Duty-free shopping is a big draw for many cruise passengers, and cruise lines are expert in whipping up desire with tempting come-ons in their on-board shops and through partnerships with pay-to-play merchants on shore. But while there are good deals to be had, there are also pitfalls — tops among them succumbing to the urge to splurge for duty-free bargains that aren't really saving you money.
Can you really get good duty-free deals? It depends.
To make sure you're getting a genuine deal, whip out your smartphone and look up the price online at Google Shopping or Amazon (assuming you follow Cruiseable's tips for connectivity) — and don't forget to factor in the shipping and sales tax (varies by city and state). On occasion, you can score a deal with savings of 20 percent or more in a duty-free shop, either on land or on ship.
Here's a good rule of thumb: If the price comparison checks out, and if you know you're getting the genuine article, and if you don't mind lugging it home, then your duty-free purchase makes sense.
How duty-free works: $800 is tax-free
Buying merchandise in a duty-free shop does not necessarily mean you don't have to pay any duties or taxes on it; the item is only tax-free in the country where you bought it. At a duty-free outlet, foreigners are exempt from import taxes and local sales taxes (often called VAT, short for value-added tax, or GST, short for goods and services tax).
So think of a duty-free shop as a mini tax-free haven. You can bring up to $800 in duty-free goods into the U.S. without incurring additional fees. If you bring home more than $800 per person, then you'll see a 3 percent levy on the next $1,000 of purchases you bring across the border. (One key exception: The duty-free allowance is $1,600 if you bought your stuff in the U.S. Virgin Islands, American Samoa or Guam.)
A nice bonus for families traveling together? Each kid, no matter how young, is allowed an $800 allotment, so if you're a couple with two children, you can bring home $3,200 worth of purchases tax free.
In short, as long as you stay within the very generous allowances, you most likely won’t pay any U.S.-imposed duty or tax at all (caveats below).
Which shops qualify and who's eligible to buy?
To qualify as duty-free, merchandise must be imported and quarantined “in-bond” until it exits the country in the hands of foreign shoppers — the locals can't buy these items. So that's why you'll see most duty-free shops at airports or on cruise ships, which local residents can't access.
And if you're wondering, Americans cannot buy in a duty-free shop upon their return to the United States — duty-free items can only be purchased for export in international airport terminals. “Duty free on arrival” is available in some other countries, but not here.
Shopping for bargains on the ship
Frequent cruisers know that the shops on board are closed when the ship is in port. By law, the shops can't open their doors until the ship is in international waters, 50 miles off shore. So you'll have to do your browsing while at sea.
But the upside is that the merchandise can then be sold without having to add on any city, state or national taxes. The price you see on the tag is the price you'll pay at the register. (By contrast, cruisers often are surprised to find a local tax added to their drinks bill while they were in port in, say, Miami or New York.)
Onboard shops are a big revenue source for the cruise lines, so don't be surprised if you're hit up repeatedly during your cruise with newsletter announcements about special sales or entreaties from the cruise director to shop at certain outlets on shore. But that's OK, there are often good deals to be had. Many cruise lines offer luxury items at competitive or even discount prices in their shops. Cruisers can frequently find better values on board than in port, so don't overlook what's right down the corridor.
If you're shopping for jewelry, particularly gemstones, wedding or engagement rings, certain gold and silver items, pearls or watches, you may be able to nab a good deal besides getting the tax-free benefit, which can be significant on high-end items. If you are looking for something specific — tanzanite earrings, for instance — and you happen to know the going prices and can assess quality yourself, you should feel very comfortable in the cruise shops. Most cruise lines offer guarantees on what they sell, so you'll be able to return the item if needed — which isn't a real option at foreign shops.
A final advantage of buying duty-free right on board your ship? Convenience. You can shop at your own pace, in your shorts if you'd like, and deal with courteous, English-speaking staff. And you can take your purchases right with you. One exception: Many cruise lines don't let you buy booze in the shop and drink it on board; your purchase is held until you disembark. Other cruise lines, like Windstar, do allow it, though with a stiff corkage fee.
