What's VAT?

As part of our travel plans, we must consider the VAT or value added tax that will be part of our costs for goods and services we buy while in Europe.  The VAT is a consumption tax that ranges between 15– 25 percent depending on which country one makes a purchase in and what one buys.  The VAT is already included in the cost of the items rather than being added on at the time of purchase as a sales tax.  For goods that are not used before leaving and are being taken out of Europe, the buyer may be entitled to a refund of the VAT if they meet specific requirements.  What this means for a traveler is that while the Venetian mask or artwork from Florence may initially include payment of the VAT, they may receive that cash back.

There are specific minimum purchase requirements to qualify for a VAT refund which vary from country to country.  For our trip, the minimum costs by country are: Italy  - € 154,95 including VAT, same shop, same day; Spain - € 90,15; France - € 175; and Malta  - € 55 per invoice, € 315 total.

In some countries, there is the opportunity to combine purchases into one request for VAT refund, while for other countries, the value is for a single, same merchant purchase which could be made of several items that add up to the value or a single, more expensive item.  There are some shops that sell items VAT-free, similar to Duty-free shopping that many travelers are familiary with.  Inside airports one might find VAT-free shops for those last minute souvenirs.

To receive a refund, you must present the unused items to Customs when departing from the EU along with the VAT refund documents and, sometimes, the original receipts.  The VAT documents are normally prepared by the merchant from whom the goods have been purchased, and the refund is made directly by the merchant.  But there are services such as Global Blue that act as a refunder and make it easier to submit your refund request.  The refunds can be made directly to your credit card if you used one to purchase your items.  Many travelers report that it takes up to three months before they see the refund.  It’s important to know that you can’t claim a VAT refund for the matching t-shirts that you bought in Spain that your family is wearing home.

The European Commission on Taxation and Customs has information specific to travelers addressing arrival and departure restrictions and requirements and what qualifies and in what amounts for a refund of the VAT.  This information can change so while it is accurate of this day, be sure to check for any updates for your own travels.