Tax Free Shopping in Duty Free shops explained, what is the difference?

People expect bargains on their travels, Tax Free shopping in airports or on airlines has always conjured up images of super cheap prices in the mind of passengers. Today, airports are lined with Duty Free stores, airlines with the seat-back catalogue and now that touch screen video. All designed to make you spend when travelling.

But, for the travelling shopper there is a confusing array of rules, regulations, terms and prices to negotiate on the way to those bargains. Not to mention the Security or Customs hurdles that have to be overcome.

One of the most frequented search terms online is “what is duty free?“, the other is “what is the difference between Tax Free and Duty Free?“.

Please let us explain in a simple fashion.

Cigarettes, tobaccos or cigars and alcohol like duty free whisky or wine, are all sold in Duty Free Shops without the inclusion of the normal Duties (Taxes) which are levied on these products in the local market. Originally these special taxes were known as “Excise Duties”. In high Taxation areas, such as Scandinavian countries, these products cost a fortune in their respective domestic markets due to these local (Excise) taxes and generally speaking, tobacco prices are just going up and up all around the world.

So, when you fly, these products can often be bought much cheaper, because these special local taxes (Excise Duties) are discounted from the price for international travellers. Hence the name (Excise) Duty Free shop.

Cigars duty free
Duty Free Cigars in the Dominican Republic

Add to that the relevant local sales taxes such as the Value Added Tax (IVA, VAT, Gst), then the savings are substantial in the airports because both taxes are deducted for you.

In some countries the different taxes added to the price of your Marlboro cigarettes, Absolut vodka or Johnnie Walker whisky can account for up to 70% of the local domestic price. Now you know why you can find a carton of Dunhill cigarettes for +/- US$20 in Dubai Duty Free, compared to a much higher domestic price elsewhere.

And then there is what many airport stores describe as “Tax Free” prices and it is often a clear distinction, such as in the United Kingdom where stores used to be split in two between the Tax Free and Duty Free product sections.

Of course, this depends on where you are and in which airport arrivals or departure lounge you are in, because every country has their own local rules. But, the simple rule of thumb is that Tax Free free really means only less the local sales tax, value added tax or gst as it is often known in Asia.

These sales taxes are usually nowhere near as high as those Excise Duties levied on liquors or tobacco and more often than not, just a percentage of the local sales price. Perhaps between 5% and 20% of the net price.

So, products like clothing, fashion goods, perfumes, watches, cosmetics, food, chocolates and really anything else you see in an airport store, (apart from tobacco or alcohol), only has the local sales tax deducted. Hence the different description of “Tax Free”.

Tax Free airport store
Next Tax Free, UK airport fashion store… there is no “Excise Duty” on fashion items, so the goods sold here are Tax Free not Duty Free.

What does this mean?

It means that the savings on goods described as “Tax Free” in airports or on airlines, may not be as great as you think. Often, such products can be bought locally at your destination at the same prices or cheaper. Why, because many destinations have lower local sales taxes and lower prices and/or their currency is weaker too. All these factors bring the prices down compared to your home airport.

Of course, much depends on where you live, your local tax rate, your currency value and where you travel to.

What is Duty Free
Tax Free or Duty Free?

Which is why we advise travelling shoppers to use our global airport shopping guide and to compare the prices, products, rules and regulations at all their travel points, before they fly.

And this is the service we provide. So, if you wish to pre-plan your holiday shopping, you can check and compare best duty free prices with our search portal.

Just choose your language by clicking your flag, enter your destination in your own language and “go”!

Buying Duty Free cigarettes for price savings gets more complicated

Buying Duty Free cigarettes or tobaccos is still about the best price saving product line when you travel, but buyers need to beware of the growing number of restrictions being imposed at Customs on arrival.

cigarettes duty free
Duty Free cigarettes not permitted

The original duty free shop was the one that sold cigarettes and alcohol at hugely discounted prices, it was this concept that the phrase “duty frees” was built on and has since spurned a global retail hub in airports and on airlines for those seeking a bargain.

But, times have changed and there are more changes to come for the smokers and drinkers amongst us.

Let the buyer beware, especially the smoker and they are best to check before they fly to find out what they can buy in an airport and more importantly, what they can take in to their destination.

duty free cigarettes
Airport Duty Free cigarette display

In 2016 there are numerous countries that will not permit the import of duty free cigarettes. The list is getting longer with Singapore, Hong Kong, Australia, New Zealand, Sr Lanka and Barbados stopping or reducing the duty free cigarette allowance. These rules apply in some countries, even if you offer to pay the tax on your tobacco.

Next year, the duty free cigarette allowance into Australia for travellers will be reduced to 25 sticks* or one pack, down from 50 sticks*, 2 packs at present. Other countries are planning similar reductions in the future. In the UK airport shopping for cigarettes is now conducted in a special area behind a screen, another rule to deter the sale of duty free tobaccos.

Oddly, there is one known exception where the Customs limits and exemptions have increased, Switzerland. This European, but non-EU Member State is one of the few to increase the allowance to 240 cigarettes on arrival. But, you can only take advantage of these new limits if you buy at the Swiss airport duty free arrivals shops. Why, because most, if not all other airports do not sell cartons of 240 cigarettes (12 packs of 20 sticks).

