Glossary

DDP (Delivered Duty Paid)

DDP is the most convenient Incoterms 2020 rule for the buyer and the most extensive for the seller: the seller handles everything to the door, including import clearance and taxes. It works for any single or multimodal transport, but it must be chosen carefully because it requires the seller to be able to act as importer in the destination country.

DDP (Delivered Duty Paid) is the Incoterms 2020 rule that places the maximum obligation on the seller: the seller makes the goods available to the buyer at the named place of destination, cleared for import and with all import charges (customs duty, VAT, etc.) paid, ready for unloading from the arriving means of transport. The seller bears all cost and risk up to that point.

Where risk and cost pass

Under DDP, both cost and risk pass at the same point: the named place of destination. The seller carries the obligation to the latest point and to the greatest extent.

  • Risk transfer: Risk of loss or damage passes to the buyer when the goods are placed at the buyer's disposal on the arriving means of transport, ready for unloading, at the destination.
  • Unloading: The seller does not unload; unloading is the buyer's responsibility (this is what distinguishes DDP from DPU, where the seller unloads).
  • Cost: The seller bears all charges, including export and import clearance, freight, import customs duty and import VAT. Insurance is not mandatory under DDP, but since risk stays with the seller until destination, the seller typically insures for its own benefit.

When to use it

DDP is preferred when the buyer wants a clear landed cost at the door and does not want to handle the customs process.

  • The buyer is unfamiliar with import formalities and the tax system in the destination country.
  • For samples, spare parts, small B2B shipments or e-commerce/parcel deliveries where an "all-inclusive to the door" experience is desired.
  • The seller has the infrastructure to act as importer in the destination country (tax registration, a local representative/customs broker).
  • The seller wants to bake the full cost into the price upfront and offer a competitive, simple quote.

Watch-outs and common mistakes

DDP looks easy, but the obligations on the import side can expose the seller to unexpected costs and risks.

  • Importer-of-record problem: In many countries a foreign seller cannot file the import declaration or reclaim import VAT; in that case DAP or DPU is safer than DDP.
  • Unrecoverable import VAT: If the seller is not VAT-registered in the destination country, the import VAT paid stays as a cost and erodes margin.
  • Confusing unloading: Under DDP unloading is the buyer's responsibility; if the seller will also unload, the correct rule is DPU.
  • Vague place of destination: The named place should be as precise as possible (full address); otherwise the point where risk/cost passes becomes disputable.
  • Local taxes and charges: Clarify responsibility in the contract for any charges arising after import beyond import duties.

How it relates to Sighthem

In Sighthem the Incoterm is chosen at the commercial-offer stage and carried into the shipment process.

  • The Incoterm is selected on the proforma/quote; when DDP is chosen, the destination country and named place are set on the offer.
  • The documents DDP entails (import clearance paperwork, certificate of origin, A.TR/EUR.1, commercial invoice, packing list) are tracked in the shipment's document set.
  • This way the term you sold on and the documents you completed for the shipment live in the same operational record.

Frequently Asked Questions

What is the difference between DDP and DAP?

Both are rules where the seller delivers the goods at the place of destination, but the difference is on the import side. Under DAP, import clearance and import taxes are on the buyer; under DDP, they are on the seller. So DDP adds import clearance and taxes on top of DAP. When the seller cannot act as importer in the destination country, DAP is preferred.

Who pays VAT and customs duty under DDP?

Under DDP all import charges, including import customs duty and import VAT, are on the seller. The key point: if the seller is not VAT-registered in the destination country, it often cannot reclaim the import VAT paid, and that amount stays as a cost. So these taxes must be factored into the price when quoting DDP.

Does the seller unload the goods under DDP?

No. Under DDP the seller delivers the goods at the destination on the arriving means of transport, ready for unloading; the actual unloading is the buyer's responsibility. If the seller is expected to unload as well, the correct Incoterm to use is DPU (Delivered at Place Unloaded).

Can DDP be used with any mode of transport?

Yes. DDP is an Incoterms 2020 rule usable regardless of transport mode (road, sea, air, rail or multimodal). Unlike sea/inland-waterway-only rules such as FOB, CFR, CIF and FAS, DDP has no mode restriction.

Next step

Select the Incoterm on the proforma and track DDP documents from one place in the shipment's document set: try Sighthem free for 14 days.

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