Italy uses the ‘OTELLO’ (Online Tax Refund at Exit) system, by the Italian Customs and Monopoly Agency (Since 1 September 2018)
Italy’s VAT rates are as follows:
- Standard VAT Rate (22%) – The majority of goods and services fall under the standard rate.
- Reduced VAT Rate (10%) – This category encompasses household gas, water, and electricity consumption, building renovations, medicine, restaurants and hotels, and admission to cultural events.
- Further Reduced VAT Rate (5%) – Various foodstuffs and social services are taxed at 5%.
- Super Reduced VAT Rate (4%) – Some foods, beverages, and agricultural products fall under this category. The 4% reduced VAT rate also applies to books, newspapers, periodicals, TV licenses, and medical equipment for people with disabilities.
Additionally, a zero-rate VAT category exists for some internal and international transport.
Welcome to Italy, a country of rich history, breathtaking landscapes, and vibrant culture! As a non-EU resident visiting this beautiful nation, you have the opportunity to make your shopping experiences even more rewarding by claiming a refund on the Value Added Tax (VAT).
Through the OTELLO (Online Tax Refund at Exit) system, implemented by the Italian Customs and Monopoly Agency, you can digitalize the process of obtaining the “customs stamp” on your invoices. This stamp entitles you to a direct VAT relief or subsequent refund on eligible goods purchased within Italy. In this concise guide, we’ll walk you through the simple steps to efficiently ask for a VAT refund using OTELLO, allowing you to enjoy tax-free shopping and enhance your Italian adventure. Let’s get started!
Easy Video Explanation by the Italian Customs Office
(oh yes, with an Italian accent!)
Shop Smart in Italy: How to Get VAT Refunds in Italy with OTELLO
1. Eligibility:
To be eligible for a VAT refund through OTELLO, you must be a foreign visitor residing or domiciled outside the EU.
2. Minimum Purchase Amount:
The total value of purchased goods (per invoice) must exceed 154.94 euros, including VAT.
3. Tax-Free Invoice:
Here it gets interesting. The retailer either works with an intermediary, like Global Blue, Planet, etc (they will both take a share of your VAT refund, roughly 30-50% total!).
Or they do not have an agreement, and you will get your whole VAT refund paid back by the retailer after you have stamped your form at the airport/port/customs office/last European country you visit. This is done digitally, so sellers knows its being stamped. This may take weeks/months for a payout, while the commercials pay you fast and in cash if you want.
When making purchases, ensure that you receive a tax-free invoice that contains the following information:
- Description of the goods
- Personal data of the traveler (name, address, etc.)
- Details of the passport or any equivalent document proving non-EU residency
4. Request code generated by OTELLO. This code must be correctly reported on the copy of the invoice given to you.
5. Validation:
The validation of tax-free invoices at Italian Customs exit points is carried out using the OTELLO information system (OTELLO 2.0).
6. Customs Stamp:
Upon leaving Italy, follow these steps to obtain the digital customs stamp: a. If the shop has no agreement with a tax-free company, go to the Customs Office desk for validation. b. If the shop has an agreement with a tax-free company, visit the desk or kiosk of that company at the airport (e.g., Milan Malpensa, Rome Fiumicino, Venice, or Florence). If the company’s desk is not present, go to the Customs Office desk. c. Show your passport and ticket to the customs officer at the designated point. OTELLO will retrieve your tax-free invoices, perform automated checks, and direct you to either the “green channel” (no inspection required) or the “red channel” (physical inspection of goods).
7. VAT Refund Process:
The VAT refund is not handled directly by customs offices. Instead, it is made by the Italian seller according to the terms agreed upon during the purchase. The refund can be made through various means, such as bank transfer, credit card refund, cheque, etc.
8. Monitoring the Status:
Both travellers and shop retailers can verify the status of the digital customs stamp by visiting the Customs and Monopoly Agency website and clicking on the OTELLO section “Tax-free invoice Research.” You can use the request code to check the status of the electronic endorsement.
Remember to keep your tax-free invoices and relevant documentation until the refund is processed.
