overseas travel It’s not only a cultural experience, but also an opportunity to shop at better prices.
Tax refund system, commonly known as duty free Tourists from many countries around the world can get back a portion of their Value Added Tax (VAT). or sales tax, which will result in loss of benefits if not handled correctly.
Here we will fully explain how to take advantage of this benefit, the main amounts, the required documents and, most importantly, the mistakes that you should avoid in order not to lose your refund.
What’s going on in Europe?
The old continent is duty free VAT refunds are implemented primarily in the European Union (EU), although each country has specificities.
The first thing you need to know is that there is a minimum purchase amount per store, which varies widely between EU countries, but you must always buy from the same store and usually on the same day (or within a certain period of time). As an example, in France the minimum amount is 100 euros and the return is between 10.8% and 12%.
In Italy, the lowest price is 154.95 euros, with discounts ranging 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 amount is 50 euros and the discount ranges from 10% to 12.5%.
It should be made clear that the refund rate is in no way the total amount of VAT (e.g. 21% in Spain and 20% in France). Tax Free management companies (Global Blue, Planet, etc.) retain their service fees and leave you with an effective profit of 10% to 15% of the final purchase price, depending on the country and intermediary company.
How is it processed?
- in the store: Please present your passport when making payment. Request a tax exemption form (may be a check or digital ticket). The seller fills in and issues your data (non-EU residence) and purchase details.
- at the airport (or EU’s last point): This is an important step. At the final departure airport from the European Union (the airport where immigration control takes place for departures from the Schengen Area), the form must be validated on a duty-free plane. If the digital system does not work, or if customs requires a digital system, you will need to go through the counter and obtain a physical stamp from customs.
- Fee: Once stamped/verified, you can choose to receive it in cash (at the management station, requesting a currency other than Euros means additional fees and an unfavorable exchange rate) or request a credit card deposit (slower option, but usually better in terms of fees).
United States: Exceptions to the Rule
The tax refund system is united states of america The uniformity is much lower. There is no federal tax exemption policy. The decision is left to each state, and most states do not offer sales tax refunds to tourists.
The states that apply it are Texas and Louisiana. In both states, the amount is minimal, but the process is more complicated, as you need to present your bill, passport, and boarding pass at a specific office (not necessarily at the airport) or through an intermediary that processes the refund (usually with an administrative fee).
meanwhileand new york and new jersey There is no general refund system, but clothing and footwear below a certain amount are exempt from consumption tax. ($110 in New York). In these cases, taxes will not be collected at checkout.
Finally, Delaware, Montana, Oregon, New Hampshire, and Alaska have no state sales tax, so purchases there are essentially “tax free.”
What’s happening in Chile, Brazil and Uruguay?
Each neighboring country has its own rules. duty free. In this sense, Uruguay is the country with the most developed tax exemption system, as it is operated and digitalized, in addition to other advantages in tourism services (gourmet, accommodation). The percentage refunded is 14.4% compared to 22% of VAT.
Applies to purchases of personal use or consumer goods (such as clothing, footwear, and crafts) purchased at participating businesses that display the Global Blue or tour operator logo. In the case of Chile, the following laws have been approved: VAT refund However, its final regulation and enforcement is still awaited. Finally, in the case of Brazil, Tax Free is a new program and its implementation at the national level is being developed within the framework of tax reform.
5 fatal mistakes that lead to refunds
If these errors do not occur, return Virtually guaranteed.
- If you forget your residency (or passport): Benefit is for non-residents. The original passport (not a copy) must be presented in store for the form to be valid.
- Not validating exit at customs: This is the most common error. If the form doesn’t have a customs stamp or digital verification (via kiosk), it’s wet paper. This procedure must be carried out at the last point of departure from the tax territory (for example, at the last airport within the EU if a stopover has taken place).
- Product Use or Damage: This benefit applies to products that are exported. Customs officials have the right to ask you to present the goods. Certification may be rejected if clothing is not labeled, perfume is opened, or electronic devices are used. Ideally, unused products should be placed in hand luggage or transported in their original packaging or with labels affixed.
- If the minimum purchase amount is not met: If the purchase amount does not exceed the legal minimum amount for the country (by region), the form will be invalid and will not be stamped. You need to make sure that the threshold is reached.
- Confusing refunds and recoveries: It is important to understand that customs validation and refunds are two different steps. A sealed or verified form (first step) entitles you to payment (second step). If the airport toll plaza is closed, you will need to mail the certified form to the agent (retain a copy).
Please take advantage of this. duty free It takes some planning, patience at the airport, and strict adherence to customs rules, but the 10% to 15% financial return on more expensive purchases is well worth the effort.
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