Understanding VAT Refunds

Paris is full of amazing food, delicious pastries, historic architecture and mesmerizing works of art. All of these things will launch Paris to the top of any wanderer’s travel list but there’s one thing that makes the city of lights an inevitable destination for fashionistas….the shopping of course! For years I was buying all of my European designer handbags and shoes in the US at full price. Then I learned about the one small thing that has had the biggest impact on my closet in the last two years. VAT refunds! Here’s the beginner’s guide to saving hundreds on designer items.

What is a VAT refund?

VAT stands for “Value Added Tax” and it is a tax that is already included in the price of goods that you purchase. If you are visiting the EU you can be eligible for a refund of the VAT you paid on items from certain stores.

Can everyone get a VAT refund?

You are only eligible for a refund if you permanently live outside the EU and are above the age of 15. You must show your passport at many of the stores to qualify.

Can I get a VAT refund on everything I pay for?

No there are a number of exclusions to items eligible for a VAT refund.

• The refund is typically reserved for smaller items that you can carry with you in your luggage.
• The refund is meant for goods not services. You can’t claim a VAT refund for your hotel stay or for meals consumed in the EU.
• In France you have to spend a minimum of 175.01 Euros at each store you are claiming a VAT refund from. This number varies from country to country.
• Not all stores offer a refund. When you go shopping look for a “Tax Free” sign on the door or a sign that states they offer VAT refunds. Most department stores and designer shops do. Smaller businesses or street vendors typically do not.

How much money will I get back?

VAT refunds range from 10-20% in the EU. France is 12%.

What do I need to bring with me?

This is important, bring your passport!!! You need to prove to the stores that you are not a EU resident. All of the stores I shopped at asked me for my passport when they were filling out the Tax free form.

So how do I get this refund?

The easiest way to do this is to shop Duty Free at the airport. Most airports are more like shopping malls these days anyway. You get the tax refund automatically and do not have to submit any forms. The downside to this is that there is a limited supply of items available and many times the items are marked up so you’re not getting as much of a discount as you think. If you actually have time to hit the shops in Paris I would recommend doing that.

I did all of my shopping at the Galeries Lafayette. Each of the stores I shopped at provided me with two receipts, one for myself and one for the VAT form. After I did all of my shopping I went downstairs to the Tax Refund office. There they asked me if I would like my refund immediately or via a refund on my credit card. The credit card option gave me 12% back while a cash refund only gave back 10.8%. I chose the credit card. They filled out my paperwork and handed me back forms with a barcode on them. I was instructed when I got to the airport to scan these documents on the PABLO machines and then place them in the envelope they provided and put them in the drop box next to the machine. This seemed easy enough. (Recently the system has changed and I don’t believe you have to submit the forms after scanning them.)

Here’s my biggest piece of advice, get to the airport early! I had a late night flight and one of the customs areas was closed. I couldn’t find a working Pablo machine and ended up walking up and down the long terminal hallways looking for one. When I did find I scanned the barcode and they were luckily accepted. This is not the case for everyone.

What do I do if I don’t get a PABLO form?

If you shopped a store that doesn’t have the PABLO form or your barcode is not working you will have to go to customs to get a manual stamp. The customs office is usually near the kiosk. They will ask for your receipts and they may even ask to see the items. Make sure your items are unused and in their original packaging. Go to customs before you check your bags or make sure your items are in your carry on. I was never asked to show my items at customs but it can happen and you don’t want to risk it.

After you have your forms stamped by customs you have to turn them in. Most merchants work with refund services like Global Blue or Premier Tax Free. (These were the two I used in Italy.) Head to their counter and turn in your forms. They will either issue you a cash refund or a credit card refund. I personally don’t think the cash refund is favorable since you are about to leave the country. Also attempting to get your refund in USD will subject you to horrible conversion rates.

What else do I need to know?

• If you are going to multiple EU countries you can submit all of your forms at your last stop in the EU.  So if you have a trip planned to Italy, France and then Spain you can submit all of your forms in Spain before you fly back home.
• You must leave the EU 3 months from the date of purchase to qualify for the refund.

How long does it take to get my refund?

The tax refund desk typically states it may take 2-3 months for the refund to show up on your credit card. I was pleasantly surprised when I noticed a refund in just under 3 weeks.

The VAT refund isn’t the only reason items are less expensive in the EU than in the States. When you purchase an item in the US that was imported from Europe there is an import tax that is added to the price of the item you are purchasing. This is why when you look at the price of something on a European website and convert it into USD the prices don’t match up. So overall you will save hundred on items purchased in Europe. Comment below if you have any questions. Happy Shopping!