How travelers can get their money back

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

I learned about this during a recent trip to Italy. My girlfriend bought shoes in Venice and was able to claim a refund of the VAT she paid on the purchase.

She ended up getting back €17 (US$20) of her total purchase of €155 (US$181).

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

A few extra dollars back after a vacation in Europe could help offset some of the skyrocketing airfares caused by the Iran war. EUR-USD exchange rate It has become less desirable in recent years.

However, we would have missed out if the Italian shop owner had not asked us if we needed the necessary documentation to claim a refund later on. The process was relatively easy at a kiosk at the airport in Rome.

Experts say stores often don’t present that option to customers.

“You have to remember to pick up (the documents) at the store because not all stores will remind you of that,” Markovic said. “You have to be proactive.”

NerdWallet travel expert Sally French said lower-priced items may not be worth the extra hassle (which typically involves an extra stop at the airport) for some people.

“It’s nice to have, but I can’t just get to the airport early to save $10,” she says.

Value-added tax is a tax on domestic consumption, similar to retail sales taxes imposed by state and local governments in the United States.

VAT is the world’s most common sales tax and is used in more than 170 countries worldwide.

European countries impose different VAT rates, which can also vary depending on the product.

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

Spain’s standard VAT rate, for example, is 21%, but lower rates apply to certain items, such as 10% for sunglasses and 4% for books and magazines, according to Global Blue, a payments company that helps with VAT refunds.

But experts say not all purchases qualify for a refund.

First, experts say that generally only merchandise is eligible for refunds, and certain categories such as hotels and meals are not.

Many countries impose a minimum amount on qualifying purchases.

In an article on VAT refunds, travel expert Rick Steves, who writes a series of guidebooks, writes: “Usually you need to spend a minimum amount at one retail store. You can’t add up your purchases at different stores to reach the required amount. So if you’re making a lot of purchases, you might benefit from finding one place where you can buy big-ticket items.”

In countries such as Greece and the Netherlands, for example, travelers will need to spend at least 50 euros ($58) at a retailer to claim a refund, according to travel and tour company Rick Steves Europe. In Italy, the minimum amount is 75 euros (88 USD). The French one costs 100 euros (117 USD). In Switzerland, the minimum amount is 300 Swiss Francs (US$384). Spain, on the other hand, has no minimum amount.

Markovic said claiming a refund was “definitely worth it” for travelers who purchase luxury items such as high-end fashion and jewellery.

“Depending on what you buy, it can be hundreds or even thousands of dollars,” Markovich said. “I know people who go to Europe just to shop.”

Travelers should also not use the products before leaving Europe, Steves wrote.

“If you show up at customs wearing your new Dutch clogs, the authorities may refuse your refund,” he wrote.

Experts say there is usually a multi-step process to apply for a VAT refund.

Participating merchants will typically need to fill out refund forms, which will require the traveler’s passport (and in some cases a passport photo), Steves wrote.

In most cases, travelers will need to process these documents at their final destination in Europe, perhaps at the airport, Steves wrote.

“At some airports, you will need to go to customs to have your documents stamped and then go to another VAT refund service, such as Global Blue or Planet, to process your refund,” Steves wrote. “At other airports, one VAT desk handles everything.”

Refund services typically involve a fee, so travelers are unlikely to receive the full amount of their VAT, Steves wrote.

Steves said travelers should remember to process their documents at their final destination within the European Union.

“So if you buy a sweater in Denmark, pants in France, shoes in Italy and are flying back from Greece, get your documents stamped at the Athens airport. And don’t forget: Switzerland, Norway and Turkey are not part of the EU, so if you’re shopping in these countries, get your documents stamped before you cross the border,” he added.

Customs stations are sometimes set up in front of airport security checkpoints, where customs officials may ask travelers to check for unused items, he wrote.

The whole process was easy for us. It was a digital kiosk at Rome’s airport that I accessed just before the security checkpoint and took about five minutes from start to finish. Experts say you’ll need to spend more time if you want to apply for a refund.

NerdWallet’s French representative said that in some countries, “there are lines and you have to set aside extra time to get in that line when you go to the airport.”

“I question whether it’s worth spending time at the airport,” she says. “If you’re buying a $5,000 designer bag, that’s understandable. But time is money, and it’s okay to skip saving a few bucks here and there for time and effort.”