Not that long ago I had the chance to look at a
website containing an endless list of complaints made by tourists that had attempted to complete
the tax free procedure unsuccessfully. And I sensed a common theme to all those complaints:
lack of information on how the system works. We are recording now this video to prevent you
from falling into the same traps we are going to discuss, the main mistakes made by those
failing to obtain their tax back. And we are going to reveal a little known option that can
make you have more Euros back in your pocket. Hola, qué tal, hello I am Tony Gálvez
from Road Trip Spain and Portugal, where we help you plan the perfect
trip with practical information, insider tips and our very own travel
guides. So, this is the list of mistakes, the last couple of mistakes are the ones
that make people fall at the last hurdle. You cannot imagine how many people we met
that gave up on having many euros back due to being unaware of the existence of the tax
free program. In a nutshell, every time you buy something in Spain, part of the price you pay
includes IVA, VAT, value added tax, the main tax paid by consumers in Spain. When you leave Spain,
tourists can claim the tax they pay back through the VAT refund program, also called tax free.
Now you know of the existence of the program! The second mistake is not to understand
that while you've got the right to get the tax back, you will have to sweat blood
to get it. The process of obtaining VAT back is an obstacle race. Is it impossible
to complete? Not at all, but you will have to overcome several obstacles.
Here, persistence is the name of the game. The third mistake is not knowing who can
claim the tax back. What determines who can claim their tax back is not their passport, but
their country of residence. The tax-free program is directed to European Union non-residents. Your
nationality is not relevant here, what matters is that you live outside the European Union. To give
you an example. Myself, holder of a Spanish passport, while I lived for many years in Brazil was
entitled to claim tax free in Spain. But right now, Cecilia, my partner, holder of a Brazilian passport,
but resident in Spain, cannot claim the tax back. You can claim tax back for purchases of any
product you intend to take back home, new, unused. These products can be electronics, clothes,
jewelry, watches, cosmetics and so on. But you cannot claim tax back for services. You will not
get your VAT back for things like accommodation, meals at restaurants, tickets for tourist
attractions, car rental and any other type of service. This mistake shouldn't
be a problem for most tourists, but you should know the purchases for
which you are claiming VAT back must have been made in the period of 90 days
before your departure from the European Union. Another common mistake is to think that
tax-free rules are the same for all the European Union countries, they are not. Some countries set a
minimum purchase value for being entitled to the VAT return, other countries such as Spain, do not
impose a minimum value. Study well the rules of each country where you intend to make purchases
for which you will be claiming the VAT return. Another classic mistake that generates
quite a lot of frustration is to think you will get back the full amount of VAT you
paid. Dome people even think they have been cheated. It is important to understand that
the tax free program does not contemplate a 100% refund of the tax paid. There is a
legal limit that sets the amount you will get back. In Spain it's 15.70%. On top of
that percentage you need to build in the commission charged by the company responsible
for the VAT return, an amount that it is also regulated by law. The final calculation is
complex but you can estimate that for a purchase of €100, including 21% VAT, you will
get back approximately between 10 and 13%. The tax return procedure includes three
compulsory steps: the purchase of the products , the validation of those products, usually
carried out at airports, and the refund of the tax paid. The order can be altered but if
you don't fulfill the three steps, there is no tax refund. In some cities you can get
the money back in the center of the city before the day of your departure, but you will
still have to validate the purchases at the airport, if you don't do that you will have to
give back the money you have been advanced and you might also be subject to a fine. The next
three mistakes are related to the moment of purchase. One of the essential steps to be entitled
to get your tax back is that, at the moment of purchase, you let the shop know that you intend
to claim tax free. It is essential because the shop needs to generate a form that will make that
claim possible. Without the form there is no VAT refund. The shop where you will make your purchases
will want to see your original passport. Without it, the tax-free form cannot be generated.
Copies are not accepted, only the original passport. One of the reasons why you don't get
all the tax back is because there is a company that acts as an intermediary between you and the
Spanish Inland Revenue, a company that charges a commission for the services they carry out. What
few people know in particular, because the intermediaries are not at all interested in making this
fact known, losing part of their business, is that you can deal directly with a shop, getting rid
of the intermediary. The Spanish Inland revenue is quite clear: the traveler can choose that the
shop be responsible for the direct refund of the tax paid to them. The problem is that in real life
things are quite different. We went out to check quite a few shops and had all types of replies.
Apple, for example, doesn't want to hear of dealing directly with the consumer, it's the middleman or
it is not. Ikea makes payments to European bank accounts, which is not of much help to foreigners.
