VAT refund with a layover?

LHR,
You need to get the customs papers stamped to prove the goods left the EU intact when you leave the EU. As you are staying overnight in London, you exit the EU from Heathrow and need to get your papers stamped there.
Whether you get your refund immediately or it is credited to your card later depends on the company. Customs doesn't pay the refund - the stamped papers authorise the shop not to charge you VAT, once they have this they can refund the VAT.

Information about VAT refunds from Heathrow airport is here: http://www.heathrow.com/file_source/Heathrow/Static/PDF/Airport_guide/vat-refund-leaflet_EN.pdf

VAT is called IVA (Imposta sul valore aggiunto) in Italian.

For general run-of-the mill purchase claiming the VAT tax is not worth the time and effort. If you are purchasing a large ticket item and the shop is co-operating then it could be worth you effort. You have to decide. Remember, it is only on goods being carried out of the country. What are you planning to purchase?

Also see notes at https://www.ricksteves.com/travel-tips/money/vat-refunds, such as "bring your passport when shopping."

LHR. You have to have the proper forms from the vendors to process the refund. We had our refund credited back to our credit card and we got it a couple of months later. The process was actually quite easy at LHR T5 where we were leaving from.

Thanks for the helpful advice, everyone!! My wife is interested in buying a designer purse, go figure. Going to have to figure out whether the hassle of getting a VAT refund and also paying import duty at US customs is going to be worth it...

As others stated the EU VAT refund applies when the goods in question leave the EU and have not been used in the EU. You must be able to present the sealed bag with the VAT refund documentation. And the person making the purchase should be the person claiming the refund and have their passport for inspection.

Finding the VAT refund kiosk can be an inconvenience. The kiosk may not be open during early morning hours. In our situation in Helsinki, the VAT kiosk curbside was not open and we needed to shift stuff between our checked and carry-on bags because the open VAT kiosk was plane-side (and long walk to the next terminal).

chrispchen, You are going to declare it to US customs? Is US customs greater than Italian VAT?
(Dear webmaster, I have not suggested the OP should break the law, please do not apply your censorship).

I admit to being clueless about the prices for designer handbags in Italy, but you should remember that you are allowed to bring a certain value ($400?, $800?) of goods into the US duty-free. You are then charged on the amount over that allowance. The duty varies, I believe, with the type of merchandise. You should be able to figure out roughly whether claiming the refund is worth the hassle.

The US duty free limit could be an issue if your bought a Rolex or the like. Otherwise, for us 98-percenters, it's usually not an issue. As a family group, you can combine limits with one combined declaration per family.

https://help.cbp.gov/app/answers/detail/a_id/454/~/duty-free-exemption,-gifts

If you are a U.S. resident returning from a foreign country with goods
acquired abroad in your possession after a stay of 48-hours or more,
you may be eligible for a personal duty-free exemption.

For instance, if you are returning from countries other than the
Caribbean countries or U.S. insular possession you are entitled to an
$800 duty-free exemption and the next $1,000 worth of the goods you
purchased is subject to a flat rate of 3%. If the value exceeds
$1,800, the remaining duty will be determined based on duty rates in
the harmonized tariff schedule, which are generally between 0-10%
(except for clothing and textiles, which can be much higher, up to
25%).

Of course they should declare anything that needs to be. The customs agent may not even bother with the duty tax if applicable. But the OP doesn't want to be caught with undeclared goods.

I can easily imagine a designer purse being worth the VAT refund, and exceeding the duty free limit for the US. And it doesn't take the top 1% to buy such things.

Be sure to follow the rules closely. If she uses the purse or removes the packaging, she won't be eligible for the VAT refund. Have all the paperwork; a specialty purse store is probably used to VAT refunds and can guide you through the process. Having it shipped is also an option to consider; you get the VAT refund instantly but do pay for the shipping. Compare and decide.

Heathrow has points both airside and landside for VAT refunds. You must use the latter if the item is in bags you are going to check in.

Hey guys,

Thanks again for your replies! The information was very helpful. Just a quick update for those who may find themselves in a similar situation - the store we purchased from recommended we try to get the refund in Rome. We knew that we were technically leaving the EU From LHR, but arrived at FCO early so decided to give it a shot. Since we were carrying the purse in our carryon bag, we requested the VAT refund on airside customs at Terminal 3 G gates. It took all of 3 minutes for the customs officer to stamp the receipt and then Premier Tax Free to process the refund. All in all, pretty painless - here's hoping I see the refund on the credit card in the next couple of weeks!