How travelers can get money back

Travelers to Europe may be leaving money on the table when they buy goods there.

I learned this during a recent trip to Italy. My girlfriend, who bought a pair of shoes in Venice, was able to claim a refund on the value-added tax she paid on the purchase.

She ultimately got back 17 euros (US$20) on a total purchase of 155 euros (US$181).

Refunds of value-added tax, known as VAT, can be worth a “chunk of money” for U.S. travelers to Europe, depending on what they buy and in which country they purchase the item, said Sofia Markovich, a travel advisor and founder of Sofia’s Travel.

Getting a few extra dollars back after a European vacation may help somewhat defray the higher cost of airfare resulting from the Iran war, and a euro-U.S. dollar exchange rate that has become less favorable in recent years.

However, we would have missed out had the Italian shopkeeper not asked whether we wanted the paperwork necessary to claim the refund later, which we did with relative ease at an airport kiosk in Rome.

Many times, stores don’t flag the option for customers, experts said.

“You have to remember to get [the paperwork] in the shop, because not every shop will remind you of it,” Markovich said. “You personally have to be proactive about it.”

For some, the additional hassle — which generally includes an extra stop at the airport — may not be worth it for lower-value items, said Sally French, a travel expert at NerdWallet.

“It’s a nice-to-have, but I’m not getting to the airport early to save $10,” she said.

Value-added taxes are a tax on domestic consumption, like retail sales taxes charged by U.S. state and local governments.

VATs are the most common type of consumption tax in the world, used by more than 170 countries worldwide.

European nations levy a range of VAT rates, which can also vary by product.

Standard VAT rates range from 8.1% in Switzerland to 27% in Hungary, according to the Tax Foundation.

Spain, for example, has a standard VAT rate of 21% but carries a lower rate for certain items, like 10% for sunglasses and 4% for books and magazines, according to Global Blue, a payments company that helps facilitate VAT refunds.

However, not all purchases qualify for a refund, experts said.

For one, refunds are generally only meant for merchandise, and not for certain categories like hotels and meals, experts said.

Many countries also impose a minimum value on purchases to be eligible.

“Typically, you must ring up the minimum at a single retailer — you can’t add up purchases from various shops to reach the required amount — so if you’re doing a lot of shopping, you’ll benefit from finding one spot where you can buy big,” Rick Steves, a travel expert who has authored a series of guide books, wrote in an article about VAT refunds.

For example, countries like Greece and the Netherlands require that travelers spend at least 50 euros (US$58) at a retailer in order to claim a refund, according to Rick Steves’ Europe, a travel and tour company. In Italy, the minimum is 75 euros (US$88); France’s is 100 euros (US$117). In Switzerland, the minimum is 300 Swiss francs (US$384). Spain, on the other hand, doesn’t have a minimum.

Claiming the refund “is definitely worth it” for travelers buying luxury goods, like high-end fashion or jewelry, Markovich said.

“It can be in the hundreds of dollars back, or even thousands, depending on what you’re buying,” Markovich said. “I know people who go to Europe just to shop.”

Travelers also aren’t supposed to use their goods before leaving Europe, Steves wrote.

“If you show up at customs wearing your new Dutch clogs, officials may deny you a refund,” he wrote.

There’s typically a multistep process to claim VAT refunds, experts said.

Participating merchants generally must fill out a refund document, and will need the traveler’s passport (or, sometimes, a photo of the passport) to do so, Steves wrote.

In most cases, travelers will need to then process those documents at their final stop in Europe, most likely the airport, Steves wrote.

“At some airports, you’ll have to go to a customs office to get your documents stamped and then to a separate VAT refund service, such as Global Blue or Planet, to process the refund,” Steves wrote. “At other airports, a single VAT desk handles the whole thing.”

Refund services typically charge a fee — generally around 4% or so — so travelers likely won’t receive the VAT’s full value, Steves wrote.

Travelers should remember to process the documents at their last stop in the European Union, Steves said.

“So, if you buy sweaters in Denmark, pants in France, and shoes in Italy, and you’re flying home from Greece, get your documents stamped at the airport in Athens,” he wrote, adding, “And don’t forget: Switzerland, Norway, and Turkey are not in the EU, so if you shop in one of those countries, get your documents stamped before you cross the border.”

Customs offices are sometimes located before airport security, and agents may ask to see travelers’ unused goods, he wrote.

The whole process was simple for us: It took about five minutes from start to finish at one digital kiosk at the airport in Rome, which we accessed just before the security checkpoint. Others will need to budget more time if they want to claim a refund, experts said.

In some countries, “there is a line, and then you have to budget extra time when you go to the airport to wait in that line,” said NerdWallet’s French.

“I’d question whether it’s worth spending time in the airport for,” she said. “It makes sense if you’re buying a $5,000 designer bag. But time is money, and it’s OK to skip on saving a couple dollars here and there for the time and work involved.”