Traveling abroad It is not only a cultural experience, but also an opportunity to make purchases at a better price.
Tax refund system known as Tax free In many countries around the world, tourists are allowed to recover part of their value-added tax (VAT). Or sales tax, a benefit that disappears if not handled properly.
Here, a complete overview of how to take advantage of this feature, what are the basic amounts, what paperwork is needed, and most importantly, what mistakes you should avoid to avoid losing your refund.
How does it work in Europe?
The ancient continent, under the method Tax free Or VAT refund, operates centrally in the European Union (EU), although it has its own specificities depending on the country.
The first thing you need to know is that there is a minimum purchase amount per store, which varies greatly between different EU countries, but it must always be in the same store and generally on the same day (or within a certain period of time). For example, in France the minimum is 100 euros and the return is 10.8% to 12%.
In Italy the minimum is €154.95 and the discount ranges from 12% to 14.5%. As for SpainThere is no minimum amount, and the discount ranges from 10.4% to 15.7%. In Germany, the minimum is 50 euros, and the discount ranges from 10% to 12.5%.
It should be clear that the recovery percentage never represents the total VAT, which is for example 21% in Spain or 20% in France. Tax-free management companies (Global Blue, Planet, etc.) retain a service commission, leaving a real return of 10% to 15% of the final value of the purchase, depending on the country and the intermediary company.
How is it processed?
- In the store: When paying, show your passport. Request a tax exemption form (this can be a check or a digital ticket). The merchant will issue it, complete with your details (residence outside the EU) and purchase details.
- At the airport (or the last EU point): This is the decisive step. At the last airport of departure from the EU (where immigration is controlled for departure from the Schengen area), you must validate the forms at tax-free machines. If the digital system does not work or if customs requests it, you must go through the counter to obtain a physical stamp from customs.
- Charge: Once stamped/validated, you can choose to collect in cash (at administration stations, which implies an additional commission and an unfavorable exchange rate if you order a currency other than Euros) or request to be credited to a credit card (a slower option, but generally more convenient in terms of commissions).
The United States: the exception to the rule
Tax refund system in USA It’s much less homogeneous. There is no federal tax exemption policy; The decision falls to each state, most of which do not offer any sales tax refund to tourists.
The countries that implement it are: Texas and Louisiana. In both countries the amount is small, but the process is more complicated, as invoices, passport and boarding pass need to be presented to specific offices (not always at the airport) or through intermediary companies, which process the refund (generally with an administration fee).
whileand New York and New Jersey They do not have a general refund system, but instead exempt clothing and shoes under a certain amount from sales tax. ($110 in New York). In these cases, the tax is not collected at checkout.
Finally, in the case of Delaware, Montana, Oregon, New Hampshire, and Alaska, they have no state sales tax, so purchases there are inherently “tax deductible.”
What’s happening in Chile, Brazil and Uruguay
Each of the neighboring countries has its own rules to apply Tax free. In this sense, Uruguay is the country with the most developed tax exemption system, as it is operational and digital, in addition to other advantages in tourism services (gastronomy, accommodation). The percentage that will be returned is 14.4% compared to the value added tax, which is 22%.
This applies to purchases for personal use or consumer goods (clothes, shoes, handicrafts, etc.) purchased at participating businesses displaying the Global Blue logo or the tour operator logo. In the case of Chile, the law on… VAT refund For tourists, but its final organization and implementation is still awaiting. Finally, in the case of Brazil, the tax exemption program is a new program and its implementation is being developed at the national level within the framework of tax reform.
The five fatal mistakes that cost you your money back
If these mistakes are not made, the He comes back It’s practically certain.
- Forgetting residency (or passport): Benefit for non-residents. Your original passport (not a copy) must be presented at the store for the form to be valid.
- Failure to verify exit at customs: This is the most common mistake. If the form is not stamped with a customs stamp or digital verification (via kiosk), it is wet paper. The procedure must be carried out at the last point of departure from the tax territory (last airport in the EU, for example, in the case of a stopover).
- Use or destruction of the product: The benefit applies to products that are exported. Customs officers have the right to ask you to show the items. If clothing is untagged, perfume is open, or an electronic device is in use, you may be denied verification. The ideal solution is to carry unused products, in their original packaging or with labels attached, in a hand luggage or to be shipped.
- Not Reaching Minimum Purchase: If your purchase does not exceed the state’s legal minimum (depending on the local level), the form is invalid and will not be stamped. You have to make sure you reach the threshold.
- Confusion between refund and collection: It is important to understand that customs verification and refund are two different steps. A stamped or certified form (first step) authorizes you to pay (second step). If the airport toll booth is closed, the certified form must be mailed to the agent (keep copies!).
Take advantage of Tax free It requires planning, patience at the airport and strict adherence to customs rules, but the economic return of 10% to 15% on higher value purchases is worth the effort.
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