What You Need to Know About Duty-Free

Liquor and tobacco are still the best buys.

1. These deals are smokin'. Buying duty-free means you can purchase items abroad, up to a certain amount, without having to pay local import taxes and other tariffs. So the best bargains will be on goods that are also heavily taxed in the U.S., such as liquor and tobacco. For example, a liter of 12-year-old Chivas Regal Scotch whisky costs about $48 in Washington, D.C. But at World Duty Free in Scotland's Edinburgh airport, you can grab the bottle for about $34.

2. Be an educated consumer. Luxury goods, such as designer bags and fancy watches, made up 35% of all duty-free sales in 2009. But you don't want to spend a fortune just because everybody else is. To be sure your high-end purchase is truly a bargain, go online to compare prices. Sites such as Dealio.com, Pronto.com and PriceGrabber.com can help you scour the Web to determine a reasonable price range. Suzy Gershman, author of Where to Buy the Best of Everything (Wiley, $20), had her eye on an Herms watch for years before she eventually snagged it duty-free in Prague for $1,000 less than her target price. "Like anything else," she says, "it takes hard work and research." And Gershman says to make sure you're comparing identical products. That's particularly true for perfumes -- you need to note both the type of fragrance and the size of the bottle.

3. Get a jump-start. Some airports let you preorder online, which can help you budget your time and your spending. For example, Ireland's The Loop lets you buy and pay for certain goods (including perfumes and chocolates) from the duty-free shop at Dublin's airport between two days and four weeks before your flight. Then you can pick up your order on your way to the gate. At the Web sites for London's Heathrow Airport and Frankfurt Airport, you can reserve items online and pay when you pick them up.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

4. Remember: location, location, location. Where you shop can be as important as what you're buying. Dubai International Airport's duty-free shopping center, for example, had the most sales of any airport retail operation last year and was voted best duty-free shop among Global Traveler magazine readers for the past three years. In many European airports, you'll escape the value-added tax, an extra sales tax charged to locals that can add up to 25% to the price.

5. Follow the rules. If you have managed to find a real duty-free deal, make sure you can bring it home. Typically, if you've been out of the country for at least 48 hours (and haven't already used up your duty-free allowance on a recent trip), you're permitted to bring back $800 worth of items duty-free. (You may ship home $200 in merchandise duty-free, which is deducted from the $800 total.) But because you can carry on liquids only in 3-ounce containers, you'll have to pack the booze and perfume. If you do, make sure you don't go over your airline's weight limit for checked bags. Spend more than $800 and you'll have to pay duty on the excess -- usually 3% on up to $1,000 worth of items over the allowance. For more details and updated information, visit the Web site of U.S. Customs and Border Protection.

Stacy Rapacon
Online Editor, Kiplinger.com

Rapacon joined Kiplinger in October 2007 as a reporter with Kiplinger's Personal Finance magazine and became an online editor for Kiplinger.com in June 2010. She previously served as editor of the "Starting Out" column, focusing on personal finance advice for people in their twenties and thirties.

Before joining Kiplinger, Rapacon worked as a senior research associate at b2b publishing house Judy Diamond Associates. She holds a B.A. degree in English from the George Washington University.