Duty free shopping: How to shop tax-free in Europe

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This was published 1 year ago

Duty free shopping: How to shop tax-free in Europe

By Michael Gebicki
Updated
You can shave around 20 per cent off the sticker price of any expensive goods you buy anywhere in the EU.

You can shave around 20 per cent off the sticker price of any expensive goods you buy anywhere in the EU.Credit: iStock

Everyone loves a bargain, right, and as a foreign resident, you can shave around 20 per cent off the sticker price of any expensive goods you buy anywhere in the EU. That's luxury goods you might buy in department stores, designer shops, even at outlet stores - around 20 per cent off for you, but you need to know what you're about.

Value Added Taxes (VAT), the equivalent of our GST, are high in Europe. In France it's 20 per cent, 19 in Germany, 23 in Ireland and 22 per cent in Italy. The lowest is Luxembourg, at 17 per cent. If you're buying goods worth several hundred euros – and the refund scheme has a minimum spend – that's too good to pass up. As a non-EU resident, you're entitled to claim a refund of the VAT paid. However the process of obtaining a refund is mired in bureaucracy, and a single wrong move will see you lose out.

First off, when you've found what you're looking for, ask if the retailer participates in the VAT refund scheme. Department stores and other major retailers are more likely to fall into this category. You will need to spend a minimum amount to qualify, and that must be spent in one store on the same day. The official EU minimum is €175 but some countries beg to differ. In Italy, the minimum is the slightly bizarre sum of €154.94, in France it's €100. Next, you need to prove you're not an EU resident, so passport out. You will be given a form to fill out on the spot and the shop assistant will complete their part of the paperwork. Keep the invoice – you need to show this along with the completed refund form plus the goods when you depart the EU. This will typically happen at an airport Customs approval kiosk, usually located on the airside of international airport terminals, when you've passed through immigration. You'll get a stamp on your refund form that will allow you to obtain the refund. Leave plenty of time, there are often queues at the refund office and they can move slowly. You might need to send the completed paperwork back to the retailer and in the fullness of time your refund will appear. The retailer will probably subtract an administration fee.

Even if your VAT refund form was not stamped, you still might be able to claim a refund. The process varies from one country to another but in some, such as France, the instructions on the VAT refund website are relatively clear.

Global Blue and Planet are agencies that streamline the VAT refund process for you. Get your paperwork stamped by Customs as you leave the EU, submit it to one of these agencies and you should receive a speedy refund, minus a service fee.

The UK does something completely different

The UK no longer holds out the tax-free shopping carrot to foreign residents. At the end of December 2020, the UK government terminated the VAT Retail Export Scheme and the tax-free shopping concession. Since January 1, 2021, passengers departing for non-EU destinations have not been able to claim a refund of the VAT paid on any purchases made in the UK. The UK government has recently announced its intention to reverse that decision and restore tax-free shopping for foreigners, however that will not happen until at least 2024.

Duty-free shopping at airports

Duty-free shopping is a huge money-spinner for many airports. Buying duty-free at international airports gets around the tedium of obtaining a tax refund, but if it's a major purchase you need to know the price is competitive. Airport retail space is some of the world's most expensive and electronic items especially might not be a bargain.

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Stock up your alcohol cellar with a couple of bottles from a duty-free shop at any airport in Europe and you're likely to lose it at your transit stop. Before re-boarding your aircraft, you will usually pass through a final inspection point and any liquids in your carry-ons over 100mls will be confiscated. That's an Australian government requirement, even if the alcohol is sealed in a tamper-proof bag with full documentation. The way around this is to buy your duty-free liquor at the very last port before entering Australia, or buy it duty-free when you land in Australia, before passing through Customs and Immigration.

The Australian way

Australia has its own GST tax refund scheme for travellers leaving Australia, the Tourist Refund Scheme (TRS), and there's lots to like about it. You get to shop at any retailer, with a local warranty, and take advantage of competitive pricing. Even better, 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. The value of the goods must be at least $300, including GST, and the supplier must have an ABN. The goods must be purchased within 60 days before leaving Australia and the invoice must show the GST paid, the retailers name, address and ABN, and the goods must be carried with you when you leave Australia. At the TRS kiosk you'll have your goods and invoice checked and if everything passes muster the GST you've paid will be refunded either to a credit card or a bank account. If you've purchased wine, you can get a refund of the Wine Equalisation Tax, which is 14.4 per cent of the purchase price, but not on spirits. If you bring the goods back into Australia you need to declare them. If their value exceeds the passenger concession allowance of $900 for passengers over 18, you might have to pay customs duty.

Australian Border Force has a TRS app which streamlines the refund process, although you still have to queue at the TRS facility at the airport, and pray those in front of you have their paperwork in order.

See also: Why so many flights are being delayed or cancelled

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