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Incoterms® 2020 chart: who pays what, and who carries the risk

Pick the term on your supplier's quote to see who clears export, pays the freight, unloads, clears UK customs and pays duty and VAT — where the risk becomes yours — and what the term does to a UK importer's VAT position.

Choose an Incoterm

EXW — Ex Works

Any mode of transport

Export clearance in China	You (buyer)
Main freight to the UK	You (buyer)
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods are made available at the seller's premises, not yet loaded.

What this means for a UK importer

You are responsible for Chinese export clearance as well as everything after it, which needs someone in China able to do it. For most UK buyers FCA achieves the same thing without that problem.

FCA — Free Carrier

Any mode of transport

Export clearance in China	Seller
Main freight to the UK	You (buyer)
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the seller hands the goods to your carrier at the agreed place.

What this means for a UK importer

The seller clears the goods for export and you control the freight. ICC describes FCA as suitable for any mode and well suited to container transport.

CPT — Carriage Paid To

Any mode of transport

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods are handed to the first carrier — in China, not at the destination.

What this means for a UK importer

The seller pays the freight but you carry the risk in transit, and neither side has to insure. Damage at sea is your loss on freight you did not book.

CIP — Carriage and Insurance Paid To

Any mode of transport

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: Institute Cargo Clauses (A) or similar: broad cover
Risk passes to you: When the goods are handed to the first carrier, as under CPT.

What this means for a UK importer

As CPT, but the seller must insure — and since Incoterms 2020 to Institute Cargo Clauses (A) or similar, the broad cover.

DAP — Delivered at Place

Any mode of transport

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods arrive at the named destination, ready for unloading.

What this means for a UK importer

The seller delivers to the named place and carries the risk to get there, while you clear UK customs and pay duty and import VAT. That keeps you as the importer, so a VAT-registered business can reclaim the import VAT.

DPU — Delivered at Place Unloaded

Any mode of transport

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	Seller
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods have been unloaded at the named destination.

What this means for a UK importer

As DAP, except the seller also unloads — the only rule that puts unloading on the seller. You still clear UK customs and remain the importer.

DDP — Delivered Duty Paid

Any mode of transport

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	You (buyer)
UK import clearance	Seller
UK duty and import VAT	Seller

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods arrive at the named destination, cleared for import and ready for unloading.

What this means for a UK importer

The seller or its agent clears UK customs and pays duty and import VAT. The catch: you are then usually not the importer of record, and GOV.UK is clear that an agent who clears goods it does not own usually cannot reclaim the VAT either — so it becomes a real cost buried in the price.

Read the full explanation

FAS — Free Alongside Ship

Sea and inland waterway only

Export clearance in China	Seller
Main freight to the UK	You (buyer)
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods are placed alongside the vessel at the port of shipment.

What this means for a UK importer

For sea and inland waterway transport only. You book the vessel and carry the risk from the quayside onward.

FOB — Free on Board

Sea and inland waterway only

Export clearance in China	Seller
Main freight to the UK	You (buyer)
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods are loaded on board the vessel at the port of shipment.

What this means for a UK importer

For sea and inland waterway transport only. Delivery happens on board the vessel; for containerised goods, ICC points to FCA as well suited to container transport.

CFR — Cost and Freight

Sea and inland waterway only

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: None — neither side is obliged to insure
Risk passes to you: When the goods are loaded on board at the port of shipment in China — even though the seller is paying the freight.

What this means for a UK importer

The classic misunderstanding: the seller pays the sea freight, so the goods feel like the seller's problem until they arrive. They are not. The risk is yours from the moment they are on board, and there is no insurance obligation on either side.

CIF — Cost, Insurance and Freight

Sea and inland waterway only

Export clearance in China	Seller
Main freight to the UK	Seller
Unloading at destination	You (buyer)
UK import clearance	You (buyer)
UK duty and import VAT	You (buyer)

Insurance the seller must buy: Institute Cargo Clauses (C): minimum cover
Risk passes to you: When the goods are loaded on board at the port of shipment, as under CFR.

What this means for a UK importer

As CFR, and the seller must insure — but only to Institute Cargo Clauses (C), the minimum cover, unless you agree something higher. Under CIP the default is the broader (A) cover.

All eleven rules at a glance

Rule	Mode	Export clearance in China	Main freight to the UK	Unloading at destination	UK import clearance	UK duty and import VAT
EXW	Any	You (buyer)	You (buyer)	You (buyer)	You (buyer)	You (buyer)
FCA	Any	Seller	You (buyer)	You (buyer)	You (buyer)	You (buyer)
CPT	Any	Seller	Seller	You (buyer)	You (buyer)	You (buyer)
CIP	Any	Seller	Seller	You (buyer)	You (buyer)	You (buyer)
DAP	Any	Seller	Seller	You (buyer)	You (buyer)	You (buyer)
DPU	Any	Seller	Seller	Seller	You (buyer)	You (buyer)
DDP	Any	Seller	Seller	You (buyer)	Seller	Seller
FAS	Sea	Seller	You (buyer)	You (buyer)	You (buyer)	You (buyer)
FOB	Sea	Seller	You (buyer)	You (buyer)	You (buyer)	You (buyer)
CFR	Sea	Seller	Seller	You (buyer)	You (buyer)	You (buyer)
CIF	Sea	Seller	Seller	You (buyer)	You (buyer)	You (buyer)

Sources

A summary of how the Incoterms® 2020 rules allocate costs and risk, for orientation. The rules are published by the International Chamber of Commerce and your contract governs; take advice on anything unusual. Incoterms® is a registered trade mark of the International Chamber of Commerce.

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