For more info:
www.agenziadogane.it
www.globalrefund.com

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IVA (VAT tax) in Italy

How to get the IVA (the state VAT, or Italian sales tax) on your souvenir purchases refunded

Look for the "Tax Free Shopping for Tourists" sign in stores and the process of getting the VAT tax refunded will be much simpler and smoother.
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. OK, 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, standarddized, 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 universally as VAT (for "Value Added Tax," which is essentailly what "IVA" means). Again, on most items in Italy this tax is a whopping 20%.

(Incidentally, this figure varies wildly across Europe, from 3% to 30%, but the E.U. is supposed to eventually settle on a common rate of around 18%. However, it's already years past the original implementation date of that plan.)

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.

Why you often have to pay the IVA (VAT) anwyay

First the good news. Since non-E.U. 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 $220), including the VAT. 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 eight years, 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 £30 ($50) in the U.K. to as much as €175.01 ($250) in France. You can find those figures—as well as lots more VAT shopping advice—at the website of Global Refund (www.globalrefund.com).

How to get the IVA (VAT) tax refund

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 the receipts when you are getting ready to leave the last E.U. country on your itinerary (in this case, "E.U. 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 Italy (and every other E.U. country) to the airport from which you depart; so if you're flying home from Paris, you can take your Italian (and French, and German, etc.) 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 with 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 another VAT refund desk inside the airport and deal with more paperwork there.

In some cases, they give you a cash refund on the spot (sounds great...but only if they can give you U.S. dollars—some can, but some can't, and if you're about to leave the country, do you really need a fisftul of extra Euros?).

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, it can take forever. The longest I've ever waited was 18 months for a few bucks back from some Irish Sweaters.

How to avoid the VAT refund rigamarole 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.

  1. Many shops are now part of the "Tax Free Shopping" network (look for a sticker in the store window, like the one in the photograph at the top of this page). These shops 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. In some cases, the store takes care of all the hard work—you fill out the form on the spot and they mail it back, then reimburse your credit card. More info at: www.globalrefund.com

  2. You can also often avoid the VAT by having your purchases shipped directly from the store, but this can get extremely pricey.

Note that none of this has to do with Duty Free Stores at the airport or Duty Free shopping. For the scoop on Duty Free, click here.

It also has nothing to do with U.S. Customs and how much you can bring back home without paying a duty (import tax). For intel on that issue, click here.

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This material was last updated January 2010. All information was accurate at the time.

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