How to avoid vat

Written by stephanie ellen
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How to avoid vat
VAT is a type of sales tax. (Europe image by margouillat photo from Fotolia.com)

Value Added Tax (VAT) is a tax on goods and services in Europe. It is similar to the sales tax in the United States. You may have good reason to want to avoid paying VAT: with the standard VAT rate skyrocketing to 20 per cent as of 4 January 2011, the prospect of saving a huge chunk of your money may seem very attractive. There are several legal ways you can avoid paying VAT.

Skill level:
Easy

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Instructions

  1. 1

    Limit your purchases to tax-free goods and services. VAT is added to a variety of consumer goods and service, but many essentials items are not taxed at all: food, postage stamps, books, newspapers and baby clothes are all VAT-exempt or taxed at a 0 per cent rate. Click on the Business link in Resources to see which goods you can purchase without paying VAT.

  2. 2

    Purchase the item from a non-European Union (EU) country and have the item shipped to you. This option makes sense if the shipping cost is less than the potential VAT on the item. For example, a £240 necklace purchased in the United Kingdom would cost £200 outside of the EU. If the shipping cost is £10, you save £30 on the transaction.

  3. 3

    Visit another country and take extra luggage. Pack the luggage with consumer goods: as long as you hand-carry items (like your luggage), the luggage and contents generally are not subject to taxes. (There are exceptions for large amounts of money: check with customs officials in your country for guidelines). You should take into account the extra cost of checked baggage. Ask airlines about weight restrictions.

Tips and warnings

  • Make sure that you are purchasing an equivalent product if buying abroad. For example, the North American version of an electronic gadget will have a different power need than the European equivalent.

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