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Can someone explain VAT to me, please ?

If anyone is VAT savvy, could you educate me, please ?

Is it charged on every purchase ? In restaurants ? Do we ask for the necessary paperwork from everyone we give money to ? Or only over a certain dollar amount ? How do we file for the refund...after we get back to the US ? While were still in the UK ? Someone said we file at the airport in Edinburgh before we fly home...which makes no sense to me.

I'm hopelessly lost. I'm sorry. Thank you in advance for the help.

Posted by
4944 posts

Value-added tax is sales tax on merchandise and service, but you can’t get a refund on VAT paid at restaurants. The idea is that if you’re not a permanent resident, you’re not getting full-time benefits of the improvements to society and infrastructure that the VAT makes possible, so you’re potentially entitled to a partial refund (with limitations) of what you paid in VAT, but you need to claim it before you leave the country, or they keep it. That’s why the VAT refund desk at the airport is essential.

The limitations are that you have to spend a minimum amount at a single vendor. Here’s detailed UK info: https://www.gov.uk/tax-on-shopping/taxfree-shopping

Posted by
3888 posts

I'm not much of a shopper, so I never paid too much attention to it. On one trip we purchased two pairs of Birkenstocks in Cologne so we went thru the time consuming bureaucracy in Amsterdam and got about 30 euro back.

Posted by
25716 posts

does it make more sense now?

Remember that the only things you might claim on must be purchased here, never worn or used, in their original packaging, and must be merchandise.

No services, consumed items, or restaurants, etc.

You have to show - or be ready to show - all claimed items to the Customs officer at the last place you leave from in the EU and UK, along with receipts and paperwork.

Posted by
2514 posts

yes you do get charged VAT in restaurants and on almost al goods unless they are VAT exempt. The Vat charges will automatically be incorporated on any price and charges you may receive and there will be a VAT analysis on the receipt.
You can only claim back any Vat on UNUSED GOODS that you are taking out of the country and must have the receipts to prove this,

Posted by
9767 posts

I had an RS bag break in me just before I left for home. I bought a new bag and claimed VAT refund at Heathrow. That was June 2017. I'm still waiting.

Posted by
2514 posts

FrankII the admin cost was probably higher than the Vat refund,so you actually might owe the UK customs and excise a few quid.

Posted by
8889 posts

VAT (Value Added Tax) is a sales tax. It is charged on virtually everything, goods and services (the above poster who said it wasn't on restaurant bills is wrong, it is, and is also on hotel bills). If you pay a plumber to fix a leak, his bill has VAT on it as well.
There is no minimum amount, you will also pay it on an ice cream you buy on the street.
All prices displayed must include all taxes and charges. If your purchase is 99p, you hand over a £1 coin, get 1p back and the receipt will list what part of that 99p was the VAT.
The only things VAT is not charged on is "essentials" (raw food) and goods exported, no country charges taxes on items exported.

As far as refunds are concerned, these apply only if the goods are exported from the EU unused and intact. In order to get a VAT refund:
1) The shop must be prepared to do the extra paperwork. The shop must give you the correct VAT refund form. Only shops with a significant number of non-EU customers will be set up to do this.
2) You must export the goods from the EU unused. You cannot claim back VAT on a hotel bill or an ice cream, they have already been "consumed" in the country.
3) When you leave the EU (not necessarily when you leave the UK) you need to get the customs officer to stamp the forms to certify the goods have left the EU. They may want to examine the goods.
4) You then send the stamped form back to the shop. As they now have proof the goods were exported, they do not have to pay the government the VAT on them, and they refund to you the VAT you were charged at purchase time.

This probably means you get the forms stamped at Edinburgh airport, provided you are exiting the EU. If you are heading for another EU country, you need to get them stamped when you finally leave the EU (by air or land border).

Posted by
25716 posts

I had an RS bag break in me just before I left for home. I bought a new bag and claimed VAT refund at Heathrow.

was the bag new and unused (you brought home an empty bag) when you claimed the refund at the airport?

