Originally Posted by
PWMTrav
I think you may be confusing IVA refund to a consumer and IVA regulation/abatement/exemption for small businesses. This thread is regarding consumers receiving an IVA refund for goods purchased by a non-EU resident and intended for personal consumption outside the EU.
This is a confusing topic isn't it? Here is my imperfect understanding of it. In the USA each city has a sales tax. In San Francisco it's 8.5%. In NYC I think it's about 8.9%.
Italy doesn't let every city set its own sales tax rate. It has a national sales tax, and the current rate is 20%.
IVA and VAT are the same thing. It's just in the translation. IVA = Imposta sul Valore Aggiunta. In english, I guess I'd translate that into, "tax on top of the value of the thing." But others have done a better translating job, and translate IVA into VAT = Value Added Tax. Same thing.
I agree with
PWMTrav that there seems to be some confusion here.
alisyed8 has made some excellent comments. But Confcommercio is a business union, and part of what it does is to help businesses trim their taxes. Confartigianato is a similar thing. It's a small business association. It helps small businesses get started by arranging tax breaks.
That is generally not what VAT refund means for traveling. By law, if you are traveling in Italy and you are not an EU citizen, you do not have to pay the 20% sales tax. That means that you should always get things on sale at 20% off, if it meets a price threshold. Incredible! Italian bureaucracy just doesn't make it easy to do.
There are a few hitches to the process because anything bureaucratic in Italy is a pain. For example, when Italy passed the law that foreigners don't have to pay sales tax, Italian currency was still in lira. The law said that you don't have to pay sales tax if you buy something that costs more than 300,000 lira. Those were the days when you'd stop at a bar and a cup of coffee was 2,000 lira.
They haven't changed the law since then, and 300,000 lira is worth 154.94 euros today. If you go into a store and spend more than 154.94 euros you don't have to pay the 20% sales tax if you are not an EU citizen. You get a 31 euro refund, minus some commissions.
I've bought running shoes and would purchase a pair of running socks I didn't need just to get over the 154.94 euros bar, which reduced the price of the running shoes by 20%. If you go to a store and buy a pair of pants for 154.93 euros, you will not be entitled to get the 20% sales tax back. You will have missed it by one cent.
Here is the tricky part. The store fills out papers and you show that you have a foreign passport. That's usually going to be on a Gobal Blue form, a private company, and they take a cut. Then to redeem it you go to customs, and they take a 5-10% cut.
I'm pretty sure that if you wanted to, you can just take your receipt and the merchandise you bought down to the local Dogana, or Customs Office, and get most of the 20% sales tax back. In Venice, for example, the Dogana is at the tip of Dorsoduro, which is a little down from the Peggy Guggenheim museum.
There is always some new piece of sculpture in front of it. It was a frog for the last few years, and that made Venetians very unhappy. I kayaked to Ponte della Dogano 5-6 weeks ago, because to get to Venice you have to kayak across a busy stretch of windy, wavy open water, and Ponte della Dogana is the first place where you can stop paddling and rest after 30 minutes of work.
They had just put a new sculpture in front for the Biennale that is going on right now, but after dodging monster cruise ships I wasn't looking for the latest sculpture at Ponte Della Dogana. But I bet that if I went in there with my receipts and merchandise, after they stopped laughing, I would get the sales tax back in euros, and the Customs office would take only a 5-10% as a fee. That would be cheaper than Global Blue. That's just my guess, but it's the cheapest way to do it by cutting out a middle person.
If you want to read up about going to the Dogana for the maximum refund on the sales tax that you don't have to pay, here is the webpage. Just click on the english version on the upper right.
https://www.agenziadoganemonopoli.gov.it/portale/
After dealing with Italian bureaucracy, you would probably need to spend as much as you have saved on the 20% tax on a sedative, or a strong drink.
Then you have Global Blue. Bring a photocopy of your passport if you are going to shop. Never carry your passport when walking around in Italy. Store it in the hotel, and just carry a photocopy. If you go into a store and you hit the 154.94 euro mark, tell them you want the VAT refund. The stores that do this usually, but not always, have the Global Blue sticker in the window. If they do not, and they say they are not affiliated with Global Blue (or the minor alternative company whose name I do not remember), and they do not have any of the papers, you still do not have to pay the 20% sales tax if you are not an EU citizen.
