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Duty-free stores are known for indulgences: alcohol and cigarettes, pricey face serums and chocolate bars that can feed a family of six. But these uncertain times of tariffs could cast the global retail outlets in a new light. No longer just an airport diversion, could they help keep your bathroom vanity, armoire and snack drawer well-stocked?
"People associate them with perfumes, chocolates and alcohol, but there are many other things available in duty free that could be a good deal," said Becky Blaine, a travel editor with The Points Guy, which in 2019 compared the prices of 13 items in 50 duty-free shops.
The first airport duty-free store was a "gimmick," said Scott Laird, a travel writer who has covered duty-free shopping. An Irish visionary named Brendan O'Regan hatched an idea to sell tax-free items to passengers stuck at Shannon Airport while their transatlantic planes refueled. The kiosk, which opened in 1947, sold Irish whiskey and other local souvenirs.
"They got an exception from the Irish authorities on local taxes on various products," Laird said. "So they were able to sell more by offering those products cheaper because they didn't have the local taxes. And that has taken off."
Duty-free retail is now a global juggernaut, worth $86 billion in 2019, according to the most recent publicly available data from the Duty Free World Council, an industry advocacy group. Airport stores around the world, from Detroit to Dubai, stock their shelves with international brands, plus a sprinkling of homegrown companies.
Despite their universality, they can still be confusing, especially when you start doing the math. So here's a smart shopper's guide to duty-free stores.
• What is duty-free shopping?
Duty-free shops carry products that are exempt from taxes and duties, including local, state and value-added taxes (VAT), and import duties. What you see is what you pay.
The stores typically occupy "stateless" places, such as border areas, airport terminals (post-security) and cruise ships; onboard shops are generally tax- and duty-free in international waters and closed while in port. Travelers can also find a few stand-alone stores, such as the sprawling complex in China's Hainan province.
"When you're leaving the country, you're in this weird nontaxable area," Laird said.
• Who can shop at duty-free?
As part of the arrangement, travelers avoid paying taxes on goods in exchange for not consuming them on-site. To ensure the shopper is departing the country, they will have to present a boarding pass and passport at checkout. Their purchases will be sealed and delivered to the boarding gate, reducing any temptation to crack open that bottle of Fireball or Tom Ford fragrance.
Travelers with a layover in the same country as their departure - such as a flight from New York to Los Angeles to Tokyo - can only shop at the last airport before they exit the country. Laird also warns of some "extraordinary situations."
Travelers bound for the U.S. proper can't take advantage of duty-free in Puerto Rico, because it's in the "same customs union as the mainland," Laird said. They can, however, shop for tax-free goods in the U.S. Virgin Islands. Europe has varying rules, because its customs unions, or trade agreements, do not neatly align with the Schengen area.
"So a flight from Norway to Germany doesn't have passport control," Laird said, "but it does have duty free."
In addition to shopping on-site, many duty-free companies, such as Duty Free Americas and Shop Duty Free, allow travelers to purchase products online, often with extra savings. The service is available at least 24 hours before takeoff. Shoppers must share their travel details, such as flight number, and pick up their gifts at the airport.
Domestic fliers can shop at duty-free stores, but not for tobacco, alcohol or other "customs-bonded" items (meaning duties have not been paid on them). Unlike international passengers, they must pay taxes.
"Duty-free shop items sold to non-international passengers are basically the same as regular airport gift shop purchases," Laird said.
On a recent visit to a Duty Free Americas at Washington Dulles International Airport, an employee repeatedly informed me that, as a domestic passenger, I could only purchase chocolate. Even without the $1.29 tax, the giant Toblerone bar was a bad deal. I paid three times too much for the instant gratification.
• What kind of products are available?
Duty-free stores stock their shelves with an assortment of products that are typically heavily taxed, such as liquor; cigarettes; cosmetics; and luxury apparel and accessories, including watches, handbags and sunglasses. Most also sell chocolate and other candy, and some carry local souvenirs, such as the almond cranberry quinoa clusters in D.C.-theme packaging (Capitol building, cherry blossoms) at Dulles.
The retailers will offer exclusive products, such as Lotte Duty Free's Dewycel mask set or Highloop picnic beach mat, available at Incheon International Airport in Seoul. At Dulles, I found a display of "exclusive" mascara pairings by Benefit.
"It's typically a specific flavor or a gift box or set," Laird said.
The item's size or packaging also might be unique to that airport location.
• What are the savings at duty free?
