Everyone loves a bargain, right, as a foreign resident you can shave around 20% off the list price of any expensive item you buy anywhere in the EU. It’s the kind of luxury you might buy at a department store, designer store or even an outlet store – giving you around 20% off, but you need to know what you’re getting.
Value Added Tax (VAT), which is equivalent to our GST, is high in Europe. France is at 20%, Germany is at 19%, Ireland is at 23%, and Italy is at 22%. The lowest was Luxembourg at 17%. If you’re buying something worth hundreds of euros – and the refund scheme has a minimum spend – it’s too good to pass up. As a non-EU resident, you are entitled to a refund of VAT paid. However, the process of getting a refund is fraught with bureaucracy, and one step wrong can cost you money.
First, once you’ve found what you’re looking for, ask the retailer if they participate in a VAT refund scheme. Department stores and other major retailers are more likely to fall into this category. You’ll need to spend a minimum amount to qualify, and must spend at one store on the same day. The official EU minimum is €175, but some countries disagree. In Italy, the minimum amount is 154.94 Euros, which is a bit odd, and in France it is 100 Euros. Next, you need to prove that you are not an EU resident, so out comes the passport. You’ll be given a form to fill out on the spot, and the clerk will do some of their paperwork. Keep the invoice – you will need to show the invoice along with the completed refund form and the goods when you leave the EU. This usually happens at the airport customs approval kiosk, usually located airside in an international airport terminal, when you go through immigration. You get your refund form stamped so you can get your money back. Leave plenty of time, there are often long queues at the ticket refund office, so you can walk slowly. You may need to send the completed documents back to the retailer, at which point your refund will appear. Retailers may deduct administrative fees.
Even if your VAT refund form is not stamped, you can still claim your refund. The process varies by country, but in some countries, such as France, VAT refund website are relatively clear.
Global Blue and[www.planetpayment.com/en/shoppers”>Planet are agencies that streamline the VAT refund process for you. Get your paperwork stamped by Customs as you leave the EU, submit it to one of these agencies and you should receive a speedy refund, minus a service fee.
The UK does something completely different
The UK no longer holds out the tax-free shopping carrot to foreign residents. At the end of December 2020, the UK government terminated the VAT Retail Export Scheme and the tax-free shopping concession. Since January 1, 2021, passengers departing for non-EU destinations have not been able to claim a refund of the VAT paid on any purchases made in the UK. The UK government has recently announced its intention to reverse that decision and restore tax-free shopping for foreigners, however that will not happen until at least 2024.
Duty-free shopping at airports
Duty-free shopping is a huge money-spinner for many airports. Buying duty-free at international airports gets around the tedium of obtaining a tax refund, but if it’s a major purchase you need to know the price is competitive. Airport retail space is some of the world’s most expensive and electronic items especially might not be a bargain.
Stock up your alcohol cellar with a couple of bottles from a duty-free shop at any airport in Europe and you’re likely to lose it at your transit stop. Before re-boarding your aircraft, you will usually pass through a final inspection point and any liquids in your carry-ons over 100mls will be confiscated. That’s an Australian government requirement, even if the alcohol is sealed in a tamper-proof bag with full documentation. The way around this is to buy your duty-free liquor at the very last port before entering Australia, or buy it duty-free when you land in Australia, before passing through Customs and Immigration.
The Australian way
Australia has its own GST tax refund scheme for travellers leaving Australia, the Tourist Refund Scheme (TRS), and there’s lots to like about it. You get to shop at any retailer, with a local warranty, and take advantage of competitive pricing. Even better, you are allowed to make use of electronic goods such as cameras and tablets before departure, or even wear the clothes for which you’re claiming a tax refund. The value of the goods must be at least $300, including GST, and the supplier must have an ABN. The goods must be purchased within 60 days before leaving Australia and the invoice must show the GST paid, the retailers name, address and ABN, and the goods must be carried with you when you leave Australia. At the TRS kiosk you’ll have your goods and invoice checked and if everything passes muster the GST you’ve paid will be refunded either to a credit card or a bank account. If you’ve purchased wine, you can get a refund of the Wine Equalisation Tax, which is 14.4 per cent of the purchase price, but not on spirits. If you bring the goods back into Australia you need to declare them. If their value exceeds the passenger concession allowance of $900 for passengers over 18, you might have to pay customs duty.
Australian Border Force has a TRS app which streamlines the refund process, although you still have to queue at the TRS facility at the airport, and pray those in front of you have their paperwork in order.
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