What is duty-free shopping?


Quick Answer

Duty-free shopping means an international traveler purchases items without the normal duties charged at other shops. Duties are fees or taxes charged by the government. Merchants who sell their goods to shoppers who are leaving the country get out of paying duties on the products, which means the savings go on to the buyers. Duty-free shops typically pop up near the last place travelers visit before leaving the country, such as airports, border towns, ports and on cruise ships.

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Full Answer

Duty-free shopping is often appealing because of the discounted price. Products purchased in duty-free shops in a foreign country are often cheaper than the same or similar items in the United States. Common items sold in duty-free shops include alcohol, tobacco, cosmetics, fragrances and luxury items such as jewelry or handbags.

While the consumer benefits from the duty-free nature of the shop when purchasing an item, the purchases could incur a duty when entering the U.S. The limit varies depending on where the items were purchased, the type of items and the duration of the traveler's stay in the foreign country. When returning from countries other than Caribbean countries or U.S. insular possessions, travelers are allowed up to $800 of goods without duties, as of 2015. The next $1,000 worth of items faces a 3 percent fee, while amounts above $1,800 face varying rates.

Alcohol is subject to volume limitations based on the regulations in the state where you enter the U.S. Most states limit alcohol to one liter per person to avoid duties.

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