How to calculate your VAT refund on tax-free shopping?
01/11/2022
Most products in Europe are subject to a Value Added Tax (VAT), which is a form of sales tax or also known as Goods and Services Tax (GST). Depending on the language you might also see VAT referred to as IVA in Italy/Spain, or TVA in France, but it is ultimately the same type of tax.
When you see a price for something in a shop, any tax will already have been applied by the retailer, even if sometimes it is not stated on the purchase receipt.
VAT is paid by the final consumer. However, because goods taken back home by international tourists are considered to be personal exports, travellers to the EU can avoid paying this tax when making purchases during their visit.
How much is VAT
In Europe, depending on the individual country the standard VAT rate ranges between 8% and 27% and is already included in the final sale price. For example, it is 22% in Italy, 21% in Spain, and 20% in France and the UK - see below table to find out the standard rate in each European country.
The standard VAT rate refers to the typical tax percentage applied in each country. This is also the most relevant tax rate for when you calculate a VAT refund as it would usually apply on the most popular tax-free shopping items such as fashion accessories, handbags, jewellery, cosmetics, watches, clothes, portable electronics, and souvenirs.
Each European country also has a reduced VAT rate that generally applies to certain services or food. Some items may even be exempt from VAT altogether, for example books and children's clothing in Northern Ireland (UK).
However, since such purchases would either not qualify for tax-free shopping (e.g. services), or be a rare exception, best to ignore them if you only wish to get a general idea of the potential VAT refund.
How to calculate the VAT amount
VAT is charged as a percentage rate of the net price, which is the price before the tax is applied. If we use France as an example where VAT is 20% of the net price, then this is equal to 16.67% of the gross price, which is the price actually paid by you in store.
Hence, if you made a €100 purchase in a French shop, the VAT amount would actually be €16.67 (and not €20 as commonly mistaken)!
Find out more here about getting your VAT refund in France with Airvat.
How much is the VAT refund
Unfortunately you will never be able to receive 100% of the tax amount back. Retailers from where you purchased the goods or their affiliated refund companies, such as Global Blue or Planet Tax Free, will usually charge a substantial commission to process your refund claim.
This varies depending on the refund agent company and can be as high as 40-50% once any additional payment charges, airport cash advances, or currency conversion fees are included. Hence, be sure to look into the provider’s small print to understand exactly how much refund you will receive.
Below are indicative refund rates based on Global Blue and Premier Tax Free VAT calculators in France, Italy, Northern Ireland (UK), and Spain. Please take these commissions as a general guide only and check the terms and conditions of your provider company for the exact amounts.
Also note that typically you should add further 5-10% of charges to the below indicative commissions due to various exchange rates and payment charges.
| Purchase price | Typical Commission (as a share of the VAT) |
Refund amount (as a share of purchase price) |
|||
|---|---|---|---|---|---|
| France | Northern Ireland (UK) | Spain | Italy | ||
| €100 | 40% | 10.0% | 10.0% | 10.4% | N/A |
| €250 | 32% | 11.3% | 11.3% | 11.8% | 12.3% |
| €500 | 29% | 11.8% | 11.8% | 12.3% | 12.8% |
| €1,000 | 27% | 12.2% | 12.2% | 12.7% | 13.2% |
| €2,000 | 21% | 13.2% | 13.2% | 13.7% | 14.2% |
| €3,000 | 20% | 13.3% | 13.3% | 13.9% | 14.4% |
What is Airvat’s VAT refund service fee
As for Airvat, we charge a transparent flat fee of 20% of the VAT amount without any hidden charges or commissions. Our fee will always be much less than when getting an in-store tax refund form from the shop where you bought the goods.
A typical Airvat customer on average receives 50% extra refund relative to using the retailer's affiliated service. You can find out exactly how much you will save on your shopping in France and Northern Ireland (UK) by using our refund calculator tool within the Airvat app.
What are the minimum purchase requirements for tax-free shopping
Most countries in Europe will have a minimum spend requirement before a purchase qualifies for a VAT refund. Keep below thresholds in mind on your next shopping trip so that you plan your purchases accordingly.
| VAT Rates and Minimum Purchases Amount | ||
|---|---|---|
| Country of Purchase | VAT Standard Rate | Minimum Amount per Invoice |
| Austria | 20% | €75.01 |
| Belgium | 21% | €125.01 |
| Bulgaria | 20% | 250 BGN |
| Croatia | 25% | 740 HRK |
| Czech Republic | 21% | 2,001 CZK |
| Denmark | 25% | 300 DKK |
| Estonia | 20% | €38.01 |
| Finland | 24% | €40 |
| France | 20% | €175.01 |
| Germany | 19% | €50 |
| Greece | 24% | €50 |
| Hungary | 27% | 54,001 HUF |
| Iceland | 24% | 6,000 ISK |
| Ireland | 23% | €30 |
| Italy | 22% | €155 |
| Latvia | 21% | €44 |
| Lithuania | 21% | €55 |
| Luxembourg | 17% | €74 |
| Malta | 18% | €100 |
| Netherlands | 21% | €50 |
| Northern Ireland (UK) | 20% | £0 |
| Norway | 25% | 315 NOK |
| Poland | 23% | 200 PLN |
| Portugal | 23% | €61.35 |
| Romania | 19% | 250 RON |
| Slovakia | 20% | €100 |
| Slovenia | 22% | €50.01 |
| Spain | 21% | €0 |
| Sweden | 25% | €200 SEK |
| Switzerland | 8% | 300 CHF |