VAT Refund Calculator for Italy
| Refund | Percentage | VAT Rate |
|---|---|---|
| € 0.00 | 22% | 22% |
Understanding Tax Refund Calculations
Understanding how tax refunds are calculated is crucial. While it might seem that a 20% VAT refund would result in a 20% reimbursement from your purchase, it’s not quite that simple. The calculation follows this pattern: Starting with 100 Euro + 20% equals 120 Euro. However, 120 Euro – 20% doesn’t equal 120 Euro. Instead, it’s 120 Euro – 16.66% which equals 100 Euro.
Keep in mind that the tax refund amount will be further reduced after accounting for administration fees.
Tips & Facts
- Do not wear or use the product you bought for the VAT claim until they are stamped.
- From 1 September 2018, it was made obligatory for retailers in Italy to issue VAT-exempt invoices electronically through OTELLO.
- VAT on tax-free purchases is never paid out by customs officials
- When you buy from an Italian retailer without the services of an intermediary (like Global Blue, Planet), the refund will be done directly by the Italian retailer according to the terms
agreed with the buyer, you, at the moment of purchase of the
goods (for example, by crediting a bank account, credit card etc).
Use an Intermediary like Global Blue, Planet or Do it yourself?
You can save 30-55% of your VAT refund! It’s very, very, easy.
When you, as a traveler, purchase items directly from a national retailer without involving any intermediary, the VAT refund process will be handled by the Italian retailer itself. Know that, all retailers are obliged to give you a Tax-Free invoice anyway, since 2018.
This means that the refund will be made according to the terms and agreements that were established between you and the retailer at the time of purchase. For instance, the retailer may choose to credit the refund amount directly to your bank account or credit card. You are responsible for sending the original invoice (yes,by mail) back to the seller within four months…
Source: adm.gov.it
The Tax-Free signs are Mostly from intermediary companies
However, there are also intermediary companies known as Tax Refund Companies that provide VAT reimbursement services to travelers. In such cases, the Italian retailers will issue invoices displaying the logo of the specific Tax Refund Company that offered the service. It’s important to note that these intermediary companies may charge a commission for their services, and this commission will be deducted from the VAT refund amount before it is given back to you as the traveler.
Question & Answers
How do I get a VAT refund from Italy?
To get a VAT refund from Italy, you need to follow these steps:
- Shop at stores and ask for a Tax-Free form invoice before making a purchase (they have to by law provide this). This can be done at ANY RETAILER. The places that advertise ‘Tax Free’ usually charge you for that as a service.
- Request a Tax-Free Shopping form at the time of purchase and ensure your purchases meet the minimum spending requirement and that all data is correct on the form. (Bring Identification)
- Get the forms validated at the Customs Office or a designated tax-free company desk before leaving Italy.
- Return the endorsed forms to the seller within four months of purchase, and they will process the VAT refund.
How do I claim my VAT refund online?
To claim your VAT refund online, use the OTELLO (Online Tax Refund at Exit) system. When making purchases, show your passport to the retailer, who will generate a request code through OTELLO. Ensure this code is correctly reported on your tax-free invoice. Upon leaving Italy, go to the Customs Office or tax-free company desk at the airport, show your passport and ticket, and OTELLO will validate your invoices digitally.
Can I get a VAT refund after leaving Italy?
No, you must obtain the VAT refund before leaving Italy. Make sure to validate your tax-free forms at the Customs Office or tax-free company desk at the airport before departing the country.
When can I submit my VAT return online?
As a visitor to Italy, you don’t need to submit a VAT return online. Instead, you must validate your tax-free forms at the Customs Office or tax-free company desk before leaving the country to receive the VAT refund.
How long does it take to get a VAT refund?
The time it takes to receive your VAT refund can vary depending on the processing time of the seller or tax-free company. In some cases, you may receive an instant refund at designated refund desks at airports or ports. Usually, cash payouts in dollars and euro are possible.
If not using the intermediaries, the traveler must return the original invoice, to the Italian retailer. Said invoice must be returned within four months from the date when the document was issued. Payment may take a few weeks or more (summer holiday season..) to receive payment (e.g., bank transfer, credit card, or check). (Bank transfer being usually the cheapest/free transfer method).
What if I bring goods from outside Italy, but from Europe?
Then the Otello system will not work but you go see the customs at their office for a stamp.
From author: We tried to make this article as accurate and up-to-date as possible, using only Italian government sources.
Sources used: What is Otello 2.0? , Itali’s Customs & Monopolies Agency