What’s the deal with duty-free?

Take an international flight, and the signs are seductive. “Duty-free” beckons you into endless rows of stores with some sense of tax savings and bargain shopping. In the United States, this trims the cost of local import taxes, but in Europe, you also bypass the value added tax (VAT), which can cut the cost by up to 25 percent.

But, it’s not that easy … it’s never that easy.

On your next jaunt to Europe, dropping more than $800 on these discounted goods can result in your having to pay import taxes when you hit your home turf. Generally, you’ll be charged 3 percent on the first $1,000 you spend over the $800 threshold. As the amount purchased increases, so does the tax.

According to an article on CNN, the best deals are on cigarettes and liquor. When it comes to luxury goods, it pays to comparison shop and keep an eye on currency swings.

[Via CNN]