London Travel Tips Part 2

VAT stands for “Value Added Tax”. It is a bit different from the sales tax that Americans are used to. It is a tax that it is added at every step along the supply chain where value is added. In the United Kingdom the VAT rate stands at 20% for most purchases. This makes prices on your London shopping spree seem higher than in New York.

The good news is, if you are not an EU resident (pre-Brexit), you can get a VAT refund on items to be taken from the country under certain circumstances. The VAT refund process in the UK is different from what I’ve seen in other EU countries.

In the Netherlands, for example, if you spend over a certain threshold at a shop and, if the shop owner is aware of the VAT refund paperwork, you’ll get a form that needs to be shown at a customs window at the airport. Sometimes you’ll also be asked to show the merchandise purchased to prove that it is leaving the EU. The customs officer will stamp the form and you mail it to the vendor for the refund. You can do this once when leaving the EU for all items purchased, even if purchased in other EU countries on the same trip.

One year at the Friedrichshafen Ham Radio show I purchased a nice handheld digital transceiver which cost about double in the USA at the time. In this case, the vendor’s bank charged a hefty wire fee for the transfer to my bank. The fee ate up much of the refund. The wire fee is avoided if the vendor participates in a program called Global Blue. In that case, Global Blue will refund the VAT directly to your credit card. This is the ideal situation and you get the full amount of your tax refunded to your credit card in the currency used for your purchase.

The UK, however, does things a bit differently. They have outsourced the VAT process at Heathrow to the money changing behemoth Travelex. Travelex makes its money by charging fees to move money between currencies. In this case, they are taking a percentage of the VAT and then charging you again for a currency exchange because they want to refund your VAT in US dollars rather than credit the full amount back to your credit card as Global Blue does. At least this is how it went down during our recent trip. Expect to get only about 11% back.

The transaction took place so quickly that I did not have time to think about it until afterward. Next time, I will insist that they refund the VAT in the currency of purchase to the credit card used for the purchase. We’ll see how that goes and if it results in a larger return.

Another unusual aspect of the Travelex VAT process is that it takes place outside of the security screened part of the airport. So, they don’t even really know that the merchandise or you are leaving the country that day. Strange indeed.

Hertz German Rental and a Slight Scuff(le)

I reserved an automotbile rental for the June stay in Friedrichshafen with Dollar. The rental was actually fulfilled by Hertz. I expected to pay about €92 for a weekend rental, including taxes.

The vehicle dropoff was on a Sunday morning at the sleepy Bodensee Flughafen and was unattended. I dropped off the keys as instructed. The vehicle was left in perfect condition.

When the charge came through about a week later, it was for over US $400. I was mystified and miffed. I had not (yet) been contacted by Hertz about any issues.

I contacted Dollar via their customer service web form, referencing my initial reservation number. No one from Dollar bothered to return my contact request about the billing discrepancy. When I returned home, about a week after the car was dropped off, I contacted Chase to dispute the excess charge.

Hertz in Germany billed me €290 for this!
Hertz in Germany billed me €290 for this!
Then, after a few more days, a letter arrived from Germany. The letter claimed €290 in damage to their vehicle. Nonsense. I probably did not drive it more than 15 km during the whole stay and there were no incidents. So, I reported the claim to Chase’s car rental insurance program.

I finally, after some weeks, received a photo of the damage. Just nonsense. As you can see, it is a minor scuff that a US car rental company would never be concerned about.

Be careful. If you rent a car in Germany, do a complete walk around and either take their insurance or have your own. Kudos to Chase and their United Explorer Card for having my back and paying the claim on this one with no trouble at all.

Transparency and International Funds Transfer

In June I attended the Ham Radio 2016 show in Friedricshafen, Germany.  I had the opportunity to purchase a nice, compact digital transceiver.  The Hytera PD365 cost surprisingly less than it would in the USA.  And, as a bonus, I could get the 19% Value Added Tax (VAT) refunded once I brought it home.

Sort of…

There are shops around the world that are setup to make the tax refund easy and will rebate it directly to your credit card.  Not so with Difona Communications GmbH, but they were able to provide a tax refund form at the show.  I had to get it stamped by customs upon leaving the European Union and then mail it back to the vendor in Germany.  They paid the refund via international wire transfer.

Here is where the fun began.  I received about $14 less than expected and set about trying to find out where the difference went.  It was not easy.  There is no transparency in such transactions.  I had to call my bank more than a handful of times before I could get to someone knowledgeable enough to assist.

Early calls revealed that the funds came in as US dollars via the Automated Clearing House (ACH).  The ACH received the funds from Fed Global.  What is Fed Global?  The Federal Reserve Bank.  The Fed suffers from a complete lack of transparency and will not speak to the consumer at all.  Kudos to those in Congress who want to audit the Fed.  I’m with you.

Anyway, after several weeks, numerous calls, and a case filed with the Consumer Financial Protection Bureau, I received an answer.

Fees were deducted from the amount that the vendor paid to me.  The vendor — Difona — indicated that this is what should be done at the time of the transfer.  Difona did not disclose this to me when I sent them an inquiry asking for documentation on the transaction.  Had this been disclosed, it would have saved me and others a lot of time spent on calls and emails to research the discrepancy.

Caveat emptor!

Hytera PD365 compact DMR radio
Hytera PD365 compact DMR radio
Still, I purchased a good piece of merchandise at less than 2/3 of the USA cost.  I learned that in the case of a VAT refund, it is better to deal with Global Blue particpating merchants.  Otherwise, expect to pay an undocumented and substantial fee for a wire transfer and expect no documentation or transparency.