FAQ: What Is The VAT?

Nov 21, 2016

VAT means Value Added Tax. It is a multi-stage sales tax that each state in the EU must adopt at some rate or another. As a visitor to the EU who is returning home, you may be eligible to buy goods free of VAT in certain shops. Not all shops participate in the VAT refund. The actual tax rates differ country to country and even fluctuate within the country itself. VAT in Italy is a minimum of 22 percent and a minimum spending amount of 155 euros (don’t ask us why it can’t be a nice, round 150). For most countries, you have to spend the minimum amount in one shop, so find your favorite place for souvenirs and gifts and stock up towards the end of your trip!

 Depending on your shopping habits, the few dollars saved might not be worth the time it takes to get the refund. The process for getting the VAT refund isn’t complicated. It consists of just several steps.

  1. Bring your passport on your shopping trip – the retailed might ask to see it as confirmation of your residency
  2. Get the proper documents from the retailer – the form is usually called the tax-free form. Ask the retailed to fill it out, and make sure you understand any spaces left blank.
  3. Find the customs station at the airport (or wherever you leave from), and have the customs agent stamp the form. (note: this is a special customs booth, it’s not the same one as when you go through security)
  4. Collect your refund! The way to collect it varies – some you have to mail in, others you can have refunded in cash right in the airport.

Although it sounds like (and is) a simple process, sometimes VAT refunds just don’t pan out. Reasons range from not being able to find a customs booth in the airport to a merchant leaving key spaces empty, so don’t make a big purchase if you can’t afford it without the VAT cash-back. Our recommendation is to make sure you’re buying from a retailer who knows the process well, and might even be able to speed the process along for you. Also, provide ample time at the airport to find the proper booth – it’s not always in an obvious place that you can breeze in and out of right before your flight. Although the VAT refund isn’t fool-proof, it definitely comes in handy when you’re buying those one-of-a-kind, Italian leather purses and shoes!