Can Someone Please Explain VAT?
 

I am traveling to Ireland in two weeks and have never really concerned my self with the VAT before on my travels to Paris and Italy. However, people at a gathering last week were up in arms over the VAT taxes and tried to explain how to get a refund at the airport. They said I had to show what I purchased with the receipts to get the tax back and that this could really add up.

Anybody have a simple explanation for what I should and should not do for the VAT tax in Ireland? And incidentally, I do not usually spend huge amounts on items to bring home but will probably purchase a sweater or such while there.

Thank you so much for any help you might give! :)

Hi

To obtain a refund you need to buy a lot more than a sweater (unless you're talking Versace etc.). In Italy recently the minimum amount was more like $500. You needed paperwork from the retailer, not just the receipt. Then you were expected to get in a lengthy queue at the airport attended by only one official. Ho, hum...

All the more reason not to buy expensive stuff. Thanks. I generally do not make huge purchases but if I do I will make sure to ask about the paperwork. Thanks for your explanation. :)

Not sure of the exact rate of VAT in Ireland - but if all you're buying is one item the store is likely not to want to do the paperwork for you. And it doesn't really pay for you to stand on a long line with your purchase and your proof to get $10 back.

Sorry - and you can get VAT only for unused items you purchase and take out of the country. If you wear the sweater you buy - no refund is allowed.

Unused? Well, there goes that. LOL :O

Vat is best explained in this verse:

Big fleas have little fleas,
Upon their backs to bite 'em,
And little fleas have lesser fleas,
and so, ad infinitum.

The VAT is a local tax, since you are not a local, you can get the VAT refunded to you if your purchase is large enough at a single store. If you are making a large purchase at one store, they will give you the paperwork. It's been a while for me so I'm not sure what the minimum purchase is now but just ask if you know you will be spending more than say $75 (I'm just guessing here). The store will fill out the paperwork for you and give you the paperwork and envelope. Before you leave the country, you go to the VAT window at the airport and turn it in. I have usually taken the convenience cost and had them refund me at the window but you can have them mail the full refund to you. It's not all that difficult but I'm like most of the responders and don't usually spend that much in one place. Although in Ireland, I did buy several sweaters and some Waterford crystal so it was worth the extra effort.

Don't sweat it unless you are buying something fairly major. You Don't get the full amount of the VAT. After fees and processing - out of the 20.1% VAT you'll only get about 1/2 of it in cash or a credit to your credit card.

VAT is a transaction tax on the sale of goods or the provision of services. It only applies to items for local consumption, not goods supplied for export. If you buy something which is going to be delivered to you in your home country, like a car or a large piece of furniture, no tax is charged from the start. If its is something you are gong to take with you and later export, unused, like a piece of jewellery, then you can reclaim the tax as you leave the country, but may have to show the goods to the customs official.

You cannot reclaim the tax on goods you consume in the country, like hotels or car hire.

When buying several items in the same store , I have done it at Galleries Lafayette in France, each time you buy something you tell the sales
person you will do a De Tax at the end of the day, then, providing you are over the required minimum you go the Administrative Office show all your receipts and that is it. It will not take much of your time
Then before leaving you have to present the paperwork at the airport not a big deal. They might ask you if you have youritems with you so you should have them but I was never asked to show them.
However should you buy something very expensive they might.

Hi,

This link might help (it is a few years old, but still a very good explanation):
http://www.irelandexpert.com/abcs_vat_7-16-99.htm

"Then you were expected to get in a lengthy queue at the airport attended by only one official."

A week ago, we took our receipt to the officer at the Rome airport to stamp -- not for a refund, the jewelry shop had already given us that, but we needed to have the form stamped for THEM to get their money back. There was only one person in front of us, so it took less than a minute -- but dumb us -- we were flying to Spain and he told us that we needed to have it done on departure from Spain. So we did that at Madrid airport and this time there were two people in front of us. Took maybe 2 minutes.

Even if it's small items, they can add up. Gather the paperwork from the vendors when they sell them to you (I've never had anyone in Ireland balk at that - Scotland, yes, Ireland, no). Before you go to the airport, fill out the master form. I waited all of 10 minutes to get mine. It was no problem (I also flew out of Shannon, so that might be part of the ease of it).

At AMS, I was the only person at the customs desk. Took only a few minutes and they did look at item.

If you're purchasing an expensive item, sometimes the merchant may agree to charge you the pre-VAT amount. Then you mail the form back to the merchant.

vat is sales tax simply put at a much higher rate than USA people might be used to but here's the catch....in all European countries I know of prices are always stated including VAT so if you go into a boutique in France to buy perfume and are quoted a price of €40 for a small bottle of some exotic perfume, that's what you pay. It's not like in the USA where you would be quoted a price of $50 and depending where you are sales tax will be added on. If the item is exported from the eu, for example, there are procvedures et up for you to have the vat refunded but policies differ by country and by stores. On large purchases, the clerks will assist yo in filling out the forms for refund of VAT (value added tax) and in most cases you don't pack the item with your checked luggage but show it to customs official at your departure airport from the eu who will look at your boarding pass to see if you indeed are leaving the eu. Several different ways of getting the vat refund again depending on store. In some cases they deduct the vat at the point of sale but you sign an agreement that if the vat exemption form is not mailed after being stamped by a customs offier, they add on the vat. In another method of dealing with this the customs officer refunds the vat in local cash at the departure airport. In another the store imprints your credit card and when they receive the approved vat form you mail from the airport, they credit your credit cdard. The store will explain to you howit is done by themn.

