VAT refunds for tourists: how tax-free shopping works

Prices in many countries include value added tax (VAT). If you live elsewhere and take your purchases home, you may be able to get some of that tax back. The catch is that the refund depends on paperwork done in the right order, and a missed step usually means no refund.

This guide covers the rules for the European Union, a detailed example from France, the situation in the United Kingdom, and the scheme in the United Arab Emirates.

The general idea

A tourist VAT refund is based on a simple principle: the goods are leaving the country, so the tax on them doesn't have to stay there. To prove it, you have to show the goods and the refund documents to customs as you leave. Only then can the shop, or a refund company working with it, pay you back.

Three things are almost always true:

• You must live outside the country or area where you buy.
• The goods must leave with you, usually in your luggage, within a deadline.
• Customs must validate the purchase before you leave, digitally or with a stamp.

The European Union

According to the European Commission, if you live outside the EU you are entitled to a VAT refund on goods you buy during your stay, provided the goods are shown to customs when you leave, within three months of purchase, together with the refund documents.

The Commission also points out that:

• the claim and refund process is not harmonised across the EU, so each country applies its own procedure, sometimes through a refund operator;
• all claims must be validated by customs before you leave the EU;
• some countries set a minimum purchase value or other conditions.

A worked example: France

French customs publishes the details for its PABLO system. You can use it if you: