Getting Your VAT Refunds

 The VAT Refund is probably one of the most confusing aspects of shopping in Italy. VAT stands for Value-Added-Tax. In some countries the VAT can be as high as 25% of the cost of the item you’re purchasing. Unlike America, where the “sales tax” is added on once you get to the cash register, in Italy (and Europe), this “tax” is added into the cost when the item is priced. So if the price is €49.50, you will pay only €49.50.

If you are a tourist from another country spending BIG BUCKS on items you will take out of the country, you may be able to get some substantial savings using the VAT refund process. It’s not hard, but like many things in Italy, it does require “paperwork!” As a tourist, you cannot get back a VAT refund on your meals, hotels, car rental, or services. (Business travelers fall under a different umbrella that we will not go into here…)

In almost all countries there is a minimum amount you have to spend in order to qualify for a VAT refund. This amount differs from country to country and changes frequently – so ask! Currently in Italy, the minimum purchase is €155. You have to purchase your item(s) from one retailer at one time. You cannot add up reciepts from multiple vendors. Also, there is a “statute of limitations.” You must collect your refund within three months of your purchase date. In most cases, for most visitors the “time frame limitation” is not an issue.

The rate you get back also changes from country to country. To make it even more complicated, the VAT refund % also changes based on what you buy. Luxury items tend to return a higher percentage than books as they are taxed at a higher rate. There are many charts on the web. Here’s the most recent I’ve found. Again, it’s all going to vary within these parameters.

• Country VAT %
  Austria 9.09-16.67%
  Belgium 21%
  Denmark 25%
  Finland 17-22%
  France 5.21-19.6%
  Germany 7-16%
  Greece 11.5-15.25%
  Ireland 17.36%
  Italy 4-20%
  Luxembourg 15%
  Netherlands 15.97%
  Norway 24%
  Spain 16%
  Sweden 25%
  Switzerland 7.6%
  United Kingdom 17.5%

It’s no surpirse to see that Italy has the “widest” redemption range of any EU country.

You’ll see decals in store windows identifying stores who are participating in the VAT refund program – NOT ALL DO! Merchant participation in VAT refund programs is voluntary, and smaller shops in non-tourist areas may feel that refunds aren’t worth the hassle.

The sign will say “Tax Free Shopping” or “Premier Tax Free.” You do not get to choose which VAT refund company you will work with – the vendor does. The largest VAT refund service is called Global Refund. They represent more than 250,000 vendors in 35 counties. Premier Tax Free respesents 70,000 vendors in 17 countries.

Do know that when you work through one of these services – again, chosen by the vendor – they will take a “modest service fee” out of your refund. In addition, a 17% VAT refund is based on the wholesale price and not what you may pay…. All these “fees” may translate to a 14.5% return to you. Again this is done through charts and tables based on what you buy, what country you buy it in, and what service the vendor has selected. So do not count on the full 17% the vendor is “advertising” to you. They are pitching the VAT discount!

Because Global Refund and other refund services take a modest commission on refunded VAT, the convenience of their services makes the charge worth it. In some cases you may want to “obtain” the refund directly from the store for extremely large purchases, like furniture, for example. Many high-end department stores have special refund arrangements for shopping tourists. If you are shipping items abroad, ask if you can deduct the VAT at the time of purchase. Some countries allow this for goods shipped overseas. If you live outside the European Union, you’re eligible for VAT refunds in all European countries that offer such refunds.

Some retailers DO handle the refunds directly – which means a larger return for you. There are no outside vendor service fees. In these stores, request a VAT refund form, have it stamped by a customs official when you leave the country or the European Union. Then mail the stamped form back to the store. Often times the vendor will “credit” the VAT amount back to your credit card rather than sending you a foreign-currency check. So it’s a good idea to pay in these stores by credit card. Cashing that check back in the States could be a hassle and end up costing you more in conversion fees.

Okay – so how do you do this….