Bonus tip: By the way, if you're looking for souvenir T-shirts, sweatshirts or other mementos of your trip, the best bargains in the ship's gift shops are often found on the last day or two of the cruise — if the item you're eyeing hasn't sold out.
About those sales pitches on board
Before you arrive in port, the ship newsletter may list stores that are good bets for high-quality, no-hassle shopping. There may also be a daily debrief in the ship's theater or main lounge about special deals on land. Invariably, these presentations are done by the cruise director or by a port lecturer who's often hired by an outside company with ties to individual retailers.
As Cruise Critic points out, "There's just one catch to all of this: The stores mentioned have paid to be mentioned. We're not talking about kickbacks; we're talking about an accepted business practice.'' In other words, factor that info into the pitch.
You may also come across the occasional trunk show, a short-term sales event put on by manufacturers' representatives from such companies as EFFY Jewelry who cruise along with you. The shows gives passengers the ability to buy duty-free merchandise not normally carried on the ship, such as diamonds and rare custom jewelry. Again, if you're in the market for some glitter and glam, there are some good deals here.
Buying duty-free in the port
Passengers I accompanied on last month's Caribbean cruise aboard Windstar Cruises’ flagship, Wind Surf, reported snagging Ray-Ban sunglasses and Quicksilver sportswear in St. Kitts (where the VAT for locals is 17.5 percent) for about one-third less than back home, while many women returned to the ship glowing over clothing and accessory purchases made in the smart boutiques of Gustavia, St. Barts, a duty-free port.
I found my treasures — a silver and larimar ring (larimar is a pale blue mineral found only in the Dominican Republic) and a batik sundress — in the gated Port Zante duty-free zone in Basseterre, St. Kitts, where locals aren't allowed to shop (an authentic island experience lies just beyond the gates). Both purchases were made from congenial Indian merchants who, when I wavered, offered reductions of about 15 percent off the originally quoted price.
What about the sexy lingerie and cute little designer dresses that you’ll never see online but can easily find in one of those smart boutiques in St. Barts? As any woman will tell you, part of the joy of shopping lies in letting serendipity be your guide. And if there's a story and a memory attached to a purchase, so much the better.
Just as with onboard shops, you get to bring your port treasures back to your room. If you choose to ship them home, you're responsible for paying the duties and taxes on those items separately, and the Postal Service may flag your item to see if you're in compliance. In 2016 President Obama signed a bill vastly expanding the duty-free exemption for products imported by mail — from $200 to $800 — so you don't plan to ship home more than $800 worth of booze, right?
Finding duty-free deals at the airport
The rules for duty-free shops at airports are fairly close to what you'll experience on the ship or in port. At just about any international airport you'll be floored by the endless walkways filled with so many glitzy shops you'll think you're in a high-end shopping mall.
One important thing to know in advance: That liter of Scotch or bottle of pricey perfume you buy in an airport duty-free shop will easily make it through U.S. Customs only if it’s properly packaged and tagged. If your international flight drops you at your final destination, you’re home free. If you have a connecting flight, though, different rules apply.
Savvy travelers know to leave room for liquor and other liquid purchases in their checked luggage. But that doesn't do you much good when you're already checked into your flight in a foreign airport and browsing the duty-free store shelves. Fortunately, TSA adjusted its rules in 2014. Now you're allowed to bring your liquor purchases onto the flight in your carryon luggage — if it meets certain conditions.
To be allowed through security, your bottles of wine or spirits must be in transparent containers and secured in unopened, tamper-free bags provided by the merchant and approved by the TSA. If the bottles don't meet these criteria, they’ll be confiscated at the security checkpoint due to rules prohibiting fluids and gels exceeding 3.4 ounces (more details here.)
If you are returning to the U.S. and then have a connecting domestic flight on the way back home, you'll be required to reclaim your checked bags prior to passing through Customs inspection, so use this opportunity to place your duty-free liquids, aerosols and gels in your checked bags before rechecking them for your connecting flight.
To play it straight, you’ll need to itemize and declare whatever you bought abroad, duty-free or not, on the Customs form provided by your ship or airline. And brace yourself: You might get a nasty surprise months after returning home in the form of a “use tax” bill levied by state and/or local authorities on purchases made out of state or abroad. The fees legally can be imposed (but seldom are) on purchases over $400 declared on your Customs form.
