DDP vs. DAP Incoterms

When shipping products to another country, the first question is who should pay for duties and taxes (D&T). Learn about the difference between DDP and DAP in international shipping to make informed decisions for your global trade operations.

Delivered at Place (DAP)

DAP is an incoterm that specifies the seller is responsible for delivering the goods to the buyer at a named place of destination, but the buyer is responsible for paying any customs duties, taxes, and import clearance costs. The advantage of having the recipient pay customs duties and taxes is that the exporting company (seller) doesn't have to pay upfront charges and the buyer takes on those costs.

The challenge with the DAP approach is that if the recipient is not on file with customs authorities already, there can be a lack of communication leading to customs delays. Customs will not release a shipment until they have confirmed the billing information of the recipient is on file. The buyer can also encounter surprise fees that they did not anticipate.

Note: DAP replaced the older DDU (Delivered Duty Unpaid) term in Incoterms 2010 and continues under Incoterms 2020 standards.

Delivered Duty Paid (DDP)

Delivered Duty Paid (DDP) is an incoterm that specifies that the seller is responsible for delivering the goods to the buyer, including paying any customs duties and taxes. Understanding DDP incoterms helps exporters and importers clarify responsibility for international shipments. The seller assumes all of the costs and risks associated with delivering the goods to the buyer, including any potential delays or issues with customs regulations and taxes.

For the buyer, DDP shipping can be a convenient solution, as they do not have to worry about paying customs duties and taxes or dealing with any potential issues related to these costs. This might also mean the seller embeds these customs charges into the price of the product. Many buyers prefer this approach because they know the total delivered cost when the shipment arrives at their location. 

Key Differences Between DDP vs. DAP

Understanding the difference between DDP and DAP is essential for both buyer and seller in international transactions. DDP (Delivered Duty Paid) means the seller is responsible for all duties, taxes, and additional costs, while DAP (Delivered at Place) means the buyer is responsible for these expenses. DDP incoterms place more responsibility on the seller for customs clearance and paperwork, while DAP places this responsibility on the buyer.

The seller under DDP must work with customs authorities or engage a customs broker to handle import clearance procedures. This requires customs experience in the destination country and knowledge of local customs regulations. Additionally, under DDP the seller is responsible for any loss or damage to the goods during transportation until they are delivered to the buyer. Under DAP the buyer assumes this risk and responsibility once the goods arrive at the named place of destination. 

Understanding DDP Incoterms 2020

The current DDP incoterms rules follow the Incoterms 2020 standards published by the International Chamber of Commerce. These rules clarify that DDP represents the maximum obligation for sellers in international trade. The seller must handle export clearance, international transport, import clearance, and all associated costs including duties and taxes.

Under DDP shipping arrangements, the seller prepares the commercial invoice and provides all documentation required for goods being imported and exported. This includes details about countries of origin, harmonized tariff codes, and declared values. The comprehensive nature of DDP makes it attractive for buyers who want predictable costs throughout their supply chain.

When to Use DDP Incoterms

DDP incoterms work best when:

• The seller has customs experience with destination country import procedures

• The buyer prefers a delivered price with no additional charges

• The seller can efficiently manage customs clearance in the destination country

• Import duties and taxes are predictable and manageable for the seller

• A trade agreement exists between countries that simplifies customs procedures

Many international buyers prefer DDP because they receive goods with all costs included. This eliminates surprises at customs and simplifies their purchasing process. For companies managing global trade operations, DDP shipping provides cost certainty and reduces administrative burden on the receiving end.

When to Use DAP Incoterms

DAP incoterms work best when:

• The buyer has established customs relationships in their country

• The buyer prefers to control their own import procedures

• The seller wants to minimize exposure to destination country regulations

• The buyer regularly imports goods and understands local customs requirements

• Import duties vary significantly and the buyer can manage them more efficiently

The seller may work with a customs broker in the destination country to ensure proper handling of customs regulations and documentation. This professional support helps navigate complex import requirements and ensures the shipment arrives without delays

View all 11 Incoterms

Our experienced team is here to help you navigate the complex world of international trade and select the best incoterm to suit your specific needs. Contact us today and let us help you streamline your logistics. 

*Incoterms are published by the International Chamber of Commerce.