VAT - what does this mean??
 

HI,
Can someone explain what VAT means??
Thanks!!

Value Added Tax = what we call in Australia Goods and Services Tax, that is, a 10% -15% and rising gov tax on all retail transactions.

harzer

VAT = value added tax

Google for more information

It means big bucks when you're shopping abroad, is what it means! :-[

It's "sales tax". Just like the tax you can avoid by buying out of state, via mail order in the US (sometimes). On "major" purchases, you (a non-European) don't have to pay it - - for items you are taking out of the "country" (i.e., the European Union) for use "back home". Since they don't know that until you actually leave the country, they still have to collect it - - and so, you have to apply for a refund as you leave the country. Typucally at the airport, though it can be also at a border crossing. You usually get it back home as a credit on your credit card, or as a check.

Best wishes,

Rex

In the UK it's a 17.5 per cent tax on top of the original price of the goods, however, major brands adjust raw prices accordingly so that a Prada bag here is the same price as a Prada bag in Paris.

For the sake of accuracy, VAT and US sales tax work in very different ways. While the end-product is the same (the consumer ends up paying it), VAT is applied at every stage in the supply chain. While those in the trade (e.g. makers, wholesalers and retailers) can reclaim the VAT they pay, the end-user cannot and will go straight into the state coffers. There are certain items (differ among countries) which are exempt from VAT (like basic food, public transport and children's clothes in UK) or carry lower rates (e.g. UK domestic fuel bills, hotel and restaurant bills in France). For non-EU residents, for purchases you take out of EU intact (but not for services you use like car rental, hotel and restaurant), you can often reclaim the VAT (less handling fee) by filling forms at participating retailers and turning them in at customs on departure. VAT on other items can only be reclaimed by VAT-registered trader or corporation if incurred in the course of business.

One difference in VAT than in US sales tax is that the price you see on things in the UK already includes the VAT, whereas in the US, sales tax is added to the item at the cash register.

Yes, you can try to get some of it refunded, but they don't make it easy. In the UK, you usually need to spend £50 or more in one store, ask the cashier for a VAT form and have them fill out a portion. You then have to present the VAT form, your receipts and the merchandise at the VAT Refund desk at the airport. Sometimes they ask to see the merchandise, sometimes they don't - but if you packed it in your checked bag and they ask for it, you're out of luck.

It's generally not worth the hassle unless you are buying big ticket items.

topping

Excellent explanation from KayB. Last December we purchased a Burberry bag for our niece at Harrod's. They have an excellent setup for VAT refund on the lower floor. We got our paperwork, carried the bag in case they wished to see it at the airport, waited in a very short line at the airport and a few weeks later the VAT was subtracted on our credit card statement. Not really a big hassle in this case.

I agree, however, that it would have to be a substantial refund before I would bother.

Yes, rex and Alec and Kayb95 describe it well. If you are in business in Europe you can avoid the tax. It is the same as having a reseller certificate in the USA. You are exempt from the sales tax but are obliged to collect it when you sell the item you bought. Antique dealers are infamous for scoffing this tax law, in the USA and in Europe.

Usually the price of the item includes the tax as mentioned by Kayb95. OTOH, many car dealer showrooms show prices with and without tax.

Well, if you bought a car in England, it would definitely be a good idea to get the VAT back. For the tea and Cadbury I bring back, it's not worth the effort. :)

Kayb95, if you bought a car in England the right hand drive would make it nearly worthless in most other countries.

And if someone charges you VAT on tea and choccies, they're having you on - no VAT on food.

Patrick:

VAT IS payable on chocolates.

Though there's been a long-running case about whether Jaffa Cakes count as food or confectionery.

Personally, I'd define them as an addiction.

PS: Hopscotch

Would you care to substantiate your claim about the worthlessness of right hand drive cars?

40% of the planet's population live in countries that drive on the proper side of the road.

Not to worry, hopscotch. I have no intention of buying a car in the UK. :)