent residential address is one outside Europe. Authorities will check your passport to confirm this.
- Now, for those of you staying in Europe for extended periods of time to pursue education or for work; a few countries will refund VAT, not all. Check if you will be eligible for a refund before you start splurging.
- You can be a European citizen and still claim a VAT refund if your permanent residential address is in a non-European country and is one in which you stay routinely.
Keep in mind: If you have purchased goods in the EU member countries, you can apply for a VAT refund only when you are leaving EU and not when you are traversing internal borders. Do not confuse this with leaving Europe. If you are travelling to one of the four non-EU countries from an EU member country, apply for a VAT refund when making this transit.
Do I get a VAT refund on services?
No, you get a VAT refund only on the purchase of goods and not when you pay for services. To put it simply, VAT is refunded for goods that are exported from the country. You have to pay VAT on services such as food and hotel stay. Since these services cannot be exported, they are not VAT free. However, some business travellers have the privilege of getting a VAT refund on services.
How does it work?
When you apply for a VAT refund at customs, you will be asked to show your purchases for verification. VAT will be refunded only if the goods are unused and new. So, if you have purchased those devil-heeled Louboutin or that elegant Piguet watch, don’t don them just yet. Wait till you cross the borders if you’d like to claim your VAT refund. A VAT refund doesn’t apply to goods purchased in small kiosks or street vendors – you will need to furnish a valid bill of purchase. So those little knick-knacks you got for a steal from the back of that beat-up car or from a pavement seller? Yeah, no VAT refund on those.
Do I get a VAT refund when I am making a purchase at a shop?
In some cases, you might get a VAT refund right away after you make a purchase. Some shops, which offer ‘tax-free’ shopping. These shops have a tie up with the tax authorities, allowing them to process your refund right then and there. However, in most cases, you will have to pay the VAT-included price when buying a product and follow the refund procedure later. Keep the following points in mind before you make a purchase.
- Make sure the shop where you are making purchases facilitates VAT refunds. Not all shops offer this service. You will, most likely, find a sign which reads ‘tax-free’ on shops which offer a refund.
- Know the minimum purchase amount for which VAT refund is applicable. Yes, there is a threshold. You have to shop for a minimum amount to apply for a refund.
- VAT refund is not applicable on all goods. Know which products fit the bill.
- Sometimes, certain shops hire an external agency to process VAT refunds on their behalf. In this case, you might have to pay a small charge. Ask about these charges.
- To get a VAT refund for a purchase, you’ll have to be present for the buy. If someone else makes a purchase on your behalf, you will not get the refund-related documents. You can, however, have someone else pay on your behalf.
- Shop managers will ask for your passport and return ticket before furnishing the refund documents. Keep them ready.
- Once you have purchased the item, make sure you leave the EU by the end of the third month of purchase.
What is the procedure to get a refund?
Documents and paperwork! These are the two golden words to get your VAT refund without any hassle. A good time to use that chic travel document folder. We have outlined the procedure to get a VAT refund below.
- The shop where you make purchases will give you a documents detailing your purchase and some relevant information about the shop. Make sure it is stamped and signed.
- Keep the purchase receipt safely.
- Show the document(s) to the customs officer, at the airport, at the time of your departure from Europe/ EU.
- Customs officers will cross-check the information and stamp the document.
- If you’ve hired the services of a third-party agency for the refund, you might get your money at the airport. You will find VAT refund counters either before or after the immigration checkpoint. Global Blue is a popular VAT refund agency in Europe.
- If you are unable to get a refund at the airport, get the documents stamped by the customs officials and mail it to the shop where you had made purchases. They will refund the money upon receipt of these documents. Make sure to keep copies before you sign, seal and send them off.
- Remember to get your refund document(s) stamped at each stage of the procedure. Failure to do so will permanently hurt your chances of getting a refund.
What if I don’t get my refund?
The liability for refunding VAT lies with the owners of the shop from where you have purchased goods. In case of a delay or confusion, contact the shop first. To know more about your refund, and VAT rules in general, you can contact the national tax authorities of Europe with your queries.
Anything I should be wary of?
If you are flying out of Europe, it is unlikely you’ll encounter any problem with the refund process, provided all paperwork is in place. However, you will need to be cautious if you plan on travelling from an EU country to a non-EU country by train. Disembark on the last stop within EU to get the stamp from customs. Sometimes, customs officials board the train for the same purpose.
Duty-free airports
Well, some of you might not want to bother with this long-drawn process of getting a VAT refund. To keep it simple, shop from the duty-free outlets on airports. Sometimes, people go to airports early just to spend time exploring the duty-free world encased within.
Additional Reading: 12 Clever Ways Indians Save on Travel
Now that you know about VAT refunds, it’s time to pack your bags for an enchanting Europe trip. Your Europe expedition can certainly get a little cheaper. And if you want to add that zing to your trip, check out Multi Currency Travel Cards .
VAT rates and minimum purchase required to qualify for refunds
| Country of Purchase | VAT Standard Rate* | Minimum in Local Currency |
| Austria | 20% | €75.01 |
| Belgium | 21% | €125.01 |
| Croatia | 25% | 740 HRK |
| Czech Republic | 21% | 2,001 CZK |
| Denmark | 25% | 300 DKK |
| Estonia | 20% | €38.01 |
| Finland | 24% | €40 |
| France | 20% | €175.01 |
| Germany | 19% | €25 |
| Great Britain | 20% | £30 |
| Greece | 23% | €120 |
| Hungary | 27% | 52,001 HUF |
| Ireland | 23% | €30 |
| Italy | 22% | €155 |
| Latvia | 21% | €44 |
| Lithuania | 21% | 200 LTL |
| Luxembourg | 15% | €74 |
| Netherlands | 21% | €50 |
| Norway | 25% | 315 NOK |
| Poland | 23% | 200 PLN |
| Portugal | 23% | €61.35 |
| Romania | 24% | 250 RON |
| Slovakia | 20% | €175.01 |
| Slovenia | 22% | €50.01 |
| Spain | 21% | €90.15 |
| Sweden | 25% | 200 SEK |
| Switzerland | 8% | 300 CHF |
| Turkey | 18% | 100 TRY |
Source: Rick Steves’ Europe
Note: The information provided is intended to give you an idea of the rates and minimums involved. But VAT rates fluctuate based on various factors including the types of goods bought. Your refund is likely to differ differ from the above mentioned rates.