DDP Incoterm: Delivered Duty Paid (Incoterms 2020)

DDP at a glance

Under DDP the seller does nearly everything: carries the goods to the named destination, clears them for both export and import, and pays duties and taxes. The buyer's only physical task is unloading. It is the heaviest seller obligation in the rulebook.

Full term

DDP — Delivered Duty Paid

Transport mode

Any transport mode

Delivery point

Named destination — on the arriving transport, ready for unloading, import-cleared and duty-paid

Risk transfers

When the goods arrive at the named place, cleared and duty-paid, ready for unloading

Export clearance

Seller

Import clearance

Seller

What DDP means in practice

DDP is the mirror image of EXW: one party does essentially everything. The seller delivers to the named place with import formalities completed and duties paid — the buyer receives goods as if they had been bought domestically, needing only to unload them.

The catch is that importing into a foreign country is a legal act, not just a logistics one. The seller must be able to act as importer of record in the buyer's country — which can require local registration, fiscal representation or licences the seller simply doesn't have. And VAT is a structural trap: an overseas seller often pays import VAT it cannot reclaim, turning a competitive delivered price into a margin leak. Many contracts vary the rule for exactly this reason (the widely used "DDP excluding VAT" pattern) — a sensible variation, but one that must be written explicitly.

Where DDP shines is cross-border e-commerce and turnkey B2B offers: the seller controls the full experience and the buyer sees one all-in price. Where it fails is casual use — a seller agreeing to DDP into a country it has never cleared goods in has signed up for someone else's customs system, at its own risk, on someone else's schedule.

Buyer vs seller responsibilities

DDP requires the seller to be legally capable of importing into the destination country. If that capability is missing, the contract fails at the border — verify before signing, not before shipping.

Where costs transfer — and where risk transfers

Cost transfer

The seller pays everything except unloading: the full journey, export and import clearance, duties, and taxes (including import VAT unless excluded by contract). The buyer's costs begin with the unloading operation at the named place.

DDP pricing must absorb duty-rate uncertainty, classification risk and VAT recoverability. Sellers quoting DDP across many destinations effectively run a small customs brokerage inside their pricing model — under-estimated duty is pure margin loss, with no mechanism to recover it from the buyer.

Risk transfer

Risk stays with the seller across the whole journey — including any border delay caused by the seller's own import-clearance obligations — and transfers when the goods arrive at the named place, cleared and ready for unloading.

This is the only rule where customs risk and transport risk both sit with the seller. A classification dispute at the destination border is the seller's delay and the seller's cost, in a customs system where the buyer usually has better standing to intervene — one of DDP's structural awkwardnesses.

When DDP works well

• Cross-border e-commerce where the customer expects an all-in price with no surprises at the door.
• Sellers with a local entity, fiscal representative or established broker network in the destination country.
• High-touch B2B offers — spare parts programmes, turnkey equipment — where delivered-duty-paid is the commercial promise.
• Buyers with zero import capability, where the seller's ability to import is genuinely stronger.

When to think twice about DDP

• The seller cannot act as importer of record in the buyer's country — the deal is structurally impossible, whatever the contract says.
• Import VAT would be unrecoverable for the seller and the contract doesn't exclude it — quote DAP or "DDP excluding VAT" instead.
• Destinations with volatile duty regimes or licensing requirements the seller cannot monitor.
• Buyers who hold import licences, duty reliefs or preferential-origin advantages the seller cannot use — the buyer clears cheaper under DAP.

DDP in the real world

UK e-commerce seller shipping DDP into Germany — the VAT lesson

After Brexit, a UK homeware brand keeps selling to German consumers with an all-in checkout price — commercially, a DDP promise. Early shipments move under a courier's duty-paid product; the courier fronts German import VAT and duty, re-billing the brand with fees on top.

The margin leak appears within a quarter: import VAT paid at the border isn't recoverable without a German VAT registration, and per-parcel brokerage fees stack on every order. The brand registers for VAT in Germany, switches to consolidated customs entries under its own EORI, and reclaims import VAT through its German returns — the DDP promise stays, the economics recover.

The lesson generalises beyond parcels: DDP is a fiscal capability commitment. The sellers who profit from it build the registrations and broker relationships first, then quote; the ones who quote first fund foreign tax authorities out of margin.

Common mistakes with DDP

TradeIntel insight

DDP is less a trade term than a market-entry decision. Done deliberately — with VAT registration, an importer-of-record solution and a broker who knows your product's classification — it converts customs competence into a genuine commercial edge. Done casually, it is the single most common source of "why is this shipment stuck and why are we paying this invoice" escalations we see. A practical test before offering DDP into any new country: can you name your importer of record, your VAT position and your product's duty rate there? Three answers, or don't quote it.

Is DDP right for your shipment?

Answer eight questions about your shipment and capability profile — the TradeIntel Incoterms Assessment explains which rules fit and why.

Check with the Incoterms Assessment

Frequently asked questions

Related Incoterms guidance

• Incoterms hub: all 11 rules
• DAP vs DDP
• EXW vs FCA
• The best Incoterm for importers: matching the rule to your capability
• The best Incoterm for exporters: service, risk and what you can price
• Incoterms Assessment