Duty Free Is It The Way To Roll?

Shopping In Duty Free
Shopping In Duty Free

Duty Free Is It The Way To Roll

Duty-Free shop (or Store) is a retail outlet whose goods are exempt from the payment of certain local or national taxes and duties, on the requirement that the goods sold will be sold to travelers who will take them out of the country. Which products can be sold duty-free vary by jurisdiction, as well as how they can be sold, and the process of calculating the duty or refunding the duty component.

Duty Free Is It The Way To Roll
Duty Free Is It The Way To Roll

Tax Free World Association (TFWA) announced that in 2011 Asia-Pacific, with 35 percent of global duty-free and travel retail sales, has more duty free than Europe and Americas, with these regions accounting for 34 percent and 23 percent respectively. 31 percent of sales came from the fragrances and cosmetics category, followed by the wine and spirit category with 17 percent and then comes tobacco products.

However, some countries impose duty on goods brought into the country, though they had been bought duty-free in another country, or when the value or quantity of such goods exceed an allowed limit. Duty-free shops are often found in the international zone of international airports, sea ports, and train stations but goods can also be bought duty-free on board airplanes and passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and both Canada and Mexico have duty-free shops for car travelers.

In some countries such as Israel, any shop can participate in a reimbursement system, such as Global Blue and Premier Tax Free, reimbursement this is lightly different than VAT exemption, wherein a sum equivalent to the tax is paid, but then the goods are presented to customs and the sum reimbursed on exit.

VAT and Duty Free the Difference

Any traveler living in a country outside the EU VAT area Or a country with such a system such as Israel.

Is entitled to shop tax-free at participating shops in the EU. Tax free shopping differs from duty-free shopping as the traveller pays the VAT on goods in the shop in the usual way, and can then request a refund when exporting the goods. There are a number of tax-free operators who can support both the stores and the traveler through this process. To qualify, the traveller must:

  • have residency in a non-EU country
  • have a maximum stay of six months within the EU
  • make purchases no more than three months prior to export
  • obtain a form from the shop where he or she makes the purchase (depending on the tax-free operator)
  • present the form, and in certain cases the goods, to a customs officer or DIVA machine when leaving the EU, where they will be stamped

Only goods meant for personal use are eligible for the refund. The stamped forms and receipts can then be sent back to the retailers, or their agents, for a refund.

In most cases, a minimum purchase applies to use the tax-free shopping scheme. The actual amount of VAT reclaimable depends on the VAT rate applicable in the particular country to the goods purchased, and may be subject to a deduction for administration fees.

Are You Really Saving Money?

The mere absence of duty or other taxes on goods being sold does not assure that they are bargains. Costs of identical goods from different duty-free sources can vary widely. They often depend on the presence or absence of nearby competition, e.g., airport stores, especially if all at any airport are owned by a single firm such as Dufry. Also, prices can often be driven upward by the costs of buyer convenience, e.g., in-flight sales by airlines. Many airlines, such as EmiratesEl AlSingapore Airlines,  Middle East AirlinesUkraine International Airlines,  Delta, and Avianca, offer duty-free sales in flight.

Alcohol is often cheaper because it is a high tax item in most countries however recently it has been often not the case.

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