1. Shop at stores that offer the VAT refund. Look for the decal or ask the store personnel before making the BIG purchase(s)

2. In italy, spend more than €155 under one roof (that € amount as of January 2009 – subject to change – ask!)

 3. Get the documents you need. Just a receipt is NOT ENOUGH. The vendor must fill out a form called a “cheque.” This is your refund document. Do not leave the store without it! In many stores you will have to have your passport, although most take a photocopy. Make sure EVERY blank is filled out and if there is anything you have to input, make sure you FULLY understand what that is. The Italian Customs officials are often not helpful… so get the salesperson to help you. Attach the receipt to the “cheque.” I always use a credit card to pay for VAT refund merchandise so I get a printed CC receipt also… Do not leave the store unitl you’re sure you have EVERY document you need.

Okay this sounds complicated but it’s not. The salespeople fill about probably 25-50 of these everyday. They know the drill.

4. Know where/how you will be getting your refund. You have to process your “cheques” and other VAT refund info at your last stop BEFORE you head out of the EU. So if you are traveling through France, Germany and leaving from the Leoanrdo da Vinci Aiport in Rome, Italy…. your VAT refund process will occur at the FCO Airport in Rome. If you are leaving the EU through a Border Crossing (driving, bus trip, etc.) than you will have to present your paperwork here.

In addition to the paperwork, you will also have to present the GOODS. And by law these goods are to supposed to be “unused.” So don’t show up with your stuffed Gucci purse, or wearing your new Armani. Sometimes a “by-the-book” customs offical will deny your refund if you are “using” the merchandise.

5. Customs desks at airport/border crossing -GET THERE EARLY! You’re probably going to have to go on a “Where’s Waldo?” hunt in some airports… just ask the Info desk. It will save you time. Then you will have to wait in line. Usually the lines are less than 10 minutes. Present your goods and get your required STAMPS. If you arrive late and do not get the Stamps you’re probably out of luck. The hassle of working though your emabssy to get the money is not worth the trouble.

A TIP: When you have a bunch of stuff to “display” put all of your VAT Refund merchandise in one suitcase. Then do all this Refund processing BEFORE checking in for your flight. (If the airline check-in line is long, send a designated line holder!). Once you get the stamps, go check in at the airline counter and check your bulging suitcase! This is the way you have to do it if you’re carrying anything you are not allowed to carry on the plane – like a sword! If you have just small items, just put it in your carry-on.

6. Show me the Money! Getting your cash depends on which service (and system) the vendor used. For most vendors using the larger groups you can get your cash right there at the airport or border crossing. I’ve cashed mine in at the C Terminal in Rome a few times. They’ll ask you if you want Euros or Dollars. Always great to get money LEAVING the country!

Sometimes you will have to mail your info back to the vendor or service provider. If this is the case, I always buy stamps beforehand and once at the airport and STAMPED, I ask the customs officials where is the nearest postal drop box. FAR BETTER to mail this while you are still in your departure company! Be patient, it may take months if you have to go the “mail route.”

Italy is notorius for paperwork mishandling so even if you do all of this you might not get your money back. Although I must say they are MUCH better lately! If you come to Italy in January or July and hit the sales with merchandise up to 70% off… and the dollar climbs against the Euro… and THEN you get back 10-15% from your VAT refund… you can make your vacation a little less expensive. Good Luck!

Refund Offices in Rome

CONDOTTI – Via Fontanella Borghese, 35 – Mon / Sat 9,30am – 7,30pm

Rome Fiumicino Airport – Terminal C – Check-in Area

Rome Fiumicino Airport – Satellite Gate C20 – Departures Area

ROME Fiumicino Airport – Terminal C – Departures Area

SPAGNA – Piazza di Spagna,38 – Mon / Fri 9am – 5,30pm / Sat 9am – 12,30am

VENETO – Via Lazio, 10 – Mon / Fri 9,30am – 7pm Sat 9,30am – 1pm

Tags: Airport, blogsherpa, Borders, Cheque, Customs, EU, Europe, FCO, Fiumicino, Global Refund. Premier Tax Free, Italy, Leonardo Da Vinci, Luggage, Purchase, Refund, Rome, Shopping, Tax Free, Taxes, VAT, VAT Refund