The most popular duty-free items
Sometimes you just want a memento from your trip and not necessarily a total steal, right? Maybe that's why luxury goods like high-end handbags, watches and jewelry make up the largest percentage of duty-free purchases. Cosmetics and fragrances come in second and wines and spirits come in third (Caribbean rum ... yum!).
In total, travelers snap up duty-free good to the tune of more than $50 billion a year worldwide, according to estimates. Here's an idea of what you'll find in your duty-free forays:
Jewelry & watches: If it's a trustworthy brand and the price is right, why not go for it? The savings on the sales tax alone could be considerable. Just be sure to declare any purchases on your Customs form. If you're caught, agents will riffle through your luggage and flag you in their computer system during your next trip.
Fragrance & cosmetics: Savings won't be as big in this category, but you might spot a sale as well as some fragrances that are available only in duty-free shops. Perhaps because of the romance of travel and the tactile nature of experiencing a new scent, fragrances make up nearly a third of all duty-free purchases.
Alcohol: If you're traveling to the Caribbean, by all means bring back those two liters of rum. (You're restricted to one liter (33.8 fl. oz.) just about everywhere else — including alcohol bought in a cruise ship's duty-free shop — with one exception: the free-wheeling U.S. Virgin Islands, where you can bring home five liters.) The main reason for buying liquor abroad is to avoid the typically high sales tax. Just be sure it's worth the hassle of lugging it around.
Electronics & gadgets: Electronics and gadgets make up only 3-5 percent of duty-free purchases because online and Big Box retailers already keep prices down in the U.S. Plus, it's difficult to verify the authenticity of the merchandise and returns are difficult to do. If you do go ahead anyway, (a) make sure you check the warranty to make sure it will be valid with the manufacturer and (b) make sure it doesn't have any plugs, ports or a foreign voltage that require adapters.
Cigarettes: Yes, you'll find savings on heavily taxed cigarettes. But a better choice is to quit!
A note for shoppers from Europe: Europeans may spot bargains at duty-free shops more quickly than Americans because in Europe the sales tax is already figured into the product's price tag before you get to the cash register. Americans, by contrast, need to consider what the item would cost back in the States with an added sales tax, which can be high on luxury goods, cosmetics, liquor and the like.
Tips for duty-free shopping
- Use cash or credit cards, not debit cards, when shopping in duty-free stores. While debit cards can be used at ATM machines to withdraw foreign cash (euros on the French-speaking islands of the Caribbean, for example), they get a bad rap for being easily compromised by unscrupulous merchants.
- Bring U.S. dollars in small denominations to pay for tips to tour guides and minor purchases like a beer or inexpensive souvenirs. Most shops in foreign cruise ports will accept dollars, although they often are not equipped to make change (in dollars) for anything larger than a 10-dollar bill.
- Do comparison pricing in advance when shopping for big-ticket items such as watches, designer accessories, perfumes, cameras or other electronics. Often you won't be able to do it on the spot, as WiFi may be slow or unavailable.
- Stay within your $800 duty-free limit, and keep your paper receipts.
- Know the rules about what can and can’t be brought back to the United States and what fees will be levied if you exceed the exemption. (For example, while the U.S. limits you to one duty-free liter of alcohol, some states allow importation of a second bottle as long as applicable duties and taxes are paid.) Rules are spelled out on the U.S. Customs and Border Patrol website.
- Some items, particularly meats and cheeses (whether purchased in a duty-free shop or not), cannot be brought into the U.S. and will be confiscated in Customs. (Alcoholic beverages labeled absinthe and ostrich jerky from South Africa are two of the more obscure examples.) Again, consult the appropriate pages on the U.S. Customs and Border Patrol website.
- Keep in mind that some destinations, like Hong Kong, have no general sales tax, so in a sense the entire city is one massive duty-free zone.
- Oh, yes. If after all is said and done you wind up owing duties or taxes on your overseas purchases, you'll need to settle up at Customs upon your re-entry. A credit card or cash will usually do.