DDP vs DAP: What Is the Difference?

Quick Overview

The main difference between DDP and DAP is responsibility for import customs clearance, duties and taxes.

Under DAP (Delivered at Place), the seller transports the goods to the named destination, but the buyer completes import clearance and pays applicable import duties and taxes.

Under DDP (Delivered Duty Paid), the seller transports the goods to the named destination, completes import clearance and pays applicable import duties and taxes.

DAP vs DDP explained in 30 seconds

Both terms require the seller to deliver to the named destination, but import responsibilities are different. Watch the comparison below.

Under both rules:

• The seller arranges transportation to the named destination.
• The seller bears transport risk until delivery at that destination.
• The goods are delivered ready for unloading.
• The buyer normally handles unloading.
• Neither rule requires the seller to provide cargo insurance for the buyer.

The International Chamber of Commerce identifies import clearance as the defining difference between DAP and DDP. However, DDP may be unsuitable when destination-country rules prevent a foreign seller from acting as importer or completing import formalities. ICC Academy: DAP or DDP.

DDP vs DAP at a Glance

For individual definitions and complete responsibility lists, see the separate guides to the DAP Incoterm and DDP Incoterm.

The Key Difference: Import Clearance and Duties

DAP and DDP create a similar physical transportation obligation. In both cases, the seller arranges carriage to an agreed destination and bears the risk of loss or damage until the goods are placed at the buyer’s disposal, ready for unloading.

The difference appears at import customs.

Under DAP

The buyer is responsible for:

• Acting as the importer, where required
• Providing import documentation
• Obtaining necessary import licences or permits
• Completing import customs clearance
• Paying customs duties
• Paying import VAT, GST or other applicable taxes
• Responding to destination customs requests

The seller remains responsible for export clearance and any applicable transit customs procedures.

Under DDP

The seller is responsible for:

• Export customs formalities
• Applicable transit customs formalities
• Destination import customs clearance
• Import documentation assigned to the importer
• Customs duties
• Import taxes and related charges
• Delivering the import-cleared goods to the named destination

DDP is the only Incoterms 2020 rule that places the import-clearance obligation on the seller. The seller must therefore verify that it can legally complete import formalities in the destination country before agreeing to DDP.

Do DDP and DAP Transfer Risk at Different Points?

No. DAP and DDP generally transfer risk at the same physical point.

Under both rules, delivery occurs when the goods are:

• At the agreed named destination
• Placed at the buyer’s disposal
• On the arriving means of transport
• Ready for unloading

The buyer normally bears the risk of unloading under both DAP and DDP.

The difference between the rules is not where transport risk transfers. It is which party handles import clearance and pays the resulting duties and taxes.

If the seller must also unload the goods at destination, consider whether DPU—Delivered at Place Unloaded is the more appropriate rule. The ICC confirms that DPU, rather than DAP or DDP, makes the seller responsible for unloading. ICC Incoterms 2020 guidance.

Who Pays What Under DAP and DDP?

Costs normally assigned to the seller under both rules

The seller generally pays for:

• Packaging and export preparation
• Loading at origin, where applicable
• Origin inland transportation
• Export customs clearance
• Export documentation
• Origin terminal or handling charges
• Main international transportation
• Transit-country formalities, where applicable
• Destination transportation to the named place

Additional costs assigned to the seller under DDP

DDP also assigns the seller:

• Import customs clearance costs
• Customs duties
• Import taxes, where applicable
• Import licences or formalities assigned to the importer
• Customs-broker coordination at destination

Costs assigned to the buyer under DAP

Under DAP, the buyer generally pays:

• Import-clearance fees
• Customs duties
• Import VAT, GST or similar taxes
• Import permits or licences
• Customs examination costs assigned to the importer
• Unloading at the named destination

The precise allocation of handling or unloading charges can also depend on the transport contract. The sales contract and freight quotation should identify these costs clearly to prevent duplicate or unexpected charges.

DDP vs DAP Example

A Spanish machinery manufacturer sells industrial equipment to a buyer in Chicago. The agreed destination is the buyer’s warehouse.

If the sale uses DAP

The seller arranges:

1. Collection from its facility in Spain.
2. Export customs clearance.
3. Ocean or air transportation.
4. Destination transportation to the named place in Chicago.

The U.S. buyer acts as the importer, completes U.S. customs clearance and pays the applicable duties, taxes and customs-related fees.

If the sale uses DDP

The seller arranges the same transportation stages but must also:

1. Meet applicable U.S. importer requirements.
2. Arrange import customs clearance.
3. Provide the required import information.
4. Pay applicable duties and taxes.
5. deliver the import-cleared goods to the named destination.

If the Spanish seller cannot legally act as importer or establish an acceptable import arrangement, DAP may be more workable than DDP.

When Should a Seller Use DAP?

