What is DDP (Delivered Duty Paid)?

DDP is the opposite end of the scale from EXW. The seller does almost everything and carries almost all the risk. The buyer only has to unload and take delivery. For the full list of rules, see what are Incoterms.

This is a general explanation, not legal, tax or customs advice. Import rules differ by country, so check with a customs broker.

Why DDP matters

Buyers like DDP because the price is the price. There are no surprise duty bills, no customs paperwork and no broker to find. For a buyer who imports rarely, that can win the order.

For the seller, DDP means taking on duties, taxes and customs in a country it may not know well. A mistake in the duty calculation comes out of the seller's margin.

Who does what under DDP

The seller

• Clears the goods for export and, importantly, for import in the buyer's country.
• Arranges and pays the carriage to the named place.
• Pays import duties and taxes and the cost of the customs formalities.
• Carries all the risk of loss or damage until the goods are ready for unloading at the named place.
• Supplies the commercial invoice, the transport document and the other documents the buyer needs to take the goods.

The buyer

• Receives the goods at the named place, and unloads them. The seller does not unload under DDP. The rule where the seller unloads is DPU, but under DPU the buyer clears import.
• Gives the seller the help it asks for with import formalities, such as documents and information, at the seller's risk and cost.

Where risk passes

Risk passes when the goods are placed at the buyer's disposal at the named place, on the arriving vehicle and ready for unloading. Until then, any damage or loss is the seller's, however long the journey.

The import clearance catch

The seller must be able to clear the goods through import in the buyer's country, directly or through an agent. If it cannot, DDP is the wrong rule. DAP is the usual alternative: the seller still delivers to the named place, but the buyer clears the goods for import and pays the duties and taxes. Ask a customs broker before you commit to DDP.

An example from product sales

Say a seller builds a CIF price of $14,200 for 10 pallets: goods $12,000, export costs $650, sea freight $1,400 and insurance $150. For DDP it adds import duty and taxes of $710, a broker's clearance fee of $200 and delivery to the buyer's warehouse of $300.

The DDP price is $14,200 + $710 + $200 + $300 = $15,410. If the duty and taxes were wrongly estimated and really come to $1,000, the seller pays the extra $290 itself. Keep the working in a landed cost sheet so the next quote starts from real figures.

Common mistakes with DDP

• Using DDP without knowing the duty. Check the HS code and the duty rate before quoting.
• Ignoring taxes. Duties are not the only charge. Import taxes can apply as well.
• Quoting a fixed price for a long time. Freight, exchange rates and duty rates move.
• Assuming the seller unloads. DDP ends with the goods ready for unloading.
• Choosing DDP by default. It only works where you can clear import and know the duty. Otherwise DAP is often the safer offer.

How DDP changes the price you quote

A DDP price is the highest of the rules, because it covers everything: the goods, export, freight, insurance if you take it, import duties and taxes, clearance and delivery. The buyer pays nothing else, so the quote needs to be built from every cost, with some margin for changes.

Related terms

• Incoterms: the 11 rules DDP belongs to.
• EXW: the rule that asks the least of the seller.
• CIF: the seller pays freight to the destination port, but risk passes at loading.
• Landed cost: the full cost of the goods at the buyer's door, which DDP puts in the seller's price.
• HS code: the classification that decides the duty rate.

How PromptLab handles it

Record DDP in the trade terms field on the sales order, which lists the 11 Incoterms 2020 rules, and write the delivery place in the order's notes and the quote's notes. The quote, the customer's price list, the order and the account's files sit together, with the email, WhatsApp and Telegram threads in the shared Inbox.

Frequently asked questions

What does DDP mean?

DDP means Delivered Duty Paid. The seller delivers to the named place, cleared for import, and pays all costs including import duties and taxes.

Who pays import duty under DDP?

The seller. Under the rule, the import duties and taxes are the seller's cost.

What is the difference between DDP and DAP?

Under DAP the buyer clears the goods for import and pays duties and taxes. Under DDP the seller does both.

Does the seller unload the goods under DDP?

No. The goods are delivered ready for unloading. If the seller should unload, the rule is DPU, where the buyer clears import instead.

Is DDP risky for the seller?

It can be, because the seller takes on costs it does not control, such as duties and local fees. Work out the full landed cost first and check with a customs broker.