julies

Do I need to pay VAT? I just got a reply from an apartment agency. The quoted price included VAT, and it said to ask if I need to pay VAT.

kerouac

Are you taking the apartment with you when you leave? Have them stamp the receipt at the airport.

julies

kerouac--

Are you trying to say that I will pay the VAT upfront but get a refund? Plus, what is the current VAT rate?

MadridMan

First, I'm no expert. But I have yet to meet anyone who has successfully attempted and received a refund of VAT taxes.

I think everyone must pay the VAT at the time of any purchase - excepted in airport's Duty Free shops. There you do not but the inflated shop prices usually make up the difference anyway.

Take a look at the following website:

http://traveltax.msu.edu/vat/vat.htm

It states that travelers can only get refunds on products taken out of the country - but NOT SERVICES.

At that website they detail:

What are VAT/GST?
Why are taxes refunded?
What countries allow VAT refunds?
Who can recover VAT- businesses or tourists?
What VAT expenses can be recovered?
What are the procedures involved in recovering VAT?

julies, once you pass through this "process", whether successfully or unsuccessfully, why not come back here to this/your thread and tell us about your experience. It'll certainly help future travels whom will likely have the same questions.

Best of luck!

Saludos, MadridMan @ you-know-where!

jamikins

I think VAT is 17.5%

esm

julies, I believe VAT refund is only for items you purchase and take back with you. Anything you "consume" you have to pay VAT. Stay in an apartment does not meet the refund requirement.

LoveItaly

Hi julies, I am almost positive you will not get a refund for taxes paid on items you do not take home with you..and do read that website MadridMan gave you..I think you have to spend a certain amount at a store to qualify for a refund. Personally I have never bothered but I would be interested to hear from those that have successfully received a VAT refund.

Not having ever rented an apartment in Italy I didn't know that the tax is charged in addition to the rent. Or maybe most rentals just include it in the price of the rental as you say the agency you are using does? I would be interested in that as well. Maybe someone who has rented an apartment in Italy, Patrick and SeaUrchin come to mind, could comment.

julies

I read the link, and it states that people traveling on business might be eligible for a refund on services. But, as a tourist I wouldn't be eligible.

I e-mailed the question to the agancy's billing department as dirrected in their communication, so it will be intresting to see what they say in their reply tomorrow.

flanneruk

Citizenship is quite irrelevant here. It's simply untrue that "you will not get a refund for taxes paid on items you do not take home". VAT is a completely different tax from GST: it operates on consistent principles throughout the EU - though some non-EU countries might describe a tax as VAT when it actually isn't.

And the technicalities of how VAT's managed can lead you to being asked things you might misunderstand

All VAT-registered businesses in the EU, if they pay more VAT than they receive, can claim the excess VAT back.

Consumers who buy a product or service in the EU pay VAT: the rates vary by product and country. Consumers who aren't resident in the EU (whatever country they have citizenship of) can reclaim VAT on products that are exported unused. Britons living in Australia or Dubai regularly reclaim VAT on things they've bought in Britain: Americans living in London can't.

If a company that's not registered for VAT (such as companies registered outside the EU) pays VAT on services obtained and used in the EU (like hiring a stall at a trade exhibition, or putting an Australian sales team up at a hotel), there are complicated systems which allow those companies to reclaim the VAT, just as an EU company would. These systems are explained at most tax authorities' web sites (google the HMRC site for full explanations in English), and are frequently used by, for example, US companies sending teams to Britain to investigate start-ups or acquisitions. They can be used - but only by bona fide companies in the course of real trading - to reclaim VAT related to renting a flat. They are also regularly used by party planners so that foreign residents planning a wedding in Europe can reclaim VAT.

The systems are administered in a way that makes it impossible for tourists to exploit for one month's holiday expenses

I don't understand what you mean when you say "it said to ask if I need to pay VAT", and you've almost certainly misquoted the site. The likelihood is that it asked you if you were registered for VAT. This is a slightly obscure requirement of the VAT system: if a company is selling to a company in another EU country, it is required to obtain the client company's VAT number. Being registerd for VAT has no impact on whether you are liable to pay it or not. Everyone has to, and the agency has no discretion here. Except, of course to pay the tax itself.

But it has no

Fodorite018

I am not an expert by any means, but have always understood it to be that it is not possible to have the VAT refunded for an apt or hotel. We do get the VAT refunds for some purchases, and it has always been very easy. The last time was this summer. The refunds showed up on my credit card within about a month.

kerouac

Sorry, Julies -- I was joking. Obviously you will not be taking the apartment with you when you leave.

julies

I didn't misquote. Here is what my e-mail said.

"The cost per 10 nights is XXXX EURO inclusive of VAT where applicable (Am I entitled to VAT exemption? Please contact
[email protected] to know if you have to pay VAT or not)"

nytraveler

VAT is sales tax and has nothing to do with nationality.

If you consume the object purchased in the country you pay VAT. If you take it home you don't. Since you consume the apartment while in europe you do NOT get it back - just like VAT on meals.

logos999

julies, it is quite easy. Is this a buisiness trip and do you have a "USTid" (German name, others are different!) for your buisinees in any EU country? In that case, give them you "USTid" and you can apply for a refund one or three months later on your regular UST (=VAT) tax declaration

No buisiness in E.U. or USTid provided, no refund.

StuDudley

Our closesst friends own a home in Tuscany that they rent out when they are not there. They advertise on VRBO & have their own web site. They do not charge/collect any VAT.

I have rented over 35 gites in France and have never seen anything referring to VAT being charged.

Stu Dudley

logos999

>They advertise on VRBO & have their own web site. They do not charge/collect any VAT.
Absolutly correct, no VAT on the rent unless it's a commercial enterprise.

hetismij

The agency handling a holiday let will have to charge VAT over their service charge.

lincasanova

also, very confusingly, if the agency is renting this flat to a busnessman for business, VAT could be applicable, in which case, it would be applied, paid for and later claimed as above mentioned against other vat paid out/ billed in total for one year.

Alec

If you own a property in an EU country and rent it out to tourists, you don't have to levy VAT unless your turnover exceeds the registration threshold for VAT. Amount varies in each country, but it's £64,000 a year in UK ($130,000). So most people are unaffected. You can voluntarily register for VAT (and levy VAT on renters) even if your T/O is below threshold - it will make your pricing more expensive, but you can reclaim VAT on business-related expenses such as cleaning, repairs, refurbishment, advertising, stationery, telephone etc, so on balance you may be better off. The downside is much more paperwork - you normally have to do your VAT return every quarter and there is financial penalty for late or incorrect returns. And if you employ an account to do all this, you have to allow for their fees.

logos999

And that amount differs considerably in each EU country. You U.K people are so lucky, you only have to "do" VAT every three months, while here it's monthy for most of us!