What Does Duty-Free Mean? – BW

Navigating through the maze of duty-free shops filled with liquor bottles, cigarettes, and cosmetics can feel endless, especially when you’re on a budget post-vacation.

Despite the overwhelming selection, duty-free stores offer excellent deals on items that typically come with high taxes.

Here’s everything you need to know about duty-free stores and some tips to keep in mind when shopping for duty-free goods.

Duty refers to the tax imposed on purchased goods, which can include value-added tax, consumption tax, or import tax. “Duty-free” means purchasing items at cost without any additional tax.

A duty-free store allows you to buy alcohol, perfume, cigarettes, chocolates, and other popular items without any additional taxes. Typically located after passing immigration in an airport, duty-free stores are accessible to international travelers.

To make a purchase, you’ll need a boarding pass, which is scanned along with your items at the register. This process prevents airport employees from buying goods without paying taxes.

Your boarding pass destination also determines your purchase allowance and ensures you’re not buying prohibited items for the country you’re traveling to.

After passing immigration at an airport, you enter a transit zone where the local tax laws no longer apply since you’ve technically “left” the country you’re physically in. The same concept applies to airports with connecting flights, allowing you to shop duty-free during layovers in the terminal.

While you can usually take your items with you, some airlines may distribute duty-free merchandise to passengers at the boarding gate.

Certain duty-free shops are located in the arrivals terminal, allowing you to stock up on items like alcohol or cigarettes upon landing in a country with high taxes on these products.

For example, if you purchase perfume at a store outside the airport during your trip to Paris, you’ll likely pay a value-added tax on that item. Additionally, you may have to pay an import duty on the same perfume when you arrive in the United States, depending on the value.

However, if you buy the perfume at a duty-free shop in Paris Charles de Gaulle Airport, you won’t have to pay the value-added tax on the perfume (although you may still be subject to tax upon returning to the US, depending on the cost).

U.S. Customs and Border Protection (CBP) provides tax-free exemptions for up to $1,600 worth of goods, depending on your travel destination and duration of stay, as long as the items are for personal use. If you don’t intend to resell the items, you won’t have to pay taxes, even when crossing international borders.

When shopping at a duty-free store, it’s important to follow specific rules.

When buying alcohol or tobacco, be sure to check the types of exemptions outlined by the CBP and when they are applicable. Exemptions vary based on your travel destination and duration of absence.

CBP travel exemptions allow you to bring back a set amount of goods without paying taxes when entering the United States. The exemption amount depends on your point of origin.

• $200: This is the minimum exemption for all travelers, regardless of their departure point.

• $800: Applies to most travelers from countries other than U.S. insular possessions, as well as travelers to the US from the Caribbean and certain South American nations.

• $1600: For returning U.S. residents coming directly from a U.S. insular possession.

Specific limits also apply to items like cigarettes and alcohol content. Refer to the complete list of regulations here.

If you purchase alcohol at a duty-free store before entering the US and have a layover, you can bring it with you on your connecting flight.

The alcohol must meet the following criteria to be allowed in your carry-on:

• Alcohol content between 24% and 70% ABV (48 to 140 proof).

• In a clear, securely sealed bag provided by the retailer. Any tampered or opened bags will be confiscated.

• You must have the receipt showing the purchase within the last 48 hours.

Even though items in duty-free stores are free of tax, prices can still be high. Compare prices of desired goods in your home country, destination country, and duty-free shop to determine potential savings.

Take advantage of additional savings on duty-free purchases by using a credit card that doesn’t charge foreign transaction fees. Review your credit card terms for more information.