What is VAT?

Sorry to ask what some might think is a dumb question but, I've seen reference to VAT several times. I get that it is some sort of tax ... when do you pay it and how can you avoid paying it?

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Google is your friend....value added tax

It is added to goods and services.

Sometimes if you have purchased a large enough amount of goods or merchandise in a single store you can apply for a refund of the tax when you take the goods out of the country, i.e. At the airport.

You cannot get the refund on things like meals or beverages.

If you are sailing in waters off Spain and purchase onboard then you pay VAT .. most annoying so watch that as you pay on everything that is billed to your sea pass

If you shop in Europe and spend enough money in a story that provides VAT refunds, you may be able to get a portion of it back. You need to have the store fill out the paperwork. Then, when you get to the airport from which you are leaving the EU (or, if only connecting through another airport, the main airport you leave from), you must get a customs stamp. Then you can get the refund on site or mail in the refund certificate from the US.

The challenge can be getting the customs stamp. In some airports, it's super easy. In others (think Frankfurt), it's hard b/c the only place to get the stamp is a different terminal than the flights leaving for the US. Or, there isn't time to do it, often b/c there's a long line. And you must do it before you check your bags or carry on the item b/c the customs folks want to see the item in many cases. Most people don't want to take the time to get the refund and leave money behind, so to speak.

It's worth it in some cases b/c VAT can be as high as 21% and you can often get back up to 3/4 of that amount. So, if you spend $500, you might get back $70. It depends on the country. In some places VAT and/or the percentage you can get back is less.

As noted, no credit on food and drink. Not every store offers VAT refunds and there are usually limits on the minimum amount you must spend at any one store in order to get the refund.

VAT is added to all goods and services in Europe. The percentage depends on the law of the country and there are reduced rates. By European law the VAT is already included in the tagged price - so nothing added at the register.

Unfortunetely it´s just the US cruise lines which charge it extra. The European cruise lines have the VAT included in their prices on the menu. Some of them don´t even have a service charge added.

As for US cruise lines you have the price in the menu for a drink:

10 $ drink price

+ 10% VAT = 1 $

+ 18% Service Charge = 1.80 $

totals: 12.80 $

So in Spain the reduced rate is 10% (mainly for all food/drinks) and the regular rate of 21% (that´s what you pay extra on regular goods like a purse in the onboard shop).

As for cruises it´s the rate of that country the cruise starts (the ship is homeported - so with a cruise out of Barcelona it´s the Spanish VAT even when you interport in Civitavecchia). This is valid for all cruises within European waters which do not have a non EU port (Channel Islands, Canary Islands, Gibratar do count as non EU).

steamboats

There is little to add to the excellent answers so far except to say that VAT stands for Value Added Tax.

It does not matter to the OP, the end consumer, but the name comes from how the tax is applied. VAT is added at each stage of the supply chain. Anyone in the supply chain who is registered for VAT can claim back the tax they have paid on their cost price but must collect, and pay to the taxman, the full tax due on their selling price. Thus, the net VAT at each stage in the supply chain is the equivalent of the VAT on the value added at that stage.

As others have pointed, for the end consumer, the selling price always includes the VAT. There is nothing added at the till. Wholesale/trade prices are often shown without the VAT added although it is charged because the purchaser can usually reclaim it.

Other popular ports to look out for (in addition to the Canaries, Gibraltar and Channel Islands mentioned earlier) that are not in the UU

Kotor, Montenegro on some Eastern Med cruises

North Africa / Israel

Turkey

Norway

Russia

If any of these ports feature on your cruise itinerary the entire cruise should be VAT free whilst on board. You might find in some EU ports (Spain comes to mind) there are strange exceptions whilst the ship is in port.

On Sillouette right now.

I tried to buy 4 night dining package before the cruise, but .Celeb system wouldn't let me.

On board I bought it for two of us at $250, final price inc gratuity. That was about the same as th £96pp I was quoted on line. I checked my account this morning and saw I have been charged $275 as 10% tax has been added.

At no time was I told the tax was not included in the price. Guest services said it was correct.

I accept the tax is mandatory but the Celeb employee should make it clear it was still to be added

Has there been an announcement about VAT in the Daily Program? On cruises I have taken where VAT was charged there has always been a notice about it.

Although within the EU, Monte Carlo, for VAT purposes is not considered in the EU so that port counts to reduce/eliminate the tax.

We did a Rome to Lisbon cruise that included Monte Carlo. As a result, the only VAT tax we were charged was when we were in Spanish Territory or waters.

For some strange reason it´s just Spain which insists in that VAT also just for a port of call. Actually it´s an EU law and therefore other countries like Italy should do the same. But as far as I know Italy charges it only for cruises out of Italy but not when you call an Italian port.

steamboats

Sorry to ask what some might think is a dumb question but, I've seen reference to VAT several times. I get that it is some sort of tax ... when do you pay it and how can you avoid paying it?

 

 

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Hi

In the Uk we have VAT added to some goods we buy. It's 20% here but it is included within the overall price so the price you see is the price you will pay.

It's a lot easier than the usa where it's added in at the cashier/till.

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Sorry to ask what some might think is a dumb question but, I've seen reference to VAT several times. I get that it is some sort of tax ... when do you pay it and how can you avoid paying it?

In answer to your question - How do you avoid VAT ?

1) Choose a cruise which has at least one non-EU port on the itinerary then you will be exempt.

2) If your cruise is totally within the EU you can pre-purchase items online before you embark.

Examples being Drink packages, Upgrade to drink pkgs., Specialist dining pkgs, gifts, etc.

