By Becky Waring

Shopping overseas is one of the great pleasures of travel, but it's even better when you get a bargain. And one of the keys to getting the best prices on items like perfume, designer fashions, high-end china patterns and other largely non-discounted items is to make sure you get your VAT refund. VAT is the value-added tax applied in Europe, Scandinavia, Canada, Australia, New Zealand, South Africa and other countries.

Tax rates vary from country to country and from item to item (books are typically taxed lower than clothing, for example) and can be very high, up to 25 percent on luxury goods which appeal the most to tourists. In Europe, rates average at about 20 percent. For a couple buying $1,600 worth of gifts and personal items (the amount you can bring into the U.S. duty-free), VAT can really add up.

Fortunately, many countries have a system for refunding VAT on goods that will be taken with you or mailed home. But there are a lot of catches to note and a lot of hoops to jump through, so follow our tips to maximize your savings when shopping abroad:

1. Have your Passport & Plane Ticket Ready—Stores will often ask to see your passport and return plane ticket as proof that you will be leaving the country and will want you to fill out the forms needed to get the refund at your point of departure. If you don't have these items on hand, or at minimum know the flight number and details, you likely won't be able to get a refund.
2. Shop at Stores that Provide VAT Refunds—Not all stores are willing to do all the paperwork which VAT refunds require, although most tourist-oriented stores do. Always ask before making a major purchase. A discount of 10 percent is meaningless if you can't get a refund on the 20 percent VAT. Usually there is a sign on the door or near the checkout counter advertising VAT refunds.
3. Know your Minimum Purchase—Different countries set minimum purchases for VAT refunds, ranging from $25 to hundreds of dollars. Make a point to pick up information on VAT refunds in the airport when you arrive so you know the rules of the country you are in and don't miss out. Usually there are brochures available in special VAT refund booths.
4. Spend it All in One Place—That pesky minimum purchase requirement normally applies per store. So you can't add up $25 receipts from 10 stores to reach a $250 minimum. Instead, group your purchases so that you meet the minimum in each store you shop at. Bigger department stores like Harrods or Selfridges in London and Printemps in Paris are good bets. The bigger stores are also experts at the VAT paperwork.
5. Bring it With You—In order to get the refund, you'll need to bring your unused purchases (don't wear those new shoes!) with you when leaving the country, since you'll have to show them to the VAT inspector at the airport. (Within the European Union, you present them at your last point of departure, no matter how many countries you visit.) Bringing them with you also gets you the $800 personal exemption on US Customs Duty when returning from overseas trips of more than 48 hours. By contrast, items you mail home will often not have VAT applied in the first place, but they'll be subject to customs duty on entering the U.S. Even more of a hassle, some countries make you visit a consulate after you receive the goods at home in order to claim your refund.
6. Get to the Airport Early!—The last and perhaps most important piece of advice is to allow an hour or so to do your VAT paperwork at the airport to claim your refund. First, you'll need to have customs inspect your goods and stamp your VAT forms; there are often long lines, so have all of your paperwork from the stores ready, as well as your ticket and passport. Then there's a second cashier line to actually get your money. You can usually get the refund in U.S. dollars, rather than local currency, which is the best bet. Otherwise you'll need to make a second stop to change the money (or spend it all in the duty-free stores after check-in!).
7. Pack Light!—All your VAT refund efforts can go for naught if you go over your airline's weight limit on the way home and have to pay for excess baggage. It's always best to be prepared and bring as little as possible or pack a half-empty suitcase so you have room for all of your extra goodies. Carrying the heaviest items on board can also help avoid baggage fees.

VAT refunds can take some planning, but with our tips and forethought, you can stretch those dollars just a little bit further!