On at least a half a dozen occasions when I was going to spend a significant amount like 1,000 euros or more I've gone into a store and they said they weren't affiliated with Global Blue, and didn't have the papers. I would show them a copy of my American passport (not my Italian passport) and tell them that if they don't process Global Blue, I want a 20% discount, because I'm not supposed to pay the sales tax. They would always counter, "OK, we will do it, but only if you pay in cash." And that's what I have always done. That has never failed. I don't do it in a brazen way, but sort of at the shops closing time. In other words, I'm not paying you the 20% sales tax that you are not entitled to, that you are going to put into your pocket and keep, although I don't say that.
I'm sure that others know more about this than I do, but I've never heard of the Global Blue fee being 50%. I suspect it has to do with what you are buying, where you are redeeming it, and how many middle-people you go through.
If you are buying a fabulous painting for many thousands of dollars, maybe you don't want to go through Global Blue to get your 20% back and give them a cut. You might want to go the Dogana, or Customs Office for that. Of course, if it's that big of a purchase when you get back to your home country, if it's the USA they will hit you with a tax when you arrive.
But to go to the Dogana because you bought a $200 pair of jeans, instead of using Global Blue just to save a few euros isn't worth your time and effort. Do it in the city or in the store.
i know that there are some stores that have stickers in the window that say something like, "Tax Free Network Store." They must by law charge you the 20% Italian tax, but then they hand you a check for 20% back at the same time that you redeem at any Customs office. I know there are also some stores, but I don't know how to find them, where everything is done at the counter, and the refund comes on your credit card and you don't have to do anything.
Always do whatever you can do to get the refund put back on your credit card rather than them handing you euros, unless you are going back to Europe soon. Otherwise, you'll have to go to one of those den of thieves places like Thomas Cook to convert your euros into your local non-EU currency, and they are going to take 30% of the money in hidden fees, no matter what the advertisement says.
When you get your VAT refund, they will ask if you want it in cash or put on your credit card. Unless you are going back to the EU soon, always choose on the credit card. I came back from Italy July 25th, and suspected that the US dollar was going to tank. It was going at about 1.04 dollars per euro. I took about 500 euros out of the ATM, just in case. Now the dollar is so weak that it is at 1.19 per euro, meaning you have to spend almost 19% more to buy anything if coming from the USA, which offsets the VAT refund.
Tell them to put the refund on your credit card. If they ask, "do you want us to put it in dollars, or in euros?"
Always say in euros, never in dollars. Many times if you buy something in a store you hand them your credit card and they ask if you want to be charged in dollars or euros. Always say in euros. That way your credit card company makes the conversion at the correct rate at no fee, rather than the store charging its own completely made up ridiculous rate, where they might say that $1.40 equals one euro, and add a surcharge conversion fee. Always say you want to pay in euros, and let your credit card company deal with it.
I live there enough that I may buy a pair of shoes, a shirt, pants, and usually don't hit the 155 euro mark in a day, but this is about what I know about the process; it's a pain in the butt to do it at the airport when a tour bus just arrived in front of you and is in a line, and there are long lines at security, and your plane is leaving in an hour.
Take care of it in the city before going to the airport. There are Global Blue stores all over in most of the major cities. Don't leave it as something to do at the airport. That's the most important thing in my opinion: don't leave it as something to do at the airport.
I'm pretty sure that others know more about this than I do, because I always travel with nothing but a small carry on and don't buy a lot of things so I only use the VAT refund process occasionally. But this is a really important topic. If you can find a store that advertises, VAT Off Service, then you never have to pay the 20%. You just get the 20% off when you buy. If you are a big spender going to Italy, there is some type of card called Shop Tax Free Card, or something like that, and it means that whenever you go into a store that offers Global Blue, which just about means anyplace, you get the 20% deduction on the spot, or something like that. Although I live there about half the time it seems, I don't have it, but that's my understanding of it. Others may know more.