The exception to the above is you will still be charged VAT if you purchase something onboard whilst docked in port exactly like you pay Florida State Tax if you buy something when docked in Miami or Fort Lauderdale.

Although within the EU, Monte Carlo, for VAT purposes is not considered in the EU so that port counts to reduce/eliminate the tax.

 

 

 

We did a Rome to Lisbon cruise that included Monte Carlo. As a result, the only VAT tax we were charged was when we were in Spanish Territory or waters.

Monte Carlo is in Monaco, a sovereign state that is most definitely NOT a member of the EU.

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Monte Carlo is in Monaco, a sovereign state that is most definitely NOT a member of the EU.

 

 

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It comes under France for all its laws etc and has the same Eu status and also the Euro as its currency.

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Monte Carlo is in Monaco, a sovereign state that is most definitely NOT a member of the EU.

Monte Carlo is the port we visited in Monaco. Yes it is a Monarchy and while Monaco is not formally a part of the EU, it does participate in certain EU policies such as customs and border controls. Monaco joined the Council of Europe in 2004. Thus it is not considered part of the VAT policies because it qualifies as excluding the cruise from sailing solely within the EU.

Last June we were on the Reflection, western med cruise from Rome and this was on Celebrity Today, port of call Barcelona:

10% VALUE ADDED TAX

Due to customs regulations, while the ship is in Spanish waters, there will be a 10% Spanish VAT added on to all your purchases from our bars and specialty restaurants. The Spanish VAT does not apply to beverage packages.

We are just off the Reflection, a round trip Rome cruise that was entirely in EU countries. VAT was 22.8 percent or thereabouts on goods. I don't know about services, since we did all that in advance.

We had some onboard credit so on the last seaday when they had the sale, we bought about 220.00 worth of stuff, since 200.00 was the minimum to get a VAT refund. To even qualify, everything had to be purchased on the same day, and in the shops (not the ILounge - my DH needed a cable earlier in the cruise and we were told we could add that to the VAT form. That was incorrect, as it turned out).

They take your receipts and give you a completed form on the last night of the cruise.

You take that to your exit point from the EU, get a stamp and then you can get a cash refund in your choice of currency. For, us they took a pretty hefty percent (close to 50%). However, we didn't leave from Italy but from London, which is still an EU country for a little while. I calculated we paid about 46.00 US in eligible purchases (most with OBC), and we got about 24.00 US back. We may have lost in that it went from Euros to Pounds and then to Dollars, but I was surprised at how much we didn't get back.

Choose a cruise which has at least one non-EU port on the itinerary then you will be exempt.

Most cruises do try to include one non EU port in their itinerary, jut for the VAT avoidance purpose.

On our Roll Call for our recent Mediterranean cruise, there were complaints that we were visiting Gibraltar, " which didn't have much to offer."

A member of the Roll Call explained that it was for our own good, otherwise we would be charged VAT on our cruise otherwise.

Similarly, an additional benefit of cruises including Turkey was avoiding VAT. Moves to avoid Turkish ports will have produced more "EU only" cruises.

We are just off the Reflection, a round trip Rome cruise that was entirely in EU countries. VAT was 22.8 percent or thereabouts on goods. I don't know about services, since we did all that in advance.

I assume it´s a typo, but VAT in Italy is 22 % (not 22.8) and the reduced rates are 10 and 4 %.

steamboats

I assume it´s a typo, but VAT in Italy is 22 % (not 22.8) and the reduced rates are 10 and 4 %.

 

steamboats

I thought they said .8, but I might be wrong. That makes the fees a little better.

Originally, the stop in Malta was Turkey. Other ships are going to Croatia, I guess if we'd done that, we'd have had no VAT.

We had Gibraltar on a cruise...awful place in our opinion, but saved us the VAT...we would just avoid VAT cruises if at all possible. Don't mind paying if on land but on a ship it is really ridiculous,..same for Fl taxes.

We had Gibraltar on a cruise...awful place in our opinion, but saved us the VAT...we would just avoid VAT cruises if at all possible. Don't mind paying if on land but on a ship it is really ridiculous,..same for Fl taxes.

Sort of agree about Gibraltar. Us Brits stole it many years ago and is a highly important strategic location for UK and its puppet master the USA- same as Cyprus. Hopefully

we will never need to utilise it militarily.

Not sure I would be too uptight about it as a cruise stop - one can stay on the boat. We sometimes stay on when doing the Caribbean as some islands don't do much for us - especially when having 2 days there.

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There is little to add to the excellent answers so far except to say that VAT stands for Value Added Tax.

 

 

 

It does not matter to the OP, the end consumer, but the name comes from how the tax is applied. VAT is added at each stage of the supply chain. Anyone in the supply chain who is registered for VAT can claim back the tax they have paid on their cost price but must collect, and pay to the taxman, the full tax due on their selling price. Thus, the net VAT at each stage in the supply chain is the equivalent of the VAT on the value added at that stage.

 

 

 

As others have pointed, for the end consumer, the selling price always includes the VAT. There is nothing added at the till. Wholesale/trade prices are often shown without the VAT added although it is charged because the purchaser can usually reclaim it.

Not a bad explanation, albeit a very general description, but it is a bit more complex than described in this post.

Some organisations can be classed as 'partially exempt' (e.g. private golf clubs) and things like 'de minimis' rules can apply.

Oh and discretionary service charges are not subject to VAT but compulsory ones are . Many unscrupulous businesses in UK ( particularly 'the smoke') imply to customer that charge is compulsory but declare it as discretionary - illegal but common.

OP asked a simple question. Unfortunately the answer is complex and makes a lot of money for Accountants and Lawyers.

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