As the dollar continues weakening against the euro, the ability to save a buck — or $200 — can have strong appeal.
Since European Union law requires that the value-added tax rate for any country be at least 15 percent, and much of the U.S. military community lives in countries with higher rates than that, local tax relief offices and the Value-Added Tax forms they supply can come in handy.
The program, according to the Army’s Morale, Welfare and Recreation for Europe’s Web site, is made available to financially support eligible servicemembers and civilians when they buy goods and services for personal use.
The VAT is a consumption tax on goods and services designed to cover retailer and manufacturer expenses. It is levied on everything from car repairs to teddy bears. Since EU nations are free to set a higher standard rate to suit their specific circumstances, each country is allowed to spend the tax revenue as it sees fit.
Also, countries can apply reduced rates for certain goods or services such as food and medicine, according to the online EU portal, www.europa.eu.
But where a servicemember or civilian lives has a huge impact on potential savings.
GermanyTake Germany, where the VAT rate increased from 16 percent to 19 percent on Jan 1. There, VAT forms can be purchased at a local tax office for use in buying, for example, new and used cars, saving buyers potentially thousands of dollars.
The VAT forms — which cost $4 each for purchases up to 2,500 euros and $6 for anything over — are a bargain. The fees for the forms help offset the costs of running the program.
If a shopper were lucky enough to get his or her hands on a 399-euro Playstation 3 (due for European release in March), using a VAT form would bring the final price to a more palatable 323 euros and change, saving nearly $100.
Thrifty shoppers can buy the forms in bulk, maxing out at 10 forms for $30. Since the program takes an average of 24 to 48 hours to process through the system, only 10 forms are allowed at one time to any person, said Kandy Partyka, tax relief office manager at Warner Barracks in Bamberg.
“It’s really easy,” Partyka said. “All they do is fill out a form, I enter their personal information into the computer, and they’re all set.”
After buying an item, a shopper needs to return the top copy of the form to his or her local office so it can keep track of how many forms the person has out at any one time.
Although retailers in Germany can elect not to participate in the program, many of the larger ones do, as do some auto repair shops and utility companies, since tax paid on either is eligible for exemption.
More stringent rules are used for purchases of firearms, Partyka said, and if you want to make a purchase of more than 7,500 euro, it requires approval of not just the vendor, but local military leadership as well.
Great BritainAt RAF Mildenhall, or anywhere else in Great Britain — where the VAT rate is 17.5 percent — you need a U.S. military ration card that’s been issued in-country, to prove eligibility for the program, and a valid identification card to use a form, said Gary Butcher, VAT program manager.
Enlisted members in the first four pay grades pay $8 per form, everyone else, $10.
Unlike in Germany, you can’t use a British VAT form to purchase a car or anything else that can be licensed to drive. Nor can you use it to pay for utilities, insurance or home remodeling, Butcher said.
Everything else “within reason” applies, including car and house repairs, provided it’s at least 100 pounds sterling including tax, he said. Butcher added that though the program does not apply to utilities yet, they may be approved soon.
Also, consumers must ask vendors if they participate in the program, since participation is voluntary, Butcher said.
ItalyWhere Britain and Germany have countrywide programs, tax exemptions for foreigners in Italy — home of a 19 percent VAT rate — vary by region.
At Aviano Air Base in northern Italy, military ID cardholders can obtain free forms from the 31st Fighter Wing legal office to get VAT-free work on their automobiles.
Farther south in Naples, the only merchandise eligible for the exemption are car parts, and honoring that is left up to individual mechanics. Motorists need to determine first if a mechanic accepts the exemption, and if so, forms are available from either the Navy Legal Service Office or the Motor Vehicle Registration Office.
The savings for those on Caserma Ederle in Vicenza are a lot broader, but so is the work. Forms can be obtained from participating stores for a variety of products, but not services. Customers then take the forms to an Italian bank and get the equivalent of a cashier’s check to cover the cost of the items without the tax. They then go to the tax relief office on base and pay a $10 fee for processing.
For further information on rules and regulations, contact your local tax assistance office.
Stars and Stripes reporters Sandra Jontz in Naples, Italy, and Kent Harris in Vicenza, Italy, contributed to this story.
