Tax-free shopping refund

What it means

Tax-free shopping refund lets travellers resident outside the EU reclaim Slovak VAT on goods bought in Slovakia and taken out of the EU in their personal luggage. It is a special case of the VAT exemption on exports.

It applies only to goods, not services, and only if the purchase on a single receipt exceeds the statutory minimum amount. The goods must leave the EU within a set period after purchase and must be for the traveller's personal use, not for business.

Sellers are not obliged to offer tax-free refunds. If they do, they must follow the statutory procedure, issue a special document and refund the tax once the traveller proves export with a confirmation from customs at the EU exit point.

How it works in practice

At the time of sale, the seller issues a document with details of the traveller, the goods and the tax. When leaving the EU, the traveller presents the goods and the document to the customs office, which confirms the export. The stamped document is then returned to the seller, directly or through an intermediary.

Many shops work with specialised companies that administer the process and pay refunds to travellers, for example at the airport. They charge a commission, so the traveller gets back somewhat less than the full tax.

In its accounts and VAT return, the seller first taxes the sale normally and adjusts the tax once it has the export confirmation and has refunded the traveller. The sale is then treated as an exempt supply, so careful record-keeping of all documents is essential.

What to watch out for

Without proper customs confirmation of export, the seller cannot apply the exemption and risks bearing the tax as a cost. In an inspection it must be able to show the goods actually left the EU, and the documents must be kept for the statutory period.

The system is open to abuse, for example through forged confirmations or purchases for resale. Sellers should verify the traveller's identity and residence and be cautious with unusually large or repeated purchases.