How to deduct tax from what you buy on holiday in Spain

Many people may not be aware that if they’re from non-EU countries, they have the right to claim VAT (called IVA in Spain) back on some of the products they buy while in Spain on holiday. 

This means that Brits, Americans, Canadians, Indians, Australians as well as residents from many different countries outside the EU can benefit from tax-free shopping in Spain. 

It does not apply to services – for example you can’t get the VAT back on your restaurant bills, car rental, theatre tickets, flights or train tickets. But, it does apply to fashion items, cosmetics, jewellery, technology and some food and drink items.

You can save up to 21 percent of the cost of certain goods. The amount on food, as well as glasses and sunglasses is 10 percent, while the amount of medicines and pharmaceutical products, books and magazines is 4 percent.

READ ALSO: Spain starts to reap rewards of one Brexit benefit

In recent years, the Spanish government removed the minimum amount of €90.16 that previously applied to Tax-Free Shopping transactions made here.

This means, that however much you spend on shopping in Spain, you the right to claim back the VAT.

How does it work?

VAT is not automatically deducted if you’re a visitor to Spain, you have to apply it and then it will be refunded to you.

At the time of purchase, ask the retailer for a VAT refund form, which must be signed by both the retailer and you. If they don’t speak English, ask them for el formulario DIVA (the Spanish government’s tax-free form).

Remember, you will need to bring your passport or another form of ID and proof of residence to the shop with you to be able to qualify.

The form will typically ask for your personal details, as well as your contact details such as e-mail or phone number.

The only part of Spain where you cannot get a VAT refund is the Canary Islands. Deducting VAT from goods bought in the Canary Islands isn't possible as the archipelago has its own system called IGIC. However, the Canary government is planning its own tax rebate for non-EU tourists soon.

Claiming back VAT at the airport

At the time of leaving Spain, and always before checking in your luggage at the ferry terminal or airport, you must electronically validate your electronic reimbursement documents for your purchases. To do this, go to the assigned desks at the airport or the Tax-Free offices.

If you were not able to get the forms from the shop, you can still claim back VAT when you leave Spain, just make sure you keep the full receipt. 

Small retailers in Spain sometimes don’t have the time or resources to carry out the tax-free process, some even prefer to offer a discount to avoid the paperwork.

Whatever paperwork you have, make sure you go to the airport early with your purchased goods, passport and boarding pass to get your documents stamped by customs before your flight. 

Some Spanish airports also have machines that allow you to carry out the process yourself, although for this you will need the DIVA form to do this. 

Once you have your form validated at customs you can get a refund either from a tax-free management body located at departures or through the shop where you made the purchases. You will typically receive refunds after 15 days by cheque, bank transfer, or straight onto your credit card.

One important point to make is that if you are continuing on to another EU country after Spain, you will not be able to claim your refund until you leave the bloc.

Using a company

Alternatively, you can use a company to sort out the refund for you. Using a tax-free company will cost you some commission, but it will make the process go smoother.

Global Blue is one of the main companies and has refund offices in the following locations across Spain:

Algeciras, Alicante Airport, Barcelona Airport, Barcelona, Benidorm, Ibiza Airport, Lloret de Mar (Catalonia), Mallorca Outlet, Madrid, Madrid Airport, Málaga Airport, Marbella, Palma de Mallorca, Seville, Tarifa- Cádiz, Valencia and Viladecans (Catalonia).

Other companies include:

- Caja de Ahorros y Pensiones de Barcelona
- Open Refund SL
- Comercia Global Payments Entidad de Pago SL
- Financiera El Corte Inglés, EFC
- Travel Tax Free, SLU
- S21 TAX FREE, SL
- KEEP SHOPPING TAX FREE, SL
- HISPANIA TAX FREE, SL
- B FreeTax Back SL
- Safety Tax Free España, SL
- Wiblink, SL

There are also a number of apps that can make the process easier, including Global Blue and another company called Zapptax, which also takes scanned forms and can inform the retailer.