Customs Clearance and Incoterms
Allocation of export and import clearance obligations between seller and buyer under Incoterms, determining who handles the formalities and costs of customs operations.
Allocation Principle
Incoterms clearly define who is responsible for customs clearance on export and import. This allocation is an essential criterion in choosing an Incoterm, as it determines the administrative obligations, costs and responsibilities of each party regarding customs formalities.
Export Clearance
In all Incoterms except EXW, the seller is responsible for export clearance:
- EXW: the buyer clears for export (problematic as they are often not a resident)
- FCA, FAS, FOB, CFR, CIF, CPT, CIP, DAP, DPU, DDP: the seller clears for export
This is one of the reasons the ICC recommends FCA over EXW for international trade.
Import Clearance
In all Incoterms except DDP, the buyer is responsible for import clearance:
- DDP: the seller clears for import and pays duties and taxes
- All others: the buyer clears for import
DDP therefore requires the seller to be able to perform import formalities in the destination country.
Practical Implications
The choice of Incoterm has direct consequences on:
- Who is the importer of record (responsible towards customs)
- Who bears the risk of duty rate changes
- Who must hold import/export licences and authorisations
- Who provides regulatory information (origin, classification, value)
In the EU, AEO (Authorised Economic Operator) status and the use of electronic clearance systems are directly linked to the party performing customs formalities.