DDP Incoterms®(Delivered Duty Paid) explained
DDP Delivered Duty Paid means that the seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.
Want to find out if this is the right Incoterms® for your business? Read on…
The Incoterms® DDP meaning
The DDP Incoterms is one of the 11 Incoterms® rules set by the International Chamber of Commerce. Read the full set of Incoterms® Rules here. In this guide, you’ll learn all about DDP, what it means, and if it’s the right option for you.
DDP is the term that places the maximum responsibility on the seller, and the least on the buyer. Under the DDP Incoterms®, the seller assumes all responsibilities and costs, including import clearance and payment of taxes and/or import duty (e.g. VAT, GST), for delivering the goods to the named place of destination. The ‘named place’ is the agreed place between the seller and buyer where the delivery will take place and is usually on the seller’s own premises. Essentially, the seller is responsible for the entire process, apart from paying for the goods, which is, of course, the buyer’s responsibility.
The below list demonstrates the responsibility breakdown between the seller and the buyer.
The seller’s obligations under the DDP Incoterms®:
Delivery of goods and documents required
Packaging and wrapping
Inland transport in the country of origin
Customs handling fees at the origin
Customs handling fees at destination
Payment of duties and taxes
Inland transport to the destination country (depending on agreed location)
The buyer’s obligations under the DDP Incoterms®
Payment of goods
Once the goods are ready for unloading from the arriving means of transport at the agreed place of destination, the risk then transfers from the seller to the buyer.
DDP vs DAP: What's the difference?
DAP is a similar Incoterms® rule to DDP and stands for “delivered at place.” Just like with DDP, the seller bears all risks involved in bringing the goods to the named place. However, under the DAP rule, the buyer is responsible for sorting out the import process including unloading of the goods at the destination, which is, under DAP, at the buyer’s risk. The buyer is also responsible for import clearance and any applicable local taxes or import duties.
Often, the buyer will be better placed to handle local import customs formalities, since, in some countries, import clearance procedures can be very complex and bureaucratic. This is a reason why DAP is, in some cases, preferred over DDP. However, if the seller has the capability to handle everything smoothly themselves, DDP might still be the preferred option. Nevertheless, it can be helpful to have a clear understanding of both options in order to make the right decision for your business.