The tax free shopping service explained
The tourist is permitted to claim back VAT tax free from any items they purchase within EU that they plan to take back to their own countries, subject to a few conditions we provide below.
- The shop will normally display a striking sign in the window, advertising that it is a ‘tax-free’or ‘VAT-free’ shop. This may certainly be in the local language.
- When you are in the shop, ask the merchant in advance whether they provide this VAT Free shopping service.
- Ask the merchant what threshold applies to the purchase in order to be eligible for a refund.
- At the checkout, the merchant will ask you to provide proof that you are a visitor to the EU. You will need to show your passport or other identity document justifying your residence outside the EU.
- The merchant will ask you to fill in a form with the necessary details. You may be asked to show your ticket as credential that you are leaving the EU within the required time. The merchant will fill up the shop’s part of the refund form.
- Make sure you know exactly what you need to do and how you get the refund. In some cases, the shop itself will give-back. In other cases, the shop will use a third party to contribute the refunds on its behalf.
- Make sure you figure out whether the shop takes an administrative fee for this service (which will be later deducted from the refunded amount) and if so what is the fee.
- You will get an invoice for the goods. You must show the invoice, the refund form or the Tax-Freeshopping cheque, the goods and any other necessary documents to the customs officers of the last EU country you leave. The customs officers must stamp the form as proof of selling abroad. Without the stamp, you will not gain the refund.
- You must then follow the steps explained at your refund document or by the chop merchant. You can claim your refund in airports immediately; otherwise you will have to send the refund form to the address given in the shop.
“Example: Christine came from the US for a vacation in Europe. She bought a designer dress in Paris; some bags and shoes in London and Italy. In each shop, she got refund forms or Tax-Free shopping cheque filed. Within a month, Christine leaves to US from London. At London airport, she shows the purchased items to the customs officer and gets the refund documents stamped. Christine finds the refund counter in the airport and get the refund immediately. The service cost is deducted from the refund amount. The remaining stamped refund document she has to send back to the shop where she purchased the goods.”
If the currencies are different in the country where you made your purchase and where you process your refund, say, pounds and euros, you may have to pay an extra conversion fee. And Switzerland and Norway are the non EU countries, so if you buy in one of those countries, get your documents stamped before you cross the border.
Be careful if you leave the EU by train or road transport. Bigger train stations handling international routes will generally have a customs office that can stamp your documents. But depending on your route, you may have to get off the train or bus at the last station within the EU to get your stamp; in some cases, a customs agent might board the transport mode. Consult your rail company or road transport company to know the customs arrangement for your particular route. In some airports, train stations, seaports, and less traffic border crossings, finding the right customs office can be hard. Give yourself plenty of time.
Once you get your refund form or Tax-Free shopping cheques are stamped by customs, you have to turn it in. If the items that purchases were bought from a merchant who works with a refund service such as Global Blue or Premier Tax Free, find their offices inside the airport. These services take a commission of your refund, but save you further tension and delay. Submit your stamped document, and they will give back your refund in cash, right then and there. The refund will be in the currency of the country you leave; if you want to be reimbursed in a different currency, such as US dollars, you’ll be subjected to their exchange rates. Otherwise, they’ll credit the refund to your credit card.
Other tax refund services may require you to mail the documents either from home, or just before leaving the country using a postage-free, pre addressed envelope. Just drop it in a mailbox after getting your customs stamp. It could take months. Look for a refund on your credit-card statement or for a cheque in the mail. If the refund comes in a foreign currency, you may have to pay a conversion fee ($40 or more) to get your bank to cash it.
If the store dispatch your purchase to your home, you won’t be charged the value added tax. If you are exporting the goods by cargo freight, in this case, a stamped Single Administrative Document (SAD) must be provided along with a stamped PDF of the transactions generated online. But shipping fees and US duty can be costly enough to wipe out most of what you’d save. Compare the shipping costs to your potential VAT refund, it may be cheaper to just carry the items home with you. Refunds apply only to items that you take with you.