Incoterms & trade contracts DDP

Delivered Duty Paid

The Incoterm with the greatest obligation for the seller: the goods are delivered in the buyer’s country, cleared for import with duties and import taxes paid, ready for unloading. It is hard to apply if the seller has no tax registration or authorised representative in the importing country, and costs such as non-recoverable import VAT can arise. Because of these risks, raw material trade usually prefers DAP with the buyer handling import clearance.

Related terms

Delivered at Place DAP

The seller places the goods at the buyer’s disposal on the arriving means of transport, ready for unloading, at the named destination, bearing all costs and risks up to that point. Unloading, import clearance, duties and VAT are for the buyer. Widely used for delivered truck sales; the contract should say who pays waiting charges if import formalities cause delays.

Import duty (customs tariff)

A tax charged on imported goods on their customs value, according to the HS code and country of origin. It is usually a percentage of value (ad valorem), sometimes an amount per quantity (e.g. EUR per tonne). The rate can change with the general WTO rate (MFN), free trade agreements (zero or reduced rates), additional duties or anti-dumping measures. In landed-cost calculations it is computed on the CIF value including freight and insurance and is then added to the VAT base.

VAT (value added tax) on imports and exports

A tax on consumption. Exports are zero-rated in most countries, so the exporter can reclaim the input VAT it has paid. On imports, VAT is collected at customs on the customs value plus duty and other taxes, and a registered importer can usually deduct it, so the main impact is on cash flow. Between VAT-registered businesses in intra-EU trade the reverse-charge mechanism applies. Standard rates vary widely (e.g. 20 % in Türkiye, 19 % in Germany), and some raw materials enjoy reduced rates.

Customs broker

A licensed specialist who prepares customs declarations on behalf of importers and exporters, declares the classification (HS code), value and origin of goods, calculates duties and deals with the customs authorities. In many countries brokers are licensed by the customs administration and share responsibility for the accuracy of declarations. A good broker saves money through regimes such as inward processing, bonded warehousing, preferential origin and anti-dumping planning.

Explained in the trade handbook

Trade handbook