Now that European summer travel season is in full swing, it's time for a simple-but-potent savings reminder: Always remember to claim a tax refund for whatever you buy on your European vacation. European countries have a simpler tax system than we do. First of all, the price that's marked is the price you pay. There are no surprises at the cash register when tax suddenly appears on the total, because tax is almost always included in the sticker price. That arrangement is much easier on shoppers and cashiers alike. But more significantly, European countries charge a flat VAT (Value Added Tax) of 15% to 25% to pretty much everything you buy. It sounds like a lot, but when you add up all the various taxes Americans pay on purchases, we're in that ballpark, too.
Americans are not subject to that tax and in many cases, we can get that money back at the airport before we leave. On a recent three-day trip to Germany, I had a expense of €66 (a pair of cool shorts) for which, in the waiting time before my flight home, I got my tax back. I put about €5 back in my pocket. That was €5 I didn't have to lose, and €5 that many tourists forget to reclaim. Here's how:
At the shop where you make the purchase, ask for a tax refund form. You must have this, and it must come from that shop with details about the purchase and its identification number included. Not every store participates, but most do, especially if it deals with tourists on a regular basis -- and chances are it does, if you're there.
Collect those tax forms with the receipts and, when you reach the airport, look for the Tax Refund signs.
At that desk, you'll have to show the papers and (usually) the items you bought, so it's best to wait to check you bags until after this step. The Tax Refund desk will always be before security screening to make this possible. Technically, you're not supposed to have used the items before leaving. If you bought something in another European country, it's okay to get the refund as you leave the European Union on the same trip.
The person at that desk will hand you a voucher that you take a cashier's window to claim your tax back. Because these windows are operated by outside vendors, they take a cut, and if you want your money exchanged into dollars the rate is not in your favor, but that doesn't matter to me, because if I didn't claim that refund, all of that money would be lost to me, and something is better than nothing.
In Germany, the two-step process took me all of four minutes, and I used the money to buy my airport meal.
There are some exclusions to the tax-back deal:
- You can't get it on food.
- You can't get it on hotels or services such as massages. It's really just for stuff and souvenirs.
- Also, it helps if you spend at least €50 on something, otherwise the refund amount will be puny after the cashier's charges.
It's your money. So to get it, make sure you have that paperwork from the store, and then make sure you build the processing time into your wait at the airport. It doesn't always take four minutes, as in efficient Germany. In South Africa (which also has a VAT), I have waited 45 minutes.
Since you are technically supposed to arrive at the airport three hours before an international flight anyway, if you use your time wisely, you will end up going home with an unexpected pocketful of cash.
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