This Travel Hack Can Help You Save Hundreds of Dollars While Shopping Abroad

Go ahead . . . buy that expensive European designer bag. You may get some cash back thanks to this handy travel tip.

Back of a young woman with large purse in front of shelves displaying French perfumes in small gold bottles

When it comes to VAT refunds, the more you spend, the more you can get back.

Photo by AboutLife/Shutterstock

If you’ve never heard of the VAT refund, get ready to see some serious financial returns the next time you go shopping abroad. If you’re looking for the best price on a high-end item, you might be able to save thousands of dollars by waiting to buy it overseas. (Discount luxury shopping: It’s not an oxymoron.) Here’s the breakdown on how to save money with VAT.

What is VAT?

VAT—sometimes redundantly called VAT tax—stands for value-added tax. This tax is associated with shopping in the European Union, though more than 160 countries around the world use value-added taxation. 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.

Keep in mind, VAT is often factored into the price of a product (so a €100 dress with a 20 percent VAT rate might have a price tag of €120). Other times, it is listed on the receipt. Ask a sales associate wherever you’re shopping if it’s unclear.

The rate of VAT in Europe varies depending on where you’re visiting and shopping, and it ranges from 7.7 percent in Switzerland (technically not an E.U. country, and it’s set to increase its VAT to 8.1 percent in 2024) to 27 percent in Hungary. The average VAT rate in the E.U. is 21.3 percent, and the minimum in the E.U. is 15 percent. Deloitte provides a very useful country-by-country breakdown.

But rates can also vary depending on what you’re buying. For example, food and pharmaceutical products are typically taxed at a lower rate than leather goods like shoes and handbags.

Can you get a VAT refund in the U.K.?

It depends: Travelers were allowed to do so throughout the U.K. up until December 31, 2020, but Brexit put an end to VAT refunds. Currently, the only country in the region that offers VAT refunds to overseas visitors is Northern Ireland.

A person walking in front of a pair of arched shop windows, with bicycle parked on sidewalk

If you’re hoping to buy luxury goods in Europe—good news. You could qualify for a VAT refund.

Courtesy of Ira Komornik/Unsplash

What qualifies for a refund?

Almost all luxury goods—including clothes, shoes, cosmetics and skincare, jewelry, handbags, leather goods, and art—will have a value-added tax. Many items qualify for a VAT refund, but it’s important to note that only new goods (not used) can be claimed. Each transaction also has to be over a certain threshold, and this threshold varies by country. For instance, you have to spend over €100 per transaction in France to qualify for a VAT refund. This means you can buy several products at one store for a total of more than €100, but if you spread those same items out over multiple stores, you would not get to claim the refund. You can also make a single large purchase over €100 at many different stores and claim for each transaction.

Your items are supposed to be unused when you declare them. That said, you can typically get away with using your new handbag or coat. But you may want to hold off on breaking in those new leather slingbacks before you present them to customs. You also will want to ensure that items you are declaring are recent purchases because you must make your claim within three months of leaving the European Union.

Items that do not qualify for a VAT refund

  • Vintage items—Those vintage Chanel clip-on earrings you bought from the Marché aux Puces de Saint-Ouen? The (probably very good) price you paid is final. No refunds here.
  • Goods purchased in the tax-free zones of airports—because there is nothing to refund
  • Transactions that do not meet the minimum threshold
  • Services—including hotel stays, restaurant meals, and tour guide fees—because these are experienced abroad and not brought home
  • Anything you aren’t bringing back to the United States. The goods have to come home with you.
  • Carsunless the vehicle is being used exclusively for business purposes, in which case you can get up to 50 percent back on your VAT
  • Alcohol and tobacco
  • Counterfeit items—This may seem obvious, but a faux Dior tote does not qualify for VAT (and in France, purchasing a counterfeit is a criminal offense).
Two people holding hands and multiple shopping bags, shown from waist down

Keep in mind: Vintage items are not eligible for VAT refunds.

Photo by Kamil Macniak/Shutterstock

What you need to do while shopping

  • Make sure you have your passport with you before you start shopping—you’ll have to provide proof that you are a visitor. If you’re shopping specifically to get a discount, ask the shop if it participates in VAT refunds and if it has a specific purchase-amount threshold. On occasion, smaller shops and boutiques do not participate, therefore you will not be able to get a VAT refund on that purchase. It’s best to know before you start shopping.
  • Ask for paperwork at each place you shop—the sales assistant, cashier, or store manager should have information. Occasionally, stores can process a refund for you on site (called “instant refund”), but most use Global Blue, Premier TaxFree, or another third-party to handle the refund process. [Author’s note: I shopped at some of the largest stores in Paris—Le Bon Marché, Liberty, Louis Vuitton, Chanel—and was unable to get the instant refund at any of them.]
  • Don’t leave the store without signed, official documents. Many department stores have a VAT office, such as Galeries Lafayette Haussmann in Paris. These offices will help you get your paperwork sorted. Staple your receipts to your forms, and keep them in a safe place so you can access them when you’re claiming your refund.
  • Ask for a second receipt. You may want this for U.S. customs upon your arrival home.
  • Try to group purchases at boutiques into one transaction, because you may get a higher rate of return. Don’t buy a bag at Hermès and then come back later to get a scarf. If you can, buy them both at the same time.
A person using a credit card machine held by a shopkeeper, with cut flowers on counter and in background

The VAT refund should be processed at your final port of departure when you’re leaving the E.U.

