A new Israeli tax refund startup Refundit developed an app to simplifies and digitizes the process of receiving VAT refunds for tourists who buy in European countries, without a queue, without paperwork, and by scanning mobile invoices.
Founded in 2017 by entrepreneurs Uri Levin, co-founders of Waze, and Ziv Tirosh, co-founders of Stockton, the company announced a pilot project in Slovakia, and will soon be launched in another Europian country
The VAT refund procedure for purchases abroad is done at the airports – if you are lucky, and the VAT refund counter is open during the flight, and the queue is reasonable. Refunds should be made in accordance with the policies of each country (Cash, credit card or bank account), but they do not always occur in practice.
With the new application tourists able to scan invoices after the purchase and receive the customs clearance for the refund based on the purchase. In some cases, the tourist will be asked to pass through the customs counters at the airport to check the claimed purchases.
The challenge in implementing the service in coordination with the tax authorities in each country. From the point of view of the authorities, an easing of the tax refund process may encourage tourism and shopping in their territory.
The company has raised $2.5 million in seed investment from the founders and private investors, and is facing another financing round. The company has 9 employees in its offices in Tel Aviv.
According to Refundit, in more than 50 countries, tourists are entitled to receive a VAT refund for their purchases of goods they take with them on their way out of the country, where the rate of return is 17% -27%.
Each country sets the minimum amount for reimbursement: in France, for example, it is €120, whereas in Belgium the threshold of €125, which was used in the past, dropped to €50 after the attack in Brussels in order to attract tourists back to the country.
Refundit claimes that the VAT refund to tourists is €26 billion a year, but only €3 million is required. In most cases, the tourists will also pay 30%-60% commissions to the companies conducting the procedure (The most prominent of which is Global Blue), while the commission that will collect Refundit will stand at 9%. The VAT refunds will be transferred once a month to the Refundit, and will distribute them to those registering for the service, less the commission.
According to the chairman Levin, 90% of VAT refunds that tourists in the European Union receive each year are not returned to them because of the bureaucracy and the ques involved. “We’re here to make sure we all get what we deserve,” he said.
Tirosh, who serves as CEO of the company, added that turning the process into a digital process will allow the tourist to monitor the way until his money is returned. The company’s solution will “allow tourists, retailers and the host country that the shopping will become more attractive.”