DDP (Delivered Duty Paid) is an Incoterms® 2020 rule that represents the maximum obligation for the seller among all eleven Incoterms® rules. The seller delivers the goods to the buyer, cleared for import, on the arriving means of transport, ready for unloading, at the named place of destination.
Under DDP, the seller bears all costs and risks involved in bringing the goods to the destination, including export and import clearance formalities, import duties, taxes, and any other charges payable upon import. This is the exact opposite of EXW, which places maximum obligation on the buyer.
DDP is suitable for any mode of transport (sea, air, road, rail, multimodal). It is commonly used when the seller has the ability to handle import formalities in the destination country, often through local subsidiaries, customs brokers, or established logistics partners.
The seller is not required to unload the goods from the arriving means of transport (similar to DAP). The buyer is responsible for unloading. If the seller should also handle unloading, the parties should consider DPU.
From the seller's perspective, DDP should be used with care: the seller must be able to obtain import clearance in the destination country and may face tax implications (such as non-recoverable VAT or GST) that cannot be recovered from the buyer.
Is the seller responsible for import clearance under DDP Incoterms 2020?
Yes. Under DDP, the seller bears full responsibility for import clearance in the destination country. This includes completing all customs formalities, filing the import declaration, and paying all applicable import duties, taxes, and charges. The seller must also obtain any import licenses or permits required. This is what makes DDP the maximum obligation Incoterm - the seller handles everything from origin to destination, including both export and import formalities.
Does the seller pay import duties and taxes under DDP?
Yes. The seller pays all import duties, customs taxes, and any other charges payable upon import in the destination country. This includes customs duties (MFN or preferential), anti-dumping duties if applicable, import VAT or GST, and any other fiscal charges. The seller bears the risk of duty rate changes between contract signing and actual import. This comprehensive cost coverage is why DDP is called "Delivered Duty Paid".
What does DDP mean for the buyer?
DDP means the buyer receives goods at the agreed destination, already cleared for import, with all duties and taxes paid by the seller. The buyer's only responsibilities are to pay the agreed price, unload the goods, and assist the seller (at the seller's cost) with any documents needed for clearance. It is the simplest Incoterm from the buyer's perspective - essentially a "landed cost" arrangement.
What is the difference between DDP and DAP for import clearance?
The key difference is who handles import formalities: under DDP, the seller handles import clearance and pays all import duties and taxes; under DAP, the buyer is responsible for import clearance and duties. Both terms deliver goods at the named destination on the arriving transport, ready for unloading. Choose DDP when the seller can handle import formalities; choose DAP when the buyer prefers to control import processes or when the seller cannot obtain import clearance.
Can the seller recover import VAT paid under DDP?
It depends on the seller's tax registration status in the destination country. If the seller is VAT-registered there, it may recover the import VAT through its VAT returns. If not, the import VAT becomes a non-recoverable cost that directly erodes the seller's margin. In the EU, non-established sellers can apply for VAT refunds under the 13th Directive, but the process is lengthy. This VAT risk is the primary reason many sellers avoid DDP terms.
What are the seller's full obligations under DDP?
Under DDP, the seller must: (1) deliver goods cleared for import at the named destination, (2) arrange and pay for all transport from origin to destination, (3) complete export and import customs formalities, (4) pay all export and import duties, taxes, and charges, (5) bear all risks of loss or damage until destination, (6) provide commercial invoice and any documents needed by the buyer, (7) assist with transit country formalities. The only thing the seller does NOT do is unload the goods.
Is DDP the opposite of EXW?
Yes, DDP and EXW are at opposite ends of the obligation spectrum. Under EXW, the seller's only obligation is to make the goods available at its premises - the buyer bears all costs and risks from that point. Under DDP, the seller bears all costs and risks including import duties, delivering goods cleared for import at the buyer's destination. Between these extremes, the other nine Incoterms distribute obligations progressively.
Who is responsible for unloading under DDP?
The buyer is responsible for unloading. Despite being the maximum obligation Incoterm, DDP does not require the seller to unload the goods from the arriving means of transport. The seller delivers the goods on the transport, ready for unloading. If the seller incurs unloading costs under its transport contract, it cannot recover them from the buyer unless otherwise agreed. If seller unloading is needed, the parties should use DPU instead.
