DDP
Also known as: Delivered Duty Paid
DDP, Delivered Duty Paid, means the seller arranges and pays everything up to and including import: carriage, export declaration, import declaration, import duties and VAT. It is the Incoterm with the most obligations for the seller.
Who arranges what under DDP?
The seller handles the full chain: export formalities, main carriage, import formalities and delivery at the agreed place. They pay the import duties and the VAT on import. Loss in transit is theirs, until the goods arrive ready for unloading. The buyer receives and unloads, unless otherwise agreed. Unloading is for the buyer, unless otherwise agreed. That is the only thing the seller does not do under DDP. Anyone who wants the seller to unload as well combines the DDP obligation with a separate unloading arrangement, or looks at DPU plus an agreement on import. DDP itself has no unloading duty. DDP applies to any mode. In e-commerce it is the term under which the consumer does not get a bill from the carrier on the doorstep. For business shipments it is the heaviest obligation you can give a seller, because they act as declarant in a country whose rules they do not know.
Why is DDP risky for the seller?
To file an import declaration in the country of destination the seller needs an EORI number there and usually a VAT registration. Without fiscal representation they often cannot recover the VAT paid, so it becomes a cost that should have been in the price and rarely is in a sales deal. They also remain liable for a correct classification and valuation in a country whose rules they do not know. An assessment years later lands with them, not with the buyer. A wrong goods code, a forgotten anti-dumping duty or a missing permit is then their customs debt. In many countries a foreign seller may not even act as importer without a local establishment. DDP on paper is then not performable, whatever the contract says. The shipment stays until someone with the right registration files the declaration, and the cost of that standstill sits with the seller.
When do you use DDP?
DDP fits deliveries to consumers and small customers who cannot or will not handle import themselves. In e-commerce it is the norm, because the customer does not want a bill from the carrier on the doorstep. The seller or the platform advances duties and VAT, or works with IOSS for the VAT, and builds those costs into the selling price. For larger business shipments DAP is usually wiser. The seller then keeps control of the transport without the fiscal consequences of import in a foreign country. The buyer does the import in a system they know, with their own authorisations, their article 23 and their representative. As a seller DDP is only safe in a customs territory you know, in practice the Netherlands or the EU, where you can be the declarant yourself or have a standing indirect representative. DDP São Paulo on a machine of a few hundred thousand euro is the classic example of a sales agreement that did not price the import bill.
What does DDP mean for the customs value?
The DDP price contains everything: goods, carriage, insurance, import duties and VAT. For the declaration the customs value has to be derived from that, and that can only be done if the seller supplies the build-up. Without a build-up the declarant is forced to take the whole price as the customs value. The import duties and the VAT must come off in any case, because they never form part of the customs value. Intra-EU carriage may also come off if it can be shown separately. If the seller only supplies a total amount, you pay duty on your own duties, because the levy sat in the price and is calculated again. On the import declaration the named place is the destination in the country of import. The declarant has to work the DDP price back to a value at entry. That is the most laborious of all the terms, and it is why a DDP invoice without a specification almost always produces a correction at an audit.
What do you arrange in advance under DDP?
Check whether the seller has an EORI number in the country of import and whether they can recover VAT there. Without registration the VAT becomes a cost they build into the price, which makes DDP expensive without anyone seeing why. The parties can agree that VAT stays with the buyer, usually written as DDP VAT unpaid, but that has to be added expressly. DDP on its own includes the VAT. Also agree who arranges the representation. A seller outside the EU cannot use direct representation in the EU and needs an indirect representative, who then becomes jointly liable for the customs debt. That is a responsibility a forwarder does not take on lightly and that should be discussed in advance, not at the first shipment. Also settle the goods code, the origin and the permits before the shipment leaves. Under DDP the seller is the declarant, and a code they do not know is their risk. A local declarant who does not have the buyer's master data starts guessing, and that is how a DDP shipment becomes an assessment.
How does DDP appear on the import declaration?
On the import declaration you enter DDP as the delivery term, with the place of destination in the country of import. Customs reads from that that the price contains goods, carriage, duties and VAT. Those last two must come off, plus carriage after entry if it appears separately. Without a specified invoice that derivation cannot be done. Ask at least for: goods value, freight to the EU border, freight after that, duties, VAT. If that split is missing, too much stays in the customs value and Customs levies on an amount that already contained the levy. That is the classic DDP error on an IMA in DMS. The declarant under DDP is the seller, or their indirect representative. The EORI number on the declaration is therefore the seller's, not the buyer's. A declaration in the buyer's name is not DDP, whatever the contract says. The form of representation and the power of attorney have to match that.
Which documents and pitfalls belong with DDP?
The seller needs invoice, packing list, export declaration, import declaration, proof of payment of duties and VAT, and the transport document to the destination. The buyer in principle only has the receipt. In practice the buyer still wants to see the declaration, because the goods land in their records and Customs can come to them for an explanation. The first pitfall is agreeing DDP without a registration in the country of import. The second is a total price without a build-up, so the customs value comes out too high. The third is thinking DDP is the same as franco domicile. Franco domicile is not an Incoterm and says nothing about duties, VAT or transfer of risk. Use DDP if the seller can actually do the import, with EORI, a VAT position and a representative who dares to be jointly liable. In every other case DAP is the term that keeps the transport with the seller and the import with the party who knows the system. That saves a standing shipment and an assessment years later.