What's the Tax Refund Process in the EU?
When you make purchases in stores in the EU (European Union), you will likely be asked if you want a VAT tax refund. (Note that not all stores offer this service.) What is VAT in the first place? It’s the “value added tax” that residents of the EU pay on goods purchased. This tax can run up to 25%! If you live outside the EU, then you may possibly get some or all of this VAT tax refunded to you, either in cash or refunded back on the credit card with which you purchased the item. Often you’ll see a sticker on a store window to indicate they offer this service. The main names you’ll see are Global Blue, Planet, and Premier Tax Free.
What are the qualifiers? I’m glad you asked. First, you need to purchase the minimum threshold to qualify. Don’t think you’re getting your tax back on a five-dollar item. And I hate to say, but it doesn’t apply to things such as hotel rooms and meals. The refund is only applicable to goods, not services. Next, you’ll need to show your passport or proof of foreign residency when you make your purchase. You will need need to apply for the refund within three months of purchase.
What is VAT in the first place? It’s the “value added tax” that residents of the EU pay on goods purchased.
Depending on the store, once you make a purchase, there are a couple different things that may happen. When I’ve purchased at small stores in France, for instance, they fill out the VAT paperwork for you, and then you receive the paper with a bar code (to be used when leaving the EU) and the receipt for the item. In larger stores (hello, Le Bon Marche), there’s often a VAT tax refund office where you bring all your purchases/receipts when finished shopping at the store, and they electronically fill in the forms for you. Again, you leave with the electronic forms and receipts.
In both cases, you’re left with envelopes of information and forms that will need to be presented at the airport or train station before leaving the EU. It’s fine if you visit numerous countries on your visit. You can buy a necklace in Copenhagen, a blouse in France, and a bag in Germany. It’ll all be taken care of at the same time. Bottom line is that you visit customs at the airport or train station as you’re getting ready to leave the EU.
The day of your flight (or train journey), I recommend getting to the airport/station at least an extra hour early to take care of the customs/VAT refund process, especially if you’re at one of the big hubs like Charles de Gaulle. I highly recommend visiting the tax refund office before you check into your flight and check your bags. You will need to have ALL of your purchased merchandise with you, as well as your completed forms. Please be organized, both for the benefit of the customs agent and for all the people waiting in line after you who are worried they’ll miss their flights.
I highly recommend visiting the tax refund office before you check into your flight and check your bags.
The customs agent will go through all the paperwork, stamp forms where necessary, and scan others. In some cases, you can take care of the whole process at an electronic kiosk. I notice more and more stores are filling in the forms electronically, which is fabulous – gotta love tech! In fact, on my latest trip I took the Eurostar train from Paris to London. Since England is no longer part of the EU, I had to take care of all my VAT refunds at the train station in Paris. I was able to use the electronic kiosk for all my refunds, and I didn’t even have to deal with an actual agent. So cool!
Agents may ask to see the merchandise, so be prepared for that. Again, DO NOT check luggage with these items before going through the customs process.
You can opt to get the refund in cash or back to the credit card of purchase. Personally, I always opt for a credit card refund. It’s quite wonderful to return from a trip and a few days later, see these refunds appear on your credit card statement. Yay!