What are the risks of using DDP for the seller?
The main risks are: (1) inability to obtain import clearance if the seller lacks a local presence, customs broker, or authorized representative, (2) non-recoverable import VAT/GST directly reducing margins, (3) unpredictable import duties, anti-dumping duties, or additional taxes, (4) regulatory compliance requirements (product standards, labeling, certifications) in the destination country, (5) full transport risk from origin to destination. The seller should carefully assess all five before agreeing to DDP.
Can DDP be used for any transport mode?
Yes, DDP can be used regardless of the mode of transport selected, including sea, air, road, rail, and multimodal transport. It is commonly used in e-commerce (where consumers expect delivered prices), B2B distribution (where the seller provides landed cost quotes), and intra-company transactions (where both entities belong to the same group and import procedures are already established).
Can DDP exclude specific duties or taxes (e.g. DDP excluding VAT)?
The ICC strongly advises against excluding elements from DDP (such as "DDP excluding VAT" or "DDP excluding import duties"), as this creates ambiguity and potential disputes. If the parties wish to exclude import VAT from the seller's obligations, the correct approach is to use DAP instead and have the buyer handle import formalities. If only VAT should be excluded while the seller pays duties, this must be explicitly stated in the contract alongside the DDP term.
Why is DDP the maximum obligation Incoterm?
DDP places the highest level of obligation on the seller because it requires the seller to handle everything: export clearance, all transport, transport insurance (if desired), import clearance, and payment of all duties and taxes. The seller bears all risks until goods are delivered at destination. No other Incoterm requires the seller to handle import formalities - this is unique to DDP. The buyer's only duty is to pay the price and unload.
How does DDP affect customs valuation?
Under DDP, the transaction value includes transport costs, import duties, and taxes. For customs valuation purposes, the price must be adjusted to determine the CIF or CIP equivalent at the point of import. Import duties and taxes are excluded from the customs value since they are charges payable upon import, not part of the goods' intrinsic value. The transport and insurance components must be identified and allocated correctly for proper customs valuation under Article 71 UCC.
What is a "false DDP" and how to avoid it?
A "false DDP" occurs when DDP is stated in the contract but the seller cannot actually perform import clearance in the destination country - lacking the legal status, fiscal registration, or local agent to complete import formalities. The buyer then unexpectedly has to handle import clearance. To avoid this: verify the seller's ability to clear goods before agreeing to DDP, confirm they have a customs broker or fiscal representative in the destination country, and consider DAP if there is any doubt.
When should a seller refuse DDP terms?
A seller should refuse DDP when: (1) they have no presence, agent, or customs broker in the destination country, (2) they cannot register for VAT and the non-recoverable VAT would eliminate their margin, (3) the destination country has complex or unpredictable import regulations, (4) the goods are subject to import licensing or quotas the seller cannot manage, (5) anti-dumping or countervailing duties may apply unpredictably. In these cases, DAP is the safer alternative.
Is insurance mandatory under DDP?
No, DDP does not oblige the seller to take out transport insurance. However, since the seller bears all risks until delivery at destination, it is strongly recommended that the seller insures the goods for the full journey. If the goods are lost or damaged during transport, the seller must still fulfill the delivery obligation or compensate the buyer. Not insuring under DDP is a significant financial risk for the seller.
Common mistakes
1Agreeing to DDP without verifying the ability to obtain import clearance in the destination country.
2Overlooking non-recoverable import VAT/GST, which can significantly increase costs beyond the expected margin.
3Assuming DDP includes unloading - the seller delivers on the transport, the buyer must unload.
Seller vs buyer obligations
Obligation
Seller
Buyer
Export formalities
Loading
Main transport
Transport insurance
Unloading
Import formalities
Risk transfer diagram
ICC Explanatory notes
Delivery and transfer of risks
Under DDP, "Delivered Duty Paid" means that the seller delivers the goods to the buyer:
when the goods are placed at the disposal of the buyer,
cleared for import,
on the arriving means of transport,
ready for unloading,
at the named place of destination or at the agreed point within that place, if any such point is agreed.
The seller bears all risks involved in bringing the goods to the named place of destination or to the agreed point within that place. In this Incoterms® rule, therefore, delivery and arrival at destination are the same.