Duty Free Allowance
Airport Arrivals Store Switzerland cigarette allowance increased to 240 cigarettes

You can check all the world-wide duty free allowances, limits and restrictions, just go to our search pages, enter your destination and click the red Customs icon for details as to what you can buy, or not! Some pre-travel research might just save you time, money or even having those cheap cigarettes confiscated on arrival.

*The conventional cigarette pack contains 20 sticks, the carton 10 packs totalling 200 cigarettes. Many airports now sell multi-packs of 400, 600 or even 1000 cigarettes. It is very rare to find airport duty free stores selling packs of 25 cigarettes or cartons of 240 (12 pack of 20).

This means that if you want to take in 25 or 50 cigarettes into places like Australia or New Zealand, you need to buy them in the airport arrivals stores located in these countries.

** Duty Free on arrival does not promote or sell duty free cigarettes, tobaccos or cigars. We just provide useful information to assist consumers who may wish to buy on their travels.

Pay £5 extra on arrival at the airport to skip the Passport Control lines?

We have all been there after a long haul flight and arriving at the airport, the long lines at immigration to clear the Border Controls, or even after a short distance, when the wait in line is potentially longer than the flight you have just taken.

Just announced in the British Media, Scotland’s Edinburgh airport have come up with a novel solution… “pay a £5 premium to jump the queues and line up in the fast-track Passport lane“, thus beating the wait for a price.

airport arrivals
Pay for fast airport arrival?

Airports around the world are big into what they call “non-aeronautical revenues”, this means any money they can raise from outside the normal landing fees. Business operations such as airport duty free shops, catering, car parking, transport all fall under this category and now, so do new streams such as fast-track for security or for the airline check-in facilities. Other schemes include paid for wifi or the use of airport lounges if not a frequent flyer.

arrivals duty free
arriving at the airport* on time then finding long lines at Passport Control?

But, this is the most creative airport ancillary revenue concept to date and one that has already created uproar on social media. Oddly, there are thoughts that this new option will fly, especially with business travellers, but the idea leads to all kinds of complications.

What happens, for example, if you are a non British or EU Citizen arriving passenger? Will you be able to remove that long wait to be cleared into Great Britain? Will your fast-track entry be a person or an e-gate? What happens if you pay but the wait time is no different to the non-payers, will you get a refund and how?

There is enough to do at the airport on arrival already, that long walk to the gate, immigration procedures, collect baggage, collect duty free perhaps, clear Customs, change money, meet friends and family, transport to your destination.

What next, a fast track line for a car park exit ticket? Like a sort of “reverse drop off charge”?

One thing is for sure, this debate will run and run and if introduced, every airport will copy it, because they will not be able to resist the new revenue stream.

To find out more about global airport shopping facilities at arrivals around the world, check with us at duty free on arrival ….

*Ryanair are one of the world’s greatest initiators of ancillary revenue streams and we are not suggesting that this new Passport fast-track initiative is their idea. It’s just that Ryanair are one of the world’s best on-time airlines and there is a great photo of them arriving at Barcelona airport early….. already saving their passengers time and money! So the airline gets you there early or on time and the airport then charges you not to lose what you have gained?

Oslo airport reveals the world’s largest duty free arrivals store

Buying duty free on arrival is a little known concept to European or North American travellers who have always expected to buy their tax free goods on departure and carry them around the globe for export. But there are two countries in Europe where you can also buy on arrival, Switzerland and Norway.

At Osyeslo’s Gardermoen airport, inbound arrival duty free shopping has been available for over 10 years, breaking the traditional convention of outbound selling in the departure lounge. Yesterday the Norwegian airport authorities and their partners Travel Retail Norway, previewed their new store in the baggage claim area. With 4000sq metres it will eventually be the largest store in the world to shop for duty free on arrival, rather than on departure.

Around the globe, flyers can shop on arrival in most Asian airports, some in China, Australasia and across the Pacific in all of Central and Latin America.

Duty Free on arrival Thailand
Bangkok arrivals duty free store baggage claim

In Brazil and Argentina more than 30% of the trade is carried out in stores on arrival in the baggage claim area. In fact, the Brazilian duty free allowances allows for the purchase of up to 12 litres of whisky when purchased in the arrivals hall and you can see the cases stacked high, ready for the arriving passengers.

Overall, the world is starting to grasp the practicality of the concept of buying on arrival. Not only does this facilitate e-commerce for the stores, who have now introduced online duty free shopping, but this leads to easy collection of the goods too. Airlines are also waking up to the idea by introducing home delivery for some of the products they sell on board. Technically these delivered goods are neither tax or duty free, the airlines just pay the tax for you, so they can deliver to your home.

Next year, it is slated that Russia and their Eastern European neighbours will also introduce shopping on arrival in airports and Japan has also decided (again) to explore the idea.

Clearly the traveller is moving online and is pre-planning the journey in advance, whilst seeking quick and easy solutions to smooth this journey, including shopping. Consumers looking for duty free bargains are seeking the best prices by comparing in advance. These arrivals facilities add to that convenience and Oslo airport has seen the opportunity and grasped it with their giant new store.

To check where also you can buy on arrival and the duty free allowances for that country, check before you fly!