DDP Meaning: Delivered Duty Paid Explained

DDP: who pays and who carries the risk?

DDP can apply to any transport mode or a combination of modes. The table shows the normal allocation between seller and buyer. Cargo risk concerns loss or damage; ownership must be agreed separately. The delivery point is the agreed point within the named destination, if one is specified.

What should a Chinese DDP quote include?

Write DDP with the exact destination and edition: DDP [agreed delivery address and receiving point], Incoterms 2020. Specify the point clearly so both parties know where delivery occurs and risk transfers.

Ask for a written breakdown covering goods, packaging, carriage, clearance, applicable import duty and taxes, and final delivery. Confirm unloading arrangements and any exclusions or charges triggered by delays.

Distinguish the carrier's tax billing service from the sales terms. DHL states that its duties and taxes billing services are independent of the agreed Incoterm. A sender-paid tax option alone therefore does not establish a DDP sales agreement or identify the importer. Confirm both the purchase terms and the clearance instructions.

Compare the responsibilities using the Incoterms guide and Incoterms chart.

Worked example: goods from China delivered to Cambridge

Illustrative purchase: a buyer orders equipment from China with DDP delivery to an agreed receiving point in Cambridge, England. The seller arranges transport and import clearance and bears applicable import duty and VAT. The buyer prepares to receive and unload the equipment.

Assuming normal delivery and no buyer default, transit damage before delivery remains the seller's risk. Risk passes when the import-cleared goods are placed at the buyer's disposal at the agreed point, still on the arriving vehicle and ready for unloading.

For this UK example, a DDP total is not automatically the customs value. Under HMRC's transaction-value method, relevant transport, insurance, loading and handling costs to the UK border are included. Separately identified delivery costs beyond the UK border and included UK duties or taxes may be deducted under HMRC's rules.

Import VAT valuation starts from customs value. Add applicable Customs Duty, levies, excise duty and other import charges, excluding import VAT itself, plus relevant incidental expenses to the first UK destination and a further UK destination known at importation. Include costs only once. See UK import duty and VAT for the calculation.

Before accepting the quote, establish who will be named as importer and whether the buyer is entitled to reclaim import VAT with appropriate supporting records. Review these questions using the China-to-UK DDP VAT trap guide.

When is DDP suitable, and when should you consider DAP?

Consider DDP when you want the seller to arrange carriage and import clearance. First confirm that the seller can lawfully carry out the destination's import formalities.

Incoterms 2020 allocates contractual responsibilities; it does not grant VAT registration or customs authorisation, or override mandatory law. If the seller cannot handle import clearance, consider DAP, under which the buyer handles import clearance and applicable import duties and taxes.

Destination checks differ. European Commission guidance states that businesses importing goods into the EU need an EORI number. In the US, CBP states that the importer of record remains responsible for entry accuracy and applicable duties, taxes and fees even when using a broker. Confirm these requirements separately from the DDP sales terms.

What should buyers agree before accepting DDP?

Ask which legal entity will import the goods, which customs representative it will appoint, who pays each charge and which clearance records will be supplied. If your details are requested for a declaration, establish the role you are being asked to accept. Required buyer assistance with clearance is at the seller's request, risk and cost.

Confirm access, unloading equipment, delivery timing and what happens if the delivery cannot be received. Failure to provide required clearance assistance or notices can shift costs or risk to the buyer under DDP, provided the goods have been clearly identified as the contract goods.

Agree specifications, acceptance criteria, payment terms and ownership in the sales contract. DDP is a delivery rule, not a complete purchasing agreement.

Sources

ICC sources support the delivery-rule explanation. HMRC guidance supports the UK valuation example; European Commission and US customs guidance support the destination checks. DHL's guidance distinguishes its tax billing services from the agreed Incoterm.