Applicable mode of transport
DDP can be used regardless of the mode of transport selected, including where more than one mode of transport is employed (multimodal).
DDP works for any type of shipment: container, full truck load, air freight, parcel, etc. It is particularly common in e-commerce and B2B transactions where the seller provides a "landed cost" price.
Specifying the place of destination precisely
The parties are strongly advised to specify the destination place or point as clearly as possible, for several reasons:
Risk transfer: risk of loss of or damage to the goods transfers to the buyer at that point - both parties should be clear about where this critical transfer happens.
Cost allocation: costs before that place or point are for the seller's account (including import clearance costs); costs after that place or point (other than import costs) are for the buyer's account.
Carriage obligation: the seller must contract or arrange for carriage to the agreed place. Failure to do so constitutes breach of the Incoterms® DDP rule.
Unloading costs: if the seller incurs costs under its contract of carriage related to unloading at the place of destination, the seller is not entitled to recover such costs separately from the buyer unless otherwise agreed.
Maximum seller obligation - export and import clearance
DDP requires the seller to clear the goods for both export and import. This includes:
Export clearance formalities and costs
Transit clearance where applicable
Import clearance formalities
Import duties, taxes, and any other charges payable upon import
This is the maximum level of obligation of all eleven Incoterms® rules. The seller should use DDP with care:
The seller must be able to obtain import clearance in the destination country (directly or through an agent).
There may be tax implications: import VAT or GST paid by the seller may not be recoverable, depending on the seller's tax registration status in the destination country.
If the seller is unable to obtain import clearance, it should consider using DAP or DPU instead, where import clearance is left to the buyer.
Critical points
Maximum seller obligation
DDP imposes the highest level of obligation on the seller of all 11 Incoterms - use with care.
DDP is the Incoterms® rule imposing on the seller the maximum level of obligation of all eleven Incoterms® rules. The seller is responsible for:
All transport costs to destination
Export clearance
Transit clearance
Import clearance
Import duties and taxes
All risks until delivery at destination
From the seller's perspective, this means:
The seller must have the ability and legal capacity to clear goods for import in the destination country.
The seller may need a local customs broker or agent in the destination country.
VAT/GST implications: if the seller pays import VAT in a country where it is not registered for tax purposes, it may not be able to recover that VAT. This cost may need to be factored into the DDP price.
The seller should carefully assess whether it can fulfil all DDP obligations before agreeing to this term.
Recommendation: if the seller is unable to obtain import clearance or faces adverse tax implications, consider using DAP or DPU instead.
Non-recoverable tax risk
Import VAT/GST paid by the seller may not be recoverable - an often-overlooked cost.
Under DDP, the seller pays all import duties and taxes, including import VAT or GST. However:
If the seller is not registered for VAT/GST in the destination country, it typically cannot recover the import VAT it pays.
This represents an additional hidden cost that can significantly erode profit margins, especially in high-VAT jurisdictions.
Even if the contract states "DDP", the tax authority of the destination country determines who can recover import VAT - the seller's contractual arrangements with the buyer cannot override tax law.
Example: a French seller sells DDP to a German buyer. The French seller pays 19% German import VAT. If the French seller is not registered for German VAT, it cannot recover this 19%, effectively increasing its cost.
Recommendation: before agreeing to DDP, verify the tax registration requirements and VAT recovery possibilities in the destination country. Consider structuring the deal as DAP + a separate arrangement for import duties.
Seller delivers but does not unload
Despite maximum obligation, DDP does not require the seller to unload - this can surprise buyers.
Even though DDP represents the maximum seller obligation, the seller is not required to unload the goods from the arriving means of transport. The buyer must organise and pay for unloading.
This can be confusing: buyers may assume that "Delivered Duty Paid" means the goods are fully delivered, including unloading. However, DDP delivery occurs when the goods are placed at the buyer's disposal on the arriving transport, ready for unloading.
Recommendation: clearly state in the contract whether unloading is included. If the seller should also unload, consider combining DDP terms with an explicit unloading clause, or use a DPU-like arrangement with import clearance by the seller.
