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How To Get A Tax Refund In Italy: The Ultimate Guide
For any purchase or transaction carried in Italy a VAT tax is applied. The IVA, VAT in Italian, is around 22% but it can vary according to the goods or services you buy.
Claiming a VAT Refund as a tourist in Italy
If you are a tourist going to Italy and you are planning for a big shopping trip, this section may be extremely valuable to you.
In order to claim a VAT refund in Italy there are 4 important conditions:
You should not be European resident, so you should not live inside Italy or any other European countriesYou should spend at least 175€ more or less from a single shop. This means that you are able to purchase one or more items from a shop but will not be able to get your VAT refunds if the total sum is less than the minimum amount requested to start this procedure.You should not wear or consume the product before leaving European Union.You should obviously have and save the bills of the shop, where you purchase the items from.
5 Things to Keep in mind
1) If you are traveling around European Union you should do this process, only in the last countries you are visiting.
2) Consider that in many European countries the threshold requested for a VAT refund may be lower as well. So, again, we strongly recommend to keep the bills of the purchase you do in any shop.
3) You cannot get VAT refund for services you consume. So for instance you will not receive VAT refund for your accommodation or travel expenses. As well as you will have meals, dinners or entrances to museums.
4) Carry with you some sort of identification ID with you or simply a copy of passport to be sure to be able to fill the requested forms.
5) You can repeat this process for every travel you make to Italy. There are no limitations.
How to claim a VAT refund?
There are many ways and many places where you can get the VAT refund. 1) From the shop There are many stores around Italy that offer tax-free products. These are very common in the touristic areas or in the city center of important towns in Italy. Please keep in mind that it is important to mention that you would like a VAT refund at the moment of the purchase. They will provide you a tax free form for tax free shopping. Be sure to buy from a store with tax free symbols like the ones attached below, if you want to take advantage of this option.
2) From one of the Tourism Tax Refund Company You can request the VAT refund form in one of the companies providing these forms such as Global Blue, Premier Tax Refunds, or Tax Refunds for Tourists. Global Blue is probably the most popular one inside the Italian airports. These shops are easy to find in the big cities and in the tourists’ hotspots of the cities. However bear in mind that you will have to pass the checks of the Customs.
3) From the Customs points These points can be found mostly in the airports, and we recommend to look around for those before leaving the EU. You should get a custom stamp for your VAT refund forms. The custom points in general can also give the tax refund form, needed to request your vat refund. You can also get these forms at the luggages’ check-in counters. Most of the controls are done at the customs. Here you need to be sure to have your passport, your ticket, and your tax refund form filled. Be sure to have the items you have purchased with you in the luggage. Some custom agents may demand to see the items. If it is all ok, a customs officer will apply a stamp on your VAT refund form.
When and how much money can you get back?
You can get your VAT refund directly from one the tourism tax refund company. There, you can decide to receive the money whether by cash refund or credit card. In case you choose a credit card some fees will apply. Moreover you will need to wait 2 or 3 months before receiving the money. Therefore we usually recommend getting your money back, in cash. In general you will get euros but you can ask to get the money in your preferred currency instead, such as dollars for instance.
Will you get all 22% VAT back in your pocket? This is unlikely. In general expect to receive a refund between 10 and 16% of the total VAT you have paid. To the original 22% you should deduct administrative fee and as well as the fee of the tourism tax company.
VAT Refund for Companies
For companies outside EU
If you are a company selling goods to Italy and you are based outside the EU, you should appoint a VAT representative in Italy. This person is in charge of VAT payments, issues invoices to the clients in Italy, is in charge of VAT compliance, its deduction and reimbursement. This VAT representative can be an individual or a company but it is equally liable with the international company for VAT obligations.
As an alternative, you can choose to get a VAT code in Italy. Check our article about sales tax in Italy for more information. In this case you will be responsible for being VAT compliant. Do you need a VAT representative in Italy to help you save money? Contact us for more information.
As a third way if you are planning to expand your business in Italy, consider opening a permanent company or a subsidiary. Check out our video about opening a partita iva in Italy.
From a business point of view, the convenience of these solutions may vary a lot depending on the income you are planning to make in Italy.
For companies within EU
If you are a company based in another european country and you are planning to sell in Italy, you can check the VAT direct registration process. Through this you can avoid establishing a company in Italy and get 100% VAT compliant.
Other tax refund for companies
If your company in Italy goes bankrupt you can renegotiate the debts you may have with the state, depending on your financial statements and the conditions that have brought your company to the bankruptcy.
Tax refund for individuals
Foreign individuals who have jobs in Italy, or are working for multiple employers at the same time (abroad and Italy). These workers often end up paying more taxes than what are due to the Italian government and their home country’s one. This is the so-called double taxation problem and you should carefully read the double tax treaty between Italy and your home country.