How to Maximize Your Tax-Free Refunds in Europe

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Last Updated: November 16th, 2021

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Travel

Guest Post by Kyle Kroeger

For many people, one of the major perks of traveling abroad is being able to shop tax-free. So, in case you are traveling to Europe and want to make the best of tax exemptions on your purchases, you have come to the right place.

We are here to walk you through the process of tax-free shopping and give you some tips on how to maximize your tax refunds. However, before we dive into that, let’s familiarize ourselves with some relevant terms.

Tax-free shopping

Tax-free shopping or TFS means you can buy any goods in a foreign land without paying the sales tax on it. Normally, your retailer collects this sales tax in the form of Value Added Tax (VAT), Goods and Services Tax (GST), or consumption tax.

However, you usually pay the full price and later get a refund for the additional tax value. This refund is what we call the tax-free refund.

Moreover, there are some basic conditions that you must fulfill to shop tax-free. We will get to that in the next couple of sections.

What is VAT?

Sales tax in European countries is levied as VAT or Value Added Tax. Usually, VAT consists of 15–25 percent of the retail price.

Therefore, if you purchase a product that costs €20, you pay an additional €4 as VAT. In this case, the VAT is 20 percent of the cost. So the total price comes up to be €24, which you usually find on the label.

As a traveler, you are entitled to claim a refund for the VAT imposed on your purchases. Let’s see how you can do that.

How to claim your tax refunds

So, what do you need to do to get your tax free refunds after making your purchase?

After you have completed your shopping at any tax-free shop in Europe, you must fill out the forms at the counter to request a tax refund. More often than not, you will have to provide proof that you are a foreigner in the country and that the goods will leave with you.

Once outside the borders, you must take the paperwork along with the goods to the nearest border station, where a customs agent will stamp your documents. Remember, you will not get your tax refund without this stamp.

In addition, here are some of the conditions you must meet to get a tax free refund:

  • You must be a resident of a country outside the European Union.
  • When visiting the European Union, you must not exceed your stay after six months.
  • Your purchases must have been made within the past three months.
  • Your purchases must be items for personal use.
  • You must have reached the minimum purchase amount of the specific region to qualify for tax-free refunds.

If you fulfill these conditions, you can qualify for a tax-free refund on your shopping.

Maximizing your tax-free refunds

Not every product you buy or every service you use as a foreigner in Europe will get you a tax refund. If you want to make the best of tax-free shopping while within the European Union, you must follow some tips.

Here are some practices that will get you the maximum tax-free refunds on your shopping.

Claiming tax refunds on goods, not services

Tax-free shopping works on the principle that exported goods are free of tax. Since a traveler buys the products and takes them back outside the European Union borders, they also count as exports.

The same cannot be said about the services you use during your stay. These services are local and, therefore, do not serve as a means of export.

As a result, you can only get tax-free refunds on the money you spend on actual products you will export.

For example, you are not entitled to demand a tax refund on a pricey restaurant meal, so spend wisely on that. However, you can request a tax refund for a new top-of-the-line blender you might be taking with you.

Not using the goods until you leave

To get a tax refund, you must always provide proof at the customs counter that these goods are leaving the country. In addition, to get an easy qualification for a tax-free refund, you must make sure that the products are completely packed and unused.

For example, you might not get a tax-free refund if you show a used pair of pants at the customs office.

Keeping the minimum purchase amount in mind

Different countries in the European Union have different policies regarding VAT. Consequently, the minimum purchase amount at which you can qualify for a VAT refund might differ from place to place.

Therefore, wherever you go, make sure that your purchase crosses this minimum limit. For instance, you must make a minimum purchase of €44 in Latvia and €155 in Italy to qualify for a tax-free refund.

Involving your merchant

Involving your merchant in the process can make it go a lot smoother. Your merchant will make you sign two slips at the cash counter, one for the retail price exclusive of VAT and one for VAT.

You will still have to go through the entire process of getting your documents stamped. However, once stamped, you can simply email your paperwork to your merchant. He will then tear up your VAT slip.

Buying from the right places

Last but not least, you must make sure you are buying from the right shops. Airport outlets are usually duty-free, and so are a lot of large retail shops.

However, you cannot buy from a vendor or small local business and expect a VAT refund. Therefore, if you want to maximize your tax-free refunds, make sure you only shop from stores that afford you this service.

The bottom line

Although the process of getting your tax refunded is long and tedious, maximizing your tax-free refunds is not all that difficult. You just have to keep a few tips in mind, make sure you fulfill all the conditions to qualify, and then complete all the necessary steps of the process.

Kyle Kroeger is a travel blogger for his site ViaTravelers.com. ViaTravelers is a modern travel blog providing the best tips, hacks, and itineraries to ensure you have an amazing adventure.

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