Detailed seller obligations (A1-A10)
Article A1General obligations
The seller must provide the goods and the commercial invoice in conformity with the contract of sale and any other evidence of conformity that may be required by the contract.
Any document to be provided by the seller may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
Article A2Delivery
The seller must deliver the goods by placing them at the disposal of the buyer on the arriving means of transport ready for unloading at the agreed point, if any, at the named place of destination or by procuring the goods so delivered. In either case the seller must deliver the goods on the agreed date or within the agreed period.
Article A3Transfer of risks
The seller bears all risks of loss of or damage to the goods until they have been delivered in accordance with A2, with the exception of loss or damage in the circumstances described in B3.
Article A4Carriage
The seller must contract or arrange at its own cost for the carriage of the goods to the named place of destination or to the agreed point, if any, at the named place of destination. If a specific point is not agreed or is not determined by practice, the seller may select the point at the named place of destination that best suits its purpose.
The seller must comply with any transport-related security requirements for transport to the destination.
Article A5Insurance
The seller has no obligation to the buyer to make a contract of insurance.
Article A6Delivery / transport document
The seller must provide the buyer, at the seller's cost, with any document required to enable the buyer to take over the goods.
Article A7Export / import clearance
Where applicable, the seller must carry out and pay for all export/transit/import clearance formalities required by the countries of export, transit, and import, such as:
export/transit/import licence;
security clearance for export/transit/import;
pre-shipment inspection;
any other official authorisation.
Article A8Checking / packaging / marking
The seller must pay the costs of those checking operations (such as checking quality, measuring, weighing, counting) that are necessary for the purpose of delivering the goods in accordance with A2.
The seller must, at its own cost, package the goods, unless it is usual for the particular trade to transport the type of goods sold unpackaged. The seller must package and mark the goods in the manner appropriate for their transport, unless the parties have agreed on specific packaging or marking requirements.
Article A9Allocation of costs
The seller must pay:
a) All costs relating to the goods and their transport until they have been delivered in accordance with A2, other than those payable by the buyer under B9.
b) Any charges for unloading at the place of destination but only if those charges were for the seller's account under the contract of carriage.
c) The cost of providing the delivery/transport document under A6.
d) Where applicable, duties, taxes and any other costs related to export, transit, and import clearance under A7.
e) The buyer for all costs and charges related to providing assistance in obtaining documents and information in accordance with B5 and B7.
Article A10Notices
The seller must give the buyer any notice required to enable the buyer to receive the goods.
Detailed buyer obligations (B1-B10)
Article B1General obligations
The buyer must pay the price of the goods as provided in the contract of sale.
Any document to be provided by the buyer may be in paper or electronic form as agreed or, where there is no agreement, as is customary.
Article B2Taking delivery
The buyer must take delivery of the goods when they have been delivered under A2.
Article B3Transfer of risks
The buyer bears all risks of loss of or damage to the goods from the time they have been delivered under A2.
If:
a) the buyer fails to fulfil its obligations in accordance with B7, then it bears all resulting risks of loss of or damage to the goods; or
b) the buyer fails to give notice in accordance with B10, then it bears all risks of loss of or damage to the goods from the agreed date or the end of the agreed period for delivery,
provided that the goods have been clearly identified as the contract goods.
Article B4Carriage
The buyer has no obligation to the seller to make a contract of carriage.
Article B5Insurance
The buyer has no obligation to the seller to make a contract of insurance. However, the buyer must provide the seller, at the seller's request, risk, and cost, with information that the seller needs for obtaining insurance.
Article B6Delivery / transport document
The buyer must accept the document provided under A6.
Article B7Export / import clearance
Where applicable, the buyer must assist the seller, at the seller's request, risk, and cost, in obtaining any documents and/or information related to all export/transit/import clearance formalities required by the countries of export/transit/import, such as:
export/transit/import licence;
security clearance for export, transit, and import;
pre-shipment inspection;
any other official authorisation.
Article B8Checking / packaging / marking
The buyer has no obligation to the seller.
Article B9Allocation of costs
The buyer must pay:
a) All costs relating to the goods from the time they have been delivered under A2.
b) All costs of unloading necessary to take delivery of the goods from the arriving means of transport at the named place of destination, unless such costs were for the seller's account under the contract of carriage.
c) Any additional costs incurred by the seller if the buyer fails to fulfil its obligations in accordance with B7 or to give notice in accordance with B10, provided that the goods have been clearly identified as the contract goods.
