This post was a request so if you aren't planning a trip to Europe that includes shopping, go ahead and skip this post. But for all those who are interested about the process read on :) . Also I'm no expert so please let me know if I got something wrong, thanks!
So first of all, VAT stands for "value-added tax" and it basically means all products sold in Europe already have their tax baked into the price of the good. This is unlike the US, where we add an additional percentage of tax to the retail price. So in the EU, the price you pay includes the tax, which you are eligible to get back if you don't live in the EU. This is where the VAT refund process comes into play.
So depending on the country, the VAT tax rebate percentage varies. In France it was about 10% and in the Netherlands it was up to 13%. Some countries, like the Netherlands also increase the percentage the more you spend on the good. There are also differing spending thresholds, so for example you have to spend at least 175 euros in France before the refund kicks in while in the Netherlands it was 50 euros. I went online to see what the various VAT percentages per country are and for the most part the real VAT percentages are a lot lower (I think it also depends on what you buy). Just ask the sales person before you purchase to find current VAT rates.
Also most stores will ask for your passport to fill out the VAT refund pages so you do have to bring your passport with you while shopping. If this makes you nervous, just make sure to leave a copy of your passport in the hotel and carry your passport securely (as in a cross body bag that you keep in front of you at all times--this is what I did; or use one of these).
So when you're buying something over the threshold amount for the refund, ask the sales clerk to prep your VAT refund documents. If you're buying something at a department store, they usually have their own tax refund office so you can get your refund immediately (you'll still have to get your papers stamped, but more on that later). If you're at a regular store, they'll give you the refund papers and the receipt. Keep these together.
And the last step is to go to the VAT refund office at the last stop within the EU to get your papers stamped and get your money back. You do the VAT refund process all at once at the very end of your trip even if you bought things from different countries. So for me this was Heathrow Airport in London even though I purchased my things from France and the Netherlands. There's a VAT refund counter at every terminal in Heathrow. Check where the refund office is at the airport you're flying out of online. Allow time before you check-in to get this done. When I went I was able to do it all in less than 10 minutes but I had no lines. If there's lines I heard it can take up to an hour. They basically take all your papers, check your passport and then calculate what you get back. They didn't ask to look at what I bought but it's a possibility so be prepared for that (either pack it in your carry on, or at the top of your stuff in your checked bags). That's also why you want to do it before you check into your flight.
And here's my biggest tip for doing the VAT refund. Get it back in cold hard cash if you can, not a refund via credit card. I'm still waiting for my VAT refund from the department store in the Netherlands that 'guaranteed' it would get charged back to my card in 3 days. It's been over a week and still nothing (boo!). And at this point there's nothing I can really do about it. So even if they take a commission for giving it back to you in cash it's worth it. (My friend also said they didn't get their VAT refund from the airport when they did it via credit card so be warned). Oh and I was able to get my VAT refund at Heathrow in dollars and they didn't charge a commission.
So that's it! If you guys have any questions just shoot me a comment below!