Posted by
9767 posts

The bag was new--I kept the tags on it--and had the receipt from a couple of days before. I stopped at Heathrow on my way out of the country to hand in my form. Of course there were clothes in the bag. The person I dealt with took all the documents and said I should hear in a few weeks. Never did. I think my refund was about 28 GBP.

Posted by
571 posts

I suppose if you buy something in the U.K. and reclaim the VAT because you are exporting it, you should declare it to customs on arrival and pay duty as an import.

Posted by
18 posts

If I've not said it before, y'all are brilliant and a HUGE help.

This whole VAT business is confusing ! Sooo...when we purchase some thing during our three weeks in the UK, we don't need to ASK for VAT information from vendors ? It will automatically show on our receipt ?

I appreciate the links. It'll give me something to read on the plane. 😉

Posted by
8889 posts

Sooo...when we purchase some thing during our three weeks in the UK, we don't need to ASK for VAT information from vendors ?

VAT will be shown on all receipts (don't receipts show taxes where you live?). But, to claim a refund you need the VAT reclaim form, which needs to be stamped by customs on departure and returned to the shop to get your refund.
Not all shops will have the forms available, it is extra work for them.

Posted by
5283 posts

Just me, but unless you are making a high dollar purchase, VAT refunds are not worth the effort. The hassle of spending even a half hour extra at the airport chasing down a stamp and submit the form (plus time at the shop) is not worth a few Pounds Sterling. Now if I spent 500 Pounds on something, then maybe, but that is not a typical trip for me.

I will add though, at least some years ago in Germany, there were some shops that handled the paperwork for you and discounted the VAT directly at time of purchase. Obviously a shop selling to mostly tourists, sure I suppose prices may have been marked up accordingly, but the clock we bought was of the same quality and price as we had seen in other shops, and less than those seen in the US, so maybe not an issue.

Posted by
8889 posts

AFAIK, shops are only allowed not to charge VAT at time if purchase if they are sending it out of the EU themselves, for example by post. If you are taking it with you, they have to pay VAT until they have proof it left the EU (VAT stamped from).

Posted by
1248 posts

"This whole VAT business is confusing ..."

It's a lot less confusing if you do what most people living in or visiting England do. Which is to forget VAT and just pay what is required. With limited exceptions that probably don't affect most tourists, the price you see in a shop or restaurant is the price you'll pay and already includes any VAT due (many goods and services are VAT exempt, or zero-rated, or charged at a lower tax level than the standard one - but you don't need to worry about this, it's all been worked out for you in the price you see).

A receipt you get may or may not show the VAT paid. If you need to know the amount of VAT then say you need a VAT receipt. A petrol station will know what you mean because lots of customers use the VAT receipt for business expenses (VAT isn't a sales tax, but a value added tax, which means many companies need to offset tax paid with tax collected - but as a private individual this is all irrelevant to you).

Unless you're intending to buy an expensive item to take home with you unused, like a fancy watch, I'd just make your life easier and ignore VAT. after all, when you pay a tour guide you don't worry about how much she is getting, how much is going on income tax or national insurance, etc. Treat VAT the same. Part of the cost.

Also, remember that taxes are broadly a good thing. They're how governments generate the money (or some of it), to pay for what makes a country civilised - health services, education, infrastructure, welfare, aid, libraries and so on.

Posted by
4944 posts

And if you’ve got tight plane connections and limited time at the airport, it may not be worth trying to claim your VAT refund. But if you’ve got the time and inclination, and if your VAT paperwork is in order, go a ahead and get your rightful money. Use it towards your next trip!

Have a great trip! I also just realized this question was posted under the “England” category, but of course, Edinburgh’s in Scotland. Cheers!

