Originally Posted by
Bob'sYourUncle
The government is reimbursing you, not the retailer. If the retailer would give you a discount, they'd still have to pay VAT to the government on the discounted amount. Plus you have to *export* the goods to receive the refund, which is why you need customs certification.
http://www.ricksteves.com/plan/tips/vat.htm
Ideally — if you're charming, lucky, and have your passport handy — you can talk a merchant into taking the tax off the price right there at the store. But even so, you'll still need to get the proper documents stamped when you depart Europe.
I did get a 5% discount, and this is did mostly offset the VAT that was not fully refunded. So despite your emoticons, it works.