Jun 23 2009
Can Canadians claim tax refund from US shopping?
I was asked the question:
Can Canadians claim back the tax they paid on clothing items…etc when cross boarder shopping? If so, how can I claim this?
The answer is “depending on the country and depending on the goods”.
For instance, if you’re cross-border shopping in UK, you can claim back the VAT (Value Added Tax) you paid in UK stores. There’s a HMRC offices handling VAT refund in major UK airports, e.g. Heathrow and Gatwick. You can claim VAT refund by bringing the receipts, your passport and the goods (to prove that you’re taking them out of the country). There is a leaflet you can get from HMRC at the airport.
Most other European countries offer similar VAT refund programs. South Africa also has a similar VAT refund program for tourists. Here’s a more complete list of countries which refund VAT to varying degrees.
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Monaco, Netherlands, Portugal, Spain, Sweden, and the United Kingdom), Canada, Croatia, Czech Republic, Estonia, Hungary, Iceland, Japan, Liechtenstein, Luxembourg, Norway, Slovenia, South Africa, South Korea, Turkey, and Switzerland.
The main idea behind VAT refund is that governments do not charge the tax on exports of goods to other countries. So naturally, you cannot claim back the VAT on goods and services you consumed within the foreign countries, e.g. gas, car rental, meals and hotel etc.. However, VAT refund may apply to some services used by business travelers.
One thing to watch out for in VAT refund is the minimum spend. Most countries specify a minimum amount you must spend in a specific shop or chain store to claim a refund. The minimum amount ranges from US$ 25 in Sweden to US$ 340 in Switzerland. Because of this rule, mos tof my spending are not qualified for VAT refund.
Sadly, Uncle Sam does not offer any VAT or sales tax refund. Each state in US charges their own rate of sales tax. The tax is not refundable when you leave the country.