Travelers attracted to Europe this summer because it's a shopper's bargain can save even more money if they make the effort to get a refund for sales taxes paid on any items they carry or ship home.
The European version of the sales tax, called a Value-Added Tax or VAT in Great Britain, can be substantial, depending on the country. In England, the tax is 15 percent. In France, the tax (called the Taxe a la Vleur Ajoute'e or TVA) ranges from 13 percent for most consumer goods, including clothing, to 23 percent for luxury items, such as perfume, furs and jewelry. In Denmark, the tax, known as MOMS, is 22 percent for goods and services.
The big catch is that in most cases a refund is not automatic. You have to ask for it, and the process (in some countries, anyway) can involve tedious paperwork and sometimes long waits in line. But if you make a major purchase abroad, getting a refund can be worth the hassle.
European travel offices say large numbers of American travelers are phoning for information about obtaining a refund. Each country has established its own procedures, but this is how the system generally operates:
Only items that you are taking or shipping from the country are eligible for a refund. You cannot collect for taxes paid on meals, hotel rooms, car rentals and other services. For items you carry home: When you make a purchase, ask the shop clerk for a tax-refund form. It must be filled out either by you or a shop employe, and you must keep a copy to show customs officials at the airport (or border) when you leave the country.
Often customs will want to see your purchases, so they should be hand-carried, not packed in your luggage -- at least until you have checked through customs. A customs official must stamp your copy of the tax-refund form, which you then mail back to the store. Many stores provide a stamped envelope already properly addressed; in such cases, mail the form at the airport (or border) before you depart so you don't have to pay the postage yourself to mail from outside the country.
When the store receives your validated copy, it will then arrange to have a refund mailed to you. Depending on the volume of requests, the refund process could take up to two months or more. And when the refund does arrive, it probably will be in the form of a foreign-currency check (British pounds, French francs or whatever).
Then you take the check to a bank or currency-exchange firm to convert it into dollars, and there may be a fee for this service. In Washington, Reusch International Monetary Services, 1140 19th St. NW, charges $2 per check to make the conversion; Deak-Perera, 1800 K St. NW, charges $5 per check (for individuals); or consult your own bank. There is no fee, for example, for depositors at Riggs National Bank.
*For items you have shipped: The process is less complicated when you have your purchases shipped home from the store. You may have to ask for a refund and complete applicable forms, but the store usually will deduct the tax immediately. However, you should weigh the convenience of getting the refund against the additional cost of packaging, insuring and shipping transatlantic by air or sea. You also may not want to take a chance on damage or loss in the mail of any one-of-a-kind item (an artwork) or some especially cherished purchase.
*For items purchased by charge card: In many countries, a tax refund for carry-home purchases can be credited to your charge-card account. You still must fill out the refund form at the store; you must have the form stamped by customs at the airport (or border) with the purchases available for inspection; and you must mail the form to the store. Once the store has the validated form, instead of mailing you a foreign-currency check, it will simply issue a credit slip to your charge-card account for the amount of the tax.
Each country has its own nuances, so it is advisable to have the sales clerk explain in detail what you must do to get a refund. Here are additional considerations:
*In Great Britain, not all shops participate in the tax-refund program, though usually these are smaller, neighborhood establishments. If you are in doubt, ask before you buy.
*Some countries permit the shop to charge a slight service fee for processing the tax-refund forms. This is the case in Great Britain and France.
*Depending on the country, your purchases in an individual shop may have to total a specified amount before you are entitled to the refund. In France, you must spend a total of at least 800 francs (roughly $110) in any store to qualify. In Italy, the minimum is 250,000 lire (about $125) per item purchased. In Great Britain, the minimum is at the discretion of the individual merchant.
*The sales clerks will want to see your passport before giving you a tax-refund application, so carry it with you when you go shopping. Allow plenty of time at the airport to complete the necessary procedures for a refund. When several jumbo jets are departing at the same time, the lines at the customs desk can be very long. The airline office in the city you are visiting should be able to advise on what to expect.
