You've probably already heard about the concept of tax-free or duty-free shopping overseas. In countries like Japan, shopping is breezy – refunds are handled in store. Europe, on the other hand, is its own beast.

In Europe, most goods and services are subject to a VAT – similar to Australian GST or US sales tax. If you're not a citizen and resident of Europe, you are entitled to receive any VAT you've paid as a refund when you leave the region, as long as the purchase was over 100 euros.

Tax-free shopping in Europe is a delightful prospect. In theory, it sounds fantastic. But in reality, it's a process riddled with red tape and quirks in the system. For first timers, it's not an easy exercise to navigate. Although, it does start to make more sense over time.

If you're heading to Europe with the intention of coming home with some extra kilos worth of shopping in your suitcase, there are a few things you absolutely need to know. Take it from me, a seasoned shopper. Here's how to get your tax refund when shopping in the European Union and other countries in Europe.

Which stores offer tax free shopping?

It varies store to store. Most stores will have a sticker in the window to let you know they offer tax-refund shopping. The best policy is just to ask the sales assistants. Remember, you have to spend at least 100 euros to be eligible.

Any major tourist district will see most stores offering tax-refund shopping but again, it depends on the store. That hand-made leather sandals boutique in the back streets of a tiny Greek island? Maybe not. Just ask the question and use common sense.

Remember, the United Kingdom does not have a tax-free shopping scheme.

How much do you get back?

VAT in most of Europe is 22%, but it can be higher in countries like Hungary, Sweden or Denmark.

Shopping tax refunds rarely give you the full 22% back, instead the standard rate is 12%. But it can be at the discretion of the store. I once bought a watch in Paris and the store kindly gave me 16% back.

What is the exact process for getting a refund

Stores do not coordinate the refund themselves. Instead, they use services like Global Blue or Planet which manage the refund process.

When you go to purchase, tell your sales assistant that you want a tax refund. You will need to show them your passport. Some stores accept a copy, but most will require the actual document. Make sure you bring it with you on shopping days.

The store will then organise the papers for you. Some department stores will require you to go to the customer service counter in order to complete this part.

Once you have your papers, the next part of the process happens at the airport. The most important part is that you need a customs stamp from the customs office before you go through security. To get this stamp, you will need a boarding pass for a destination outside the European Union. The customs officer also needs to see the items you bought. They need to be in new and unused condition, so make sure you have them in your carry on with the original packaging. Dust bags are fine if the boxes are too bulky to pack.

From here, the process will be different from airport to airport. Bigger airports can have self serve kiosks where you can scan your forms to coordinate an automatic refund. In other airports, there is a refund desk after customs. Be warned, if you are at a smaller airport, the refund desks are often run by third parties who take large commission percentages and even flat fees. These dramatically eat into your refund. You will get the best deal by leaving through a bigger airport.

If you have to leave through a smaller airport, you also have the option to post your forms back to the refund provider rather than use a refund desk –  a way to avoid the extra third-party fees. But, posting usually has to be done before customs. If you don't like the fees at the third party refund desk, and decide you want to mail your documents instead, it may not be possible as you have already passed customs.

Posting the form is also risky. I've mailed one before which was conveniently lost in the post. Since I didn't have a picture of the forms, I had no proof when I enquired about it later and I never received my refund.

If all goes well, you should receive your money in cash or an electronic refund back to your card. Cash is given in person on the day, while electronic refunds can take time. I once had one that took four months.

How can you get the most possible money back?

There are a few things to be mindful of here.

Certain airports, Rome's Fiumicino being one of them, will give you the full 22% back if you shop at the airport after customs. So, if you're looking for pure savings, making your purchases at the airport is the most cost effective. Of course, not all airports have a big selection of shopping and you do run the risk of the airport boutiques not having the exact item you're after.

If you are making your purchase outside of the airport, you can sometimes negotiate the refund percentage at the store. Typically there is more flexibility for larger, luxury purchases. If you're visibly umming and ahhing about a large-scale purchase, sometimes stores can offer additional tax back as an incentive for you to buy.

Once you've made a purchase (outside the airport) double check the commission that your refund provider (Global Blue, Planet etc) charges. Compare the fee for different refund types, whether cash, electronic or cheque. There's often a surcharge for being refunded in your own currency or onto a credit card. Often, choosing a cash refund in the country's local currency will save you the most in fees.

Avoid completing your refund via a third party provider post-customs. Always research your refund options at the airport you're leaving from. If the only option is a third party, perhaps posting your documents will get you the best refund. Just remember to take a photo of everything.

In which country do you submit your forms?

You submit your forms at your last stop in the European Union. This is an important point.

The European Union, not Europe. Countries like Norway and Switzerland are not in the European Union. So if you've been shopping in France and you're finishing your trip in Norway, you will need to submit your refund documents at the airport when you leave France. But, let's say you were shopping in France and are also going to Croatia, with a final stop in Greece, then you will submit your forms in Greece.

What if you have a Europe trip itinerary with a stop outside the EU, for example: France, Morocco, Spain? Here, make sure you submit your forms the first time you leave the EU even if you will reenter just a few days later.

If you have shopped in a European country that is not in the EU, you will need to completely any tax refund documents at the airport when leaving that country. So, if you are shopping in Norway and move onto Sweden, you will need to do your tax refund at the airport in Norway even through these countries are right next to each other.