TAX FREE SHOPPING – HOW DOES IT WORK?
Did you know that you can shop tax-free in shops outside airports?
When you buy goods in a foreign country that allows tax-free shopping, you pay the goods in the shop, tax included, and can claim the refund of the sales tax (that has been collected by the retailer on those goods) when leaving the country with the goods.
The process and conditions of refund depend on national regulations, which means that they can be different from one country to another. But what is common is that you can only claim a refund on goods that you export out of the country, and those exported goods might be subject to applicable taxes in your country of residence.
In more concrete terms, the refunded amount corresponds to the sales tax, either VAT (Value Added Tax) or GST (Goods & Services Tax) or Consumption tax, applied on the product in the country you buy it from, on which a fee can be withheld by the tax-free operator. Note that the sales taxes differ a lot from country to country, from 8% in Switzerland to 27% in Hungary. Keep this in mind when estimating your VAT refund!
If you have never used this tax refund service, it is high time to begin to take a closer look at it! You might save a lot of money on your clothes or electronic purchases, among other things!
How does it work in Europe?
Conditions to get tax refund
First of all, you have to constantly live outside the EU to be eligible to tax refund. If you hold EU citizenship, you may still be considered as a visitor during your holidays in Europe if you live permanently in a non-EU country.
Which purchases are eligible for tax refund?
Only goods meant for personal use and that you will export out of the country are eligible for the refund. Make some prior research to know which types of goods you can claim refund for: for example, some countries do not allow tax-free shopping for books, tobacco, cars or food.
Bear in mind that there is usually a minimum spending in a single shop on the same day (different depending on the country) before you can claim a tax refund.
However, not every store will allow you to shop tax-free so always inquire before buying something expensive. You can also look out for “Tax Free” signs in the stores. You will have to pay the total amount in the store, tax included, and you will claim the VAT refund later when at the Customs when leaving the country.
How to get your tax refund in a few easy steps?
- For each purchase eligible for tax refund, you have to get a tax-free receipt from the retailer, on which you have to staple your receipt. Remember to always have your passport with you when doing those purchases as some stores might refuse to edit a tax-free receipt without seeing your passport.
- When leaving the country, you need to visit Customs with all your tax-free receipts, your passport and the unused goods to get a stamp at the customs. Be sure to arrive early enough so the customs are not closed if you flight late at night or to have time to queue as there may be a lot of people requesting tax refund. You have 3 months from the purchase to get a stamp at customs.
- You can request your money back by mailing back the receipts (with Customs stamp) either directly to the retailers or to tax-free operators that are handling the process for the retailer, to receive your refunds at a later date. It will depend on the terms and conditions specified in your tax-free receipt.
Lately some start-ups, like Zapptax, have developed an innovative service that facilitates tax-free shopping by use of a smartphone application. The refund process is handled on a mobile platform, making it more convenient and simplified, with higher refunds (the Zapptax fee is lower than the tax-free operators’ ones). Good to know, this service benefits from a 24/7 ultra responsive customer support.
The ZappTax service is available today to all non-EU resident travelers for purchases made in 4 European countries: France, Spain, the UK and Belgium with additional countries to follow soon.
More information on http://www.zapptax.com or firstname.lastname@example.org
How does it work in the United States?
It seems that only a couple of states in the US allow tax-free shopping. So we advise you to check before departure the regulation in the states you are planning to visit as in some of them, there is no sales tax at all.
For Louisiana and Texas, you can have a look at the following websites to find more information about process and conditions to get tax refund:
If you plan to travel anywhere else in the world, check beforehand whether the country allow tax-free shopping, and if so, which are the requirements to be eligible.