Definition of the DDP Incoterm (Delivered Duty Paid)
The DDP Incoterm means that the seller delivers the goods to the agreed location in the buyer’s country, having assumed all costs and risks from the origin, including:
- International transport
- Export and import customs formalities
- Payment of duties, taxes, and VAT
- Domestic transport to the final destination
Current version: The DDP Incoterm remains unchanged in the Incoterms 2020 and can be used with any mode of transport.
Seller's Obligations (DDP)
- Delivery of goods and contractual documentation
- Proper packaging and labeling
- Inland transport at origin
- Export clearance and costs at origin
- International freight
- Port or logistical costs at destination
- Import clearance at destination
- Payment of VAT, duties, and excise taxes
- Inland transport to the agreed point with the buyer
- (Optionally) unloading of the goods, if agreed upon in the contract
Buyer's Obligations (DDP)
- Payment for the goods under the agreed terms
Insurance under DDP Terms
Insurance is not mandatory but is highly recommended for the seller, as they bear all transport risks up to the agreed destination.
For this reason, many exporters choose to:
- Take out comprehensive insurance that covers the entire logistics chain
- Include insurance terms and coverage in the international sales contract
Advantages and Limitations of the DDP Incoterm
| Aspect | Advantage | Risk |
|---|---|---|
| For the buyer | Minimal administrative burden and no customs formalities | Lack of control over transport, costs, and timelines |
| For the seller | Differentiation through a high level of service | Maximum logistical, tax, and legal responsibility in the destination country |
DDP can be an ideal option for buyers with no import experience or no infrastructure in the country of origin. However, for the seller, it is essential to be familiar with the legislation and customs requirements of the buyer's country (licenses, fees, restrictions), or to work with trusted local agents.
DDP vs DAP vs DPU - and Why DDP is the "Maximum Seller" Incoterm
"DAP vs DDP" alone is searched 4,100 times monthly globally; "DDP vs DAP" adds another 3,100. The two terms describe nearly identical delivery scenarios, the difference is who pays import duties and VAT.
| Attribute | DDP (highlighted current term) | DAP | DPU |
|---|---|---|---|
| Import customs clearance | Seller (the only Incoterm requiring this) | Buyer | Buyer |
| Duties + VAT paid by | Seller | Buyer | Buyer |
| Unloading at destination | Buyer | Buyer | Seller |
| Risk transfer | At named destination, goods ready for unloading, import-cleared | At named destination, goods ready for unloading | After unloading at named destination |
| Caveat for seller | Seller must be registered for import / VAT in destination country, OR work with a fiscal representative; cross-border e-commerce shippers must consider EU IOSS, UK VAT, and de minimis thresholds | No customs registration required by seller | Verify unloading equipment at destination |
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