Travel

Does airport duty-free actually prevent cash?

December 27, 2022

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No trip is full with out first operating the perfume-scented gauntlet of airport duty-free.

With the anxiousness of transit, check-in and customs behind you, you emerge into an assault course of the senses: gaudy whiskey shows, unique fragrances and novelty-sized chocolate bars siren-calling you to succeed in into your pocket.

But is duty-free actually the Aladdin’s cave of cut-price marvel it claims to be? Or is it only a well-marketed fable?

We needed to know so we seemed into the price of eight standard duty-free mainstays spanning a variety of classes and cross-referenced them in opposition to 12 main airports to see which supplied one of the best worth.

What is duty-free?

Duty is the tax you pay on taking a product throughout worldwide borders. This contains value-added tax and customs tax, which fluctuate by nation.

The story of duty-free begins on the windswept coast of western Ireland in 1947. It was the brainchild of Brendan O’Regan, a comptroller on the minuscule Shannon Airport, a preferred re-fuelling spot for flights ferrying celebrities (the one individuals who may afford transatlantic air journey again then) between the U.S. and Europe.

O’Regan realized these super-rich passers-by have been an untapped supply of nice wealth for Shannon. So he persuaded the Irish authorities to create a tax loophole that allowed him to promote farm meals and Irish whiskey to transiting passengers, with the same old customs taxes knocked off. They by no means left the airport, he argued, so why ought to they must pay native duties on merchandise they wouldn’t be consuming regionally?

The concept took off. Inspired by Shannon’s success, Amsterdam opened its personal micro free-trade zone in 1957, earlier than the idea went to the U.S. in 1962.

In 2021, based on Fortune Business Insights, worldwide vacationers spent $35.87 billion in duty-free shops, a determine that’s anticipated to greater than double by 2029.

The floor guidelines

EDUCATION IMAGES/UNIVERSAL IMAGES GROUP VIA GETTY

The world of retail has modified vastly because the Nineteen Forties. In immediately’s age of on-line reductions, year-round gross sales and rising competitors for shopper consideration, does duty-free really nonetheless prevent cash? And in that case, the place are you able to get one of the best offers?

We selected a handful of essentially the most iconic merchandise from the best-known manufacturers that you’d count on to see in any duty-free retailer internationally.

It is essential to notice that it’s unlawful in some nations, reminiscent of Turkey, to promote alcohol or tobacco merchandise, which means the costs of some objects weren’t available on-line, and couldn’t be offered remotely. In different circumstances — reminiscent of Madrid, Rome, Prague and Warsaw — our requests for additional info concerning some merchandise (cigarettes specifically) acquired no response from the airports and duty-free retailers we reached out to on the time of writing.

We then seemed for one of the best high-street and on-line costs we may discover for every product. In the pursuits of parity, we excluded limited-time presents or seasonal gross sales from our searches.

The merchandise we checked out have been:

Jack Daniel’s Tennessee Whiskey (1l).
Talisker Dark Storm Single Malt (70cl).
Taittinger Brut Reserve or Moet&Chandon Imperial Brut (75cl).
Hendrick’s gin (1l).
Dior J’adore Eau de Toilette for ladies (100ml).
Versace Eros Eau de Toilette for males (100ml).
YSL Rouge Pur Couture lipstick (3.8g).
Ray-Ban Wayfarer Folding 50 (or related Wayfarer) sun shades.
A carton of 200 Marlboro Gold cigarettes.

The airports we checked out have been:

London Heathrow (LHR).
New York JFK (JFK).
Rome Fiumicino (FCO).
Berlin Brandenburg Airport (BER).
Stockholm Arlanda Airport (ARN).
Adolfo Suárez Madrid–Barajas Airport (MAD).
Athens Elefthérios Venizélos (AIA).
Václav Havel Airport Prague (PRG).
Warsaw Chopin (WAW).
Istanbul International Airport (IST).
Mexico City Airport (MEX).
Dubai International Airport (DXB).

Key takeaways

In quick, VAT varies from nation to nation so there’s no laborious rule as to what it can save you in duty-free. In the U.Okay. the usual price for many items and providers is 20%. In Italy, it’s 22%; in Luxembourg, it’s 17%. The U.S., alternatively, levies no VAT. Though, like most nations, it does require shoppers to pay some customs tax upon taking sure items in another country.

