Maximize your travel budget: all about the VAT refund

Traveling across Europe is an enriching experience, but expenses can quickly add up. However, there exists an opportunity to gain back some of the expenses in the form of VAT refund. In this article, we'll delve into the intricacies of how the VAT refund process works in Europe, what it takes to qualify, and how to make the most of this advantage. Are you going to be traveling in Europe? Then learn all about the VAT tax refund. 

Don’t forget to get the correct visa before your trip. If you need a visa for your trip you can rely on Visagov. Visagov’s services allows you to get multiple visas for over 50 countries with a simple form in your language. 

What stands for VAT? 

VAT stands for value-added tax, is a sales tax that everyone pays when purchasing a product. As a traveler from a non-European Union country who may be returning home or traveling to another non-EU country, you may be eligible to purchase goods free of VAT at special shops.

You are considered a visitor and therefore can try to buy goods free of VAT if you permanently or usually live in a country outside the EU. This will be proved with your address in your passport or identity document. European Union citizens who permanently live in a non-EU country are also eligible for the VAT refund. 

How does the VAT refund process work? 

The process of the VAT refund is quite straightforward. While the process will highly depend on the shop that processes the whole VAT refund, here are some general steps you can expect:  

1. In a shop, ask the shopkeeper whether they provide the VAT tax refund. Shops that offer the VAT tax refund service usually will display a “Tax-free” or “VAT-free” sign in the window.
2. If they do so, ask what threshold applies to the purchase. You must spend above a certain amount of money in order to be eligible for VAT refund (this depends on the country). You can enquire national tax authorities on the thresholds applicable in a specific EU country. 
3. At the check-out, you will have to show proof that you are a visitor to the EU. Passports or ID that shows your residence outside the EU will be sufficient. In some cases, you might be asked to show your ticket as proof you will leave the EU.
4. You will have to fill in a form with the necessary details. The shopkeeper will fill in the shop’s part of the form.
5. Make sure you understand how you will receive the refund. In some cases, the shop will refund you. In other cases, the shop will use a third party to organize the refunds.
6. Ask about whether the shop has an administrative fee for this service.
7. Keep your invoice for the goods, the refund form, the goods and any other documents safe. You will have to show all of these are customs officers of the last EU country you leave. The customs officers must stamp the form as proof of export (if not you won’t get a refund). If you don’t receive the stamp, you must contact the entity in which you bought goods.
8. Follow all steps outlined in your refund document, by customs authorities or by the shopkeeper. In larger airports or ports, you can claim your VAT refund immediately if the shop where you made the purchase offers this service (you will receive your refund on the spot). Otherwise, you will need to mail the refund form to the address provided by the shop.

Remember if you're going to visit different countries in the European Union, you will have to do the VAT refund process in the last airport or port (some certain train stations might also do it, but ask in advance the national authorities or your refund company on the arrangements applicable) you visit before leaving the EU.

After completing all formalities you will get the VAT refund. Keep in mind that it is unlikely you will receive all the VAT refunded, since in many cases there can be an administrative charge for the service in the shop. 

You cannot pay the VAT-free price in the shop directly while buying the goods. 

Can somebody else go shopping for me and ask for the VAT Tax refund?

The short answer is no. You must purchase the goods yourself and complete the VAT  tax refund process. Also know that not all shops offer the VAT refund arrangement and not all products can qualify as VAT-free (goods to be exported as freight, for example, and cars and yachts and others are excluded).

Do the goods have to be brand new?

You are not supposed to use your goods before leaving Europe. In fact, customs officials may specifically ask to see "your unused products" to verify your exporting of purchases. Some retailers will even staple and seal the shopping bag to prevent you from circumventing this rule.

We recommend taking out the products for which you are seeking a VAT refund from your checked luggage. You must show all products to customs when leaving to the EU. 

All goods must accompany you when you leave the EU. The goods you purchase VAT-free must exit the EU before three months have elapsed from the date of their purchase.

What if I don’t receive my VAT refund? 

You can complain to the shop where you bought the goods because it is the main responsible to give the refund. Nevertheless, if that company used an intermediary you may first apply to them. The European Commission does not intervene in particular cases of VAT refund. 

An example case: traveling to Spain reclaiming your VAT tax refund

In Spain you will have the option of getting VAT refund in multiple stores and for multiple products following a simple procedure. You just have to ask the shops  to provide you with the DIVA (electronic VAT refund procedure) form, and validate it directly at the automatic terminals installed in Spain’s main ports and airports.

When you are returning to your home country, be sure to always carry: your passport, receipts or DIVA form for your purchases, the goods and your boarding pass.

At customs you will then have to reclaim VAT tax refund. You can choose to go through the Tax Free management body located where you are departing (usually you will be refunded then and there) or directly at the shop where you made the purchases (you will have the amount within 15 days).

The VAT you can find in Spain may vary from other countries in the EU. In fact, the VAT ranges from 8 to 27% across the EU. The UK, after Brexit, is no longer part of the VAT refund policy for tourists. Also, keep in mind that Switzerland, Norway, and Turkey are not part of the EU. Therefore, if you shop in one of those countries, make sure to get your documents stamped before you leave.