Presumably if you qualify for a VAT refund, you may also qualify for paying US import tax?

THere was also a card thingy they gave us at one store, where the vat information was added to the card, and then just swiped at the airport with minimal paperwork. However, last year (May 2011) only about 20% of the stores I bought stuff at used the card. I still used it for some, and then the others on regular paperwork. If more people buy in, it's much easier.

Me again. Caroline must have read my mind! There is the issue of import duty. In Oz you are permitted to bring in up to $900 worth of stuff. I wonder how buying a Rolex, getting the VAT back and then wearing it on the plane home could be policed though.

For someone living in Australia, it must surely ALWAYS make more sense to buy "European" high-value goods online from a merchant's international site than from a brick and mortar foreign shop.

The warehouse it's shipped from will almost always be closer to Oz (so the freight costs will be lower than getting a European shop to ship, which would avoid VAT and the costs of getting it refunded altogether) and there'll be no European VAT, or Australian import duty to pay.

For those living in North America, the argument can vary by state/province. But given the cost and complexity of getting VAT refunded, the few merchants who operate refund-compatible systems, the near-ubiquity of websites offering truly global delivery and the relatively few transactions where the net refund actually outweighs the near-certain US or Canadian import duty, there really can't be many occasions when these partial and highly uncertain refunds really make sense.

And you can be 100% certain of one thing. There isn't a snowball's chance in hell European taxpayers are going to tolerate money being wasted on paying for any more officials to speed up handing over our taxes to citizens of countries whose idea of hospitality is to fingerprint us on arrival and slap secret, unaccountable taxes on everything we buy in their country.

If you don't like queueing for a refund: tough.

Thank you for the information everyone. :)

secret, unaccountable taxes?

I presume he is calling US sales taxes secret and unaccountable vs. VAT. I don't know why, they are all taxes and the amount determined by govt. US taxes aren't exactly secret, they are added on to your bill before you pay. And of course, some people believe travelers to foreign countries should read up a little to find out things like local customs, taxes, etc. I suppose if you are a foreigner and have no idea they have sales taxes in the US and didn't bother to read a guidbook on this issue, etc., you might be surprised as the sign on the sales tag or sign in the store will be the amount pre-tax. So in Europe, the tag is after tax, but a lot of people obviously have no idea there is a VAT tax, either, nor its amount. So to a lot of Americans, I suppose the VAT is secret and unaccountable, also.

And actually, everything bought in the US isn't taxed, either. A lot of things in grocery stores are not taxed in various places.

Christina, but listening to friends in the US who make their living as servers in restaurants, apparently many foreign travelers to the US do NOT read up on anything about the country they are going to -- particularly that tipping IS the custom in restaurants.

In this day and age, I would venture to say that most travelers to the US are traveled enough to know tipping is customary in the US. They just choose to ignore it as it is not their custom. And in the same respect, people like my husband insist on overtipping in places like Paris simply because it is their custom to tip 20-25%. To each their own, I guess.

"same respect"??

Let me see -- one person knows that someone's living depends on tips and it is customary to tip them but chooses not to. Another person knows that tips are not necessary but chooses to reward the person who has given them exceptional service by giving them a little extra.

I fail to see how those two things are even remotely the same! There's a big difference between not including what is required by custom and choosing to give something extra than what is required. In my book there is no such thing as "overtipping" for good service. Do you honestly resent all forms of rewarding good workers -- including things like corporate bonuses?

Yes 'secret' taxes. Think about it - when we buy an item that costs $50, we <i>all</i> know that unless we are in a no-sales-tax state -- it will really cost between about $52.50 and $55 (depending on the city/state). Americans just go w/ it and know that tax will be added on top. Many foreign visitors don't know that until it hits them.

In the UK/Europe, if something is priced at £50 or €50 . . . that is what you pay.

Even more apparent in restaurants. In the US, that $40 steak will actually cost you something like $ 50.50 once you add on the sales tax AND a standard tip. In Europe, that 40 euro steak will actually cost you 40 euros, since the tax is included and the service is likely to be, as well.

I think the tipping thing is a different subject and we have filled pages on it already.

In terms of getting sales tax back, it should be easy and all service should be efficient, the days of importing VHS into France via a small trading estate near Lille have long gone.

In terms of buying stuff. I like the price I have to fork out to be the price I see on the label. If not I might as well be in Marrakesh (don't get me wrong, I like Marrakesh) but nothing bugs me more than queuing up to buy a book in the States, to offer my strange green money and get a staffer asking for more for the tax. It feels rude.

Have a nice day now

Neopatrick...If you read what I wrote "in the same respect" refers to the sentence preceding it which said "They just choose to ignore it as it is not their custom.". People do what they are accustomed to.

Chill out. It's a forum for discussion not bashing.