Duty-Free Meaning – How Does It Work?

Have you ever wondered how much time you spent waiting for a flight to the airport? Or how productively do you spend the “lost hours” accompanying travel? You’ve probably heard of Duty-Free shops at least once or seen them at the airport. Do you know their exact meaning and what to consider when entering such places? Let’s dive in.

Duty-Free is an action that allows you to purchase an item in a particular situation without paying sales, imports, value-added, or other taxes. The attractive advantage of international travel is the Duty-Free Shops. These retail businesses sell goods that are exempt from all taxes because they are taken out of the country for use. Many popular duty-free items at airport stores include perfume, chocolate, and spirits.

Under normal circumstances, host countries usually expect you to pay sales, imports, and VAT. However, when shopping at international airports, cruise ships, seaport terminals, and international airlines, your purchase takes place on no-man’s land. This means you are not in or outside a host country. You are simply at the location of the terminal.

Duty-Free Shopping has changed in the E.U. Goods you buy while traveling between E.U. countries are payable or taxable. Products you buy while traveling in or within an E.U. country are subject to a refund. This means that the traveler must apply for a VAT refund. Customs-free shops often sell premium branded high-end branded goods, including cigars. They also sell high-class tourist items from the host country.

The ads boast that duty-free prices are 10% to 50% lower than domestic prices. Due to the demands of using the brand outside the host region, the duty-free place will pack your asset and deliver it to you as soon as you appear to leave.

Duty-Free Goods and Customs Duties

It is worth noting that duty-free goods in the host country may be taxed when you return to your home country. The duty-free regulations vary depending on the destination of your trip, the government of residence, and the length of your stay. Other rules apply to the land of manufacture, the cost of the product, and the items purchased.

For example, you will have to fill out a U.S. customs form to declare purchases made in the U.S. overseas. Receipts are crucial as they confirm how much you paid for the product. You will have to pay an additional fee if the value of the item you purchased exceeds the duty-free exemption for the country from which you are returning. Personal exceptions range from $200 to $1600. Additional regulations include waiting periods between frequent trips and restrictions on the length of travel abroad.

However, some products are still limited in quantity no matter in which country you buy them. For example, cigarettes and alcohol in limited quantities are allowed. Duty-free alcohol from the E.U., such as Scotch whiskey, has a one-liter limit. Likewise, travelers should be aware that some products in other countries are illegal in the U.S.

How does the system work?

As a rule, clothes, cosmetics, and perfumes are trendy. Sometimes you can find unique clothes or perfumes at attractive discounts; Other times they are cheaper in nearby stores. Cosmetic deals can be found on items that are generally not for sale. Sometimes, you can find unique gift kits containing unique combinations. As a rule, electronics and other technical purchases are unsuitable for duty-free shops. Online prices can compete with duty-free prices or even better.

However, items specific to the area you are leaving will be cheaper at a duty-free shop. 

However, caution is needed here as well. Remember, just because a duty-free shop can offer you low prices does not mean that it will necessarily be so. Duty-free stores may have high overheads that absorb potential savings to maintain storage space. You can plan duty-free Shopping from sources like dutyfreeaddict.com. This allows you to compare prices and see how much you are worth paying for a particular item.

Most importantly, do not forget about the exchange rate. If you buy in currencies other than the dollar, it can be more or less expensive. Visiting Duty-Free shops is usually a favorite activity for many people due to the time spent at the airport. So, what are you waiting for? I wish you safe and happy Shopping.

Duty-free shopping is a must when leaving or returning from a trip. All travelers look at the products offered by the stores. Whether it’s sweets, perfume, tobacco, or souvenirs, everything is there! But in the end, is it really profitable for travelers to buy products in duty-free stores? Bourse des Vols tells you everything.

The origin of the concept of “duty-free” stores

Duty free is one of the special features of the shops found in airports: they are not subject to government taxes. Indeed, because they are located in the international zone, they are not subject to VAT. This means that the products sold in these shops must, on average, be sold 20% cheaper than in traditional shops.

Duty-free shops are present in almost all international zones. Not only in airports but also at border crossings. And in some countries around the world, it goes even further. If you are going to travel to Manila, in the Philippines, you have the opportunity to do your duty free Shopping in a large shopping center located more than a kilometer from the airport.

This concept comes straight from Ireland. These are stores that do not apply the various taxes of the country in which they reside, such as VAT. This type of store is very present in international areas, particularly airports and seaports. 

Duty free stores theoretically have the right to sell products at a lower price than the usual price. This allows them to be attractive without encroaching on their commercial margin since they are not subject to the various taxes like a traditional store. 

 

However, other factors come into play. For example, these shops pay for their location at the airport, which is directly reflected in the sale price of the goods. In addition, some shops have a luxury positioning and take advantage of the absence of taxes to inflate prices. However, buying products at the airport often allows you to get some good deals on cigarettes and perfumes, unlike food, which is often sold at exorbitant prices.

Interesting shops under certain conditions…

It is good to know that not all travelers are automatically entitled to buy duty free! Certain taxes, such as VAT, are always present if you travel within the E.U. Only a few exceptions exist for destinations with specific tax regimes, such as Andorra, the Canary Islands, or Gibraltar. 

To benefit from this reduction, you must therefore transit to a country located outside the European Union or overseas territories. In addition, cashiers will always ask you for your boarding pass. Failed for the smart ones who already thought they could get around the law!

Finally, if you want to buy products, in terms of quantities, you are allowed to bring back up to 4 cartons of cigarettes per adult and 10 liters of strong alcohol per person if you are traveling within the E.U. There are no restrictions on other products sold duty free. 

