If you are a traveler visiting the EU and planning to leave EU territory to return home or go to a non-EU destination, you may have the opportunity to buy goods without paying VAT (Value Added Tax). The sales tax averages 21%, which in most cases you can get back completely without
What is “Tax-Free” Shopping?
VAT Explained: Value Added Tax (VAT) is a multi-stage sales tax ultimately borne by the end consumer.
When you purchase goods, the sales tax is included in the price you pay. Its that sales that that you will get back. As a visitor to the EU who is returning home or heading to a non-EU country, you may very well be eligible to buy goods without VAT in specific shops that offer tax-free shopping.
Or you buy the items you want, and get a vat refund at the airport (or later from the vendor, depending on the country)
Who Qualifies as a ‘Visitor’?
A ‘visitor’ is anyone who permanently or habitually resides in a country outside the EU. The address in your passport or other identity document will determine your place of permanent or habitual residence.
Example: Maria resides and works in Brazil but, as an avid traveler, she spends three months every summer in Europe, where she owns a time-share in a villa. Since Maria’s permanent address is in Brazil, she qualifies as a ‘visitor’ to the EU while in Portugal.
In certain countries, you may also qualify as a ‘visitor’ if you live in an EU country for a defined period for a specific purpose, but your permanent home is outside the EU, and you have no plans to return to the EU in the immediate future. Additionally, EU citizens who permanently reside in non-EU countries are eligible for the VAT refund.
Example: Roger is a Belgian citizen but lives permanently in Alaska. He returns to Belgium once a year to visit his parents. Paul is a ‘visitor’ and can apply for a VAT refund based on his American residence card.
Understanding ‘Tax-Free’ Shopping: How Does VAT Refund Work?
Can I Pay the VAT-Free Price at the Shop? No. In the shop, you must pay the full price, including VAT. The VAT will be refunded to you once you fulfill the necessary formalities and can provide proof of export.
Steps to Obtain a VAT Refund:
- In the shop, inquire if they provide this service.
- Ask about the threshold for eligibility for a refund.
- At the check-out, show proof that you are a visitor to the EU (your passport or other identity document).
- Fill in a form with required details; you may need to show your ticket as proof of leaving the EU within the required time.
- Ensure you understand the refund process, as some shops refund directly, while others use third-party organizers.
- Be aware of any administrative fee the shop may charge for this service, which will be deducted from the refunded amount.
- Receive an invoice for the goods, and show it, along with the refund form and other necessary documents, to the customs officers of the last EU country you leave. The form must be stamped as proof of export by the customs officers; without the stamp, you won’t obtain the refund.
- Follow the refund procedure outlined on your document or by the shop assistant. At larger airports, you may receive an immediate refund. Otherwise, you’ll need to send the refund form to the given address.
Please note that the exact details may vary based on how each shop handles the refund process.
Example: John, a US traveler, purchases a designer bag in Paris, clothes and shoes in Milan and Budapest. In each shop, he completes refund forms. Within a month, John departs to the US from Budapest. At the airport, he shows the goods to the customs officer and gets the refund documents stamped. Some refund documents were provided by a refund intermediary, and he gets an immediate refund at their counter. An administrative cost is deducted from the refund amount, and he sends back the remaining stamped refund document to the shop where he made the purchase.
Will I Get a Full VAT Refund? It is unlikely that you will receive a full refund, as there is often an administrative charge for the service. Before leaving the shop, find out the amount you will be charged.
Can Someone Else Shop for Me? No. To make a VAT-free purchase, you must be present, although you do not need to pay for the goods yourself.
Do I Have to Wait Until I Return Home for the Refund? Not necessarily. In larger ports and airports, you may receive an immediate refund after customs officers stamp your form, if the shop offers this service.
What if I Don’t Receive the Refund? If you encounter any issues with the refund, contact the company where you bought the goods, as they are primarily responsible for providing the refund. If an intermediary was involved, you may contact them first. The European Commission does not intervene in individual cases of VAT refunds to foreign visitors.
VAT-Free Shops and Eligible Goods
Can I Buy Goods VAT-Free from Any Shop? No, not all shops offer a VAT-free facility. Shops that provide this service must arrange it with the tax authorities.
How Can I Identify a VAT-Free Shop? VAT-free shops typically display prominent signs in their windows advertising that they offer ‘tax-free’ or ‘VAT-free’ shopping. The signs may be in the local language.
Can All Goods Be Bought VAT-Free? No, certain goods do not qualify for VAT-free purchases. The facility is intended for goods that can be carried in personal luggage. Items exported as freight, cars, yachts, and some other categories of goods may not be eligible. Specific countries may also exclude other goods.
Is There a Threshold on Each Purchase? To avoid administrative burdens for small-value items, a minimum purchase value of EUR 175 (or the equivalent in national currency outside the eurozone) applies, but EU countries may set lower thresholds. This threshold is for the total value of goods purchased in a single shop. Normally, purchases from different shops cannot be combined to reach the threshold. Each shop will provide you with a separate form for the VAT refund. You can inquire about the thresholds from national tax authorities in each EU country. Contact addresses for national tax administrations can be found in the document “VAT in the European UnionEN•••.”
When Must the Goods Leave the EU? The goods you buy VAT-free must leave the EU by the end of the third month after the purchase date.
Example: Bruce, a Canadian resident, spends two weeks on vacation in Italy. He buys a designer suit from a VAT-free shop on 10 September. The suit must leave EU territory by 31 December at the latest.
Do I Need to Take the Goods With Me When I Leave the EU? Yes, you must take the goods with you when you leave the EU. If, for any reason, you cannot or do not wish to take the goods with you when leaving the EU, you cannot make a VAT-free purchase. Additionally, you must be ready to show the goods to the customs officer who will stamp your VAT refund form.
Do I Have to Leave the EU from the Country Where I Purchased the Goods? No, you can buy VAT-free goods even if you plan to visit other EU countries before returning home, as long as you leave the EU with the goods within the specified time limit. Customs officers at your point of exit from the EU must stamp your refund documents