Many countries impose a Value Added Tax (VAT) of up to 25% on goods and services purchased for consumption within the country. Unlike sales tax in the U.S., the VAT tax is built into the price, so you won’t see a separate line item on your receipt. If you are a big shopper, the VAT tax can put a pretty good dent in your wallet. But there’s good news – in some countries, tourists can get a VAT refund. Sounds great – but is it worth the effort involved. Read on to see our experience with the VAT refund system in three countries.
Each country has its own value added tax refund rules and process. But in general, you need to spend a minimum amount on eligible goods. And, you need to shop at a store that participates in tax free shopping and provides the required documentation. Then, you need to take the documentation and goods to the VAT refund office at the airport when you leave the country (some countries have additional options like refund by mail).
South Africa VAT Refund
The store receipt contained all of the required information – we just needed to enter our name and address. I hadn’t researched the airport departure process, so we had to go back and forth to the customs counter and VAT refund office. But after we figured that part out, the rest went quickly. South Africa issues a debit card loaded with the refund amount. I had no trouble using the card in other countries in the following weeks.
The verdict: Tax free shopping in South Africa was worth it.
See full details about the South Africa Tax Refunds for Tourists system.
European Union (Spain and Portugal) Vat Refund
We spent two months in Europe, so we definitely intended to get the VAT refund. We did quite a bit of shopping a Corte Ingles in Spain, which has a tax refund office that reviews your receipts and generates the refund form. Unfortunately, tax free shopping at Corte Ingles is very popular, so we could not avoid waiting in line. Our country of departure was Portugal and we had a very early flight – so early that most of the airport was closed when we arrived to check in. We found that there are separate processes for checked and carryon luggage. For checked luggage, it was necessary to check in for the flight first and then bring our luggage to a separate area to be checked. We weren’t comfortable with the process, so we decided to put the goods in our carry on. The airport was undergoing extensive renovations and nothing was located where indicated on the directory maps. We walked around for a long time and could not find the VAT office. Since it was so early, the information counters weren’t open and there was nobody to ask for directions. We gave up on seeking our 56 euro refund and went through security to the lounge for breakfast.
The verdict: On this occasion, tax free shopping in Europe was definitely not worth it! We spent a lot of time gathering receipts and getting the forms and then couldn’t find the tax refund office at the Lisbon airport. However, I would still consider tax free shopping in the EU on future trips.
Learn about tax free shopping in the European Union.
July 2017 Update – Tax Free Shopping in Spain
On our recent trip to Ibiza, I gave tax free shopping a try again. Here’s how it turned out.
I shopped at two tax-free stores. One provided the receipt with tax free form, store address, and store signature. The other store’s receipt was missing part of the form, store stamp, and store signature. I was so into chatting with the employee, that I didn’t think to check until later. So, I went back the next day and got the store stamp and signature – they couldn’t provide the missing part of the form.
Since it had been a few years, I researched tax free shopping in Spain. There are two tax free companies: Premier Tax Free and Global Tax Blue. Merchants will use one or the other. The stores I shopped at use Premier Tax Free. The receipts had a form at the bottom to enter your name, address, and passport number, and signature. I filled out the forms and packed the goods in my carry on to prepare for the trip home.
At the airport in Barcelona, it was very easy to find the customs office (unlike in Lisbon a few years earlier). There was a huge sign outside of security near the check in counters. When I arrived at roughly 10:30 AM, there were approximately 45 people in line. I waited 35 minutes – and when I was done, the line had doubled. There was only one window open plus a staff checking people in line to confirm they had everything required. About half way into the wait, I started to question whether it was worth the time. After getting the customs stamp, I went through security and found the Premier Tax Free kiosk to present the stamped receipts (note: the Premier Tax Free and Global Blue kiosks are directly across from each other). The clerk asked if I wanted cash or credit on my credit card – I said cash, but then she noticed that one of the merchants didn’t allow a cash refund, so I opted for both via credit card. She processed the transaction and I was off. It has been 2 ½ weeks and the refund has not yet hit my credit card. Stay tuned for an update…
August update: Six weeks after I submitted the VAT tax refund forms in Barcelona, I received the refund as a credit on my credit card. The credit was $13.18 for each purchase – although the purchase amounts were not the same. After crunching some numbers, I ended up getting back half of the 21% vat tax paid.
The verdict: With the long wait at the airport to get the customs stamp, this time, tax free shopping was not worth the effort.
Reminder Tip: Before you leave the store, make sure your receipt has the following: store’s full address (some use a stamp), a form at the bottom for you to enter your information, and a stamp that says ‘tax free’.
Turkey VAT Refund
The process was fairly easy to follow. At the Istanbul airport, we went to the tax free processing office first (which was a little tricky to find) where they inspected the goods and stamped our form. Then we went to the refund office and waited in line to get the refund – which was provided in cash. Since we were heading to Europe, we got euros.
The verdict: Tax free shopping in Turkey was worth it.
Tax Free Shopping Tips
- Research each country’s tax free shopping rules to learn which goods are eligible, minimum purchase requirements, and refund process.
- Bring your passport when you shop because some stores may ask to see it before completing your tax refund paperwork/form.
- When you enter a store, ask if it participates in tax free shopping – don’t assume that all stores do.
When you shop, save the receipt and get any required additional documentation from the store.
- Some stores may have the option to deduct the VAT from the price so that you don’t need to seek the refund. Sounds great – but wait – you will still need to submit the proper paperwork when you leave country. I found this out the hard way many years ago in France. I ran out of time at the airport and didn’t process my form. Several months later, there was a charge on my credit card for the VAT that the shop had deducted.
- In some cities you may see companies that offer to issue your tax refund on the spot. If this option appeals to you, do your homework carefully to determine their fee.
- If possible, carry your purchases in your carry on. Some countries require you to present the goods to the customs officer before heading to the tax refund office.
- When you leave the country, get to airport extra early and bring your patience. Be prepared to have trouble finding the tax free office (Do they do that on purpose?) and when you do, be ready to wait in line.