Duty free is not always the best deal
If you suddenly were transported to the departure area of Heathrow or Charles de Gaulle, you'd think you were in a shopping mall rather than an airport. In many big overseas airports, you can't get to your departure gate without wending you way through an array of shops hawking "tax free" or "duty free" purchases. Do those places really offer good deals?
Duty free vs. online
A recent report by Kelkoo UK (kelkoo.co.uk), the British arm of the online international price-comparison service, says, overall, "No." In a "mystery shopper" test of 10 major European airports, average discounts ran about 6 percent below prices in local stores - but online sellers gave even better discounts, averaging 12 percent below local retail prices.
According to Kelkoo data, a 450-ml bottle of Johnnie Walker Red costs a minimum of $22 in those European airports- quite a bit more at several -, compared with U.S. prices starting at $19.
Basically, tax-free means "no VAT" (value added tax), and VAT averages about 17 percent in Europe. True tax-free prices should be 17 percent lower than local retail. Instead, they're about 6 percent. And that 11 percent difference goes right into the airports' pockets.
If you're a dedicated shopaholic heading to Europe, Kelkoo says that Heathrow, Berlin/Schoenfeld, and Gatwick have the poorest discounts in Europe; Lyon and Charles de Gaulle are tops.
Know your prices
Your only defense against being gouged is to know your prices before you leave home and compare them with what you see overseas. If you plan to buy liquor, electronics, fashion products or cigarettes, get prices at a local store or go online. Then you can tell right away which tax-free goods are a good deal and which aren't.
Keep in mind that the United States is generally a low-tariff and low-tax area, compared with almost all of Europe and much of the rest of the world. Aside from handmade custom clothing in many large Asian cities, I seldom see overseas deals that tempt me to reach for my wallet. The potential risks of trying to get service on tech products purchased overseas are obvious. And unless you can tell the difference between a real emerald and a piece of green glass, be careful buying jewelry or gold overseas. If you enjoy shopping, go ahead - but know your prices.
