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Will Europe’s Tax Hikes Deter Tourism?

Travelers heading to Europe may have another expense to budget for: higher taxes on their purchases.

The French government said Tuesday it would move forward on a plan this spring to increase its value-added tax – which is similar to a sales tax — from 5.5% to 7%. It joins a host of other European countries that have made similar increases recently. Hungary raised its VAT from 25% to 27%, while Ireland’s new VAT is 23%, up from 21%. Last January, the British government put into effect a planned VAT jump from 17.5% to 20%.

As we’ve previously reported, travel to Europe is one of the few expenses experts say may get cheaper this year, largely due to the economic unrest in Europe. And the increased taxes are unlikely to affect most visitors’ budgets, says Ed Perkins, a contributing editor for travel advice site SmarterTravel.com. Those higher tax rates focus primarily on things that locals buy, such as groceries, books, cars, and other household items. “You don’t go to France to buy appliances or electronics,” he says.

Those tourists who are hit with taxes can often receive a refund for the VAT they pay on souvenirs and other items, and the higher rates make it more important to do so, says David Lytle, editorial director for Frommers.com. “Travelers should always ask if they can get their VAT returned, regardless of where that item comes from,” he says. Many stores have the forms on hand. Customs officials processing the forms may require travelers to show the goods in question, he says, so be cautious shipping or checking anything you’d like to declare.

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    • The United States is a huge, interesting, and fun country. Travelers should save money and check it out! :-)

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