On the other hand, if you are traveling outside the E.U., you are only allowed to bring back with you one carton of cigarettes per adult and 1 liter of strong alcohol per person maximum. The total number of souvenirs purchased in the store cannot exceed 430 euros per adult and 150 euros per child. If this threshold is ever exceeded, you will have to declare the goods to customs and pay the various taxes.

The 4 main rules of duty-free

• Duty Free does not apply between the member states of the European Union (except for exceptions, such as Andorra or the Channel Islands).
• You can buy duty-free at airports, in flight on the plane, or before passing through customs in border areas.
• The conditions of purchase are subject to the rules of the country in which you are. Find out about the limits and allowances applied by the customs of the country in question.
• Consult the specific regulations and those likely to change on the customs website.

Duty free and regulations

Duty-free sales refer to any goods exempt from tax, particularly VAT, which is normally imposed on them. This type of sale is governed by the Community Customs Code. Airport duty-free sales are subject to the law of the country in which they are located unless the airport has international status. 

Two airports have this status: Basel-Mulhouse and Geneva-Cointrin.

In addition, the products sold in duty-free shops must comply with the country’s regulations in which the airport is located. Please note that opening a duty-free store is subject to administrative authorisation. 

The duty-free manager must comply with certain obligations, including maintaining a material compatibility record to identify the goods, their location, and the stock situation.

Regarding the sale of products on airplanes, the applicable regulations are those of the country in which the airline is registered. And internationally? In China, for example, since April 2016,

new measures have been taken to strictly regulate imports by e-commerce. 

How to benefit from the tax refund?

The tax refund is done in 3 simple steps.

Step 1: Ask for a sales slip (BVE)

When paying for your items, ask the seller for the slip to claim the tax refund. It includes a barcode or the words “emergency procedure.”

Step 2: validate your slip

On your departure and before the end of the third month following the month of purchase, your slip must be stamped by the customs services before you check in your baggage.

The tax refund purchase slips made in another Member State of the Union and those that include the words “emergency procedure” must be presented to the customs officers.

You must validate the sales slip(s) before going through the controls. The tax refund office is located in a public area.

Step 3: Get a refund

Present your passport and your customs-validated slip in the public area.

For a cash refund, you will have the option of getting a refund immediately in euros.

What products can you buy in duty-free?

Airport duty-free shops sell all kinds of products. You can buy food and confectionery, electronic devices such as telephones or headphones, perfumes from major brands, souvenirs such as key rings, soft toys and other decorative objects, spirits, and tobacco and cigarettes. If you do not yet have your plane ticket, use our flight comparator to find a cheap flight.

Is duty-free worth it?

Because products sold in airport shops are not subject to VAT, it would be natural to think that they are 20% cheaper. However, this is not entirely true.

Higher tax-free prices

Indeed, duty-free shops tend to charge higher tax-free prices than supermarkets to compensate for the high rent of their premises, which is often very high in airports. At the same time, duty-free shops mainly specialize in luxury products, and many stores take advantage of this reputation and the absence of taxes to increase their commercial margin.

Result? It happens very often that products sold are actually at prices much more expensive than those found in supermarkets and traditional stores.

But then, should you really avoid Shopping in airport duty-free stores? It all depends on the product you want!

Products more expensive in duty free than in supermarkets

Some products are sold at a higher price in duty-free stores than in traditional stores. This is particularly the case for confectionery, electronic devices, souvenirs, and certain spirits.

For all these products, it is better to stock up in a small local supermarket before your departure, because duty free stores tend to inflate their margin on them. Why? Because they know full well that sweets and souvenirs are “impulsive” purchases, which do not require any particular thought and meet an immediate need or desire.

Products cheaper in duty free than in supermarkets

Conversely, some products are worth it! Some spirits can be sold at lower prices depending on the country and the promotions offered.

The same goes for branded perfume, sold on average 10 to 30% cheaper than traditional perfumeries!

Finally, tobacco can also be interesting. With an average price of €100 for a cartridge in EU, it will not be difficult to find two or three times cheaper in duty free cartridges.

How to get a good deal in duty free stores?

To ensure you pay less for your products, we advise you to keep your smartphone with you during your shopping session. For each product that tempts you, try to find the price at which it is sold at home. This is the best way to ensure that you don’t pay more for a good bottle or a souvenir that catches your eye.

Duty free- different prices depending on the destination

Prices may vary depending on the destination you are going to. For example, if I return to Germany after a trip to the European Union, the items I buy in Duty-Free will be subject to taxes. 

On the other hand, if I return from a trip outside the European Union, the goods I buy are tax-free. Indeed, Duty-Free does not apply between E.U. member countries except in exceptional circumstances, such as Andorra, for example.

Another example: If I go on a trip from Germany to an E.U. country, VAT applies to Duty-Free goods. If I go to a country outside the E.U., such as Switzerland, for example, the goods purchased in Duty-Free are tax-free.

However, some items excluding alcohol and tobacco may have cheaper prices that will benefit all European travelers.

Duty free at airports: watch out for the limits! Because duty-free shopping brings little money to local governments due to the absence of VAT, certain restrictions have been put in place to prevent abuse.

Bottom Line

Duty free represents the unique opportunity to buy various products at reduced price, free from different taxes such as VAT. But, it’s crucial to bear in mind that not all products are always cheaper in duty free shops. 

The benefits can vary depending on the product type and destination. Luxury products like certain spirits and perfumes might offer significant savings. On the other hand goods such as electronics or confectionery could be priced higher due to the overhead costs associated with airport locations. 

It is important for travelers to stay alert, carefully comparing prices and taking into account the tax consequences of their travel routes. By staying informed and planning strategically, you can make the most of duty-free shopping and fully enjoy your travel experience.