In many countries, there is a system in which foreign citizens are refunded the tax on purchases made during their stay when they leave the country. This useful thing is called tax-free. Tourists, including those from former Soviet Union countries, can get back part of the money for goods bought in 36 countries around the world, including the UK, Korea, Singapore, Switzerland, Norway, Czech Republic, Argentina, the Schengen countries, and some other states.
First, the restrictions. Citizens who have a residence permit in the country where the purchase was made, or in any EU country, are not eligible to use tax-free. Foreigners who have stayed in the country for more than three months or have a work permit also lose the privilege of getting a tax refund. In addition, the tax-free system does not apply to tobacco, food, and books—that is, to items that are usually inexpensive. At the same time, each country has its own minimum purchase amount for which you can claim a tax refund.
For everyone else, the road to savings is open—you just need to know and follow certain rules. The tax is refunded only on purchases made in stores bearing the sign “tax-free for tourists,” so an online clothing store does not fall under this scheme. After buying an item you like, you need to get a special receipt—a tax-free cheque (TFC). It is on the basis of this receipt that your money will be returned. To avoid surprises at this—most pleasant—stage, you should check the correct spelling of your last name, passport number, and list of purchased goods. The receipt must show the purchase price, the amount of VAT paid, and the amount (tax minus commission) you will receive when leaving the country.
By the way, in some countries, particularly Japan, large stores have a service that refunds the money immediately after the necessary documents are processed. A corresponding mark is made in the exit document (to avoid the temptation of getting compensation twice). Sometimes sellers, wanting to avoid the complicated paperwork, immediately offer the customer a discount or a gift as compensation. But then it’s up to you—take the bonus on the spot or, after spending the time, get your tax back.
Another important point. You must handle the purchase very carefully. Clothes and shoes bought with an eye to a tax refund cannot be worn before leaving the country. It is not even recommended to remove price tags, labels, or seals. Some stores give out separate paper seal stickers that need to be attached just before departure. At customs, after presenting your passport, TFC, and the purchases themselves, you will receive a stamp on the back of the receipt. After going through all these procedures, the money will be returned and can be collected at a Cash Refund office. These offices can be located either in the main hall or beyond passport control, from where there is no way back. Therefore, in order to get tax-free, you should arrive at the airport early, with at least an extra hour to spare. Finding all the necessary offices and standing in line takes a lot of time. You may also be asked to show the “returnable” goods, so do not hide them away.
National features
Each country has its own subtleties. It is a good idea to get a special memo in advance—either at the store checkout or at the window of a dedicated tax-free processing point. The leaflet explains in many languages, including Russian, exactly where the customs control point is located at the airport and where money is refunded.
Different countries also have their own time limits for getting a customs stamp on the tax-free receipt. For example, the Netherlands and Sweden allow no more than 30 days from the date of purchase, Italy and the Czech Republic 6 weeks, and Germany one month.
The tax-free receipt itself is valid in most countries for a quarter after the month of purchase. That is, even if you made a purchase, say, on March 1, the right to a tax refund extends through April, May, and June. There are exceptions, however. Switzerland and Liechtenstein allow 30 days for the tax refund, Canada and Singapore 60 days, and Slovenia, Ireland, Lebanon, and South Korea strictly 3 months.
Taxes can be refunded at home
If for some reason you did not manage to get your taxes back at a foreign airport, do not despair. According to Financial Izvestia, if the receipt is stamped, you can do this at VAT refund points already at home. Today many banks cash tax-free receipts if no more than a year has passed since they were settled at customs. True, it is not all that rosy. The bank will charge a fee for its services—from 1% to 3%. In addition, if the currency of the country where you made the purchase is rare for our country, you will also have to pay conversion costs. So it is important to calculate in advance whether these additional fees will exceed the amount saved from taxes.