What does ‘tax free’ mean? – The guy who scored

If you’re like me, you often browse strategically placed items near checkouts at grocery stores as you wait in line, asking yourself if you need just one more item to add. Your shopping cart does not.

The idea of ​​buying things you don’t necessarily need also pops into my head at airports from duty-free shops. They lured me in with the charm of saving money by not shopping Import tax on goods shipped internationally.

I most recently shopped for duty free items at Paris-Charles de Gaulle Airport (CDG) after spending a week trying to find simple crackers and pure chocolate for Mother’s Day no result.

I not only found some in duty free shop at CDG Terminal 2, but I also realized that if I buy something for her, I should probably buy something for my dad, too. As a result, I bought two boxes of cookies and a chocolate bar.

Whether your next international trip coincides with shopping for a loved one or you just want a pre-flight snack, here’s everything you need to know about duty-free shopping.

What is Tax Free Shopping?

If you’ve ever flown internationally, you might at least notice (if you don’t want to buy) duty-free items at the airport while on your way to another country.

In fact, some of the larger airports, including Heathrow Airport (LHR) and Los Angeles International Airport (LAX)there are nearly 20 duty free shops to choose from.

However, what exactly does “tax free” mean? It’s all tax related.

Duty-free stores allow tourists to shop without being taxed locally, so you can buy certain items tax-free as long as you ship them across international borders, each US Customs and Border Protection.

Duty-free shops are usually located in international terminals, although regular terminals with international flights may also offer duty-free options.

Visitors can buy a variety of luxury items at these stores, including food, Alcohol, tobacco, accessories, perfumes and beauty products. Some of the most popular duty-free store brands are Dufry, DFS Group, International Shoppes, Duty Free Americas, and World Duty Free.

Along with duty-free shops, you can also shop duty-free at some airport retail stores. For example, British high-fashion brand Burberry says “You can buy duty-free items at select airport stores”, including at the LHR.

Tourists can also purchase duty-free items online from duty-free shops and individual retailers. After deciding which item to buy, they can choose a pre-order time to receive the order.

To buy duty-free items, look for duty-free shops at your airport. Most airports list their various stores online. However, you can also search specifically for duty-free stores, as illustrated below with Chicago’s O’Hare International Airport (ORD).

Before going to the duty free shop, remember to take boarding pass as you may be asked to show this as proof that you will be leaving the country on your upcoming flight.

If you buy a liquid at a duty-free store, such as alcohol, perfume, or lotion, know that duty-free items are Limit liquid carry regulated by airport authorities, so you can pack larger liquids in your carry-on baggage when returning to the United States. This is the case even if you have a connecting flight.

To avoid any problems getting your items through security, keep each purchase in a tamper-proof plastic bag wrapped by duty-free store staff until you leave for the airport. Keep your receipt as you may be asked to present it as proof of your purchase.

Some countries place purchase limits on certain items, such as tobacco and alcohol. They also limit how much you can spend on international purchases without being charged tax.

Currently, Americans can spend up to $800 within 31 days without being taxed on their purchases, according to US Department of Homeland Security. To verify your country-specific tax-free limits, visit Duty Free Americas website.

Read more: Where is the cheapest duty free shop? We checked 50 airports to find out

One TPG cost comparison 2019 of items from duty-free stores at more than 50 airports across six continents concluded that the prices of items at duty-free stores vary by location and sometimes even between stores. different tax exemptions at the same airport.

In general, buying alcohol here is the cheapest Caribbeancosmetics and perfumes in Europeand cigarettes in Asiabase on the research.

To get the best price possible, do your homework before your trip. Research in advance the prices of similar or identical items at airports with many duty-free shops. Also, be sure to compare that price with non-tax-free shops.

Don’t forget to consider the strength of the US dollar against your local currency. You can do this using a currency converter like CAR.

If you’re traveling to Europe, keep in mind that duty-free shops don’t charge value-added tax, so you can save up to 27%, depending on which country you’re from.

“The key to a successful duty-free purchase is calculation. There are some good deals out there, but I often find that I can get a better price at home,” said Scott Mayerowitz, editor-in-chief of TPG. . “Know your prices and exchange rates. Don’t be afraid to take out your phone and compare prices with online retailers.”

In addition to airports, some cruise ships, such as Royal Caribbean’s new marine wonder and Norwegian Cruise Line’s new Norwegian Prima There is a duty free shop on board.

“All the larger ships have an on-board store, usually a handful, selling everything from apparel with the cruise line’s logo to souvenirs,” says Gene Sloan, lead writer for TPG.

“Even if not specifically labeled exempt, in theory they are all tax-free in the sense that there are no local taxes as long as the ship is at sea in international waters. For this reason. , cruise ships won’t open shops on their ships until they’re out in international waters — so they don’t have to collect taxes.”

Can you use miles for duty-free shopping?

Although you can use some mileage at duty free shopsyou’ll want to calculate how much value you can get from using your miles on flights versus duty-free items.

For example, you can spend 4,500 Emirates Skywards miles for a $20 credit at a duty-free store in Dubai International Airport (DXB)saves you just 0.4 cents per mile, way below TPG current valuation of Emirates mileage for 1.2 cents per person.

Before redeeming miles this way, compare that rate of earnings with the price of a The Emirates flights using Skywards miles versus cash.

For example, you can book a round-trip flight from John F. Kennedy International Airport (JFK) to Milan Malpensa Airport (MXP) for 45,000 miles plus $141 in taxes or $804 in cash this April. . By using miles, you will get a conversion rate of about 1.47 cents per mile, which is much higher than the tax-free redemption option.

Instead of using your miles for duty-free purchases, you can use them to book an Emirates flight, which can offer more value than using your miles for duty-free purchases .

Using your miles to book flights instead of using them for duty-free purchases could be a better deal on airline currencies.

Buying duty-free items may not always make financial sense. However, when it happened, Use a credit card with no foreign transaction fees when making your purchase. Also, keep in mind how difficult it is to find the item you want to buy.

“I love bringing home wine, but I know the prices at my local store and know if something is a bargain,” says Scott. “Usually, I just buy local wine that I can’t find at home. And even then, I need to factor in the hassle of bringing home a bottle or two and the risk that it might break in the middle of the day. throughout the journey.”

If the value you gain from buying the item outweighs the inconvenience of bringing it home, the item may be worth the investment — even if you have to spend some extra money.