shopping mall

If you´ve already read the Tax Free Today articles on products and services VAT and digital products VAT, you probably know everything about this tax.

However, something that not everyone knows is that, in general, if you reside outside of the European Union and you’re not going to use the good in the EU, you can request a refund of the VAT you paid. And this is precisely what we’re going to explain to you today; how you can request a refund of the VAT you’ve paid in the EU.

Today’s article comes from Christian Funke, our German-Belgian partner who was, not long ago, an advisor for our German clients. Since he lives in Switzerland, near the German border, he’s in constant contact with this practice and will talk about the necessary processes and steps to consider in order to get your VAT back.

VAT refund for individuals without residence in the EU

If you don’t reside within the EU, you can recover the VAT paid for items you take out of the EU. In principle, this isn’t complicated or difficult, however, we must take some exceptions and details into account in order to avoid problems.

Unfortunately, there is no global law for VAT refunds in the European Union. This article was written describing, in depth, how it works in Germany and it’s possible that there will be some differences in other countries. However, all EU countries usually have similar regulations and you can surely apply it in other States as well.

First, you should know that the State leaves the VAT refund procedures exclusively in the hands of the merchant. Individuals can´t ask the State for anything directly.

Moreover, not even merchants are required to give the VAT refund to the final customer, but they can offer to do so voluntarily.

Therefore, you need a merchant willing to cooperate, otherwise you won’t be able to get a refund. In the case of large acquisitions, you should consult the seller on this matter or request that the VAT refund be entered into a binding manner in the sales contract.

Many merchants, especially those located very close to the border, recognize the possible competitive advantage by offering VAT refunds. In many cases you’ll find shops with stickers or posters advertising that they offer this possibility.

VAT refunds in practice

In practice, it proceeds as follows: You’ll need an invoice with the buyers address from outside the EU. In the case of online merchants, the “Address of the provider” and “Address of the invoice” should be separate.

Example of invoice address: Person’s name, street XX, postal code and City, COUNTRY. The name of the country must be written in full. While it’s rare for customs to ask for this, it can happen.

If we only have one purchase receipt (for example, from the supermarket), the seller can staple the receipt to an “export certificate”. There is a place where you can put the buyers address on the export certificate, see the following example.

Receipt

Excerpt from an export certificate.

By the way, VAT should always be included in the invoice. If you buy something without VAT, logically they won´t give you anything back.

Frequent misunderstandings with VAT refunds

It’s not mandatory to attach the export certificate if we have an address invoice. It’s difficult to dispel the myth of the “mandatory export certificate”, so full invoices with complete export certificates always reappear.

I advise clients to simply take it calmly, as this doesn’t cause any harm apart from the superfluous use of paper or waiting time.

There is a “Passport number” box on the export certificate. It’s not necessary to put a passport number if the buyer’s address appears clearly (although it won’t do any damage to include it either).

In practice, this box has been provided as an address substitute for when there are language barriers or writing difficulties in Customs that prevent the correct completion of an export certificate.

Imagine a Chinese tourist talking to the German customs officer. Unfortunately, not all merchants know this, so we´re sometimes required to enter our passport number for no reason.

If, for whatever reason, you´ve only been able to issue an invoice with an EU country´s delivery address, you can cross it out and write the address of the country outside of the EU by hand on the side. You can recover the VAT as long as customs seal the invoice.

There is a time limit between purchase and export in Germany: three months, not counting the month in which the purchase was made. Example: If you buy a product on any given day of January (January doesn´t count), the export must take place before the last day of April (February, March, April).

The good must be presented to customs in the “first” export. If we forget to do it, in theory, we can´t go back and ask them to put the stamp on for us. It´s not very clear what this is for and how they ensure it´s done this way, but that´s a completely other issue.

The good has to be “new and unused” at the time of the exportation; otherwise, the “added value” would have already been generated in the EU and you wouldn´t be in a position to request a refund.

In practice you don´t always pay attention to this (if for example you bought a suit to go to a family party or a business meeting in the country, but then you take it and you will use it abroad), but that would be a matter of luck.

EU exit

With the export certificate correctly filled out and/or invoices AND the goods And a proof of address confirming that the address is not from the EU (German passport with a residence registered abroad, passport from outside the EU, foreign residence permit…) we go through EU customs for departure.

If everything is in order, the customs officer will stamp the invoices/export certificates. The stamp confirms that the merchandise was exported and that it has left the EU.

Since only the merchant can return the money in Germany, you must send the sealed invoice to the merchant at customs. In the case of stores located near the border, you can take the invoices with you for your next purchase, where a discount is often made for the VAT already paid.

If the store is further away, you can send the invoice by mail indicating an account number to which the refund should be transferred to.

Exceptions to the rule

This article would end here, if there wasn´t so many exceptions. Let’s have a quick look at some of them:

Amazon: Just like what happens with everything else, VAT refunds are also organized in an extremely simple way on Amazon. In this case you don´t even have to send them a written copy, you simply send the sealed invoice to Amazon and that’s it.

In Germany, the address would be:

Amazon.de, VAT refund, Im Gewerbepark D 55, 93059, Regensburg

Amazon always reimburses you using the same payment method that you made the purchase with. If this isn´t possible (if your credit card expires precisely at that time…), Amazon will provide us with a voucher.

Of course, in this case the seller must be Amazon itself. If you buy from a third party through Amazon platforms, that merchant will be responsible for reimbursing the VAT, and as you know, not all merchants offer this option.

In some online stores you can´t use a foreign address because the software doesn´t anticipate that circumstance. In this case, you can try tricking the software.  For example, in my case, I choose the address according to the following layout:

  • My name
  • My street
  • 00000 city/Switzerland

The Spanish case

If you make your purchase in Spanish territory but you reside outside the EU, in the Canary Islands, Ceuta or Melilla, you can request VAT refunds. Of course, it must cost more than 90,15 Euros and, as in the case of Germany, the good must leave the country within three months of its purchase.

The easiest thing is to ask for the DIVA form in store (a VAT refund form). If they don’t have it, you can try to get the refund using only the invoice, it usually works as well.

Before checking in your luggage you have to go to the customs office and show them the invoice, the product purchased, your boarding pass and your passport. If you live in the Canary Islands, Ceuta or Melilla you have to show an ID card in which your address appears.

With all this, they will seal the invoice for you in customs and you then have two options to ensure they give you back the VAT. You can send the sealed invoice to the store where you purchased the item, or you can directly request the refund at the specially designed airport offices (only if they have them at the airport you´re departing from, of course).

Concluding

And we are thus ending this general overview of the basic procedure of VAT refunds. What this article completely ignores is the possible requirement of having your goods taxed in the destination country, according to the rates and tax-free amounts. This is something that completely changes depending on the country where you live.