Shopping is high on the list of travel activities for many Americans overseas. Yet many published reports indicate most American shoppers don't bother with the paperwork needed to recover the hefty double-digit Value Added Tax (VAT), tacked on to purchases in other countries, but available as a reimbursement to foreign shoppers. VAT in European Union countries usually ranges from 15 to 25 percent of the base price, depending upon the country. Examples are 19 percent in Germany, 19.6 percent in France, 20 percent in Italy, and 17.6 percent in the UK.
There are a few things to remember in seeking a VAT refund. Each country has a minimum purchase requirement to qualify for reimbursement, ranging from about $25 to a couple of hundred dollars depending upon the country. You also need to make the purchase requirement in one store. You cannot combine smaller purchases in multiple stores to make the minimum, so it is best to find a favorite store for shopping and make your purchases there. Look for a shop that has an official "Tax Free for Tourists" sign and confirm before buying that the store has the required VAT tax-refund forms and stamps to document your purchase. Top stores, like Harrods in London, have a VAT department to help you with paperwork.
When arriving at airport customs for departure from the country, the American shopper presents the stamped tax-refund form from the store, along with the purchased merchandise for inspection, to a customs official and receives either a refund on the spot, or fills out a document for the VAT refund to be mailed back to the U.S. It is also possible for the shopper's credit card shown as the method of payment to be credited with the tax reimbursement. The paperwork involves a little bit of time, but isn't saving about 20 percent on a travel shopping purchase worth it?