By means of a VAT refund, non-EU tourists can enjoy tax-free shopping in the Netherlands. Where nowadays an outdated B2B model still controls the processby means of paperwork, Refundit‘s fully digitalized solution revolutionizes the world of VAT refunds. The use of a smartphone app provides the solution for instant refunds of paid VAT, boosting the spending of travelers while in Dutch shops. We compare Refundit‘s B2C technology (100% GDPR compliant) with thestandard B2B approach.

Standard B2B approach

A (non-EU) traveler can buy products from shops anywhere in the Netherlands and reclaim the paid VAT upon leaving the EU with the product. Unfortunately, verifying the authenticity of the claim is difficult in the current model. For example, whether a purchase has actually been made in the declared store is solely based on the observance of retailers. The traveler’ refund request must be physically checked for eligibility by two organizations: customs and a refund operator. All of this is done on the basis of the paper receipts and complex forms for the traveler to fill in and authorities to validate.

Verification of the receipt and identity documents (passport, travel document etc.) is based on human assessment by custom officers; and therefore susceptible to fraud. Travelers still have to be physically present at the counter on the airport, often waiting in queues taking up to two hours. Unfortunately, there is currently no possibility of establishing a correlation with previous purchases made by the traveler or sales made by the shop in question. This makes fraud detection more difficult and leaves no room for theuse of big data for sales and marketing purposes.

Under the current system, long waiting times are the norm and payouts take weeks. Due to the lengthy and administrative form of the process, a lot of costs are also incurred which the traveler will no longer see refunded.

Refundit’s B2C technology

When the traveler chooses Refundit as his collaborating entity the application verifies with geolocation that the traveler was physically present at the store and purchased the goods at the specific moment of sale. This is done by checking the time on the receipt, the identity of the store, and comparing those to known databases near the geolocation of the traveler.

The traveler takes a simple photo of the receipt and with digital extraction and a verification process using artificial intelligence, the authenticity of the receipt is ensured. The app compares the data it extracts with external databases to make sure the information is genuine. The technology subsequently also grants the possibility to establish a tax free shopping history of the traveler and the store. Previous transactions can be linked and possible fraud patterns can therefore quickly be identified.

The app uses a number of sophisticated technological ingenuities to carry out verifications. Biometric facial recognition is used to match the traveler and its identity documents. A real time selfie is made by the traveler and technology capable of comparing active and passive liveness detection, ensures facial matching even with physical transformations. The app also uses technology with enhanced reading capabilities that enables checking visible identity data on the passport against the encrypted data (invisible to the human eye) within the barcode at the bottom of the passport. Only genuine passports will pass this verification. This technology provides by far more fraud control capabilities than any sales or customs person could provide. The technology thus eliminates the human error of a physical check.

At the airport, only a digital validation through a Kiosk or with the mobile smart phone is needed to complete the claim, again supported by the use of geolocation. There is no need anymore for standing in line at the counter. The refund is 100% digital and totally retractable. B2C technology ensures a fast, transparent and secure VAT refund without the need for physical checks, also contributing to post-covid19 solutions. A glimpse of the fast-approaching future!

Read more about Refundit here.