Duty and Tax Free


Interlining Although products sold to passengers travelling within the EU are no longer duty and tax free, export shop operators generally make them available to such passengers at tax free prices. Many passengers, usually those from regional airports, take connecting flights at hub airports in the EU for a final destination outside the EU, for example Newcastle to Bahrain via London. This is known as interlining. Because of the importance of duty-free sales revenue to regional airports, the issue of the treatment of interlining passengers was raised with the EU Commission. In a letter in January 2001 to the Director of Italian Customs, the Commission confirmed that duty and tax-free sales could be made to travellers who were initially taking a connecting flight via another EU airport, provided that their final destination was outside the EU and that the travel could be considered as one continuous journey. The Commission left it up to each Member State to determine the conditions under which travel may be regarded as an uninterrupted third country journey. The criteria applied by HM Revenue and Customs (HMRC) are that the passenger must

  • (i) hold a single valid through ticket for the whole journey, and
  • (ii) depart the transiting airport within 5 hours of the scheduled time of arrival

HMRC stipulate that duty-free sales may not be made to passengers holding two separate tickets (for example Newcastle-London and London-Bahrain), as they are considered to be making two separate journeys, the first being a domestic one. HMRC rules on this are contained in paragraph 5.2 of Notice 197A.

Click here to view HMRC guidance

The sale of duty-free goods to interlining passengers with a final destination outside the EU now has a legal basis. Article 14 of Council Directive 2008/118/EC which came into force on 1 April 2010, provides that Member States may allow such sales to travellers leaving the EU and also includes a definition of eligibility.