In addition to this, duty-free costs fluctuate between airports relying on native prices like using employees, rents and charges, and different taxes. In different phrases, they will just about set their pricing as they see match. Duty-free costs in a single airport, subsequently, will not be in step with these in one other airport in the identical nation.

With that in thoughts, right here are some things we discovered:

Never purchase sun shades in airports situated in sunny nations.
On common, Sweden is likely one of the most cost-effective locations to purchase alcohol merchandise in airports.
Dubai airports are a number of the most cost-effective to purchase tobacco merchandise.
Buy your duty-free fragrances and make-up in Poland.
Do not purchase Champagne at New York City’s JFK Airport.
Duty-free isn’t all the time one of the best deal on the town. If there’s one thing you really need, all the time test on-line for a greater provide first.

Which airports have the most costly duty-free retailers?

Perhaps unsurprisingly, Dubai — whose duty-free emporium turned over $976 million in 2021 — is the most costly airport on common in the case of alcohol and wonder merchandise.

Interestingly, although, JFK is the most costly airport in our listing to particularly purchase Champagne — greater than $18 costlier than the typical throughout all of the airports we researched.

Sunglasses are most costly in sunspots Mexico City and Dubai — the 2 locations on our listing the place you’re most certainly to wish them.

Which airports have the most cost effective duty-free retailers?

When it involves booze, the Swedish capital Stockholm supplied one of the best worth on common of all of the airports we surveyed. There, a bottle of brut Champagne prices simply $34 (£28), in comparison with $39 (£32) at Heathrow and $50 (£41) within the grocery store. Meanwhile, a bottle of premium Tallisker scotch prices $59 (£49) in Stockholm and $74 (£61) at Heathrow.

However, if American whiskey’s your tipple, one of the best worth is in Warsaw, the place a 1L bottle of Jack Daniels prices simply $21 (£17), nearly $12 (£10) cheaper than at Heathrow and half the worth at British supermarkets.

Warsaw can also be the place you should buy the most cost effective magnificence merchandise, persistently cheaper than the typical throughout airports when taking a look at product-by-product comparisons.

As for tobacco merchandise, dedicated people who smoke shall be happiest in Dubai, the place 200 Marlboro Gold cigarettes value $27 — a 3rd the worth of the identical carton at Heathrow, and 500% cheaper than in a British grocery store.

What merchandise are cheaper to purchase at a shopping center or on-line as a substitute?

An on-line store may very well be extra sensible than utilizing duty-free throughout your travels. FILADENDRON/GETTY

The reality is, for lots of merchandise, there isn’t all the time a lot distinction between duty-free and the costs you will get at residence — particularly for those who’re ready to hunt on-line.

The key differentials are tobacco and alcohol, that are each normally taxed closely and subsequently may be purchased for lots much less on the airport.

But it’s a extra difficult image in the case of magnificence merchandise. A stick of YSL Rouge Pur Couture, for example, is $36 (£30) in British retailers — precisely the identical worth you’d pay at Heathrow. And the one two airports the place you’d pay lower than which might be Rome and Warsaw, for a saving of round $3.

The identical goes for equipment reminiscent of sun shades and watches. We discovered that, whereas airport costs could compete with what you’d pay in Ray Ban’s central London store, a fast search on-line will typically yield a much better deal.

What are the foundations of duty-free within the US?

You can’t simply refill a suitcase of whiskey and fragrance on a visit residence from Greece. But the U.S. does have pretty beneficiant allowances for what you possibly can carry again.

When getting into the U.S., vacationers can usher in one liter of alcohol and as much as 200 cigarettes duty-free, based on the U.S. Customs and Border Patrol (CBP) web site. residents are additionally entitled to carry $200 value of products into the nation with out paying extra taxes.

However, for those who go over your allowance, then you should pay tax and obligation on the whole worth of the products, not simply the worth above the allowance. You might also must pay import VAT and customs obligation for those who exceed your allowance.

Bottom line

To get a duty-free discount on something that’s not alcohol or cigarettes, it’s best to all the time perform some research earlier than you journey. Because duty-free isn’t all the time the nice deal it is marketed as.

An on-line sale or in-store provide can typically make lower-taxed objects cheaper at residence than in a duty-free store, particularly for those who’re shopping for make-up, the place you would possibly discover that the duty-free low cost isn’t higher than a present set supplied at your native pharmacy or magnificence retailer.

If you’re out there for a pair of designer sun shades or huge model fragrance, know forward of time what it prices each at residence and on the internet so that you’ll acknowledge a great deal if and whenever you see it throughout your vacation.