Everybody can probably come up with three or four great reasons to go on a cruise right now. But duty-free shopping is rarely one of them. Even if you’re not a power-shopper and even if you have no intention to turn your cruise vacation into a shopping expedition, you can still nab some serious bargains by shopping the duty-free stores. Guess what? They’re onboard the ship!
I don’t know why they call it duty-free shopping, since the name is a bit misleading. It ought to be called tax-free shopping. When you venture into international waters (50 miles off shore), merchandise can be sold without having to add on city, state, or national taxes. Duty-free stores are shops that sell the merchandise for exactly the price marked, with no taxes tacked on at the cash register.
Many cruise shops feature luxury items, the kinds of things that would surely attract sales tax and possibly other taxes in many countries. If you are interested in buying a watch that you know costs $500 or a bottle of perfume that retails for about $75 at your local department store, you may not be initially impressed at the duty-free store. The price tags for these two items will likely be $500 and $75 or very close to it.
The difference is that the duty-free price is the total price you’ll pay. Buy that same watch in a U.S. jewelry store and you can expect to pay sales tax of around $40. The perfume would tack on about $6 in sales tax. This is based on a rough 8% sales tax rule for the U.S. If you live in Canada, sales tax hovers around 12% and it is even higher in Europe.
Europeans may notice the bargains at duty-free shops more quickly than Americans because in Europe, it is customary for the sales tax to be figured into the price tag before you get to the cash register. In the U.S., sales tax is one of those things nobody talks about until you get to the cash register when it just magically appears on your bill.
Many cruise lines will offer certain luxury items at competitive or even discount prices. If you are shopping for jewelry, particularly gemstones, certain gold and silver items, pearls, and watches, you may be able to nab a good deal besides getting the duty-free benefit. 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. You’ll be able to know if you’re getting a good deal or not.
I’ve heard a lot of cruise anecdotes about cruise passengers who combed local ports of call seeking bargains only to find out they could have done just as well or better by sticking to the duty-free shop onboard!
When making a duty-free purchase, keep the receipts. You may be asked to show them upon returning home. A U.S. citizen may bring up to $800 of merchandise back into the country without paying duty. If you rack up more than that, you may be asked to pay a certain amount of duty or tax on the purchase. I guess the idea is that you can bring a reasonable amount of personal purchases back home from your vacation duty-free but not so much merchandise you could go into business!
Another advantage of buying duty-free on your cruise ship is convenience. You get to shop when you feel like, dressed casually, and deal with friendly, outgoing, English-speaking personnel. And the best part is that you can cart your purchases right back to your room. Many cruise ships offer guarantees on their merchandise, meaning that once you’re back home you can contact the cruise line if you experience a problem with what you’ve purchased. This service is not likely to be as handy from foreign shops, if it is even available at all.
Airports may also have duty-free stores but only for people who will literally be traveling from a foreign country back home. The same principles apply: you may not see radical mark-downs (but then again, you often see good prices) but you will not be charged taxes.
Keep in mind that when you return to the U.S., U.S. citizens can only have $800 in total purchases (duty free or not). After that, the customs officials have the prerogative of charging duty, a tax on what you’re bringing in. (Note that duty is not necessarily levied against anyone who brings in more than $800 but it may be.)
If you are traveling with your family, you may combine each family member’s $800 duty-free allowance. As an example, a married couple with two children would have $3200 duty-free allowance.