Packing for your summer holiday? Here’s something you definitely should take with you – a tip from the Money team that will save you cash when shopping abroad.
You might not know you’re entitled to shop tax-free in many European countries, meaning you can claim back VAT.
With rates as high as 27% (looking at you, Hungary), it can be well worth the effort. You can get up to 24% off in Greece, 21% in Spain and around 12% in France.
Many people don’t realise they have this option – or can’t be bothered to go through the process – but in this handy guide, we explain where you can claim back your VAT and how simple it can be.
Reminder: What is VAT?
VAT, or value added tax, is a type of tax that is applied on the sale of goods and services. It is charged to customers in the price of products and is collected by businesses, who are then responsible for reporting it to the government.
In the UK, the standard rate of VAT is 20% and the reduced rate is 5%.
The reduced rate is applied to specific products and services such as items related to health, fuel, heating and children’s car seats.
Countries that are part of the European Union must have a standard VAT rate of at least 15%, and can also set reduced rates as long as they are at least 5%.
Some sectors, usually those that are considered to be basic necessities, are exempt from VAT altogether.
Where can you claim back VAT?
You can claim back VAT on goods you buy in all 27 countries that are part of the European Union – but each country has its own criteria to be met for a refund to be valid.
The most common requirements are:
- You must have a permanent address outside of the EU;
- You are taking the unused goods with you when you travel back to the UK;
- Typically, these goods must be taken back to the UK within three months of the date you bought them, but this can vary by country;
- You must have spent a specific amount on the single purchase.
It’s worth checking all the specific requirements for the country you are travelling to before trying to claim back the VAT.
Here’s a look at the amount you are required to spend in each country in order to claim back the VAT…
How much can you get back?
It’s unlikely that you will be able to claim the full amount of VAT back. Most countries offer part of it back, and there may also be fees to consider.
The percentage that you get refunded will differ depending on the country, and some may charge intermediary fees.
A lot of countries use VAT refund agents, such as Global Blue or Planet, to handle your request, and they tend to charge an administration fee.
If you choose to receive your refund on a British card, you may need to pay foreign exchange fees.
Four steps to claim the VAT back
Again, this may vary depending on the country you are visiting, but here are six general steps to take that should keep you covered:
1. Shop and meet the minimum spend requirement
While shopping, and meeting the minimum spend requirement, ask the shop staff about the VAT refund policy.
In some countries, staff will give you a form at the point of checkout that you will need to fill in – in others, they will direct you to an online platform.
Luxury retailers tend to proactively offer you the form before you make your final purchase.
You’ll need to have your passport with you as well. Most shops need to check you are a non-EU resident before giving you the VAT refund documents that you need.
2. Fill out the refund form
You’ll have to fill out the form and keep hold of the receipt for your purchase.
The form will ask for the date of purchase and is usually signed by you and the retailer.
3. Get the form stamped
Before you head home, you need to head to the customs office at the airport.
Here you will hand over your form, along with your receipt, for staff to stamp it.
Staff may ask to see the items you have purchased, so you may need to do this before checking your bag in.
This is the most crucial step as it proves that you are taking goods outside the EU.
4. Obtain your refund
After your form has been stamped, you can head to a tax refund office at the airport or border crossing.
You can receive your refund in cash or credited to your card. Some agents also offer digital wallet transfers.
If you opt for cash, you will get the refund immediately, but if you choose to have the amount refunded to a card, it will take several days to land back into your account.