DDP vs DAP Incoterms Infographic - Avalara (2024)

FAQs

What is the difference between DAP and DDP Incoterms? ›

The main difference between DDP and DAP is delivery to destination and who is responsible for import duty, taxes and security clearance. Under DDP, the seller assumes the maximum responsibility in costs and risk from the beginning to the end. Under DAP, the buyer bears the costs and taxes of import clearance.

DAP and DPU gives the buyer more control over the customs clearance import process. DDP allows the seller to manage the entire shipping and customs clearance process.

Delivery Duty Paid (DDP): advantages and disadvantages

This rule was originally published in Incoterms® 1967 and has continued largely unchanged in its intent. The seller must deliver the goods as in DAP, but this time all import clearance formalities are at the cost and risk of the seller.

Go with DAP if you're well-versed in import clearance processes and can efficiently handle local taxes. Risk Management: If you want to limit your shipping risks, DAP may be a better choice since the seller bears the risks until delivery. With DDP, the buyer takes on risks only after delivery at the final destination.

Under DAP, the buyer only pays the unloading fees and the import duty, taxes, and customs clearance, and the seller is responsible for all other costs.

The buyer is responsible for import duties. Delivered Duty Paid (DDP) indicates that the seller must cover duties, import clearance, and any taxes. DDU is still commonly used in transportation contracts even though the International Chamber of Commerce has officially replaced it with the term Delivered-at-Place (DAP).

Due to the complex rules associated with international shipping and each country having its own set of rules and laws for customs formalities, DDP is best for high-value items (i.e., an average order value of greater than $30). Incoterms are internationally recognized shipping terms.

DAP (Delivered At Point) differs from DDP in that under DAP, the buyer is responsible for customs clearance, duties, and taxes. Whereas, under DPP, it is the seller's obligation to clear the goods and pay for the import duties and taxes.

DDP is an incoterm that stands for “delivered duty paid.” Used in sea freight and air freight importing, when shipping under this Incoterm, the maximum responsibility is placed on the seller. DDP can be risky since sellers are responsible for the delivery, and may lack local destination knowledge and requirements.

DAP and DDP are two Incoterms used in international trade. Under DAP or delivered-at-place, the buyer and seller share some of the responsibilities of the shipment of goods. The seller loads and ships goods to the buyer.

What countries do not allow for DDP? ›

Under DDP, there is an obligation to be declared as the importer. Many imports are declared incorrectly – Buyer as importer. As the owner of the goods on importation, the Seller would have to register for VAT in the buyer's country. For imports into the EU, this could result in multiple VAT registrations!!

DAP stands for Delivered at Place. According to the ICC, DAP means that the seller delivers the goods at a named place of destination, but the buyer is responsible for unloading the goods and clearing them through customs.

But before we delve deeper, let's establish a basic understanding: Definition: DDP refers to an agreement where the seller takes on all responsibilities, risks, and costs associated with delivering goods to a final destination. This includes shipping costs, import duties, and customs clearance procedures.

DDP indicates that the seller (exporter) assumes all the risk and transportation costs. The seller must also clear the goods for export at the shipping port and import at the destination. Moreover, the seller must pay export and import duties for goods shipped under DDP.

Under the Delivered At Place (DAP) Incoterms rules, the seller is responsible for delivery of the goods, ready for unloading, at the named place of destination. The seller assumes all risks involved up to unloading.

Who pays freight on DDP? In a DDP agreement, the seller of the goods is responsible for all shipping costs, as well as customs clearance fees, import duties, and VAT. Essentially, the seller pays for all fees associated with getting the goods to the buyer.

Since most businesses already refer to Incoterms when they do cross border trade, they also include them by default when doing domestic shipments. This is perfectly fine in most cases, however, both buyer and seller must be clear of their costs and obligations.

Fortunately, by utilizing Incoterms, you can make this as simple as changing EXW to DDP [name your delivery point] destination. Domestic and international use.