The only positive answer we had was from retail giant El Corte Inglés. They do deal with tax-free claims
directly with the consumer, no middleman needed, but they stressed that it is vital the customer
makes it clear at the time of purchase they want a commission-free tax return when making
the purchase. In smaller shops you'll find those willing to deal with a tax refund directly, another
more inclined to involve an intermediary. Always ask. We are not specialists in tax law, we would
love to hear from an expert whether a company like Apple can refuse to deal with a direct tax
refund given that the Spanish Inland revenue is quite clear: it is the consumer's choice not the
shop's. The feeling we have is that the companies -some companies- abuse the fact that most foreigners
are not familiar with their rights to enforce on them they need to deal with a tax claim through
a middleman. The next steps we're going to mention are related to the validation step. With this
step the Spanish tax authorities acknowledge the purchases can be contemplated in the tax free
program, an essential step for you to get your tax back. The validation of your purchases must always
be made in the last airport before you leave the European Union. It doesn't matter whether you're
taking a direct flight back home or a connecting flight, validation must always take place at the
final airport. Let's see several examples. You are flying from Barcelona to Boston. The validation
should be carried out in Barcelona. You're flying from Barcelona to Miami, with a connection in
Madrid. validation should be made in Madrid. You are flying from Madrid to New York, with a
connection in Paris. Validation should be made in Paris. Or you are flying from Madrid to Toronto,
with a connection in London. Validation should be made in Madrid, since the United Kingdom no longer
forms part of the European Union. Sometime ago a follower of the channel told us that one of the
companies intermediating the tax free program told her that, in the case of a connecting flight,
validation could take place in the first airport, not in the airport where the change of plane would
take place. According to that version, in a flight Madrid Amsterdam Hong Kong, validation could be
made in Madrid. As the intermediaries, the middlemen, are an interested party, we did what we always
do, go to the source. We went to the VAT return office to ask, and the answer we got was adamant:
validation always in the last airport before leaving the European Union. In the last example
we used, validation would have to be made in Amsterdam. From what we've just explained follows
that, if you plan on going back to your country with a connecting flight, you should make sure
it is not a short connection, you will need time to warranty the validation can be made. The
authorities understand that you are responsible for counting with enough time for dealing
with that procedure at the final connecting airport. Even if you're not going to have
a connecting flight, if you are thinking of requesting tax free, make sure you arrive at the
airport with sufficient time to deal with the procedure. The queues at the VAT refund office can
be lengthy and slow depending on the time of the day. In all the major Spanish airports you will
find electronic key kiosks scattered throughout the terminals, where you can try to validate your
purchases automatically, without having to go to the VA refund ofice. Those kiosks, pay attention,
can only be used to validate purchases made in Spain. If you intend to validate purchases made
in other countries as well, you will have to go to the tax refund office. The way the kiosks work
is quite simple. You select the language of your choice and follow the instructions. You will have to scan
the tickets related to the purchases for which you intend to claim tax back. If you use the kiosks
two things can happen during the process. You can see an okay message informing that the validation
was carried out correctly. If that is the case, you just need to let the shop or the intermediary
company know, following the instructions you must have received at the time of purchase. Or
you can see a message informing that the purchases cannot be validated automatically. In
that case you will need to continue the process at the VAT refund counter. Its location is
usually well signposted, not far from the kiosks. Not all airports have a 24-hour
VAT refund office, check the times in the airport you intend to use, in particular if
you are catching a late or an early flight. And let's deal with the final two mistakes,
the ones that spoil the party for many people. An absolute classic you placed your
purchases in your luggage, checked it in and the digital kiosk demands that you go to the VAT
refund office. And at the office they will want to see the products for which you are claiming the
tax refund. If the products are in your checked in baggage you will not be able to validate the
purchases and you will be unable to complete the procedure. You could either place your purchases
in your checked in luggage, but check it in just after completing the tax-free procedure. Or, in the
case of small purchases, carry them on your cabin luggage, but always keep in mind there's a limit to
the amount of liquids you can carry on your cabin luggage. And yes, another classic mistake.
Nonresidents can claim VAT back on the understanding that those products will be
taken out of Spain and used back in their countries. For that reason, the tax authorities
will want to see the products looking new or as new. What does as new mean. It means they
must be in their original box or wrapping, in the case of clothing they should still have
all the tags. In theory, your purchases shouldn't have been used. You could always carefully remove
the cell phone you bought from the box, after all, you'll want to check it is working, and place it
back carefully again in the box, that should be acceptable. We talked recently to an officer
from the tax refund office, who explained to us that not presenting the purchases as new was
one of the main reasons for a failed validation. We don't know, we really don't know where the
limit from as new and used is but if you want to get your tax back try all you can to make
the products look new, with no use at all. As we mentioned, not cutting the labels in the case
of clothing would be good practice. That was our review of the traps that might make you fail
in your attempt to obtain your tax back, but we are sure there will be someone out there with a
question we haven't dealt with here. So go ahead and ask in the commentary box, if we know the
answer we'll be delighted to help. One question we didn't deal with in the video is what happens
when you leave Spain in a cruise ship departing from the European Union. Cruise terminals in
Spain haven't got a permanent tax-free office so you should seek advice from either the cruise
company or your travel agent on how to proceed. And when it comes to saving money, there are quite
a lot of measures you can take on your visit to Spain. On the video we are showing you now on
the screen we present quite a few ideas on that regard, make sure you watch it. we are going to
that video where we are already waiting for you.
