8 Things You Need to Know About Duty-Free Shopping

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These days, the post-security departure areas of most big international airports look more like shopping malls than transit hubs. Often, you can’t avoid a long trek past a meandering duty-free shopping area before you get to your departure gate.

And while duty-free shops advertise their items as deals, the truth is that many aren’t. A new report from The Points Guy helps shed more light on this sometimes poorly understood shopping system, naming which international airports are best for which duty-free items. More on that below, but first there are some general basics you need to know.

The Basics of Duty-Free Shopping

1. When shopping duty-free abroad, the “duty,” or, more accurately, “tax,” that you avoid is the tax that’s in effect where the airport is located. You’re not avoiding a U.S. import duty, which is very low on most items, anyways. The main tax is usually a value-added tax (VAT), although a local import tax could be involved, depending on the location.
2. When duty-free shopping in the U.S., the taxes you avoid are the state and local sales taxes, and/or the federal excise tax that apply to some products.
3. Airport duty-free shops do not price items by simply dropping the tax; they price so as to be reasonably competitive in their local area. But the shops have to bear the usual retail overhead and also pay a stiff royalty to the airport, so the markups are still high.
4. When you’re returning to the U.S. after a foreign trip, the best buys are generally confined to items that are subject either to a stiff U.S. excise tax or to tight manufacturers’ price controls. That means liquor, tobacco, cosmetics, and fragrances typically offer the best deal.
5. Although they’re often available when duty-free shopping, cameras, watches, and other electronics are almost always cheaper online via sites like Amazon, Best Buy, Costco, or Walmart, than at any duty-free shop.
6. Some countries allow arriving international travelers to use duty-free shops before leaving the airport, but the U.S. does not. Returning U.S. travelers can buy duty-free only at foreign departure airports.
7. Liquor is probably the most popular duty-free buy for U.S. travelers. TSA rules allow travelers to bring liter bottles into the country as an added carry-on even on connecting domestic flights, as long as they’re packed in tamper-evident bags—which the duty-free stores provide with your purchase.
8. Returning U.S. citizens are allowed one liter of duty-free alcohol and a maximum of either 1,000 cigarettes or 100 cigars from most foreign countries. Some states impose tighter restrictions on import of liquor and tobacco than the federal restrictions. Conversely, “states may allow you to bring back more than one liter, but you will have to pay any applicable Customs duty and IRT,” according to U.S. Customs and Border Patrol.

The Best Places for Duty-Free Shopping

If, with all that in mind, you’re still ready to do some duty-free shopping, there are places that are better for it than others. The Points Guy ranked major foreign airports with the best duty-free prices for popular purchases as follows:

• Overall: Kuala Lumpur, Singapore, Grand Cayman
• Liquor: Kiev, Madrid, Grand Cayman
• Cosmetics: London (Heathrow), Dubai, Vienna.
• Fragrance: Madrid, Porto, London (Heathrow).
• Tobacco: Singapore, Hong Kong, Bangkok.

And the airports with highest duty-free prices, overall, are Santorini, Sydney, and Zurich. The study also found that prices can often vary among duty-free outlets in different terminals of the same airport. U.S. airports with the lowest duty-free prices for liquor are Atlanta, Miami, and Honolulu; and Honolulu, Charlotte, and Ft. Lauderdale are the best for tobacco.

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The fundamental key to duty-free shopping is knowing prices in the real world—what you’d pay at Amazon, Best Buy, Costco, Walmart, or wherever—and buying only the real deals when you recognize them.

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Consumer advocate Ed Perkins has been writing about travel for more than three decades. The founding editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuse every day at SmarterTravel.

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