Courtesy of Unsplash/Getty Images

How to collect your refund

When you’re ready leave the E.U.—your last port of departure—make sure you have your goods ready to declare and your paperwork completed, then head to the airport well in advance of your flight. Keep in mind, if you’re traveling around multiple European countries, you do not go through this process each time you leave and go somewhere new within the continent (even if you’re going to a non-E.U. country, like Norway or Switzerland).

The refund process is completed on your final departure when you’re headed home. Your forms should have instructions on what steps to take (and where to go), but here’s what to do.

  • Find a VAT counter. You’ll want to identify your options in advance of your flight so tracking them down is easier on the day of your travel—Moneycorp, Planet, and Global Blue are fairly common. Check your individual airport’s website for more information; some will have detailed instructions specific to their location.
  • Some airports may offer a dropbox when there’s no one there to check your paperwork. This is relatively rare, but you may run into a situation where there’s no one at the counter to take your paperwork. Look for a drop box where you can take your completed paperwork for processing. The downside here is that it can add time to the process if anything is filled out incorrectly or information is missing. So make sure to double-check everything before making the drop.
  • Once you’ve arrived at the counter, present your completed forms and paperwork alongside your passport and boarding pass to the employee. You may need to present certain purchased goods, particularly if they’re over €1,000. At this point, if you do have a larger purchase, you will likely be sent to the local customs office to have an officer see your goods and give you a customs stamp. If that step doesn’t apply to you, an employee will stamp your documents at the refund counter and either mail them off or hand them to you to drop into a mailbox.
  • Choose your refund delivery method. You receive your refund either in cash or as a direct credit back on your credit card. Cash refunds are faster but typically have a higher fee. Credit card refunds can be slower but usually get more money back. Sometimes the refund is instant, sometimes it takes five days, sometimes it takes months. Keep your paperwork in case you have to track down your refund. If you haven’t received information in six weeks, it’s time to contact the agency.

Now for the less fun news: You do not get the full 15–20 percent VAT refunded. There are unavoidable processing fees that unfortunately cut into the final refund amount, but typically it’s a small charge. You can get an estimate on the Global Blue website of what your refund might be.

People in a public square in Europe

VAT is a value-added tax on goods purchased within the European Union.

Courtesy of Jacek Dylag/Unsplash

How this affects your travel home

  • Consider adding at least two hours to your travel time when declaring your goods at an airport VAT counter.
  • Repack your items into your checked bag after you present them for your refund.
  • In addition, you have to declare your goods when you come back to the United States, and a customs officer may want to see your items if you’ve spent over $800. You may also have to pay duty, depending on the value of your purchase and the size of your party. The first $800 (per person) is tax free, the $1,000 after that is taxed at 3 percent, and beyond that the rate is variable.

Can I just go to the duty-free airport shops?

Yes, but often the products are only slightly discounted from what you’d see outside the terminal. You’ll save more money if you go through the VAT refund process.

A woman wearing a mask going through a rack of clothes, with shelves of purses and shoes in background

Make sure to declare any goods purchased abroad that are worth over $800 to U.S. Customs.

Courtesy of Arturo Ray/Unsplash

How to maximize VAT savings

At this point you may be thinking that’s way too much effort for a few bucks. To that end, you’d be right—sometimes this is too much if the rate of return is small. The best way to maximize your VAT refund is on larger purchases like luxury items or a group of items at one store.

  • Buy something made in the country you’re visiting. Purchasing a Louis Vuitton purse in France will save you a significant amount of money compared to buying the same purse in the United States.
  • Travel with family. The United States allows $800 per person of duty-free goods. If you travel with a family of four, that’s $3,200 collectively of U.S. tax–free import.
  • Don’t try to avoid U.S. customs tax authorities if your purchase is over $800. This is tax fraud, and you can be fined a major penalty and lose Global Entry status. Your VAT refund is connected to your passport number, so do yourself a favor and go through the process.
  • Pay in euros or use a credit card with no foreign transaction fees so you don’t incur unnecessary charges.

Some travelers have managed to save substantial amounts on certain luxury goods. Others have had less success, despite following instructions to the letter. But if you’ve spent a lot on souvenirs in Europe, you’ll at least want to try to get that VAT back to offset the duty you’ll pay in the United States.

Is there any way to avoid paying the VAT?

Technically, yes. If a store offers home shipping services, you could opt to have your purchase sent directly to your place (thus saving precious packing space!). The shop won’t charge the VAT if you go this route. But there’s a catch: You’ll have to pay for the freight shipping, which can add up very quickly. So carefully weigh the pros and cons—what is the maximum shipping cost that will offset the inconvenience of dealing with the VAT refund paperwork?

This article originally appeared online in 2020; it was most recently updated on February 2, 2024 by Erika Owen, to include current information.

Dominique Michelle Astorino is a fitness, health, and wellness writer based in San Diego.
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