DDP — Delivered Duty Paid — is the Incoterm with the most obligations for the seller. You deliver goods to the buyer's door, cleared for import, with duties and taxes paid. Buyers love it because it gives them a fully landed price. Exporters should be careful, because it moves a lot of cost and legal risk onto them.
What DDP Means
Under DDP [named place of destination], the seller:
- Handles export clearance
- Arranges and pays for main transport to the destination
- Clears the goods for import in the buyer's country
- Pays import duties and taxes — such as customs duty and VAT or sales tax
- Delivers the goods to the named place, ready for unloading
Risk passes to the buyer at the named destination.
Why Buyers Like DDP
- A single, all-inclusive price
- No need to deal with customs or pay duties
- Easy comparison with local suppliers
Why DDP Is Risky for Exporters
1. You Become Responsible for Import Clearance
Under DDP, you are responsible for clearing goods through the destination's customs. In many countries, this requires a local importer of record, registrations, or a representative. As a foreign company you may not be able to act as importer yourself without setting this up.
2. Duties and Taxes Can Be Hard to Predict
Duty rates depend on classification, origin, and value — and can change. Several major markets changed tariffs significantly in recent years. Under DDP, any unexpected duty comes out of your margin.
3. VAT and Sales Tax Complications
In many markets, import VAT is recoverable by a registered business. If you pay it under DDP and are not registered, you may not be able to recover it — while the buyer might have been able to. Some countries also require VAT registration by foreign sellers in certain situations.
4. Delays and Storage Costs
If clearance is delayed — missing documents, inspections, classification questions — storage and demurrage charges build up at your cost.
💡 Consider DAP instead
DAP (Delivered at Place) gives the buyer a delivered price, but the buyer handles import clearance and pays duties and taxes. You manage transport; they manage their own customs. It is often a safer compromise.
When DDP Can Make Sense
- You have a reliable customs broker or partner in the destination who can act for you
- You understand the destination's duties, taxes, and regulations for your product
- You sell regularly to that market and can build DDP costs into pricing accurately
- Small-parcel or courier shipments where the courier offers duty-paid services
How to Price DDP
Your DDP price must include:
- Product cost and export costs
- Main freight and insurance
- Destination port and handling charges
- Customs broker fees
- Import duties
- Import VAT or sales tax (unless recoverable)
- Delivery to the named place
- A buffer for delays and changes
See landed cost calculation for how importers build these costs — the same logic applies.
Variations: DDP With VAT Excluded
Sometimes parties agree "DDP, VAT unpaid", meaning the seller pays duties but not VAT. This modifies the Incoterm and should be written clearly in the contract to avoid confusion.
DDP vs DAP vs CIF
| CIF | DAP | DDP | |
|---|---|---|---|
| Main freight paid by | Seller | Seller | Seller |
| Risk passes | On board at origin | At destination | At destination |
| Import clearance | Buyer | Buyer | Seller |
| Import duties and taxes | Buyer | Buyer | Seller |
Frequently Asked Questions
What does DDP mean in shipping?
DDP means Delivered Duty Paid. The seller delivers goods to the named destination, cleared for import, with duties and taxes paid.
What is the difference between DDP and DAP?
Under DAP the seller delivers to the destination but the buyer handles import clearance, duties, and taxes. Under DDP the seller handles all of these.
Is DDP a good idea for new exporters?
Usually not. DDP requires knowledge of the destination's customs, duties, and taxes, and can require a local importer of record. DAP, CIF, or FOB are generally safer for new exporters.
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