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I am going to be traveling to Europe (Paris, London, and Rome) for the first time. I have only heard of VAT and I am not sure I truly understand it. What do I need to know about it and how do I keep track of it?

Not sure if it helps, but I plan to use my American Express Card the entire time I am there.

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VAT can be loosely compared to the US sales tax. It is added to every purchase, service, and more or less everything that requires payment. But since you'll probably be only shopping - consider it as "something like a sales tax". In Europe, prices are always quoted with the VAT already included.

The VAT itself can be up to 25% in some places, so its good to know that you can get some of it back, when you leave with your purchase.

For some (larger) purchases, you get the VAT back at the airport. It has to be over a certain amount per each receipt, and the store has to fill out a special VAT return form for you.

Make sure, if you're paying more than say 50-100 EUR in a single transaction, to ask the seller for that form. Sellers that provide this form have stickers showing "Tax Free Shopping" or "Vat Refund for Tourists".

Here's an example of how to ask for the refund:

France

UK

Everywhere else its similar.

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    Note that the refund only applies to stuff you export from the EU. – Peter Green Mar 1 '16 at 22:21
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VAT will already be included in all the prices that you see, and you can generally forget about it. It's illegal to quote prices to consumers without including the VAT, so the price you see is the price you pay. If buying items that you plan to take home with you, you should keep the receipts, and you may be able to reclaim the VAT for those items at the airport -- I'd arrive early to make sure you have enough time.

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