If you’ve ever looked closely at a shopping receipt in Italy, you’ve probably seen the acronym “IVA” at the bottom and thought that Iva person really had her fingers in with lots of companies… Okay, you probably didn’t think that last part. But in case you’ve ever wondered just what that “IVA” thing was, I’m here to tell you – and also explain how keeping track of those receipts could save you money the next time you travel in Italy.
“IVA” is the Italian acronym for “VAT,” which frequent travelers may be more familiar with as the “value-added tax” that gets added onto many of the things you’ll spend money on while on vacation. All countries in the European Union have a VAT that they levy on purchases, although each country sets its own rate. The VAT rate in Italy is (at present) 22%, and the tax is applied to accommodation expenses, meals, and merchandise. Since those are some of the main expenses for tourists, and since 22% isn’t a small amount, this VAT thing can really add up.
The good news for those of you who aren’t EU residents is that you can if you want to, get some of that VAT money back at the end of your trip.
Technically, as a tourist from outside the European Union, you don’t need to pay the VAT in the first place – but because it’s incorporated into the listed price of everything, and because not all merchants are prepared to just knock the VAT off at the cash register, you could end up leaving quite a bit of money behind in Italy that you don’t really need to.
(I should note that I’m one of the people who’s always just left that VAT money behind, because, as you’ll see, it’s kind of a huge pain in the you-know-what to get it back.)
What Expenses Qualify for a VAT Refund in Italy
While you’re likely to spend a pretty penny on accommodation in Italy and (if you’re me) food in Italy, sadly those are things that you won’t be able to get a VAT refund for. The only exception to this is if you’re traveling in Italy for business, but the rules for business travel are generally quite different than the rules for leisure travel. In other words, you’d best check with an accountant to get the most recent details on that.
Any other purchases you make in Italy where you see an “IVA” being added, however, are eligible for a VAT refund at the end of your vacation – including souvenirs, clothing, and even some services. Keep in mind that there’s a minimum amount required in order to claim a VAT refund which varies depending on the country, but as this is being written the minimum purchase amount to submit a VAT refund in Italy is €154.94 – and that’s money spent at one time, at one store. That means you’re better off finding one place where you can buy several of the things you were thinking of getting rather than spending €30-50 at each place, but of course, this isn’t always possible.
There are additional rules about claiming a VAT refund, including that anything you bring back out of the EU is for personal use only, carried in your luggage, goes through customs, and leaves the EU within three months of the date of the purchase.
Ideally, the merchant from whom you’re buying that pair of Prada shoes or ceramic olive oil urn will remove the VAT from the purchase price before you even hand over your credit card, just because you showed your non-EU passport. But in reality, some merchants find this to be a hassle or have no earthly idea how to do it – so be prepared to keep track of all your receipts. Oh, and even if the merchant is willing to take the VAT amount off the purchase price, you’ll still need to get the receipt stamped at customs before you leave the country, so you’ll need to keep track of those receipts whether you get an immediate deduction or request a refund later on.
(And now you may be starting to realize why so many people just don’t even bother looking into a VAT refund.)
How to Get a VAT Refund in Italy
If you can’t get the VAT amount taken off the price before you pay for your goods, you still need to make sure you have a conversation about the VAT with the merchant before you leave the store. The merchant will need to give you a separate receipt, in addition to the one that comes out of the cash register – it’s called a “fattura,” and it should include your name (so keep that passport handy) and the amount of the IVA (VAT) tax for that purchase clearly marked. If there are blanks on the “fattura” for you to fill out, make sure you ask what information goes into what blank space. Keep all forms and receipts, including the additional “fattura” receipts, in a secure place.
When you’re getting ready to go home, collect all your receipts and forms – along with all the stuff you bought that’s listed on those receipts – and bring them to the local customs office in the airport from which you’re departing. You may get lucky and be able to easily find the customs office, not to mention the special VAT refund line, but if you’re intent on getting the refund then make sure you get to the airport even earlier than you’re accustomed to.
When it’s your turn at the front of the special customs line, you’ll present all your receipts (and your purchased goods for inspection, if that’s required) and they’ll stamp everything. But wait, you’re not done yet. You then need to get those stamped receipts back to the merchant where you initially purchased the items.
No, I’m not joking.
Many bigger merchants work with companies with branches at airports and other international gateways in Italy (Premier Tax Free is one of the most common), which means you’ll need to take your stamped receipts to the appropriate agency’s office in the airport in order to get a refund on the VAT. You’ll either get a refund in cash right then, or they’ll refund your credit card. They take a small cut of the total amount, but they usually make the process go infinitely more smoothly.
If, on the other hand, the merchant from whom you made your large-enough-to-qualify-for-a-VAT-refund purchase doesn’t work with one of those in-airport agencies, then you’ll need to mail your receipts back to them directly, either from the airport before you leave or from home. As you can imagine, this is a gamble, as you may never see a refund or hear from the merchant again. Even getting a refund from the merchant may not be ideal, as it could come as a check that’s in euros – which could require a fee from your local bank to convert it into dollars.
The bottom line is that even if you’ve done everything right, you may still end up with nothing at the end of it all. Well, nothing except a lovely pair of Prada shoes, that is.
Tax-Free Shopping in Italy
One very easy way to avoid all this hassle is to shop in stores that display a “Tax Free Shopping” or “Euro Tax Free” sign in their window. To be sure, this won’t cover all the shopping you’re likely to do in Italy, but if you can make all or most of your big purchases in shops that are ready and willing to help you get your VAT refund easily at the airport before you go home.
In these “Tax Free Shopping” stores, you’ll need to show your passport when you make your purchase, and you’ll get a check for the VAT amount along with the receipt for the goods. When you get to the airport, you’ll still need to go through the rigamarole of finding that special line at the customs office and having the receipts stamped, but then you’ll take the receipts – and that check the merchant gave you – to the “Tax Free” booth in the airport where they’ll give you cash for that check. These booths are typically near the airport’s Duty-Free Shop.
>> For more information, check out the Italian customs department’s website. It’s detailed – almost too detailed – but after a read-through, you’ll certainly understand how complicated the process is.
>> On a related note, make sure you know how much you can spend in Italy duty-free before you do any shopping.