How to Claim VAT Refund: An EU Guide
Claiming a VAT refund if you are entitled to one is worth doing! Use this guide to get some money back on your purchases in the EU.
In the UK, we do have VAT or Value Added Tax. However, we don’t apply VAT to everything. In the EU, things are a little different. It’s extremely common for most products and services to be VAT registered. Therefore, you’ll have an extra 20%+ to pay on top of your retail price.
There is a way of claiming a VAT refund from purchases made in the EU.
This guide will show you step-by-step exactly how to claim your tax refunds successfully.
Here’s What We’ll Cover:
What Is VAT?
VAT or Value Added Tax is a type of sales tax most commonly employed in the EU. Though, in truth, over 160 countries worldwide use VAT as a system.
It is a consumption tax. That means that the final burden for paying the tax rests on the private customer. The business that charges VAT on the good or service then pays the VAT to the government.
The rates for VAT vary widely from country to country. There are also different levels of VAT. For example, let’s take a look at how VAT acts in the UK.
There is a standard VAT rate of 20%. There’s the reduced VAT rate reserved for domestic goods at 5%. Finally, there is a zero VAT rate at - you guessed it - 0%.
There are variations within each country. Some EU countries go as high as 25%.
Are You Eligible For a VAT Refund?
You could be eligible for a VAT refund if:
- You don’t normally reside in the EU
- You are no longer in the EU when you make the claim. Crossing borders within the EU is not enough. You need to be completely out of the Eurozone to qualify for a VAT refund.
- You are claiming within the monetary limits set by the individual country you are claiming from. You can find out the limit from the national tax authorities.
- You are claiming on products that you bought in the EU and are taking to your home country. This technically classifies the product as an “export”.
- The goods you purchased are new and unused.
- You are not claiming on services, restaurants or hotel stays. These don’t qualify because they were bought and consumed in the EU country in question. You’re not “exporting” them.
How to Claim a VAT Refund
- Have your proof of residence outside of the EU ready before you make your claim.
- Fill in a VAT refund form. Often, the merchant who sold you the product will be able to help you with this. Because they want to facilitate sales from visitors, they’ll keep VAT return forms handy for when they are requested.
- Head to the VAT office at the airport. You’ll need your receipts and VAT forms to show the customs officer. Very important to remember that you can only claim a VAT refund when you are leaving the EU zone. Say you bought a pair of shoes in Portugal but your last stop is France. You can only make your claim for all of your purchases with all of your VAT forms in France. Bear in mind the countries that are in the continent of Europe but are not part of the EU. Key example would be Switzerland.
- Now go to customs and declare your goods. The customs agent may want to see the purchased items. They’ll stamp your forms to confirm you’re eligible for a VAT refund.
- Some retailers work with refund service agents that are available to you at the airport. You can show your documents with the customs stamp to them and get a cash refund straight away. Global Blue is an example of a tax-free refund agent. However, they will take a small commission fee. If that’s not an option, you have to send your documents by post and wait.
When travelling in Europe, you now have the option to reclaim some of the VAT. Always check the specific guidelines for the company you are travelling to here.
For more tax guides like this one, head to our resource hub!