min read
· Posted on
February 21, 2024

How to get a tax refund on your holiday shopping

Make the most of your overseas shopping spree by claiming the VAT refund.

What's the key learning?

  • The value-added tax is a consumption tax paid in most countries. In Australia, it's called GST.
  • As a visitor or tourist, you can get a VAT refund on certain purchases. The tax rate varies country to country.
  • You can also get this refund in Australia, if you've recently purchased an eligible item recently.

Tis the season to splurge guilt-free on your holiday shopping… because we’re done gatekeeping the VAT refund.

This is the secret you wish you knew years ago.. And is probably one of the OG ‘girlmath’ to just spending.

Whether you’re splurging on souvenirs to remember the trip, cheap electronics (felt cute, might never use again), or elephant pants and beaded bracelets that will end up in your own personal Op Shop, we’re not judging…

Because in over 100 countries across the world, you can get a refund on the consumption tax you pay on your purchases.

Most countries, for example the European Union, The UK, or Vietnam call it a ‘value-added tax’ or VAT.

Other countries (like us) call it ‘goods and services tax’ or GST, and some have their own name for the tax

But they all largely work in a similar way.

How much is the VAT?

The amount of the VAT ranges roughly from 5%-25% depending on the specific country.

In the EU, the lowest VAT is 16% in Luxembourg and the highest VAT is in Hungary, at 27%.

In Australia, our VAT or GST is of course 10%. 

Bet you’re already picturing those juicy tax refunds looking at these figures, and you’d be right to.

So how does this VAT you speak of work?

We’ll use the EU as an example.

To be eligible for the refund, you’ve got to:

  • Be a visitor in the EU
  • Reside outside the EU
  • Leave the EU by the end of the third month after buying the item
  • Spend over a specific threshold on VAT-eligible items in a single store (this threshold varies between around 30 euros to 175 euros depending on the country) 

When you find things you’re keen to buy, ask the shop assistant if they provide a VAT refund and if your items meet the spending threshold.

Many shops also have stickers outside saying ‘tax-free’ or ‘VAT refund eligible’.

You when the shop assistant says they offer VAT refunds.

Then, you go ahead and pay for the item in full (hang in there, the refund part is coming) and request the store assistant for a tax-free form, which they’ll help you fill out.

You’ve also gotta have some proof of residential address on you (like your passport or your Aussie drivers licence) and make sure you get tax invoices for your purchases. 

Those tax invoices are super important to get the refund. Don’t lose them!

Once you’re on your way home or to your next destination, you can claim your refund at the airport.

At the airport:

  • Make sure you’ve got all your VAT-refundable items in carry-on luggage. Don’t put those goodies in your checked baggage. 
  • Have your tax invoices, tax-refund form (which you’ll have gotten from the store), passport, and boarding pass on hand
  • Head over to the Tax Refund office where they’ll process the refund.
  • Kaching!

BTW - for the EU specifically, you can collect refund forms from multiple countries in the EU, and get them stamped and approved for your refund collectively as you’re leaving the EU.

You know you made the most of your VAT refund when your carry on looks like this.

Quick example for ya:

Nadia’s solo backpacking through Europe as she takes a break from Uni. During her trip, she bought a $250 handbag from Berlin, a $400 wool coat from Paris. And at both the stores, Nadia got her tax-refund forms filled out. 

Paris is her final destination in Europe before flying back home. 

When Nadia gets to the airport in Paris, checks in and clears customs, she can head to the Tax Refund Office in the airport.

She’s rocking her brand new wool coat and her handbag and heads over to the VAT refund booth. She shows her tax invoices of the purchases, the items and her passport and boarding pass in hand, Nadia’s VAT refund can be processed. 

Given the standard VAT rates of 19% in Germany and 20% in France, Nadia will save $47.50 on the handbag and $80 on the shoes - $127.50 all up!

And you can get this refund in Australia too

If you’re an Australian resident or tourist and you’re leaving Australia with a recent purchase (under 60 days) that’s $300 or over, you can get a 10% GST refund following exactly the same steps!

Bought a shiny new camera for your upcoming holiday? Make sure to take your tax invoice to the airport with you so you can claim your 10% GST refund.

Happy holiday shopping Flux Fam!

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