Posted by
5 posts

I got my VAT refund for the first time, last year leaving Heathrow. I had made several purchases over the course of two and weeks and whenever a shop offered it, I took them up on it. They filled out forms and put the receipts into a sort of envelope. I had plenty of time before my flight, so I found my way to the VAT refund counter, handed over all of my paper work and passport, the official stamped it and had me turn it in at another counter that took care of the actual refund. I had them put it on my CC and the credit showed up in a few weeks. It took a little bit of effort, but nothing too extreme. During a previous trip, we bought a lot of items at one place and they offered to ship it all and forego the VAT (which "paid"for the shipping in the end). If you have the time, the paperwork and a large enough amount to collect it can be worth your while.

Posted by
6492 posts

I don't know if it works the same in the UK, but when i have submitted VAT refund requests in the past in Spain and elsewhere, you couldn’t submit a request for a VAT refund for any old purchase. You had to spend a certain (relatively high) amount in one store at one time to be eligible to apply for a VAT refund.

so if this still applies, a few groceries at the store wouldn't be eligible*, but an expensive pair of shoes or handbag might be if it costs enough.

*that is a bad example, because groceries wouldn't be eligible anyway, as you would eat them during your visit and not re-export them.

Posted by
7 posts

Living in a resort town here in the US, I fully appreciate the sales tax paid by tourists. It covers many of the services in town--some of which are used by tourists and some not. As a result, I don't worry about a VAT refund. Not only do I feel it is a hassle, but what goes around comes around.

Posted by
166 posts

Good Luck trying to get the VAT $$$$ back. I jump through all the hoops years ago, and it wasn't worth the effort. Big time waster if you are from the USA

Posted by
5654 posts

VAT is a consumption tax on goods and services.

There is some debate the equality of VAT (vs. a progressive income tax). It can be intitially regressive in that a higher income person spends a lower fraction of their income on consumption and more on savings/invenstments than a lower income person. However, a VAT can be progressive in the sense that a higher income person buying a Lamborghini for example, pays more taxes than a lower income person buying a Fiat, or just taking transit. And if the income from the VAT subsidizes transit an basis services, it becomes more progressive

An advantage of a VAT system is that money in itself is worthless unless it untimately spent for goods and services. A person can hide their shadow economy cash income under the mattress to avoid income taxes. But the income tax evader will end up paying VAT when they spend the under the table income. VAT just changes the form of shadow economy tax evasion.

Posted by
16032 posts

The Hardest Thing in the World to Understand is Income Taxes.

Albert Einstein

Posted by
3197 posts

I loosely think of the VAT as a national sales tax (not exactly the correct definition). It’s another way for the government to get more of your money. I stopped trying to get a refund in any VAT, since I never got anything back after trying to claim it.

Posted by
11262 posts

Just agreeing with the other replies.

If you are buying expensive items, or are buying a lot at one store, so the hassle of trying to get the refund is worth it, look into what's involved in getting a VAT refund. Even then, don't count on it.

Otherwise, ignore VAT completely and don't worry about it. VAT is built into prices, so the only place you see it is on the receipt after you pay. You just pay the price on the sticker, menu, etc, with the VAT already included. So, no fishing for change if something costs £10; your final cost is £10. It's not like a $10 item in the US, which will actually cost you more in most places, and where the extra amount will vary by jurisdiction.

Posted by
980 posts

I’ve never bothered with VAT because I don’t usually do a huge amount of shopping when I’m in Europe except for in 2017 when I bought 3 prs of Birkenstocks for my daughters in London. They gave me the paperwork for it because I asked them and it only took about 10 minutes at Heathrow since there wasn’t much of a line. I brought them in my carryon but took them out of the boxes. They didn’t even ask to look at them. A few weeks later I got about $45 put back on my credit card. That was worth the hassle.

Posted by
14323 posts

If it's any consolation, it's a lot easier to explain VAT to an American than to explain US sales tax to a European. "What the heck. The price tag was $19.95 and when I got to the cashier, I had to pay $21.70!!! Thieves.

