DDP Incoterms 2020: Delivered Duty Paid

DDP (Delivered Duty Paid) means the seller delivers the goods to the named place of destination, cleared for import, on the arriving vehicle, ready for unloading. The seller pays all transport, export and import clearance, import duties and taxes such as VAT or GST, and bears the risk to that point. The buyer only unloads. DDP works for any mode of transport.

Seller and buyer obligations under DDP

Seller	Buyer
Arranges and pays all transport to the named place	Unloads the goods at the named place
Clears export and import and pays duties, taxes and fees	Helps the seller with import information when asked
Bears the risk until the goods arrive, ready for unloading	Takes delivery when notified

Example

A US hardware vendor sells servers to a company in Australia "DDP Customer data centre, 40 Clarence St, Sydney, Incoterms® 2020". The vendor's freight forwarder flies the servers to Sydney, files the import declaration, pays the Australian duty and GST, and delivers to the data centre's loading dock. The customer's staff unload them. The price the customer pays already covers everything.

The seller becomes the importer

DDP is popular with buyers because the quoted price is the full delivered price, but it puts the seller in the importer's position in the buyer's country:

• Registration. Many countries only let a locally registered business or a non resident importer with a tax number clear goods. The seller may need a local agent.
• VAT and GST. The seller pays import VAT or GST, and may not be able to reclaim it if it is not registered there. That cost has to be in the price.
• Classification and valuation. The seller carries the liability for the HS code and customs value declared.

If any of these is a problem, DAP keeps door delivery while leaving import to the buyer. Some contracts use "DDP, VAT unpaid" to leave the import VAT with the buyer; if you do this, spell it out clearly in the contract. Our guide to DAP vs DDP works through the duty and VAT on one real shipment under each rule.

DDP for ecommerce and samples

Couriers often offer "duties and taxes paid" services, which work like DDP for parcels: the sender pays the duties so the recipient is not asked for money at the door. Check that the courier's service and your contract say the same thing.

Whatever the rule, the seller provides a commercial invoice that names the Incoterm and place, and usually a packing list. For quotes before the order, use a proforma invoice with the same rule written on it.