Duty Free and VAT Refund Shopping for the International Passenger
What is duty-free shopping?
Are there any bargains?
How can I find bargains
at Duty-Free Shops?
What can I expect to find in Duty-Free shops?
How does Duty-Free shopping differ between the US and other countries?
What about in-flight
Duty-Free shopping?
What about those
"Substantial Savings" they advertise
What is VAT Refund Shopping?
What is duty-free shopping?
When you buy an imported item in your (US) local store, you pay an import
duty in addition to the usual wholesale price and retail mark-up. The government
(almost all governments all over the world) imposes duty on imported goods to
slightly raise their prices to the retail customer and make domestic goods more
attractive to the comparison shopper.
When you travel outside the United States, you are allowed to bring back
$800/person in foreign-purchased goods duty free. (Note that the duty free
allowance is different for travel to certain countries, particularly the
Caribbean.) Therefore, if you purchase, for example, a French scarf in France
you will be buying a French-made domestic good and will not pay duty. When you
bring the scarf home under your $800 duty-free allowance, your net price will be
the duty-free French domestic price.
Note that the duty free allowance was raised from $400 to $800 effective Nov
4, 2002. Full information may be found in the
US
Customs Fact Sheet.
"Duty-Free" shopping is a way that you can buy foreign-made goods
as a departing international passenger without paying import duty at the time of
purchase. You must then schlep the item out of the country with you and, unless it is
given away or consumed during your trip, you must declare it as one of your
foreign purchases when you return. If you make a lot of purchases during your
trip, your "duty-free" purchase will not be duty-free if you have exceeded
your $800 limit.
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Are there any bargains?
Theoretically, foreign-made goods available in airport Duty-Free shops
"should" be cheaper than similar goods on the shelf of your local
department store. Are they really? The only way to know is to comparison-shop
and your ability to comparison-shop is limited when you are on a flight that will
leave within the hour.
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How can I find
bargains at Duty-Free Shops?
Before you leave for your trip, consider what foreign-made goods are of
interest to you. Make a list and jot down the prices you find in your local
stores. When you arrive at the airport, visit the Duty-Free shops and
compare the prices you see with what is available in your local stores. If there
are substantial savings, then go for it. If not, then wait and shop when you
arrive at your destination or just wait until you return from your trip.
Avoid Buy-or-Die Shopper's Hypnosis!
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What can I expect to find in Duty-Free shops?
You will see a lot of alcohol and tobacco products, as those are free of
import duty and, usually, any state or local vice taxes. Alcohol and tobacco are
usually consumed by the purchaser during the trip and, therefore, do not need to
be declared upon return. They are also attractive as gifts to your overseas host
and hostess.
You will also see expensive, imported purses, scarves, small leather goods,
candies, electronics, watches and other designer and status-symbol items.
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How does Duty-Free shopping differ between the US and other countries?
It is very different.
In many other countries, it is common for a government official to check
departing passenger's documents. In such airports, all passengers have to pass
an official "Passport Control" booth before entering the departure
lounge. The only exit from the departure lounge is through Customs. Therefore,
all persons in the departure lounge are "officially" departing
international passengers and can freely visit any duty-free shop. The passenger carries
her own purchases out of the shop, then eventually on to the plane. If
the passenger were to suddenly change her mind about her trip, she would exit
the departure lounge through Customs and would be asked to pay duty on anything
she had purchased in the duty-free shops.
The US does not require departing passengers to present a passport or other
documentation when leaving the country. Therefore, departing passengers need
only present their passport and airline tickets and boarding passes to airline
officials and to airport security employees. No US Government
official routinely checks departing passengers' documents.
If US airport duty-free shops were open to anyone, shoppers could
purchase goods without ever leaving the US. For that reason, US duty-free shops
and purchases are carefully controlled to insure the purchase leaves with the
departing international passenger. A shop employee guards the entrance to the
store and requests your boarding pass before allowing you entry. If you do not
have a current boarding pass, you will not be allowed in the store. When you
make your purchase, you are not allowed to carry it out of the store, but are,
instead, handed a receipt. Your purchases are put in a carry-bag with a copy of
your receipt.
Just before your plane is opened for boarding, a duty-free shop employee
takes all purchases for that flight onto the airplane jet bridge. Once your
boarding pass is accepted by the airline and you step foot onto the jet bridge,
you are officially and legally "gone". You walk down the jet bridge,
hand your receipt to the duty-free shop employee, receive your purchases in
the carry-bag, then carry it on the plane and stash them in the overhead bin.
You have no opportunity to give your duty-free purchase to a friend staying
behind in the US, perhaps as a passenger on a domestic flight.
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What about in-flight
Duty-Free shopping?
The airlines usually offer in-flight duty-free shopping. This is of use to
someone who had planned to buy something in the airport shops, but forgot or ran
out of time. Bored passengers see it as "something to do". When you
see the duty-free cart in the airplane, get out your comparison-shopping price sheet and check out the prices.
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What about
those Substantial Savings they advertise?
Remember that Duty-Free shopping is Buy-or-Die Marketing at its finest. They
advertise Substantial Savings in an environment where the customer has no
opportunity to comparison shop. Buy only what you need and only if the price is
in line with what you would otherwise pay. Bear in mind that you have to carry
your purchases with you throughout your trip (unless you consume or
give them away) and if you bring your purchases back with you, the prices
will be part of your $800 returning passenger allowance.
Fore-warned is fore-armed! Bring your comparison shopping price list with
you. Then, if you see a good price, you will be ready to take advantage of it,
knowing that you have truly found a bargain.
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What is VAT Refund Shopping?
Value Added Tax (VAT) is a national sales tax imposed on purchase. It is
called General Sales Tax (GST) in some countries.
You can get the VAT you have paid on certain purchases refunded to you when
you leave the country on your way home or to the next stop on your trip. Note
that all European Union (EU) purchases are eligible for non-EU residents when
they leave the EU. So if you buy things in the UK and France, then leave France
for home, you will get your refund for all purchases when you leave France.
Don't worry about it in the UK-France leg of the trip.
It works like this: You go into a store, find something nice. Before you finalize the purchase,
you tell the clerk you want a VAT refund. The clerk processes your purchase,
charging you the whole price, including VAT, but also gives you a special
receipt that indicates what you paid in VAT.
When you cross the border to leave that country (or leave the EU) you go to a
special Customs office in the departure lounge of the airport, or to a Customs
office in border cities if traveling by road or train. The Customs officer
inspects your purchases, then stamps your VAT receipt. You can either mail the
stamped receipt back to the store or turn it in to a commercial outfit that
processes refunds. (See Global Refund
for more information.) Note that you must pack your refundable items in your
carry on luggage as you have to show the actual items to the Customs
officer. Some airports have facilities for this procedure before you check in
for your flight. If so, then you can pack your refundable items in checked
luggage. Check the departure airport web page before you leave home for exact
information.
Some countries have a minimum purchase in one store at one time to
qualify for VAT refunds, and this minimum can be several hundred dollars. Some
stores do not want to hassle with VAT refunds. Those that do usually have a
"Tax Free Purchases for Tourists" or similar sticker in their window.
Ask before you buy.
VAT refunds are a rip-off, in the opinion of a CompuServe Travel Forum
member. Read about Brenda's experience in the Frankfurt
airport.
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08/09/2003
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