If you've ever shopped abroad and wondered why you pay more than the people who live there, put the blame on taxes you shouldn’t be paying because you are a foreigner. Sometimes, you are asked if you want a tax-free receipt, which is a legal way to help you reclaim the Value Added Tax (VAT) or sales tax on goods you take out of the country. As a foreigner, tax-free shopping while travelling can help you spend less if you understand how the system works. This article explains how tax-free shopping works for international travellers and how you can cut down on your shopping expenses.
Tax-free shopping is also called a VAT refund or a tourist refund. It's a provision that allows international travellers to reclaim the local sales tax (VAT) they paid on goods they take home. In most countries, this can save you 5–25% on major purchases, such as fashion items and electronics.
VAT is usually included in the displayed prices in most countries. Tax-free shopping removes tax on certain items after you’ve purchased them, depending on the country. Usually, you must be a short-term visitor (staying less than six months) to qualify for tax-free shopping. You would also be required to prove you're not a resident of the country you're shopping in. For example, a non-EU passport is all you need in Europe. Tax-free shopping only applies to personal items not intended for resale in your country. The item must also be leaving the country with you.
Also read: How virtual cards can simplify your life abroad
Here is how you can benefit from tax-free shopping as an international traveller:
Not all stores offer tax refunds for tourists. Look for stores with stickers that say “Tax Free”, “VAT Refund”, or “Global Blue”/“Premier Tax Free” on their window or at checkout. Many big department stores and designer boutiques offer tax-free shopping. Many times, these stores have a minimum amount you can spend per visit.
Show your passport (some stores will permit a clear photo on your phone). The shop will issue a tax refund form or an electronic receipt. In some systems, you pay the full price, including tax, while others deduct the tax at checkout. Keep the items unused and with their tags, as customs may require them.
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Before you check in your bags (or after security in some airports), go to the customs desk. Show them your form, passport, and the goods. They stamp or electronically validate it to confirm you're exporting the items. This step is important because you won’t get a refund without the custom validation.
Once stamped, go to the refund counter (often run by Global Blue or Planet). You can usually choose cash (in local currency or sometimes USD/EUR), credit to your card, or bank transfer. Many now offer instant refunds on their app. There might be a service fee of around 10–20%. You may not be receiving the full tax refund.
Also read: A complete guide to budgeting as a remote worker
Every traveller will take the slightest opportunity to maximise their budget. Tax-free shopping is an effective way to reduce your expenses while travelling. If you're wondering whether there is an easier way to pay for your international travel and shopping, Grey makes it simple with multi-currency accounts that support USD, EUR, and GBP. With low transaction costs, versatile virtual cards, and competitive exchange rates, you save more on your international spending. Grey now allows you to manage multiple cards for different purposes, helping you track your international spending more effectively. You can also spend directly from your balance without waiting to top up your card, reducing delays. You can also receive your tax refund seamlessly by providing your account details to the service provider.
Sign up on Grey today by installing the Grey app to manage your international shopping with ease.
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