Seen the signs "VAT Refunds for Tourists" when you're sauntering down London's Regent Street, or possibly "Tax Free Shopping" on the Printemps department store on Paris' boulevard Haussmann? Perhaps followed by the thought that a retail interlude is now top of the to-do list? And with Value Added Tax at 20 per cent in France and Britain and 22 per cent in Italy, what's not to like about shopping with a fat refund at the end of it?
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While the shopping part is easy and satisfying, the refund process can be tricky.
Throughout the EU, non-residents are entitled to a refund of the VAT that applies to goods. In theory, obtaining the refund is fairly straightforward. First, at the point of purchase you need to makes sure that the shop is part of the VAT refund scheme. You also need to make sure that your purchases are above the threshold.
In France the minimum is €175 ($270), and any number of items provided they're purchased from the same shop on the same day. In Italy it's €155 while in Britain it can be as low as £25 ($50), although £75 is more common.
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You might need to complete a tax refund form – the Tax Refund Yellow form in Italy, a VAT 407 form in Britain with relevant parts to be filled out by the retailer. When you make the purchase you might be asked for proof of residency outside the EU, and your passport will do just fine.
When you leave the EU, locate the tax refund office at the airport and arrive early, as there are often queues. You'll need to present your goods and the paperwork, which will be certified by a customs official. At some larger airports you can obtain the tax refund immediately. Otherwise, you need to return the certified documentation to the shop where you purchased the goods. In the fullness of time, a tax refund will appear on your credit card minus an administration fee.
Some larger stores operate their own tax refund office where you can get an immediate refund. You might pay a service fee but it's usually small, and this is the most hassle-free solution.
There are also a couple of agencies that will speed up the refund process. If the store you're purchasing from participates in the Premier Tax Free or Global Blue refund schemes, you can ask for their forms. After you've had your tax refund paperwork validated at the airport as you are about to depart the EU, find the agency's refund counter in the terminal, hand over the paperwork and you'll get an instant refund, minus a service fee. If there is no refund counter you need to mail the forms back, and you should be given an envelope at the point of purchase for this purpose, with free postage from anywhere in the world.
The agencies that provide this service are Premier Tax Free and Global Blue.
Global Blue in particular has come in for sharp criticism in online forums for some of its practices, for example refunding in US dollars instead of euros, at an inferior exchange rate. Claims by Global Blue that it has not received documentation, and therefore will not pay a refund, is another source of discontent.
The process of obtaining a tax refund in the EU is almost guaranteed to wring any joy from the shopping experience. Even when you follow instructions to the letter the queue at the airport tax refund booth might be long or the office unattended – not uncommon in Italy. Minus fees, the refund you get might be well short of the tax you've paid – but there's good news right here at home.
Australia operates is own Tourist Refund Scheme (TRS) and considering the benefits – ease of shopping in your home country, competitive pricing, full refund of all tax paid and a local warranty from a retailer you can negotiate with if anything goes wrong – there are good reasons for doing your duty-free shopping right here.
Except for air and sea crew, the TRS is available to all Australian residents as well as overseas visitors. Goods must be purchased within 60 days before leaving Australia, the purchase from any single business must total at least $300 and purchases can be made at any retail outlet.
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Beer, spirits and tobacco products are not eligible. Wine qualifies but beware, you need to carry this in your hand luggage if you're exiting on a flight. If you're transiting through another airport such as Singapore or Dubai en route to your final destination, any liquids in your hand luggage over 100 millilitres might be confiscated at the final inspection point before boarding your connecting flight.
To claim your tax refund you simply visit the TRS facility located airside in our international airports or the cruise terminals of some Australian seaports. You'll need original tax invoices and the goods themselves. While wine and perfumes must be unopened, you are allowed to make use of electronic goods such as cameras and tablets before departure, or even wear the clothes for which you're claiming a tax refund. At the TRS facility you'll get a total refund of the GST, which is the price you paid divided by 11, and/or the total Wine Equalisation Tax, which is 14.4 per cent of the purchase price. Payment is made either to a credit card or to an Australian bank account, generally within 60 days, or by cheque.
The TRS also has apps and a website that streamline the refund process, enabling you to enter the information required to lodge a TRS claim before departure. For more information see www.border.gov.au/Trav/Ente/Tour/TRS-applications
The duty-free allowance when you re-enter Australia is $900 for anyone over 18. You might have to pay tax on purchases over that amount, however if you've used or worn the goods while overseas, Australian Customs can depreciate their value at the discretion of the customs officer, with a tax break to you.
