How to Calculate Your Tax-Free Refund by Country
What is Tax-Free Shopping and How Does It Work?
You can get reimbursed for the VAT (value added tax) fees you pay on any of your personal trips to Europe. Getting a tax refund allows you to shop tax-free and pay less for the products you buy.
The tax-free system not only ensures that tourists coming to the country are not charged consumer taxes, but also makes the stores more attractive to tourists.
There are 3 basic steps you need to take to get a tax refund.
- Fill out the tax-free form while still at the store
- Have your form approved at customs before leaving the country
- Complete your transaction by visiting the tax-free agent’s offices
How to Calculate VAT Refund for Tax Free Shopping?
On this page, you can find a list of the European countries where VAT refunds are available and at what rates. These tax-free rates vary parallel to the individual VAT rates of each country. Thus, if the VAT charged in a certain country is high, the refund you receive on products you buy there will also be high.
Here is an example to better explain the tax-free calculation process. The VAT rate in Germany is 19%. In other words, when you make a purchase of 1190 euros, you are actually paying 190 euros in VAT fees. That is to say, if you take 190/1200, you get a 16% VAT refund in Germany. Yet, there is one more step involved in the tax-free calculation process.
The company you work with to get the tax money back will also take commission on the refund you receive. In our example transaction the tax refund company would usually apply a commission of approximately 20%. As the amount of shopping you do increases, the percentage of commission you pay to the firm will decrease. In Germany, for 1200 euros’ worth of shopping, you will receive about 156 euros back. You will receive a 13% tax refund on the total price you paid.
To summarize, your tax-free refund depends on 3 things:
- The country's VAT rate
- The VAT rate specific to the product you purchased
- The commission of the company you work with
European Countries with the Highest and Lowest VAT Rates
The VAT rates in Europe vary from country to country. This directly affects the VAT refund you will receive on your purchases.
In addition to these varying rates, VAT rates are not the only variable involved in getting a larger refund, as the commission rates of the company you work with can also vary from country to country.
You can find out which countries offer larger VAT refunds via the table on our site.
The 5 Countries with the Highest VAT Rates
- Hungary - 27%
- Croatia - 25%
- Denmark - 25%
- Norway - 25%
- Sweden - 25%
The 5 countries that apply the highest VAT rates on shopping in Europe are Hungary, Croatia, Denmark, Norway and Sweden. In these countries, the VAT rate is 25% or higher. In other words, the VAT rate you pay for your purchases is higher than in other countries. This ensures that the VAT refund you will receive on your personal travels to these countries is larger.
The 3 Countries with the Lowest VAT Rates
- Switzerland - 7.7%
- Luxembourg - 17%
- Turkey - 18%
When compared to the standard VAT rates of other countries within Europe, the countries where you pay the lowest VAT rates are Switzerland, Luxembourg and Turkey. For this reason, the VAT rate for your purchases from these countries will be low. This will mean a reduction in the VAT fees you receive back. In addition, countries may also apply lower VAT rates to specific products. In such cases, the VAT refund you receive may be even lower.
Country-Specific Terms for Tax-Free Shopping
Regulations may vary from country to country regarding certain types of tax-free products, affecting the amount of money you can get back. For example, some countries do not refund VAT fees on product groups sold at a lower VAT rate.
In order to be exempt from consumer taxes when shopping in the European Union, it is generally required that the tourist reside outside of the EU. In countries like Turkey that are not members of the European Union, anyone living outside of Turkey can get a VAT refund.
While some countries require that purchases be made by individuals over the age of 18, other countries do not have such restrictions.
To find out more about product-specific terms and country regulations please review our country-specific Tax-free Shopping and Tax-free Refund Calculator pages.
Important Things to Know about Tax-Free Shopping
When leaving the country with your tax-free purchases, you must verify your tax-free forms at customs.
If you want to receive your tax-free payment in cash, you will be charged extra commission.
In some countries there are offices within the city where you can get a tax refund payment before going to the airport. In such an event, you must send the tax-free form that’s been verified at customs to the company by post once you have received your payment, otherwise your card may be penalized.
Any tax-free items you have purchased must remain unused until leaving the country.