What is duty-free shopping? Everything you need to know

Tips for duty-free shopping:

• Use local currency
• Prioritize high-tax items
• Look for additional discounts

Once you’ve checked in your luggage and made your way through security, the next step is to take advantage of duty-free discounts before your flight. Whether you’re perusing the shelves for limited-edition spirits, stocking up on cigarettes, or satisfying a sweet tooth with some Swiss chocolate, this guide will provide some much-needed information surrounding duty-free shopping, the economics behind it, and how to save money.

What is duty-free shopping?

When we talk about duties in the context of shopping, we’re simply talking about the taxes collected by customs on cross-border goods. The term “duty-free” applies to goods that are free from these taxes. Most duty-free shopping areas can be found in departure terminals of airports. However, they’re also in seaports, train stations, and other spots where borders or trading zones are crossed. In a duty-free airport store, you’ll often find goods like alcohol, cigarettes, perfume, and jewelry cheaper than they’d be in a standard store.

How does the duty-free store work?

The reason duty-free exists is quite simple – it’s all about reducing competition. Let’s say, for example, you’re flying from the UK to the US and know you’ll be able to purchase goods cheaper once you land. The incentive to purchase these goods in the UK is reduced, thus reducing the market for UK items. To combat this cross-border competition, most countries agree not to raise taxes on goods leaving the country, specifically in international zones like airports. The resulting discount caused by the lack of taxes creates a cheaper and more appealing product for customers.

To purchase items from duty-free stores in airports, you need a valid boarding pass. Of course, there are certain limits and allowances to how much duty-free you can purchase. These allowances differ from country to country and often vary the most on products like alcohol and cigarettes. Another thing to consider is that just because the goods are free from import duties doesn’t mean they’re going to be cheaper than standard stores. Duty-free prices still depend on the market, country, demand, and buyer convenience.

Tips for duty-free shopping

1. Do your research: If you know you’re going to be passing through an airport, it’s worth doing some research beforehand. While duty-free isn’t guaranteed to be cheaper than standard retailers, it does help to know the usual price of goods. That way you’ll be able to calculate your duty-free savings and find bargains with ease.

2. Understand your duty-free allowance: Each country has its own limits on the amount of duty-free goods you can bring in. If you exceed this limit, you may be met with penalty charges or confiscation of your goods at customs. Duty-free allowances also vary depending on the product, with more specific rules for alcohol and cigarettes.

3. Abide by the rules of the airline: Some airlines don’t allow certain liquids on planes, even if they were purchased in a duty-free shopping area. Always declare any duty-free goods before boarding the plane to avoid any penalties.

4. Prioritize high-tax items: Alcohol and cigarettes are the most common items purchased in airport duty-free stores, mostly because of the large discounts associated with them. These particular products receive some of the highest importation tax rates.

5. Use local currency: Sometimes, using local currency can ensure better exchange rates. If you aren’t using cash, many card machines allow you to pick which currency to use.

6. Look for additional discounts: Some airports offer larger discounts for payments made with credit cards or those who have pre-ordered items in bulk. Again, be mindful that orders don’t exceed your duty-free allowance.

7. Consider packaging and weight: Items purchased in a duty-free shop will still count toward your in-flight luggage allowance. It’s important to keep this in mind, especially if you need to take these goods on a return flight.

FAQs

What’s worth buying duty-free?

The majority of items purchased duty-free are alcohol, cigars, cigarettes, and perfumes, mostly because the tax margins and savings on these goods are higher. However, other products like chocolate, jewelry, and travel supplies are also available.

Spirits, jewelry, and cosmetics are often among the most expensive items in duty-free zones, and many luxury brands stock limited edition or collectable items reserved for duty-free stores only.

Are there any restrictions on duty-free in the EU?

There’s no duty-free shopping for EU travelers moving between EU member states. This is because the EU operates as a single customs territory, and goods can circulate freely without customs duties or taxes. If you're traveling from an EU country to a non-EU country, you can purchase goods duty-free at the airport or port, as long as you’re leaving the EU. These purchases are typically exempt from Value Added Tax (VAT) and customs duties.

Are there any security concerns associated with duty-free?

Those traveling on long-haul flights with at least one connecting stop between their departure airport and destination airport should be careful about their duty-free purchases. This is especially the case if the connections are between different airlines with different duty-free rules. Always make sure you understand your duty-free allowances before you make a purchase to avoid any costly charges or confiscation. To counter the issues caused by connecting flights, many airports are now introducing duty-free shops in the arrivals areas to avoid the security issues associated with the transportation of liquids.