DAP may be appropriate when:

• The buyer is established in the destination country.
• The buyer already has an importer number or customs registration.
• The buyer has a trusted customs broker.
• The buyer understands local product regulations.
• Duties and tax rates are difficult for the seller to predict.
• The seller cannot legally act as importer at destination.
• The buyer wants control over customs declarations and duty payments.

DAP lets the seller control transportation to destination without assuming the buyer’s import obligations.

However, the seller still carries transportation risk to the named place. If the buyer fails to complete import clearance promptly, the shipment may incur storage, demurrage, detention or re-delivery costs.

When Should a Seller Use DDP?

DDP may be appropriate when:

• The seller can legally complete import clearance.
• The seller has destination-country customs and tax support.
• Duties and taxes can be calculated reliably.
• The seller wants to provide a delivered price.
• The buyer does not have import experience or infrastructure.
• Central control of the international logistics process is commercially important.

DDP can give the buyer greater cost predictability because import costs are assigned to the seller. However, the seller should not use DDP simply because it sounds like a complete door-to-door service.

Before agreeing to DDP, the seller should confirm:

• Who will act as importer of record
• Whether a foreign seller may import the goods
• Whether local tax or customs registration is required
• Whether the goods require licences or certifications
• How import VAT or similar taxes will be treated
• Whether the customs broker can represent the seller
• How tariff changes will affect the selling price

When Can DDP Cause Problems?

DDP becomes risky when the seller agrees to import obligations without understanding destination-country requirements.

Possible problems include:

• The foreign seller cannot act as importer.
• A local tax registration is required.
• The customs broker cannot represent the seller.
• The commodity needs an import permit.
• Product compliance documents are missing.
• Duties are higher than expected.
• Customs value or HS classification is disputed.
• Import VAT cannot be recovered.
• The shipment is held while the importer arrangement is corrected.

In some countries, customs rules or legal restrictions require a locally established party to complete import clearance. The ICC advises that DDP should not be used when the seller cannot undertake those import responsibilities; DAP may be the more appropriate alternative. ICC Academy comparison.

What Are the Main Risks of DAP?

DAP reduces the seller’s import obligations but does not eliminate destination risk.

Potential issues include:

• The buyer is not prepared to clear the shipment.
• Import documents are submitted late.
• Duties or taxes are disputed.
• The buyer refuses unexpected import charges.
• Customs clearance delays delivery to the named place.
• Storage or equipment charges accumulate.
• Responsibilities between the buyer, seller and carrier are unclear.

The sales contract should explain how costs caused by the buyer’s failure to complete import formalities will be handled.

Buyers should estimate duties and taxes before accepting DAP. The landed cost calculator can help model freight, insurance, duties, taxes and destination charges.

Is DDP the Same as Door-to-Door Shipping?

No. DDP and door-to-door describe different aspects of a transaction.

• DDP is an Incoterm governing the division of costs, tasks and risks between seller and buyer.
• Door-to-door describes the physical scope of the transportation service.

A freight quotation may cover transportation from one address to another without making the freight forwarder or carrier responsible for duties and taxes.

Likewise, agreeing to DDP in a sales contract does not mean every charge is automatically included in a carrier’s standard door-to-door quotation. The seller must ensure its transport, customs and tax arrangements collectively meet the DDP obligation.

See the guide to door-to-door, door-to-port, port-to-port and port-to-door freight for transportation-scope differences.

How to Write DAP or DDP in a Contract

Always include a precise named place and the applicable Incoterms edition.

Use this format:

DAP [precise named place and point], Incoterms 2020

or:

DDP [precise named place and point], Incoterms 2020

Examples:

DAP Buyer’s Warehouse, 2500 Example Avenue, Chicago, Illinois, Incoterms 2020

DDP Buyer’s Distribution Center, Gate 3, 2500 Example Avenue, Chicago, Illinois, Incoterms 2020

Avoid writing only “DAP Chicago” or “DDP United States.” A broad location can leave uncertainty about the delivery point, terminal charges and inland transportation.

The commercial contract should also address:

• Unloading arrangements
• Importer-of-record requirements
• Required customs information
• Product licences and compliance
• Duties and tax calculations
• Customs inspections
• Storage and delay costs
• Cargo insurance
• Proof of delivery

DAP or DDP: Which Should You Choose?

Choose DAP when the buyer can manage import clearance and the seller wants to control transportation without accepting destination-country import obligations.

Choose DDP when the seller can legally and operationally handle import clearance and wants to provide the buyer with a delivered price that includes applicable duties and taxes.

Do not choose DDP until the seller has confirmed that it can act directly or through a permitted representative in the importing country.

This table is an initial decision aid. The parties should verify the precise named place, destination-country rules and official Incoterms 2020 wording before signing the sales contract.

Compare Freight Options

Once the sales responsibilities and named destination are agreed, use the iContainers freight cost calculator to compare available ocean and air freight options.

Confirm separately which pickup, terminal, customs-clearance and delivery services are included in the freight quotation.