The amount of savings depends on an array of variables, such as the overall markup of the item and whether the product is made locally or imported. The price can vary by state, province, country, airport or even terminal.
In the European Union, the standard VAT for the 27 member countries ranges from 8 percent to 27 percent, though foreign visitors can apply for a refund at the end of their trip. According to the website for France's international airports, duty-free shoppers can save on average 20 percent, the amount of the VAT.
In general, Laird said alcohol, tobacco and cosmetics are "particularly good savings." He advised against buying alcohol in the United States because its taxes are comparatively low. But if you're traveling to Tahiti, he suggests picking up duty-free liquor there because the prices on the French Polynesian island are so high.
Laird has also scored some great deals on cosmetics. On a trip back from Auckland, New Zealand, he discovered one of his favorite serums for $40 less than what he would pay at home in Dallas.
In The Points Guy's 2019 study, the staff recommended buying:
• Alcohol in the Caribbean
• Cosmetics and perfumes in Europe
• Tobacco in Asia
For price-conscious consumers, the best duty-free shopping was in Kuala Lumpur, Malaysia; Singapore; and Grand Cayman Island. Sydney; Santorini, Greece; and Zurich were the priciest.
• Will tariffs affect duty-free prices?
If the cost of manufacturing rises, Laird said, companies could raise their prices. The duty-free stores could then pass along the higher prices to their customers.
"Duty-free will probably continue to be a cost savings for consumers," Laird said, "but retailers have a little bit of wiggle room on how they behave in the market, and that's the factor that we don't know."
However, Sanjay K. Dhar, a professor who studies retail at the University of Chicago Booth School of Business, said airlines and airports rely on amenities such as duty-free shops to entice travelers. Higher prices could erode their customer base, so they will proceed with caution.
"Duty-free shops might pick up some of the margins, so the prices at duty-free shops will become more attractive than what you would pay if you had bought it in the local market," Dhar said.
• Can you be taxed on duty-free purchases?
Yes, if you exceed the monetary or quantity limit set by customs.
"If your acquired articles exceed your personal exemption/allowance, the articles you purchased in Customs duty-free shop, whether in the United States or abroad, will be subject to Customs duty upon entering your destination country," Customs and Border Protection states on its online fact sheet.
In the U.S., you can bring back $200, $800 or $1,600 in personal goods, depending on the countries you visited. The agency also places caps on the amount of tobacco and alcoholic products. If you exceed the limit, customs will charge a flat-rate of 3 percent.
"At LAX once, I came in with some Tahitian pearls," Laird said. "I was over by about $400 or $500, and they collected $12 in duty, which I was happy to pay because I owed that."
Don't try to sneak in unclaimed goods. If you get caught, "you risk forfeiting the item," according to CPB. Other penalties include hefty fines and losing your Global Entry membership.
• Other tips and tricks
On international trips, you can bring more than 3.4 ounces of duty-free liquids, gels and creams through TSA security as long as you follow a few guidelines. For instance, the items must be wrapped in a "transparent, secure, tamper-evident bag" provided by the store. You must have purchased the items within 48 hours and have the original receipt.
Other countries may not follow the same protocols, so to avoid having your goodies confiscated, save your duty-free shopping spree for the final leg of your outbound trip.
For even greater savings, sign up for the free membership programs offered by the duty-free companies. You can receive discounts and other specials.
"If you make a big-ticket purchase on your outbound flight and then you see something you like at a store by the same operator on your return flight, you can use those points as a discount on your next purchase," Laird said.
At Los Angeles International Airport, Laird bought a silk scarf and earned enough points for a $30 serum.
• So, really, how good are the savings?
Definitely don't buy the chocolate, at least at the Dulles duty-free store.
In addition to the Toblerone bar, the family-size bag of M&M's and Milka Chocolate Bar (both $17) were significantly more expensive than the street price. The Silvana Raffia Tote by Guess was also a bust. The L.A.-based fashion company listed the same bag online for $103.50, down from $138 at the airport store.
I found the best deals in the cosmetics and alcohol departments, including savings on L'Occitane's Rose Body Lotion ($6 less), Moroccan Oil's conditioner ($4 cheaper) and Johnnie Walker, which is an even better bargain when you double up - two bottles for $46.
Take a beat and check the prices online, factoring in taxes and shipping or pickup. If the items cost less at home, you can be excused for paying a little more at airport duty-free if you wish to consume the products during your trip or on your first night back from vacation.
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