Travel can get really expensive. From booking plane tickets to making hotel reservations to spending money on meals and gifts, the costs add up pretty quickly. Let’s not forget about the cost of exchanging currency if you are traveling internationally as well as the sales tax you’ll have to pay on any items you purchase while you are abroad. UGH.
The good news is there's something you're probably not doing when you travel outside the U.S., and that is by getting refunded for the sales tax charged on any purchases you might have made while traveling abroad.
What is a sales tax refund?
The sales tax refund is basically reimbursement for the sales tax you paid on an item (specifically goods, not services). One way in which foreign countries attract tourists is by offering a sales tax refund (also known as VAT) on goods purchased while there. As a result of the sales tax refund (which can be up to 25% in some countries), you can save a considerable amount of money purchasing certain items abroad compared to in the states. Most commonly, these savings are higher on goods produced internationally.
Here are a few things to keep in mind to make sure you can get a sales tax refund on your purchases when travelling abroad:
Find out whether or not the country you are visiting offers a sales tax refund
Most countries in the European Union offer sales tax refunds as well as some countries in Asia. You can confirm with a customs agent upon arrival at your destination.
Remember to get the necessary paperwork for all your purchases
In order to be eligible for the sales tax refund, you may need to get specific paperwork from the merchants where you make your purchase. Sometimes the purchase receipts are enough, however, in many instances you may need to get additional documents — usually VAT forms — to give to customs when you are departing.
You also want to keep all your receipts handy until after you have received your refund. Don’t assume any additional paper work you receive is a substitute for your receipt.
Claim your refund before you depart
Be sure to claim your refund before you board your flight back home. In addition, allow adequate time before your flight leaves to head over to customs to make your refund claim. While it’s still possible to claim your refund after your departure, it will cost you money in international mailing fees to send over the paperwork.
Don’t check-in the items purchased before getting your refund
Customs may ask to see what you purchased before approving your refund, so you probably want to get your refund before you check your bags. Otherwise, keep the items in your carry-on.
If you don’t want to go through the hassle of getting your sales tax refunded, consider shopping at the duty-free shopping section in the airport after you go through customs, as sales tax on items you purchase is not included.