The "duty" you avoid is the import tax that applies to local retail sales in the country where the duty-free shop is located. It's usually some combination of value-added tax VAT and sales tax. And while duty-free stores are most commonly found in airports, you may also see them at major land border crossings and on cruise ships sailing in international waters.
With the opening of the world's first duty-free shop in the transit area of Shannon Airport in , Ireland became the pioneer of this business model. The Irish government passed the Customs Free Airport Act that year, exempting in-transit passengers, goods and aircraft from normal customs procedures. This concept was copied internationally, says Nadine Heubel, CEO of Heinemann Americas, a company with duty-free shops in 74 airports across 28 countries. For international travelers, limits on how much you can spend and how much you can bring back vary widely -- check your country's allowances here.
Family members traveling together can combine their personal exemptions. In addition to dollar limits, there are restrictions on how much alcohol and tobacco you can bring into a particular state. Americans are allowed one liter Some states may permit you to bring back more than one liter, though you'll have to pay customs duty and Internal Revenue Service tax on the additional bottles. Other states may limit how much alcohol you can bring in without a license.
As a general rule of thumb, it's best to know the prices at home and in the country you're visiting. Because duty-free retailers are not obligated to pass tax savings to the customer, many set prices just below local prices, says Schrange.
It will also benefit you to familiarize yourself with the rules regarding duty-free shopping in the country you'll be traveling to, Schrange advises. Some countries have limits on how much you can buy before taxes kick in, which may have to be paid once you return home.
You can usually learn the limits by checking with the border patrol or customs agency in the country you're visiting. According to The Points Guy's research, you'll find the best prices on alcohol in the Caribbean, cosmetics and fragrances in Europe and tobacco products in Asia. Look for larger, duty-free-exclusive sizes of products for savings, suggests Heubel. While liquor and tobacco are generally better value buys at duty-free shops, according to Schrange, "there's no one great deal" Mayerowitz adds.
I would say this: Duty-free items might be a good price but always factor in the hassle. Is it worth it to pick up a few extra duty-free souvenirs or would you have been better off shopping before you set foot in the airport? However, for U. So if you buy French wine at Charles de Gaulle airport in Paris, you are not paying taxes on it in France. But it could still be subject to taxes when you cross the border back into the U. All taxes aside, what about the actual duty free prices?
Sometimes the savings is in the tax-free element and not the actual purchase price. According to the website, if you are looking for cosmetics, then London, Vienna and Dubai are your best bet while Madrid, Porto and London are the places to buy perfumes.
It was surprising to find that duty-free shops at Bangkok airport BKK ranked among the most expensive place to buy cosmetics and fragrances. Their study across 14 US airports revealed that the overall cheapest US airport for duty-free was Honolulu and most expensive was Seattle. It is also important to study the rules of your home country and the country countries you are visiting regarding how much stuff you are allowed to carry into the country, duty free.
Talking to a leading media network, Andrew Schrange, co-founder of personal finance community site Money Crashers, advised that passengers will benefit by familiarising themselves with the rules regarding duty-free shopping in the country they will be traveling to.
If you happen to carry more than the exemption limit, then you are liable to pay duty. Remember, the duty exemption is applicable for the airport of the country where you bought the goods.
Your home country or other countries may have a different rule for personal exemption limits. Check on the exemptions allowed on products such as cigarettes or cigars and liquor. Sometimes luxury goods, such as clothing, may be more expensive at duty-free shops compared to what is available at superstores and online.
Also, avoid the compulsion to buy souvenirs at airport duty-free stores, advise veteran travellers. Souvenirs are best bought beforehand in city shops because you have the option of browsing through many shops and may even get a chance to haggle the price. None of that is possible in the airport shops. That said, it does not mean that you will avoid duty-free shops at airports the next time you travel.
Go shopping by all means. But ensure that you are a gainer in the long run. From pandemic to royal fancy, from experiment with Chinese tea plants to
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