Euro-shoppers need stamina for tax refund
Confusion about rebates causes some to leave their money behind

By Kitty Bean Yancey
Copyright 2001 Gannett Company, Inc.
Article date: July 13, 2001
 

The strong dollar -- at its highest levels in a decade against many European currencies -- means better deals on that Scottish cashmere sweater or French perfume purchased in Europe. Especially when you factor in refunds tourists can be entitled to on value-added tax (VAT), a form of sales tax (sometimes as much as 20%) built into price tags of European goods.

But even veteran Euro-shoppers say that actually receiving their refunds can be a nightmare.

"In my frequent travels abroad, I have yet to understand the whole VAT procedure," says Christina Orlovsky of New York.

"We never did seem to have the right copies of the receipts, or the right form to fill out or be at the right counter at the airport. Finally, we gave up in frustration," says Mel Goff of Colorado Springs, who traveled to London last fall.

Global Refund, a firm that facilitates refunds for a fee, says that American travelers in Europe left behind at least $50 million in unclaimed VAT refunds last year.


Problems abound

That's not surprising, because getting tax back requires knowing the rules and can mean rounds of paperwork, including having receipts stamped by a customs official and mailing VAT forms back to stores. Sometimes the refund never arrives.

"I've gotten burned so many times on this VAT thing that now I won't buy anything that's a high-ticket item" while traveling, says Pat Bell of Miamisburg, Ohio. Her most recent problem stemmed from failing to get the required customs stamp for a refund of about $200 on a Chopard gold bracelet bought in Austria. It wasn't her fault: Customs officers at the Vienna airport told her she must get her refund documents stamped at her point of exit from the European Union.

That was Paris, where her connecting flight from Vienna arrived too late for a visit to the airport customs checkpoint without missing her plane back to the USA.


Service charges commission

Some travelers circumvent that problem by getting a refund on the spot -- but that's rare and up to the shopkeeper.

Global Refund offers instant refunds in dollars at more than 700 locations. It's the largest of several companies that handle VAT-refund paperwork, working with more than 170,000 retailers in 28 countries. (When you fill out refund forms at Harrods in London or Galeries Lafayette in Paris, those are through Global Refund.) Its commission is on a sliding scale -- the less you buy, the more you pay -- and averages about 3%, says Colleen Cowan, Global Refund director of marketing for North America.

While some resent paying to get back money owed them, Cowan justifies it on the basis of convenience and having someone who will trace delinquent refunds.

James Zipursky of Omaha was pleased with the efficiency of Global Refund reps at Harrods until he saw that there was a commission and was told he had no other option, that "if you want a (Harrods) refund, you've got to pay them to get it. That would be akin to the IRS saying, 'If you want your income tax refund, you've got to pay someone to fill out the forms for you.' "

Another Harrods shopper is philosophical: "It is much better to have something refunded than nothing," says Jane Bonheim of New York.

Still, most of the 58 travelers who responded to a USA TODAY query about VAT-refund experiences were unhappy with the process.

Some feel European governments deliberately make refunds difficult, from the multistep procedure to slow lines at customs stations.

"My sense is that the countries encourage the confusion so as to keep the revenue," says Howard Hoffman of Granite Bay, Calif.

Global Refund's Cowan doesn't buy that. "It isn't in the governments' best interests to turn people off from spending," she says.

Paris-based Suzy Gershman, author of the Born to Shop guidebook series, also doesn't believe the red tape is a government plot.

"I think Americans don't understand that in some ways this is a medieval continent. Things don't work as efficiently. To get the simplest thing done is a mess."

Though a savvy shopper, Gershman has skipped VAT refunds. "Your time and sanity are worth more than fighting to get $50 back," she says. She also dislikes using refund services because of the commission.


Shoppers want changes

Travelers who shop would like to ring up changes in the system.

"Unless you spend huge sums of money, it is not always worth the hassle to get this money back," agrees Kathleen Gallagher of Glen Ellyn, Ill.

"The (airport) check-in process seems to take longer and longer, meanwhile the VAT is put off until last -- and never redeemed. Surely there is a better or more convenient place and time to do this," says Becky Simpson of Scottsbluff, Neb.

"It's not worth getting to an airport earlier than usual and getting irritated before you get on the plane," says Roger Casty of Winnetka, Ill. "There's plenty of aggravation ahead anyway."
 

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