Have you ever heard of the VAT tax and wondered what it is? Several friends who are planning trips to Europe this spring and summer asked me about it and I thought the topic would make a good post. I hope this information will be useful and will give you confidence to claim your refunds if you are entitled to them. Rick Steves is right – Tourists leave millions of dollars in Europe every year by not claiming their refunds.
A value added tax or VAT is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the “value added” to a product, material or service. The “value added” to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. – Wikipedia
Rick Steves writes about it this way:
” Every year, tourists visiting Europe leave behind millions of dollars of refundable sales taxes. For some, the headache of collecting the refund is not worth the few dollars at stake. But if you do any serious shopping, it’s hard cash — free and fairly easy to claim.
You just have to bring your passport along on your shopping trip, get the necessary documents from the retailer, and track down the right folks at the airport, port, or border when you leave. (This will give you something to do while you’re hanging around waiting for your flight or ferry.)
The standard European Union Value-Added Tax ranges from 15 to 25 percent per country, averaging about 20 percent overall. Rates change; you can double-check with merchants when you’re there.
Unlike business travelers, tourists aren’t entitled to refunds on the tax they spend on hotels and meals. Still, you can get back most of the tax you paid on merchandise such as clothes, cuckoos, and crystal.
To get any refund, your purchase has to be above a certain amount — ranging from about $30 to several hundred dollars, depending on the country (except in Ireland, which has no minimum). Typically, you must ring up the minimum at a single retailer — you can’t add up your purchases from various shops to reach the required amount — so if you’re doing a lot of shopping, you’ll benefit from finding one spot where you can buy big. If you’ll be in Europe for a long time, shop near the end of your trip. You need to collect your refund within three months of your purchase.”
If you would like to know more about the European Union you can find the information here.
I have received VAT tax refunds in Denmark, Germany, Italy and France and the procedure is basically the same in each country. If you plan to do any serious shopping the amount necessary to qualify for the tax is easy to reach. If you are thinking about cookware in Paris I recommend E. Dehillerin because they have the best of everything at the most reasonable prices we found anywhere. For example, if you love copper cookware and find a beautiful saute or sauce pan with the price tag of 175€ the actual price after the 19.6% refund is 140.70€, a big difference in my book.
The VAT tax can really add up on big ticket items.
The VAT Tax in France is 19.6% and purchases of over 175€ are eligible for reimbursement of the tax. This minimum must be met with each retailer – you can’t add up your purchases from various shops. That is one reason selecting a large retailer like E. Dehillerin can be a good choice. It’s very easy to reach the €175 mark and an almost 20% refund is significant. For a serious shopper, a family, or even several friends, pooling your purchases usually won’t make this a difficult limit to reach.
Getting a refund is easy (or more accurately worth the effort) if you just follow a few steps and make sure you have the correct paperwork. Ask retailers if they participate in the VAT program. Be sure to have your passport with you when you make your purchases. Ask the merchant to fill out the necessary paperwork and be sure it is completed BEFORE you leave the store. Attach your receipt to the form. We purchased cookware at E. Dehillerin and they filled out all the paperwork and gave us a stamped return envelope so we could mail it from the airport, so that part of the process was easy.
When you arrive at the airport go to the Customs Desk BEFORE (very, very, very important) checking in (look for the Detaxe sign) . They will want to see your passport, the paperwork from the merchant, your receipt and the purchased goods. They will stamp your papers and you can mail them right there at the airport. We had our refunds on our first credit card statement after the trip.
Make sure you allow enough time (at least an additional hour before the time required for checking in at the airport) for Customs. At CDG and Orly airports, you may find long lines of other travelers at the customs counter, especially during the tourist season. (Pray that you are not in line behind a tour group). We had no problems with lines and got through the process very quickly.
A bit of a Catch 22 – You also want to make sure you don’t arrive too early. Customs at CDG will not process a claim more than 3 hours prior to your flight. Your flight must appear on the Departure board for customs to endorse your forms.
If all this sounds complicated and time consuming it really isn’t. There are just a few simple steps that you must take and it’s very important that these are done right (or forget it!!!!) If you don’t get it right the first time just consider it a learning experience and you will know better next time. You won’t be out anything except a little time and you may have a nice refund on your next credit card statement.