Value-Added Tax (VAT): What It Is, How Refunds Work

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
What is value-added tax (VAT)?
- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
How value-added tax (VAT) works
Is there VAT in the U.S.?
- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
How to get a VAT refund
- Spending on food and hotels often isn’t eligible for VAT refunds.
- Typically, you pay the value-added tax at the time of purchase and then apply for a refund from the shop.
- Usually, your purchase must be over a certain amount in order to qualify for a VAT refund. In the EU, for example, you have to buy at least 175 euros worth of stuff in a shop.
The threshold isn’t cumulative, though, meaning that spending 100 euros in one shop and 100 euros in another shop doesn’t meet the minimum. It may be worth it to consolidate your shopping if you’re angling for a VAT refund.
- Some shops don’t offer VAT refunds. Some shops process the refund directly, and some shops use third parties to process the refund. Ask for written instructions about how to claim your VAT refund.
- You usually have to be a visitor to get a VAT refund. The address on your passport matters here. You might qualify as a visitor if you’re living in the country temporarily but have a permanent home somewhere else.
- You’ll likely need to show the store clerk proof that you live outside the country, and you’ll have to fill out a form.
- Sometimes the shop charges a fee for VAT refunds, so be sure to ask about that ahead of time.
- Usually, you’ll need to mail your stamped VAT refund form to an address the shop provides. But you don’t always have to wait to get back home. Some big airports, ports and train stations have VAT refund offices where you can get your refund right away — if the retailer you shopped at uses that office.
- When you go home with your stuff, a customs officer has to stamp your refund paperwork as proof of export. Without the stamp, you won’t get your VAT refund.
Article sources
- 1. European Taxation: Taxation and Customs Union. VAT rates. Accessed Jun 4, 2024.
- 2. PricewaterhouseCoopers. Value-Added Tax (VAT) Rates. Accessed Jun 4, 2024.
- 3. European Commission: Taxation and Customs Union. Guide To Vat Refund For Visitors To The EU. Accessed Jun 4, 2024.
with LedgerWay