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Claiming your tax refund in Europe: Rules & How to do it

Whether it’s your first trip overseas or you’re a regular in the Northern Hemisphere, there’s much to see and do in Europe.

But with such long flights, the new Europe visa system that will soon require Malaysians to get a visa when visiting, and a high cost of living in most countries in the continent, it pays to find ways that you can save money. From searching for cheap flight tickets and understanding the car rental system in Europe to knowing about tax refunds and cheap shopping, we can help you save money on all areas of travel.

Tax-free shopping in Europe

In short, tax-free shopping is available for all visitors to Europe. As always, there are a few disclaimers that go along with this statement:

If you tick all those boxes, you can reclaim the VAT on purchases you made while in Europe to make your trip a bit cheaper. Still unclear of what each of the above points means? Want to find out the process for VAT refund in Europe? Read on to find out more.

What is VAT?

Value Added Tax (VAT) is an extra fee that has to be paid on goods in most European countries. The tax percentage can differ from country to country. At the moment, the lowest VAT rate in Europe is 17% in Luxembourg while the highest is 27% in Hungary.

CountryVAT Rate*Minimum spend for tax refund
Austria20%€75.01
Belgium21%€50
Bulgaria20%250 BGN
Croatia25%740 HRK
Czech Republic21%2,001 CZK
Denmark25%300 DKK
Estonia20%€38.01
Finland24%€40
France20%€175.01
Germany19%€25
Great Britain20%£30
Greece24%€50
Hungary27%54,001 HUF
Iceland24% (11% on food & books)6,000 ISK
Ireland23%€30
Italy22%€155
Latvia21%€44
Lithuania21%€55
Luxembourg17%€74
Malta18%€100
Netherlands21%€50
Norway25%315 NOK
Poland23%200 PLN
Portugal23%€61.35
Romania19%250 RON
Slovakia20%€100
Slovenia22%€50.01
Spain21%€90.16
Sweden25%200 SEK
Switzerland8%300 CHF
Turkey18%118 TRY

Do take note that the above rates may change and you may not get the full refund, especially if it is subject to processing fees.

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Who is eligible for a tax refund in Europe?

Essentially, anyone who is not a resident of the country is classified as a visitor. So, if you live in Malaysia, you are eligible for tax-free benefits.

However, if you decide to stay in Europe for a long time, you should know that it’s only purchases made within three months of your departure that you can get the refund on.

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Which shops allow you to claim back VAT?

Although you can get tax refunds on certain products, you still have to pay the VAT at the time of purchase.

Do bear in mind that only stores with an agreement in place with the relevant tax authority will allow you to claim back the VAT. You’ll find that most of these shops will have the “VAT/Tax-free” sign clearly displayed, however you can always ask a shop assistant if they are registered.

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What products can you buy to qualify for a tax refund in Europe?

The products that are exempt vary from country to country, but the general rule of thumb is that it only applies to goods that you can carry in your luggage. That means that large items, like a new car, are not covered. At the other end of the scale, there’s a minimum purchase value too – refer to the table above for details.

There are also some other things that are excluded, such as services, hotels, and tobacco purchases.

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Europe VAT refund process

When making a purchase at an eligible shop, you will need to show your passport to prove that you’re a visitor and you’ll be given a form to fill out. Some shops allow you to get an immediate refund, while others require you to claim your money back at the airport which you will be leaving Europe from.

VAT refund process at the airport

1. Get your forms stamped at the customs office

To get a refund at the airport, you will need to get a stamp from the customs officer. Ensure that you have all your paperwork (form given by the store & receipt) and items ready, just in case the customs officer needs to inspect the goods.

If you are planning to keep the item in your checked bag, please go to the customs office to get the stamp before you proceed to check-in. Queues for a tax refund at the airport can be quite long and it is recommended to arrive way ahead of your departure time to ensure that you don’t miss your flight.

2. Proceed to the tax-refund counter inside the departure area

After obtaining the stamp, you can proceed to check-in and go through immigration with your documents. The tax-refund counter, where you can collect your refunds, is normally located within the departure area after immigration. The staff there will then process your request and return the tax to you in cash (in the currency of your departure country) or via credit card.

Note on getting a tax refund for purchases made in a non-EU country

The EU currently has 28 member states, which includes most of the major European countries: France, Germany, Portugal, Spain and the UK are all included. However, 18 European countries are not in the EU. This list includes many of the tiny countries (including Andorra, Monaco and the Vatican) as well as some popular tourist destinations like Iceland, Norway and Switzerland.

If you are travelling to countries that are not part of the EU (European Union), make sure you have your paperwork stamped before you leave the country. If you are planning to travel around Europe by train, do take note that only the bigger train stations would have a customs office.

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Map

We’ve all had that experience of splurging while on holiday and coming back broke. Hopefully, with a VAT refund or two in your pocket, your return from Europe won’t quite be as hard to handle.

Adapted from the original article on Skyscanner Australia