Did you know that you can now claim back up to 20% VAT on purchases in the EU?
That’s right! As a British tourist, travelling to Europe post-Brexit, you can claim a VAT refund on purchases made in the EU. So, if you’re planning a trip to places like France, Italy or Spain, make sure you keep your receipts because you can finally benefit from tax-free shopping!
What is tax-free shopping?
Goods in European countries, like in the UK, contain VAT (value-added tax). This tax gets automatically added to your shopping bill and can be as much as 20% of the net price! However, if you’re shopping abroad in the EU and take your purchases home with you to enjoy, you can get a refund on the tax that you’ve paid. Think of it as duty-free shopping at airports, except now you can do it in the city, town or village that you’re visiting.
How much can I expect to save?
VAT is added to the net price to arrive at the final price of the item and the amount you get back is dependent on the VAT rate in the country you are visiting.
Take France, for example, where VAT is 20%, here’s how the breakdown of VAT would look:
Original price of product: €833.33 + VAT: €166.67 = purchase price you pay = €1000
When shopping ‘tax-free’ you’ll always have to go through a VAT operator. How much your refund comes to is based on the service charged by your VAT-refund provider, calculated as a percentage of the VAT. Unfortunately, it’s not something you are able to do yourself. Typically, once all of the fees have been deducted, you can expect to get somewhere between 6% – 15% of the ticket price back.
Am I eligible to take advantage of ‘tax-free’ shopping?
If you are a resident of England, Scotland or Wales and you visit Europe for less than 6 months, then – yes! However, there are some rules on what you can and can’t claim.
Goods that are not consumed on your trip will qualify. So, things like clothing, shoes and accessories, cosmetics, jewellery, technology, even the wine you don’t drink! So if you wanted to visit a rustic French wine merchant and bring back a case, you’ll be able to claim back the VAT!
You cannot claim for restaurant bills, metro tickets or bus tickets, or alcohol you’ve already drunk.
If you’re planning on staying in the EU for a bit longer, make sure to keep an eye on your purchase time because the right to claim a VAT refund expires at the end of three months after the date of your purchase.
How do I claim back the VAT on purchases I made in the EU?
There are three easy steps shoppers need to take in order to claim a EU VAT refund:
1 – Ask for a form when you shop
Make sure to ask for a Tax Free Form when paying in-store. Provide proof of address as well as your passport.
2 – Get your form validated at customs
At your EU departure point, get your Tax Free Form validated by customs. Be ready to show your receipts and unused purchases if asked.
3 – Claim before you leave
Take your validated form to a refund office (usually located at your departure point) to receive your refund.
There are also a few sites and apps out there in which you can do the above digitally.
Whilst there are many drawbacks to post-Brexit Britain, at least we have got one perk in the form of tax-free shopping for tourists.
It’s a win-win, because British tourists can take advantage of more affordable shopping opportunities, whilst the economy of those EU countries can enjoy the untapped potential of this increased tourist spending.
Happy shopping and happy saving!
FAQs
When can you claim a VAT refund? If you are charged VAT on business activities in an EU country where you are not established, you may be entitled to have the VAT refunded by the authorities in that country.
Can you claim back EU VAT? ›
When can you claim a VAT refund? If you are charged VAT on business activities in an EU country where you are not established, you may be entitled to have the VAT refunded by the authorities in that country.
What does claiming back VAT mean? ›
Understanding the concept of VAT reclaim. Value-Added Tax Reclaim is a process through which businesses can recover the VAT they have paid on their purchases. This means that when a business buys goods or services, it can later claim a refund for the VAT paid to the tax authority.
How do I get VAT back on purchases? ›
You might also be able to claim VAT even if you don't have receipts. You'll need proof of purchase, such as a bank statement, and any other supporting documentation. You must also be able to show that the purchase was exclusively used for your business.
Can Americans get VAT tax back? ›
It's a sales tax paid by consumers (not businesses), and it doesn't exist in the United States. Only visitors—including U.S. tourists—are able to qualify for a VAT refund.
Can you get a VAT refund after leaving Europe? ›
The VAT can be refunded if the merchandise is purchased and exported by a customer whose residence is outside the European Union. Please note that in order to qualify for tax-refund the merchandise has to be exported within three months of purchase.
Is it possible to claim VAT back? ›
The application for a refund must be lodged with the VAT Refund Administrator's offices. These offices are situated at Johannesburg, King Shaka and Cape Town International Airports, various land border posts and designated commercial harbours.
Is it worth reclaiming VAT? ›
VAT reclaim is a huge opportunity to reduce business costs and put money back in your budget. HMRC allows businesses to reclaim the VAT (value added tax) paid on goods and services bought for business use. This includes travel and expenses such as the VAT on fuel.
Where do I claim VAT back? ›
For an immediate VAT refund, you should present all your documents at the tax refund desk at the airport, the port or the train station from which you are departing.
How does VAT return work? ›
A VAT return is a form you file with HMRC, usually four times a year, to show how much VAT you are due to pay them. If you're not registered for VAT, you won't file VAT returns. The VAT return shows the calculation of the amount of VAT due on sales minus the amount of VAT reclaimable on purchases.
VAT at the appropriate rate will be included in the price you pay for the goods you purchase. As a visitor to the EU who is returning home or going on to another non-EU country, you may be eligible to buy goods free of VAT in special shops.
What countries have VAT refunds? ›
Australia, Austria, Belgium, Bulgaria, Canada, Canary Islands, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Holland, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Monaco, Norway, Poland, Portugal, Romania, Serbia, Slovakia, ...
Do you need a receipt to reclaim VAT? ›
To reclaim VAT on the purchases that you've acquired for your business you need to have a valid VAT receipt (or VAT invoice) as proof of the purchase and that you've paid VAT on that purchase. If you don't have a valid VAT receipt you cannot reclaim the VAT. What should the VAT receipt show?
How does VAT work in the EU? ›
The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union.
Can I claim VAT from USA? ›
If the USA company is registered for UK VAT and it meets the conditions for reclaiming VAT then you would claim it back on your VAT return. If it is a USA tax that you have been charged you cannot reclaim that back form the UK.
Do US customers have to pay VAT? ›
Does the United States have a VAT? The United States is in the minority of countries that don't levy a value-added tax, though most states have a sales tax that serves the same purpose. The US also charges federal excise taxes on certain goods, including fuel, alcohol and tobacco products.
Can I claim French VAT back? ›
To get a VAT refund, you must be a resident in a non-EU country, such as the United Kingdom, at the time of purchase. You must also have been in France for less than 6 months and be at least 16 years old. You cannot be employed by a travel/transport company either, if you are working during your visit.
Can you claim VAT on overseas expenses? ›
However, the VAT portion of business expenses is fully reclaimable, even when you're a non-resident organization incurring eligible business expenses in a foreign country.
Can I claim VAT back if I am not VAT registered? ›
Can I claim VAT back even if I'm not VAT registered? No. In general, you must be VAT registered to claim for VAT on the goods and services you've purchased for your business.