Posted by
3173 posts

VAT in the UK is a 20% sales tax on goods & services. Grocery store food and some children's items are tax free. From Rick Steves:

"What the heck. The price tag was $19.95 and when I got to the
cashier, I had to pay $21.70!!! Thieves.

Tell me about it! We say the same thing about the government all the time. It lets you know what the local/state government is taxing you. Tax rates can vary by city, county, & state so tags just show the untaxed price.

Posted by
4362 posts

Also, remember that taxes are broadly a good thing. They're how governments generate the money (or some of it), to pay for what makes a country civilised - health services, education, infrastructure, welfare, aid, libraries and so on

And free entry to some of the world's finest museums. Suck up that VAT and consider it a cheap entry to a world class museum or two.

Posted by
2204 posts

Last year about this time I got horribly sick in London. Bad cold turned into bronchitis, terrible cough, high fever, I knew I needed treatment and drugs. Over the course of under 3 hours I bounced from pharmacy, to Waterloo clinic, sent to ER instead, sent back to clinic with appointment, seen by doctor, to pharmacy with scrip for antibiotics and painkiller. Total cost to me? Around 79 pence, and I think that may have been because the VAT on the over-the-counter pain med was not covered. With my excellent US healthcare this would have been considerably more at home. And a lot longer than under 3 hours.

Somebody paid for this! I can’t understand why anyone should ever have a problem with the VAT.

Posted by
4362 posts

Did you not have to pay the prescription fee which, I can't recall the precise figure, is around £8 and is irrespective of the amount or value of the medecine?

Posted by
2204 posts

Nope, just 79p, or maybe it was even 59p, it was under a Pound. I had already handed my credit card assuming there was a serious bill, and then was embarrassed to see the trivial amount. Since I do not know your system, I have no way to explain why. Could it be because the scrip was written be the Waterloo Clinic? In any event, your system, to an American, seems far better than ours, and I have gotten a lot of mileage with this sharing it with our practitioners here. And like I said, the entire process to returning to the Bligh House, all on foot, was under 3 hours.

Did not mean to hijack this thread, but it always raises my hackles when I see the complaint over paying taxes that are for the good of all. Especially in an environment such as here on RS, where a traveler who is objecting clearly cannot be doing this as a financial issue.

Posted by
4362 posts

Nope, just 79p, or maybe it was even 59p, it was under a Pound. I had already handed my credit card assuming there was a serious bill, and then was embarrassed to see the trivial amount. Since I do not know your system, I have no way to explain why. Could it be because the scrip was written be the Waterloo Clinic?

The Waterloo Clinic is a private practice therefore any prescription would be charged at a higher rate than an NHS one. So I'm unsure why you were not charged a prescription fee, perhaps they forgot!

The way the system works here with the NHS is that if you visit a GP and they prescribe medicine you pay the pharmacist where you obtain the medicine a prescription fee, currently £9. You do not pay for the medicine itself. Sometimes the medicine costs less than the prescription and if it can be bought over the counter you're better off doing that rather than using the prescription.

In Wales, Scotland and Northern Ireland there are no prescription fees, it is only the long suffering English taxpayer who pays the charge.

There is also no prescription fee if you fall into the following category:

children under 16,

people 16–18 and in full-time education,

people who get some means-tested benefits such as Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance or the guaranteed credit part of Pension Credit and Universal Credit if their net earnings are £435 or less in the last month, or £935 or less if they get money for a child or who have a limited capability to work,

people over 60,

women who are pregnant or have had a baby in the previous 12 months and have a valid maternity exemption certificate (MatEx)

people who have a certificate (HC2) entitling them to help under the NHS Low Income Scheme

There is also a lengthy list of conditions, diseases etc that will exempt you from the fee because of the duration that the patient is expected to be taking the medicine, potentially for the rest of their life.

Sorry to go off on a non VAT related tangent!