Because of the large number of American shoppers seeking tax refunds, steps are being taken in some European countries to simplify procedures -- or at least smooth the process.
*Danish and Norwegian merchants have just adopted a relatively uncomplicated system patterned after the privately operated Swedish Tax-Free Shopping Service, which has been in effect for the last few years. Refunds are available before you leave the country under this system, but only when you shop at stores participating in this special service. They usually are identified by a logo on the window.
When you make a purchase in any of the three countries, ask for the MOMS refund form, which must be completed at the shop. The sales clerk will then issue you a check specifying the amount of tax to be refunded. At the airport (or aboard ship), your purchases must be available for inspection by customs officials. Afterward, you can cash the check at a Tax-Free Shopping Service window. You will get the local currency, which then can be exchanged for whatever currency you want.
The same procedure applies for charge-card purchases and items you are having shipped back to the United States.
If you are traveling by train in Scandinavia, ask the sales clerk where the refund is issued. Refund windows are available only at certain major stations, including those in Stockholm, Oslo and Copenhagen. You may, however, obtain a tax refund for a Swedish purchase in the Oslo station in neighboring Norway, if that is more convenient for you.
There is a processing fee charged for the less complicated service. In Sweden, the MOMS tax is 19 percent, but your tax refund is 14 percent after 5 percent is deducted to pay the fee; in Norway, MOMS is 16.67 percent and the refund is 12.5 percent; in Denmark, MOMS is 22 percent and the refund is 18 percent.
To get a full refund, or a refund for purchases made at nonparticipating stores, you must follow the standard procedure of mailing back a validated form to the shop and waiting for a check in the mail or a credit on your charge-card account.
*In Paris, one of the city's leading department stores, Galeries Lafayette, has set aside a special customer-service office specifically to handle tax-refund requests. When you make a purchase, the salesperson will direct you to the office. There you will be seated in a private booth, and a clerk will help fill out the application form and answer any questions.
Even at this office you may encounter lines this summer, says Robert W. Bloch, a New York spokesman for the store. He suggests shopping before lunch, when the lines, if any, are very short. The worst time is just before closing, when all the last-minute shoppers show up simultaneously.
*Also in Paris and Nice, certain shops will permit you, for a small fee (about $2), to obtain a refund at the airport bank just before your departure. You must have the tax-refund form stamped by a customs official before you go to the bank. Air France customers can pick up a free brochure describing French tax-refund procedures at the Air France office, 1120 Connecticut Ave. NW, Suite 312.
*Because of the flood of inquiries about the Value-Added Tax, the British Tourist Authority is providing a free six-page brochure describing the standard process for getting a refund. There also are instructions on the steps to take for a refund once you are back in the United States, if for some reason (your plane was about to depart) you failed to get the necessary customs stamp before leaving the country. To obtain a copy, contact: British Tourist Authority, 40 West 57th St., New York City, N.Y. 10019, (212) 581-4700.
Many travelers will find the refund process a nuisance, and if their purchases aren't substantial they will probably want to avoid the paperwork and the lines. In many instances, because of the dollar's buying power, items may be a bargain even when you pay full taxes. It's a question of balancing the amount of refund due you with how much vacation time you are willing to spend getting it.
In some countries, of course, there is a way around bureaucratic complexities.
In Italy, where the sales tax ranges from 9 to 18 percent, a tax refund is available only on individual items of 250,000 lire (about $125) or more, such as a suit or a pair of shoes. Paperwork must be filled out for each item; the wait at the airport to get the customs stamp may take hours; and the refund check may not arrive for months, according to the Italian Tourist Board in New York. That's the official way.
The unofficial way is to ask the shop for a discount of, say, 10 percent. Shopkeepers may be very willing to give it to you, both to get your business and to avoid the tax paperwork themselves.