I’ve gotten this question a multitude of times. So much so, I find myself constantly telling my friends the same things over and over again but in disparate and random orders. I figured if I made a blog post about it then I can send them here once and for all! Behold … Luxury Shopping Abroad!
So you are headed abroad, whether it’s Europe, Asia, etc., and you want to do some luxury shopping. First I must say the brands that are typically most worth while to shop abroad are Chanel, Hermes & Louis Vuitton.
Many of you may gripe with this, but the reasoning is simple (and I’m super Asian about it …). None of these brands have sales in terms of bags and shoes and accessories. In addition, the prices for these brands continue to increase year after year. In 2004, a classic Chanel Flap bag in Medium was somewhere around $1900 or $1800. Today it’s upwards of $5500 or more depending on size and material. You cannot get a “cheaper” Chanel bag today than you were able to get almost 13 years ago. The same goes for many Louis Vuitton & Hermes bags.
With that being said, and I won’t go into the finances of buying bags as “investments” since I know ADW also doesn’t appreciate this … I’ll just get straight to the point.
What you’ll need:
- Your passport
- A valid credit card (usually signed)
- Some patience
Every store will ask you for ID showing that you do not reside or are not a citizen of the country you are in. Passport is one of the only ways abroad that is accepted as showing that you intend to eventually (within 30 days) take the item out of the country. You will be charged the full price at the time you purchase the item, and you will be given a form that will tell you how much you get back.
What to ask for:
When you purchase something, just ask the associate for a tax refund form and they will generally know what you mean. You should always ask for a secondary copy of the receipt and form for your own records.
The forms come in many different shapes & sizes but usually has the itemized set of the thing or things you purchased as well as details on how much you’ll get back. You actually won’t get back this particular number, but I will explain more later.
You will also be given an option of whether you want this money back in credit (back on your card) or in cash. I always prefer the cash option because you can have cash on hand and you will know that you got it back, versus wondering 8-12 weeks from now whether you got the credit on your card or not. I have, in some instances, not gotten this credit back so the cash option is usually more secure in knowing you did receive the refund.
What to keep or hold onto:
The form you get, you will have to surrender. In some countries (mostly Asian countries), they will staple this to your passport. Fear not, they will rip it out before you leave the country for their records. This is why I mentioned above that you should ask for a secondary form for your own records. Usually the form you hand over will also include a receipt, and a credit card slip (the one you sign) so you often times end up with no proof of purchase at all. This is usually not ideal when you buy luxury goods, so remember to ask for copies!
Customs? Stamps? What?
If you are leaving the country (and in the EU case, leaving the European Union and not going to another EU country), you will need to bring your form at the airport and get a customs stamp before you can get your money back. Customs ensures that you are actually exporting the specific item that you have purchased and that you are indeed taking it out of the country and not getting a tax refund and keeping it within the borders. You should have your item accessible as Customs usually asks to see the item and of course, the item should match the one that’s on the tax refund form and the receipts.
Once customs has cleared this, they will stamp this form. You then usually have to take the form to another window / booth such as a travelex or currency counter to get your refund in cash. But keep reading …
Mail it in?
There are a few very common tax refund processors. Two of the biggest is Global Tax Free and Global Blue. They sound similar, but are very different. They both give you options to mail your refund in and get it back in your own country. You usually get a postage paid envelope to do this in. However, you must get a stamp first from customs, bring the form back to your own country (or sometimes you can do it at the airport) and send it via mail. You will get a check or credit back on your card within 8-12 weeks.
For me, this seems like a long time, so I prefer the cash option instead and getting it at the airport.
Once you get a stamp, you have roughly 3 months to mail it in if that’s what you want to do. Or if you don’t have time at the airport and you plan on going back within 3 months you can always hold onto it and get cash in hand later.
Many places will offer you “in town” offices to get your cash back but you usually get back a little less and still have to mail something out at the end of the day.
The most convenient way, I think, is to do it at the airport on your way out.
How much you’ll get back:
VAT (Value Added Tax) is usually something that is already included in the price of an item you buy overseas. For example, if you see a pair of sunglasses in Paris for 200 euros, that price already includes the VAT. In Paris, specifically, this is roughly 17%. Does this mean you will get 17% back? No, but it sure will say that on the form!
Many VAT refund agencies make money from these types of transactions, so after fees that are deducted because you are translating from one currency to another, and because you’re going to a counter, and because you opted for cash back instead of credit, etc. etc., you’ll typically get back around 5-7% less than the VAT amount. In Paris, this means you’ll get back around 11-12% instead of 17%.
In addition, many countries impose a minimum. You can’t usually get back anything for purchases under 150 Euros or equivalent so be sure to ask what the minimum in your country of choice is.
If you are a US citizen or permanent resident, you should read the customs forms carefully on your return trip and identify / call out your purchases. You are allotted up to $800 worth of tax free items and you must report any amounts above that for taxation in the US. This number is current as of 2017 but could change so read carefully.
Hope that helps!