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How foreign citizens can save on purchases in Russia

The tax-free system has started operating in pilot mode in Russia

The tax-free system kicked off in Moscow and St. Petersburg on April 12. Starting from April 13, foreigners departing from Sochi can also get VAT refunds.


What is tax-free system?

The tax-free is a system that allows foreign citizens to obtain a VAT (value-added tax) refund from purchases made abroad when they leave the country.

The price of every product includes taxes, for example, the VAT. When making purchases in another country, foreigners may not pay it, since they do not enjoy the benefits provided to (that country’s) citizens through taxes. Stores cannot deduct the VAT from the price, but the tax can be returned upon leaving the country where the purchases were made.

The tax-free system was first introduced in 1980 and now operates in more than 130 countries. Russians actively use it when making purchases abroad.


Who can get a tax rebate after making purchases in Russia?

This opportunity can be used by foreign citizens, but not by everybody.

For example, citizens of countries in the Eurasian Economic Union - Armenia, Belarus, Kazakhstan and Kyrgyzstan - will not be able get VAT refunds for goods purchased in Russia.


How much money can you get back?

The full VAT rate in Russia comes to 18% (the preferential rate of 10% applies to low-cost items like bread, milk, as well as children's products, medicine, and some printed publications).

Foreign nationals who want to use the tax-free system, must make a purchase higher than 10,000 rubles ($162.74). Purchases can be paid on different checks, but should be made in one day and in the same store. If these goods are not from the preferential list and are taxed at the full VAT rate, the return amount will be a maximum of 12%.

The tax-free system does not apply to excisable goods (i.e. alcohol and cigarettes).

The minimum purchase sum for a tax rebate is set by many countries. For example, when purchasing goods in Germany, tourists can get a VAT return on purchases for more than €25, and in France this can happen with purchases over €175.


How to get a VAT refund?

Step 1. In the store, you will have to get a receipt for the purchased goods and a special form. Information about the purchase is added by the seller (the name of the item, the date of purchase, the price, name and address of the outlet, and so forth), and the customer adds in his personal details (full name, passport data, address, telephone number, bank card number, and so on).

Step 2. When leaving the country, you must receive a stamp from the customs service. Without this stamp, it will be impossible to get a VAT refund. The customs officer may request that you show the article purchased: the item must be brand new.

Step 3. You’ll need to hand over the form and receipts for inspection at special tax refund points (domestic operators of the tax-free system will work together with two foreign companies - Global Blue and Premier Tax Free. So you’ll need to look for their logo at the VAT refund point). Their employee will collect the receipts with the customs authorities stamp and return the money in cash minus a certain amount, which would be their service fee that on average reaches 5-15% of the receipt sum. In addition, the tax refund station can take a small commission from each receipt.

If a buyer wants to receive the entire amount intended for refund (it is registered in a receipt from the store and the form), then it is better to put the receipts in an envelope (given out in the store along with the form) and put it in a special mailbox, which is usually located next to a station where you can return your money. After one or two weeks, the money should be wired over to the bank card indicated in the form.


Can I get a VAT return departing only from Moscow, St. Petersburg and Sochi?

So far, yes, but the list of cities where you can get a VAT rebate will gradually expand. The pilot project will start at six air airports - Vladivostok International Airport is expected to join Moscow (Vnukovo, Domodedovo, Sheremetyevo), St. Petersburg (Pulkovo) and Sochi. In addition, soon it will be possible to get VAT rebates at the Mamonovo-Grzechotki border checkpoint in the Kaliningrad Region and at the seaport in Vladivostok.

By June, the tax-free system will functions in all cities that host the 2018 World Cup. By the end of the year, the tax-free system should be launched throughout Russia.