Article B10Notices
The buyer must, whenever it is agreed that the buyer is entitled to determine the time within an agreed period and/or the point of taking delivery within the named place of destination, give the seller sufficient notice.
DDP vs DAP comparison
Critère
DDP
DAP
Import clearance
Seller handles all import formalities and duties
Buyer handles import formalities and duties
Import duties and taxes
Seller pays
Buyer pays
Seller obligation level
Maximum (highest of all 11 Incoterms)
High
Tax risk for seller
Non-recoverable VAT/GST possible
No import tax risk
Best for
Seller with import capability in destination country
When buyer handles import in its own country
Critère
DDP
EXW
Seller obligation
Maximum - all costs, risks, formalities
Minimum - goods at seller's premises
Transport
Seller arranges and pays all transport
Buyer arranges and pays all transport
Customs formalities
Seller handles export AND import
Buyer handles export AND import
Risk transfer
At destination
At seller's premises
Buyer simplicity
Maximum - buyer only pays price and unloads
Minimum - buyer must arrange everything
Impact on customs value
Incoterm DDP belongs to group DDP. This group determines which adjustments (AK/BA) are applied to the invoiced price to calculate customs value.
Seller has import capability: the seller has a local entity, customs broker, or agent in the destination country that can handle import formalities.
"Landed cost" pricing: common in e-commerce, B2B distribution, and intra-company transfers where the buyer wants a single all-inclusive price.
Buyer is inexperienced: when the buyer has limited experience with customs procedures and the seller is better positioned to handle them.
Intra-group transactions: DDP is often used for shipments between subsidiaries of the same multinational company.
Competitive advantage: offering DDP can be a commercial differentiator, simplifying the buying process for the customer.
When to avoid DDP
Seller cannot obtain import clearance: if the seller has no means to clear goods in the destination country, use DAP instead.
Non-recoverable tax risk: if the seller would pay import VAT/GST that it cannot recover, the total cost may be prohibitive.
Complex import regulations: if the destination country has complex or unpredictable import requirements, the buyer may be better positioned to handle them.
Seller wants limited exposure: DDP represents maximum obligation - if the seller wants to limit its risk, use DAP (import clearance by buyer) or CPT (carrier risk).
Recommended contractual clauses
Precise destination: specify the exact delivery address.
Tax allocation: clarify whether import VAT/GST is included in the DDP price or will be invoiced separately.
Unloading: explicitly state whether unloading is included (DDP does not require it).
Compliance: specify which party provides product compliance documentation (CE marking, certifications, etc.).
Insurance: although not required, clarify insurance arrangements for the transport and import phases.
Analysis by profile
Advantages
Obligations minimales. En termes logistiques, l'acheteur n'est en charge que du déchargement au lieu convenu.
Disadvantages
Absence de flexibilité en terme d'organisation et de négociation des coûts pour l'acheteur. Le vendeur est en charge des formalités douanières dans le pays de destination, en pratique le vendeur est souvent renseigné comme importateur sans le savoir ou ce dernier subit un retard de livraison à la suite de blocage en douane.
Recommendations
Limiter l'usage de l'incoterm DDP aux cas où le vendeur est identifié dans le pays d'importation et peut agir en tant qu'importateur.
Prévoir des clauses contractuelles pour contrer l'effet des faux DDP.
Prévoir la coordination avec le vendeur pour le déchargement.
Warning : Verify that the seller can act as importer in your country.
Comparative analysis (radar)
DDP
Compare with
Common mistakes
1
Agreeing to DDP without verifying the ability to obtain import clearance in the destination country.
2
Overlooking non-recoverable import VAT/GST, which can significantly increase costs beyond the expected margin.
3
Assuming DDP includes unloading - the seller delivers on the transport, the buyer must unload.
4
Not specifying the precise destination, leaving ambiguity about where delivery and risk transfer occur.
5
Failing to account for potential changes in import duty rates, tariffs, or regulatory requirements between contract signing and delivery.
DDP 2020: Seller Pays Import Duties & Clearance - The Trade Hub