Bright white lights reflect off bottles of the finest imported wines, designer watches and the latest luxury perfumes. No, you’re not dreaming – you have found your way into the mesmerizing world of duty free shopping.
While they can sometimes be a great option for last-minute gifts, finding deals on luxury items or spending the last of any remaining local currency, duty free shops have come under scrutiny lately. Many travelers are asking themselves if they really are finding the best deals on specialty goods or if it’s all just a clever ruse to get them to spend more of their hard earned money.
Whether you’re meandering around the duty free shops in an attempt to kill time before your flight, or you’ve come determined to buy gourmet chocolates and specialty liquors, we’ll reveal the ins and outs of how to make the most out of any duty free shopping experience.
What is the difference between tax free and duty free?
Perfume, liquor, chocolate or souvenirs? The possibilities of duty free shopping are endless
You will often see tax free or duty free shops in most international airport terminals as well as ferry stations, cruise ports and border shops. But what is the difference between tax free and duty free?
Generally, “tax free” means you will not pay the local sales tax on certain items. This sales tax can range anywhere between 5-25% and is known as value added tax (VAT) or goods and services tax (GST) in many countries.
“Duty free” items have both sales tax and excise duties (a special government tax on tobaccos, liquors, wines and spirits) deducted from the selling price.
The EU got rid of duty free years ago, so you can only snatch up duty free deals if your journey begins or ends in a non-EU country. If you are flying from one EU country to another, you can purchase tax free items, which will spare you from spending the additional VAT charges.
Is duty free always cheapest?
Local wines and hard to find spirits are a great gift to bring back after your holiday
Surprisingly, shopping in a duty free shop does not always guarantee that you are getting the best deal for your money. It’s always a good idea to check the prices online first so that you can compare the duty free price to what the item typically sells for in other stores.
While items like designer bags, perfume, sunglasses and electronics are not known for being much cheaper in duty free shops, you can usually find savings on large quantities of alcohol and cigarettes. If you are travelling to a country where alcohol is notoriously expensive (like Singapore, Australia and Scandinavia), it might be a good idea to stock up on your favorite French wine or Irish whiskey before you leave the terminal. The same applies for other products: if a certain type of cosmetics or brand of chocolate is known to be quite pricey back home or in the country you are travelling to, it may be worth your while to check out the prices in duty free when you have a chance.
However, if you are visiting a country with a weaker local currency than your home currency, it is often more cost-effective to skip the temptation of duty free shops and shop directly in the local shops in the city.
How much can you bring back with you?
Contrary to popular belief, purchasing from duty free shops does not necessarily mean that you do not have to pay any taxes at all on these items. Whichever items you buy are technically only duty free in the country where you bought them. If you exceed the limits of what you are allowed to bring back to your country, you could end up having to pay taxes upon going through customs on your home turf.
So what are the exemptions and how much are you allowed to bring back before being taxed on your items? Of course the limitations vary per country, but a very basic rule is that anything you bring back has to be for personal use or a gift. If it looks like you are bringing back an unusually large amount of goods that you could potentially make a profit on by selling, you could find yourself being questioned by customs agents.
Travelers without any goods to declare exit customs before leaving the airport terminal
There are specific regulations on tobaccos and spirits. For instance, if you are arriving into an EU country from another EU country, you can bring 800 cigarettes, but if you are coming from a non-EU country, you can only bring 200 cigarettes before having to pay taxes. To be safe, always check with the customs authorities of the country you are going to before you travel.
Every country has their own allowances and exemptions on the amount of duty free or tax free products that can be brought into the country before the items will be taxed. British citizens, for example, are allowed to bring £390 worth of other goods which do not fall in the tobacco or alcohol category before they are required to pay taxes. Americans, however, are permitted to bring up to $800 worth of merchandise back to the United States without having to pay duties.
Save yourself from confusion and make sure to check online or get advice from the shop assistants if you are planning to bring back large quantities of tobaccos or spirits.
Making the most out of duty free
Surrounded by so many different chocolates and sweets, it’s hard to pick just one!
Now that you’re equipped with a better understanding of the complex rules of duty free shops, you have all the tools to make informed decisions the next time you go bargain hunting! But just in case, we’ve gathered some best practices and advice for you to keep in mind during your next airport shopping spree:
- If you’re in the market to shop duty free, make sure you are buying local products to find the best deals. Buy hard to find wines and spirits in the country of their origin, like Italian wines when in Rome and Swedish vodka when in Stockholm, otherwise skip it
- Be aware of poor exchange rates. You could end up spending double or triple the price of your favorite fashion accessories, liquors and souvenirs depending on the local currency
- When you’re in the checkout queue, have your boarding pass out and ready to be inspected. While you do not have to show your boarding pass at every airport shop, you do need to present it at duty free so the shop can make sure that you are actually leaving the country and are therefore eligible for duty free
Keep in mind these simple tips and tricks the next time you find yourself on a mission to snag the best deals and you’ll be shopping like a duty free pro. Whether you’re jet-setting off to French Polynesia or taking a quick trip back home to see the family, arriving at duty free is an integral part to every trip. Duty free marks the start of a new journey and the excitement of your next adventure, so bon voyage and happy shopping!
