This is one of those “explain it to me like I’m ten years old” questions.
I’m an American and have never left the continental 48 states, so I’m extremely international-travel-ignorant and naive. I don’t have a passport, and I’ve never dealt with customs. But over the past 2 years I’ve done a lot of domestic flying, and I began noticing something I’ve never noticed before, these “duty-free” shops in airports.
I tried Googling to find explanations of how they work, but as with so many things, the articles out there seem to assume a certain degree of background knowledge I don’t have. Even articles with titles like “What’s the deal with duty-free shopping?” and “How Does Duty Free Work?” leave me with questions. Near as I can tell, and please correct me if I’m wrong, these shops are intended for international travelers, and any goods purchased there are exempt from local taxes (the taxes in the jurisdiction where the duty-free shop is located,) though you still have to pay any import taxes levied by your destination country when you arrive there.
But these shops are right there in the airport, next to all the other shops, and anyone can walk right in. These articles make it sound like they exist to allow you to avoid taxes on the condition you’re going to take the items out of the country. So do they check your boarding pass to verify that you’re in fact leaving the country? Or can anyone shop there? Can I, while I’m flying domestically, stop in a duty-free shop to pick up some Scotch tax-free? None of the articles I’ve found even hint that this question might exist. They’re written like they just assume that everyone is travelling internationally.
I can only tell you how it works in the airports I’m familiar with. Yes, duty-free shops are often (not always) on the outside of the international boarding area, but you can’t just walk in and walk out with stuff. Your ticket and boarding information is simply used to determine what gate to send the stuff to. You pay for it, and it’s delivered to you just before you board your flight.
The savings can be quite substantial, especially in countries that have high liquor taxes which can be more than than half of the total normal cost. You end up getting a great deal despite what I’m sure is a huge markup that these bandits charge to pay their concession fees and still rake in huge profits.
The quantities you buy have to be limited by the allowance you have in the country you are entering. A typical purchase might be a single 1.1 L bottle or the like.
IME duty free shops have a huge markup, same as everything at an airport, that much more than cancels out whatever the tax percent is supposed to be.
Friends assure me there are some cosmetics and such worth buying at duty free, but for me I’ve never seen an item that was cheaper than a non-airport shop, let alone the internet.
I have no idea about cosmetics, jewelry, watches, etc. Never looked at that stuff. But liquor is definitely much, much cheaper at the duty-free than at regular stores anywhere in Canada and probably throughout the US. Haven’t bought any in a while but I seem to recall it being about half the price.
FTR, that’s what they used to do ages ago. Now, in my experience (at least, traveling from Canada) the purchase is transacted at the duty-free store but the actually delivery occurs before flight time on the other side of the security perimeter. This makes it difficult to buy duty-free liquor on behalf of a friend who will just take it home with him.
Good thing I asked. I wonder how often people like me just wander in and attempt to buy something, are bewildered when they are asked for their boarding pass, and embarrassed when told what the deal is?
I did go into one once just to check the prices on whiskey. I recall them being about the same as the prices in my local state store, but the absence of tax would still constitute savings.
In Australia, duty-free shops are available for both departing and arriving international passengers, so if you are coming to Australia you don’t need to carry your liquor and cigarettes on the plane.
Yep. It might be because the two places I’ve lived are Britain (which has significant sin taxes on alcohol but extremely competitive supermarket pricing) and China (where alcohol is pretty cheap, except maybe wine), but IME the prices in airport duty free are more like* double*, not half, a regular shop’s.
It may depend on where you are. I know that in Ontario the excise and sales taxes are huge. I’ve found no clear guideline for how much they are because they apparently vary so wildly with product and origin, but the Canadian Alcohol Duty Calculator might serve as an approximation based on what you would be charged bringing something in. If you had a 1.14 L bottle of cognac that you had purchased duty-free for $50, and it was not eligible for duty-free import when you brought it back, total duties owing on it would be $45.67. It would therefore not be unreasonable to expect that bottle to be selling in a regular retail store for $95.67. So the savings in that case are more or less as I said earlier – close to 50%.
I travel regularly between the US and Panama. I sometimes look at duty free prices on liquor and it is generally pretty close to the supermarket price in Panama, certainly not enough to make it worth the hassle of picking it up and taking it as carry on.
It could be worth it on other products, or between other destinations.
In New Delhi as well, they had a duty-free shop in the arrivals area, so rather than buying the stuff in the US, it was easier to buy it just after clearing the security checkpoint at the New Delhi airport.
I think in many countries, luxury goods are taxed so heavily that it might make sense to purchase them, even at inflated prices, at the duty-free shop before you leave the US and bring them into the foreign country. But in the US, most goods, including liquor, are discounted at retail so the duty-free prices aren’t worth it. I had relatives in the UK who would travel to France or even just get on the ferry just to buy the duty-free goods to bring back to the UK.
My observation in Australia is you generally get a 1L bottle of mid-range spirits for the same price you’d pay for a standard 700ml bottle outside a duty-free store - so it’s a worthwhile saving.
There can be some pretty good savings on “Top Shelf” spirits, too - Duty Free is definitely worth it for booze, IME, but a complete WOFTAM for electronics, confectionery, and all the other stuff that isn’t liquor or smokes.
FWIW The Australian Duty-Free allowance is 2.2L of spirits per adult traveller - usually two x 1L bottles and a 200ml mini-bottle, or two x 1.1L bottles.
The problem here is that you can’t carry a 1 litre bottle of anything through security. You can buy it in duty free once you are airside, but as said by many people above, there is little or no saving usually.
<nitpick>
“Whom are duty-free shops in airports for?” Good try, but you should have asked - For whom are duty free shops in airports.