IVA (VAT tax) in Italy
How to get the IVA (the state VAT, or Italian sales tax) on your souvenir purchases refunded
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Look for the "Tax Free Shopping for Tourists" sign in stores and the process of getting the IVA (VAT tax) refunded will be much simpler and smoother. • VAT 101
• VAT refunds
• ResourcesOK, first the bad news. The IVA (VAT) national sales tax in Italy is 20%.
One tiny bit of good news for math-haters: Unlike in America, where sales tax is (mostly) a state-by-state phenomenon that gets added on at the cash register, in Italy sales tax is national, standardized, and already included in the price tag.
That is nice, in that there's no math to do in your head, but it's awful for two reasons.
Why you should not have to pay IVA (VAT)
This national tax rate is called IVA (Imposta sul Valore Aggiunta) in Italian, but is also known (as are all such national taxes around the world) by its English-language acronym VAT (for "Value Added Tax," which is essentially what "IVA" means). Again, on most items in Italy this tax is a whopping 20%.
(Incidentally, this figure varies wildly across Europe, from 16% to 25%; for more on other countries, see the VAT page on our sister site ReidsGuides.com.)
The real bummer, however, is that you end up paying this VAT automatically, even though, as a tourist, you are not obligated to pay the VAT.
First the good news. Since non-EU residents technically do not owe VAT, a system has been set up to refund these ill-gotten taxes to you.
Now for some more bad news, the refund system doesn't kick in it unless you drop a big chunk of change all at once in one store. In Italy, that amount is precisely €154.94 (roughly $212). That means you have to spend at least €154.94 in a single shop to get a VAT refund.
(By the way: That truly odd number make a lot more sense when you realize that €154.94 is equal to 300,000L in the old currency, the Italian lira. Why, after nearly a decade, they have yet to round it up to €155 is beyond me.)
There also lots of good, straightforward advice on the English-language pages of the Italian Customs Bureau site (www.agenziadogane.it).
Note that the VAT tax spending minimums for refunds is different in other E.U. countries—in fact, it varies wildly from as little as nothing in Ireland and £30 ($48) in the U.K. to as much as €175.01 ($240) in France. Again, you can find details on those figures at our sister site ReidsGuides.com.
Getting the VAT refunded involves telling the store clerk you're going to be asking for the VAT back (they'll give you receipts and forms to carry with you) then filling out more forms at the airport.
Note that you redeem all your receipts at once, when you are getting ready to leave the last EU country on your itinerary (in this case, "EU country" means all of Western Europe except Switzerland, Norway, and Iceland; and all of Eastern Europe minus Bulgaria, Romania, and Turkey—the latter three are up for membership).
That means bring all your receipts for every EU country to the airport from which you depart. So if you're flying home from Paris, you can take all your Italian, German, Spanish, and French receipts to the customs agent at Charles de Gaulle airport.
Before you even check in for your flight, you must visit the local Customs office at the airport with the receipts and the items you purchased—this is in case the officer wishes to inspect your purchases (which rarely happens).
The Customs agent will stamp your receipt and give you further directions—usually, after going through check in and security, you head to a private VAT refund desk inside the airport and deal with more paperwork there.
In some cases, they give you a refund on the spot (taking a fee of anywhere from 4% to 13% for the service, depending on how much you are getting refunded).
The problem is, while they can sometimes give you a refund in your home currency, in my experience they almost always give you the refund in the local currency.
So there you are, about to leave the country, and they hand you a stack of Euros. You now have all of the 20 minutes before your flight boards in which to try to spend it. (Duty Free shops and other airport impulse-buy stores must adore this system.)
More often, the stamped receipt is sent back to the store and your reimbursement is credited against your credit card or sent to you by check. Either way, this can take forever.
Typical waiting time for a VAT refund is 4–8 months. The longest I've ever waited was 18 months for a few bucks back from some Irish sweaters.
How to avoid the VAT refund rigmarole still get the money back
There are two ways around going to all the efforts mentioned above to get the IVA (VAT) refunded to you. Many shops are now part of the "Tax Free Shopping" network (look for a sticker in the store window).
These shops either:
- a) Issue a check along with your invoice, which—after you have the invoice stamped at customs—you can redeem for cash directly at the Tax Free booth in the airport (usually near customs or the duty-free shop), or you can mail it back to the store in the envelope provided within 60 days for your refund.
- b) In some cases, the store takes care of all the hard work—you fill out the form on the spot at the register and they mail it back for you then reimburse your credit card.
There is lots of VAT shopping advice at the websites of Global Blue (www.global-blue.com) and Premier Tax Free (www.premiertaxfree.com)—two of the companies that are likely to be running that booth past airport security where you get your refund.
Again, there's lots more good advice (in English even) at the Italian Customs Bureau site (www.agenziadogane.it).
- So wait: What's "duty free shopping" then?
- U.S. Customs limits and requirements
- Shopping tips
- Top gifts and Italian specialties
- The fine art of haggling
This material was last updated February 2011. All information was accurate at the time.
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