Today, Russians and citizens of other countries increasingly travel abroad to make some purchases there. At the same time, they leave the value added tax far from the bins of their homeland. But it has long been known that in the modern world every traveler has the opportunity to carry out a profitable operation, called the return of Tax free (a specific part of VAT). Tax free first appeared in the 1960s in Sweden. Since then, citizens of many countries have actively taken advantage of such an attractive opportunity to save money.
Essence Tax free
Tax free - what is it? As noted above, this concept implies a VAT refund. Everyone knows that the tax presented is aimed at social security of society. Thus, it is included in the total cost of absolutely any product or service. As a rule, the value of VAT varies from 9 to 20 percent, which completely depends on the individual settings of a particular state.
Why return tax free? The answer to this question is much simpler than you might imagine. The fact is that tourists who made some purchases, while paying the tax included in the price, do not have time to apply its social mechanisms, since they stay in the country for a very short period of time.
A brief description of the process itself
When making a purchase in the territory of another state, a tourist has the right to receive a special check. When leaving the country (at customs), this document must be stamped specifically for the operation in question, which will be absolute confirmation that the goods have been exported (Free tax filing). Only after carrying out the above operation is a citizen vested with the right to return VAT. Funds can be received both after passing through customs and upon arrival.
It should be noted that such a profitable system extends its effect to approximately 20 countries of the world. In addition, the procedure for the refund of a part of VAT in all countries is similar. Only the restrictions on the minimum cost of objects purchased in the territory of another state differ, as well as the validity period of the check document.
Tax free - what is it? Current Tax Free Systems
It is important to note that the fulfillment of absolutely all VAT refund operations is entrusted to the Tax free systems endowed with a private nature. They serve as an intermediary between tourists and a particular state. Each such system has in its structure several stores combined in one network, as well as a number of offices designed to return money to citizens. It should be noted that any such system keeps a minimum commission, as a reward for the implementation of such an important operation. Several systems are known in the world, the largest of which is the following.
Global tax free unites 36 countries (29 of them are in Europe), including Germany, Finland, France, Hungary, Iceland, Norway, Lithuania, Latvia, the Netherlands and others. It should be noted that only seven countries corresponding to the presented system are located in other parts of the world (Japan, Argentina, South Korea, and so on). Global blue tax free was founded back in 1980 in Sweden. Its owner is Global Refund Group.
Other systems
The totality of the systems under consideration has 3 more units in its structure, among which:
- Premier Tax Free, which includes 20 countries (15 of which are located in Europe), including Germany, Czech Republic, France, Great Britain, Switzerland, Sweden, Morocco, Singapore and others. The system was founded by the developers of The Fintrax Group in 1985 in Ireland.
- Tax Free Worldwide includes only 8 countries: Denmark, Iceland, Ireland, the UK, Norway, Austria and others. It is important to note that more recently this system has merged with the Premier Tax Free considered above.
- Innova Tax Free consists of six countries: Portugal, China, Italy, Great Britain, France, Spain.
VAT refund terms
Both foreign citizens and those who do not have citizenship, residence permit, work visa or refugee status in the country of purchase are entitled to take advantage of this opportunity (while they must stay on its territory for no more than three months).
A necessary condition for returning Tax free is the conformity of the goods to a specific list, which includes industrial products: shoes, clothes, jewelry, household goods, electronics, household appliances, accessories, stationery, watches and so on. It is important to note that the system does not cover the scope of services. In addition, exceptions are transport mechanisms, food products, books, precious metals (bullion bullion), precious stones located separately from jewelry, goods for activities of a professional nature, as well as objects purchased via the Internet.
Registration of a check document
A check document issued by an employee of a foreign store shall indicate the total value of the goods, as well as the amount of value added tax intended for return. Data is filled in by the seller by hand or through a cash register. At the same time, it is not the duty of the employees to fill out additional information regarding the client, however, as a rule, they willingly do this. It should be noted that it is mandatory in the documentation to indicate the details of a bank card in the event that the client prefers to receive funds through this tool. After filling out a check by a trade employee, a foreign citizen only needs to verify the data and sign it. If possible, it is advisable to take a brochure in the store with information about the VAT refund system (according to a specific system, for example, Tax Free blue)
It must be remembered that in any case there is a specific time period during which a particular product must leave the country where it was purchased. A tax free check document with a customs stamp also has an expiration date.
Additional nuances
The return of Tax free (what it is, see above) does not mean at all that the citizen will receive the amount of the specified value-added tax in full, because a certain part of the money goes to commission costs to the intermediary and administrative affairs. With regard to this provision, each country has organized an individual system of rules, which should be followed.
If the goods are purchased in one of the EU countries, then stamping on the check document is necessary not when leaving the country itself, but only when crossing the EU border. So, there may be some trouble if a citizen leaves the EU through a transit stop. It should be recalled that EU countries are countries such as Poland, Romania, the Netherlands, Cyprus, the Czech Republic, Austria, Bulgaria, Malta, Hungary, Croatia, Sweden and others.
Ways to refund part of VAT
You can cash out checks in one of the following scenarios:
- Within the airport, which is the fastest way to receive money.
- By post organization. So, you need to leave a check document in the office of a particular system (Tax free in Moscow can be obtained from one of a number of existing systems). After some time, the funds will go to a bank account or to a customer’s card. It is worth noting that the operation presented is quite long, because the period of its implementation often reaches four months.
- Through any point of issue, as a rule, in the city where the client resides (however, this provision applies only to large-scale settlements). It is important to note that today it is possible to organize the operation in question without leaving your home, through Free online tax filing.
Interesting to know! Subtleties of VAT refund in different countries
It will be advisable to note several useful facts related to the design of Tax free (what it is, we said at the beginning of the article) in different countries.
- According to check documents filled in Poland, funds are returned exclusively in cash.
- When leaving Slovenia, two stamps are required: on the check and on the form of Tax free.
- To receive part of the value added tax when purchasing woolen goods in Iceland, the presence of a seal on the check is not required.
- In Holland, every tourist has the opportunity to return VAT even in the case of a purchase in a store that is not part of the Tax free shopping system. But a prerequisite for this is the repeated return to the country.
- In Norway, stamping is not done at customs, but directly at the office of the system. In addition, it is the only country where part of the value-added tax is refunded for food items that are more expensive than 285 kroons.
- German airports have their own requirements: you must first register, and then only go to the customs. When registering, you must definitely warn the employee that tax free is planned. Thus, the baggage will be registered, and then returned to its owner.
- In countries such as Norway, Croatia, Finland, Sweden and Denmark, individual national stamps are provided. Therefore, the checks of these countries cannot be used in other places. So, a tourist can receive part of the value added tax only at the airport.
An important point in the event that a citizen suddenly forgot to put a stamp on a check document is the opportunity to do this upon arrival home at the embassy (consulate) of the country where the goods were purchased.