With time to kill on the airport, there’s a big chance you’ll end up in one of the duty free stores. I mean, no taxes.. sounds like a deal! And don’t we all love a great bargain? Discount here, deal there, free gift with your purchase, a special edition or a travel exclusive; it’s a psychological mind-game that make us irrationally want to spend money on things we don’t need. Just because it’s ‘cheap(er)’. But is it really cheaper? Let’s get a little deeper into duty free shopping!
Okay, first let me explain a little about the tax-thing. I promise I’ll keep it short!
So, as you may know: every country has its own tax rates that influences the price of a product in that country, like duty tax (that a country places on imported goods) and value added taxes (VAT). For example, I’m from The Netherlands and our VAT rate is 21%, but the tax rate in Russia is only 18%. This means that you’d expect your favorite perfume to be cheaper in Russia than it would be in Holland. But how does this work with duty free stores on airports?
Duty free shopping
Duty free, or tax-free, comes from the conception that as soon as you pass customs, you technically leave the country and enter an international zone where local import taxes ‘don’t exist’. This means that you avoid paying the duty tax that a country places on imported goods that are usually included as part of the product’s list price. In addition to that, duty free shops in airports are also tax-free (excluded of value added tax).
They came up with the duty free zone idea back in the 18th century, when it was actually a clever way to make money out of travelers who were in transit (and it pretty much still is). Irish Shannon Airport was the first airport that introduced the duty free zone in 1947 and nowadays you can’t imagine an airport without.
Is duty free shopping really cheaper?
Over the years many different platforms researched the duty free matter. It turned out that in a lot of cases it’s not necessarily cheaper! These stores are located in the so called international zone, so they won’t place taxes on products, but still have other costs to cover. Think of 24/7 employees, rent (I bet that won’t be cheap and employee benefits and taxes. That’s why they have other base prices; prices that can be higher than the usual list price or retail value and might not benefit you at all!
And okay, some products do get cheaper on the airport, but the weird thing is that’s it usually the unhealthy stuff like liquor and cigarettes…😅
So if you’re planning on buying something; it’s good to do your research!
Tips for smarter duty free shopping
There are actually ways to be smarter about your duty free shopping! Here are some tips:
- If you’re really in need of something make sure that you go to the airport prepared. Be aware of the retail prices, because the product might be cheeper at home or at the country of your destination (for example, when their tax-rate is lower).
- Websites like Duty Free Buzz and Duty Free Addict will let you compare prices of products across multiple international airports. This way you know what to buy on what airports to get the best price!
- Be aware of the currency and conversion rates. In some cases it may be beneficiary to pay in cash with the local currency instead of using your credit card (also a great way to spend that leftover foreign currency!).
So, duty free or duty fool?
Sure, no taxes and all the sale and discount signs are tempting, but it would be foolish to think those duty free shops were only put there to save you money. So, you might want to reconsider and check your facts before you’re getting into that shopping spree mode….
And if you do decide to do some shopping, don’t forget about your allowance! But to be fair, why bother carrying all that extra weight when you can find the best deals online and save more to travel?