It wasn’t until maybe my fifth or sixth trip to Europe that I learned about VAT taxes and that you were able to get them refunded. Let me tell ya…I was pretty upset when I did learn because I could have gotten money back on all those previous trips!
Today I’ll be answering the following questions for you:
What is a VAT tax?
How do I get VAT tax refunded?
Let’s get started, shall we?
General Info About What VAT Tax Is
- VAT Tax = Value Added Tax
- It is similar to sales tax in the US, but it is in the EU (European Union).
- The EU’s minimum standard VAT rate is 15%.
- Currently every single EU country has VAT above that minimum rate, ranging from 17% to 27% (YIKES!)
- You pay this tax up front, then can get refunded for it later. But, you must take the goods you purchased home within 3 months of purchase.
- There is typically a minimum amount that you need to spend in a single transaction at a single store, but this varies depending on the specific country you’re in. Make sure you research that beforehand.
- Items must also be brand new. So if we use the example of the Icelandic sweater we discussed buying on Instagram on Sunday, the sweater must be unworn for it to be eligible for a VAT refund.
The First Step to Getting VAT Tax Refunded (aka Shopping)
- Sometimes you can find stores that are tax-free or VAT-free for visitors, but more often than not you need to tell the sales clerk that you are a tourist and will be requesting a VAT refund (make sure you have your passport on you to prove this). Do this before you even start the checkout process.
- The sales clerk will then fill out a form, and you’ll be given the receipt and the form that was just filled out. They will normally staple them together, but if they don’t make sure you hang on to both the receipts and the VAT forms!
- You start the process of getting your refund when it’s time for you to leave the EU. If you’re touring Europe and hitting up multiple countries, you would wait to do the refund at the last EU country you’ll be in.
- This is where things get a little tricky…
- In order to get the refund, you’ll need your receipts, VAT forms, AND THE ITEMS on your person. They cannot be in your checked luggage because customs and/or the third party issuing the refund needs to be able to see the item and confirm that you purchased what you are claiming.*
*Supposedly there are ways around having the items purchased in your carry-on, though I cannot speak from personal experience. Research tells me that if Customs is before you go through security, you can go through there prior to checking your bag. You still may need to show the items you purchased, so have them easily accessible, but you can keep them in the bag you’ll be checking. Once you go through Customs and get your refund, you can check your bag and proceed through security as you usually would.
Getting the Stamp of Approval + Your Refund
This is a 2, possible a 3, step process.
- First, you’ll go through customs where you will present your usual forms of identification (passport, boarding pass, etc), receipts and your VAT forms. They will most likely ask to see the items you purchased for confirmation.
- Once your forms have been stamped by Customs, one of two things needs to happen:
- If you shopped at a tax-free or VAT-free store that already refunded your VAT, you’ll need to mail the stamped forms to them to confirm that you actually left the country within that maximum 3 month timeframe. If you skip this part, you will be re-charged for those VAT taxes.
- If you have not yet received your refund, there is typically a stand in the airport to get your refund (either in cash or refunded to a credit card). The big agencies to look for are Global Blue and Planet. Global Blue is the one in Reykjavik.
- If you’re struggling to find it, try heading to a currency counter. They’re often in the same place because if you are getting your VAT back in cash, they can typically only issue it in the local currency or, sometimes, USD so you may wish to get that cash converted right away.
- At the stand you’ll present all your information, including your stamped forms, and they will issue the refund to you.
Final Words of Wisdom About Getting a VAT Refund
- If you want the refund back in cash, try to only get it in the local currency. They can often give it to you in USD, but the conversion rates are pretty unfavorable and don’t reflect the true current rate.
- Give yourself at least an extra hour at the airport than you normally would if you plan on getting your VAT refund! I can promise that you will not be the only visitor looking to get this back, and the lines can be pretty long. I waited in the Global Blue line for about 40 minutes in Iceland.
- There is normally a slight service fee, but it’s pretty minimal, maybe 3 or 4%
- Always, always, always ask about VAT when you’re shopping. You won’t always qualify for it, but it’s better to ask and be told no rather than potentially missing out on getting some money back
- I haven’t done this, but a lot of things I read said to consider shipping your items home. If you have the store ship your items, you will not be charged the VAT. However, there’s always the potential that the shipping and duty fees will be more than just paying the VAT and carrying the item with you. Definitely do your research before committing to this.
- If you’re planning on leaving the EU by train, double check what the process for getting a VAT refund is before you even board the train. Sometimes a customs agent will come right on the train, but other times you’ll have to get off at the last EU stop and have it processed at that station.