Tax-Free allows you to get back 8–27% of the value of purchases made abroad. We tell you how to go about it
What is Tax-Free
Tax-Free is a system for refunding value-added tax on a purchase made by a foreign citizen.
Value-added tax is included in the final value of the goods. The seller transfers this money to the state budget, from where it is distributed to various social programs. Foreigners are not involved in the social mechanisms of the country and therefore are exempted from paying tax. This right is formalized, not through a discount but a refund of overpaid money after leaving the country.
How much can you save
The amount of money returned depends on the amount of value-added tax established in the specific country where the purchase was made. The minimum share is 8%. This is the amount of Tax-Free established in Japan. Hungary remains the most generous in the list of countries providing Tax-Free; by default, 27% of the price is returned here.
Simultaneously, the amount returned in reality may be significantly less than the one that the tourist expects. Money is usually returned through a third party that the store has a contract with. The intermediary will keep part of the funds for the services. The largest companies working with Tax-Free are Planet, Global Blue, Innova Tax-Free.
What to buy to get Tax Free
You can get a tax refund on purchases of clothing, shoes, household and electronic appliances, watches, and jewelry in most countries. Simultaneously, online shopping, books, food, medicines, souvenirs, and services may not be subject to regulations on VAT refunds to foreigners.
AIRVAT customer service specialist who helps to issue Tax-Free online. If the VAT on the country’s product is 0%, you will not be able to issue a refund. For example, in the UK, this rate applies to children’s clothing, books, tea.
The tax cannot be refunded on purchases that cannot be taken with you and put in a bag to show to the customs officer at the border. This includes payment for services, tickets for musicals and other performances, hotel accommodation, lunch at a restaurant.
How to get Tax Free
To make a purchase
A sticker is placed on the store’s door or window that provides the Tax-Free refund receipts. The information is usually in English, so you don’t have to be a polyglot to understand it. The label will also indicate the name of the company through which you will be issuing the return.
Issue Tax-Free Checks
Tax-Free returns require the seller to issue special checks. In any country, they can be requested using the keywords Tax-Free voucher or Tax-Free form. This document is attached to a standard sales receipt. For paperwork, you will need a passport or a photocopy of it. Ensure that all personal data was transferred to the form correctly, as errors may become the basis for refusing a tax refund.
Each country has a minimum amount for which Tax-Free checks are issued. For example, in Germany it is 25 euros, in France – 175 euros, in Holland – 50 euros, in the UK – 30 pounds sterling, in Argentina – 70 Argentine pesos, in Japan – 5 thousand yen.
Purchases for this amount must be completed with one check. In large shopping centers, sometimes there are special departments in which they will collect data about your purchases from different stores into one general document.
Food and non-food items cannot be entered in one check.
Put a stamp at customs.
When leaving the country where the purchases were made, you must stamp on the export of things at the customs. To do this, service employees need to present receipts and goods in packaging, without signs of use. For persuasiveness, you can save branded store packages.
The states of the European Union are considered a single zone, therefore, you must put a mark on the export in the country through which you leave the EU.
The stamp is affixed in a special office at the customs. You should look for it on the Tax-Free office or VAT Refund plate. If it is located before the check-in counters, contact it and get the corresponding stamps. Sometimes the Tax-Free customs office is located behind the check-in counters. In this case, transfer the items purchased in the country to your hand luggage so that you have something to confirm the purchase.
The checks have their own expiration date, during which you need to put a customs stamp on them. Most often, documents should be stamped within three months from the date of purchase. In Switzerland, Norway, Morocco, the term has been reduced to one month.
You can return VAT in material terms in three ways:
1. At the airport
For receipts that are stamped by customs, contact the Tax Refund office of the intermediary company listed on your documents. The required amount can be given in cash or transferred to the card, the details of which you provide.
The company can withhold interest; the funds will come to the card without deductions. Some companies set up special mailboxes at airports, where you can drop a check with a customs stamp and a bank card number to which funds will come.
If you want to receive VAT in cash at the airport, be careful. Such a service may cost an additional commission of 10–20% of the VAT amount due to the unfavorable exchange rate and an additional fee for a cash payment. Therefore, if you do not feel an urgent need for cash, it is better to save money and wait for the payment to arrive at your specified bank account or card after arriving home.
2. When crossing the border by land
The Tax Refund office can be located at the checkpoint. In this case, you need to get a stamp from the department’s employees and then apply for a refund.
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3. Via mail
Mail the customs-stamped check to the reseller company. The address must be indicated on the document itself. Do not forget to enter your bank card number in the form. The money will come to the account on average in 1-2 months.
4. At the bank
In some cases, a refund can be made at one of the banks that cooperates with a Tax-Free payment intermediary company. Global Blue issues money in Kaliningrad, Moscow, and St. Petersburg through Bank Intesa, in Pskov – through AKB Slavia; Innova Tax-Free – via SMPbank in Moscow, Chelyabinsk, St. Petersburg, Kaliningrad, Yekaterinburg. A complete list of financial institutions that issue money can be seen on the website of their intermediary.
In rare cases, the tax can be returned to you in the store immediately after purchase. However, then you will definitely need to mail a Tax Free check with a customs stamp, otherwise the issued amount will be debited from your card.
Why tax refunds may be refused
- The Tax-Free form was completed with errors.
- You did not stamp at customs on the export of things from the country where you bought them.
- The dates on the cashier’s receipt and Tax-Free form do not match. This rule is not followed in all countries. For example, in Spain, purchases made in one store on different days are summed up.
- According to the instructions, you can apply for VAT with a check on which the customs stamp is affixed, within three months (Belgium, Greece, Morocco, and so on) to infinity (Netherlands, Lithuania, Lebanon). In practice, it is better not to delay applying for money. Otherwise, you may be refused.
Adapted and translated by The Cop Cart Staff
Sources: Life hacker