In Israel, one of the powerful sales techniques used among higher-end souvenir shops is telling the tourist they will receive a “VAT refund at the airport.”
VAT stands for Value Added Tax, which currently is 16%. The VAT is what most of our travelers would know as sales tax, and is added to every transaction that involves money. However, certain services and items related to tourists are exempt from VAT, if the proper procedures are followed.
In the tourist trade, vendors who are appropriately recognized by the government offer a special receipt that allows the buyer to get their VAT refunded for each item they take out of the country. However, this only occurs if:
- a certain purchase threshold is met, and
- if the shop is certified, and
- if the shop actually provides the appropriate form to the buyer, and
- the buyer shows the item at the VAT desk at the airport.
Up to this point, everything seems more or less reasonable. It’s a hassle, and some buyers don’t know the rules, or don’t receive the proper form, but it’s pretty nice to get 16% of the purchase price back.
The process is as follows:
- Shop in properly certified shops, which display a green TAX REFUND logo (see above).
- Purchase enough goods at the same time to meet the spending threshold. (we’ve heard different numbers, beginning at $100.)
- Get the proper form and keep the receipts.
- Do not pack the Duty Free item until it is presented to the VAT clerk located inside the departure hall at Ben Gurion Airport, prior to the first security checkpoint. After the clerk verifies the item and stamps the form, the item may be packed in checked luggage or hand carried. Jewelry is verified only beyond passport control at the Change Place VAT desk in Duty Free.
- After passing all security checks and passport control, present VAT refund forms at the Change Place VAT desk in the Duty Free hall.
- Receive a 16% rebate on your purchase(s) in dollars or shekels. You can receive the refund via credit card also, but we’ve been told it takes up to three months.
- Fly home happy with your purchase(s) and the extra money in your pocket.
Sounds easy enough. And it is, as long as you follow the procedure exactly. However, there is one catch: At step 6, don’t expect to get 16% as you were told by the sales clerk because there is a hefty 20% commission, which brings the actual refund to 12.8%.
We’ve been told there is a sliding commission scale, depending on how much VAT has been paid. Unfortunately, the Change Place website provides no such information. So, BUYER BEWARE! If your budget is dependent upon the VAT REFUND, you need to recalculate what you can afford to spend.
*This page does not constitute legal or financial advice specific to any individual’s situation. It is a general explanation of Discipleship Travel LLC’s understanding of the VAT refund system in Israel. Your experience may differ at certain points. The shopper assumes personal responsibility to verify the proper procedure for receiving a VAT refund.
**Any shopping expenses incurred are the responsibility of the shopper and are not included in the tour price.