Check tax-free shopping rules for summer savings

Holidaymakers who plan on shopping while abroad are being shown how they can claim back tax and save some money.

The travel insurance experts at Quotezone.co.uk have broken down exactly what Britons need to do to make sure they’re eligible for their tax refund.

Tax-free shopping allows tourists to purchase goods without paying VAT that applies to local residents.*

Value-Added Tax is removed, as tourists do not benefit from the impact of paying these taxes. It’s also in place in many countries to encourage spending and boost the local economy.

Tax-free shopping lowers the price tag on many items that are intended for personal use. Tourists can typically claim around 10-25% off the total purchase price, which creates an incentive to shop.**

Over 60 countries across the world offer this relief on ‘sales tax’, although the UK is not one of them. As of 2021 it is no longer available in the UK, so Brits on holiday will need to save their purchases for the journey home. 

The insurance experts are warning travellers that there are a few other things they need to be aware of to ensure they qualify for the tax refund.

Helen Rolph, travel insurance expert at Quotezone.co.uk said: “Tax-free shopping is a great way for tourists to save money by cutting off VAT prices – particularly for those looking to make luxury purchases such as watches, handbags or perfumes, as it can sometimes lower the price tag significantly.

“It’s really important that travellers are aware of how they meet the criteria to get a tax refund, as it’s not automatically available on all items.

“Tourists will need to show their passport at the time of purchase and ask for a tax-free form if they don’t get it automatically with their receipt – without this, they won’t be able to claim back. Travellers should also allow extra time at the airport to make their way through customs, as they may need to have paperwork validated and even present the items purchased.

“Refunds can then either be processed at a refund desk at the airport or online, depending on the instructions on the tax form. Digital VAT refunds are becoming increasingly popular, with a lot of the process now available on smartphone apps, normally cutting down the time it takes to receive the refund from several weeks to a matter of hours.  

“As long as travellers are well prepared, there are savings to be had, ideal for boosting or replenishing the holiday budget.”

Do’s and don’ts for tax-free shopping:

Do bring your passport when you shop

Stores with tax-free programs will need proof you are a visitor. You will also need to ask for a tax-free form before making a purchase, as this cannot be issued after. Many new tills will do this automatically if you’re eligible and auto fill key details from your payment information, to help speed up the process.

Do ask about tax-free shopping before you buy

Not all stores participate in tax-free shopping, and those that do often have a minimum spend requirement.

Do keep all receipts and documents together

Once you have made your purchase, keep all of your paperwork linked to it together in a safe place. Without these your refund may be delayed or even denied.

Do make sure you know where customs validation happens

Different airports have their customs desks in different locations, so depending on where you are flying from, it may be before check-in or after. Checking this beforehand can save you time at the airport and ensures you don’t miss out on validating your paperwork.

Don’t pack purchased items into checked bags

If the customs desk is post check-in, you’ll need to ensure your purchased items are in an accessible carry-on bag, as customs can sometimes ask to inspect your purchase.

Don’t assume you can use the purchased item

Some customs authorities expect the goods in new condition and their original packaging, so check the local rules before opening and using your new purchase. This is important as items need to leave the country to be eligible.

Don’t select a refund method without checking for fees

Different refund methods such as cash, debit or credit card may be subject to different fees and exchange rates, which will affect how much money you receive.

Don’t assume validation can be done when you arrive home

Normally paperwork needs to be validated before you leave the country where the purchase was made – missing this step could invalidate your refund.

Quotezone helps over 4 million people every year compare and find savings on bills and essentials, including travel insurance. 

References:
*https://www.weareplanet.com/blog/tax-free-shopping
**https://pievat.com/blog/what-is-tax-free-shopping-the-complete-guide-for-tourists

Photo credit – iStock.com SolStock

This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.