DDP vs DAP: Who Pays Duty, Clears Customs and Carries Risk

DDP vs DAP Incoterms Side by Side

Incoterms 2020 defines DAP delivery as the moment the goods are "placed at the disposal of the buyer on the arriving means of transport ready for unloading at the named place of destination". DDP uses that same delivery point and adds one layer: the seller must also clear the goods for import and pay any import duty and taxes. Up to the destination, the two rules are identical. The real difference in ddp vs dap sits at the border.

Obligation	DAP	DDP
Export clearance	Seller	Seller
Main carriage to destination	Seller	Seller
Unloading at destination	Buyer (unless the freight contract includes it)	Buyer (same exception)
Import clearance	Buyer	Seller
Import duty and taxes (incl. VAT/GST)	Buyer	Seller
Risk transfers	On arrival, before unloading	On arrival, before unloading
Insurance	Not required	Not required

Two points are often misstated. Duties are paid at import clearance in the importing country, not before the goods leave origin. And neither rule makes insurance compulsory: the seller carries transit risk, so taking out cover is a commercial choice rather than a contractual duty.

Both rules sit at the opposite end of the Incoterms range from Ex Works, where the buyer takes on almost everything from the seller's premises onwards. They also differ from CPT, where the seller pays carriage to destination but risk passes much earlier, when the goods are handed to the first carrier.

Where risk transfers under DAP and DDP

Risk moves at exactly the same moment under both terms: when the goods reach the agreed destination and are made available to the buyer, still sitting on the incoming truck, container or vehicle. Loss or damage before that point falls on the seller. Anything that happens during unloading, or after it, is the buyer's problem. Because the destination fixes the risk point, write it precisely, ideally as a full street address. Naming only a city leaves room to argue about where transit risk actually ended.

Who is the importer of record

This party, known as the IOR, answers to the customs authority for the import declaration, tariff classification, valuation and payment of duties and taxes. Under DAP the buyer normally takes this role. Under DDP the seller must act as IOR or appoint someone eligible to do so in the destination country. Many customs regimes limit who can lodge an entry as importer, so a seller with no local entity, registration or agent may find DDP hard, or even impossible, to perform lawfully.

When the seller must also unload: DPU

Neither DAP nor DDP obliges the seller to unload. If the deal is that the seller hands over goods already unloaded at destination, use DPU, which replaced DAT in Incoterms 2020. Under DPU risk passes only once unloading is complete, while import clearance and duties stay with the buyer, just as they do under DAP. There is no single rule where the seller both unloads and pays duty; for that, DDP has to be amended expressly in the contract of sale.

DDP vs DDU: What Happened to DDU

Plenty of people search for ddp vs ddu after spotting DDU on a carrier label or an old supplier quote. DDU, short for Delivered Duty Unpaid, was one of the rules in Incoterms 2000. Under it, the seller delivered the goods, still aboard the arriving vehicle, at a named place in the buyer's country, and the buyer handled import clearance, duty and taxes. Incoterms 2010 dropped DDU and introduced DAP (Delivered at Place), which the current Incoterms 2020 rules published by the ICC retain.

DAP is the nearest modern equivalent, but it is not a straight rename. It works for any transport mode and any named place, including a location in the seller's own country for domestic sales. It also carries the 2020 allocations for security clearance, transport documents and costs. So the practical answer today is that the comparison that matters now is DDP against DAP. Writing DDU is not forbidden, yet a contract that relies on it points to a rule set more than twenty years old.

Why carriers still print DDU and DDP on labels

Express couriers, postal operators and parcel platforms use DDU and DDP as billing codes rather than sales-contract terms. On a label, DDU tells the carrier to invoice duty and tax to the receiver, while DDP tells it to invoice the shipper. That code controls the carrier's bill and nothing more. It does not decide where risk passes from seller to buyer, who must insure the cargo, or who is liable under the sale.

When a delivery dispute lands on your desk, treat the label instruction and the contract term as two separate layers, and check each against its own document. Clearance practice also varies by market, as the differences between customs clearance in Australia and New Zealand show. Who lodges the entry, and when, can differ even where the label code is identical.

How to update quotes and contracts that still say DDU

Work through each document in this order:

1. Replace "DDU [place]" with "DAP [full named place] Incoterms 2020", then confirm the commercial intent still matches.
2. Confirm who unloads. DAP leaves unloading with the buyer, just as DDU did.
3. State who pays destination terminal handling and any carrier surcharges, because these charges cause frequent disputes.
4. Align the courier booking with the contract, so a parcel booked "duties to receiver" supports a DAP sale instead of contradicting it.

Where bookings and contract terms sit in separate systems, mismatches creep in. Passing the agreed Incoterm through an EDI link between forwarders and customs brokers helps keep the label instruction and the sales terms consistent from order entry to delivery.

Worked Example: One Shipment Under DAP and DDP

Consider a single consignment of machine parts sold for 10,000 currency units (CU) and delivered to the buyer's warehouse. Main carriage plus on-carriage to the buyer's site costs 1,200 CU. That figure would shift depending on whether the parts travel as a part load or a full container (see LCL vs FCL). Export clearance costs 150 CU, import brokerage 250 CU, and port, terminal and clearance fees 180 CU. Unloading at the warehouse adds 120 CU.

For illustration, assume duty of 5% on a customs value of 11,200 CU (goods plus freight). Assume also a 10% import tax charged on customs value plus duty. That gives duty of 560 CU and tax of 1,176 CU. Valuation bases vary by jurisdiction. Some assess duty on cost, insurance and freight, while others use a free on board value, so read these figures as a method rather than a rate. Either way, a correct entry depends on accurate tariff classification and valuation. That part of the forwarder's job is the focus of Expedient Software's customs clearance features.

Costing the shipment under DAP

The seller covers export clearance (150 CU) and freight (1,200 CU), which adds 1,350 CU on top of the goods. Everything after arrival falls to the buyer: brokerage 250 CU, clearance fees 180 CU, duty 560 CU, import tax 1,176 CU and unloading 120 CU, totalling 2,286 CU. A buyer registered for VAT or GST can usually claim the tax back as an input credit. Its real cost therefore sits below the cash it pays out at the border.

Costing the shipment under DDP

Now the seller funds every charge up to the warehouse door: export clearance, freight, brokerage, clearance fees, duty and tax, 3,516 CU in all. The buyer's only outlay is unloading, 120 CU. Compared with DAP, the seller's exposure grows by 2,166 CU. Unless it holds a tax registration where the goods are imported, it may have no way to recover the 1,176 CU. That stranded tax is frequently the cost that turns DDP from attractive to uneconomic, and it is the sharpest practical difference when weighing the two rules.

What happens when a DAP consignee refuses to pay

Suppose the DAP buyer declines to clear the goods or pay the charges. The consignment sits under customs control or in a carrier facility, building up storage and demurrage. Under the ICC Incoterms 2020 rules, the buyer bears additional costs and risks arising from its own failure. However, the carriage contract is normally between carrier and seller, so the invoice lands with the seller first. The seller then has three options: pay for return freight, abandon the goods, or switch to paying duty itself. In each case it must pursue the buyer separately for reimbursement under the sales contract.

When to Choose DAP and When to Choose DDP

DDP hands the buyer a predictable landed price and the easiest possible receiving experience, so it suits competitive tenders and direct-to-consumer sales. DAP keeps the seller out of the importing country's tax and customs system, which is why many forwarders and brokers treat it as the sensible default for cross-border B2B trade.

Cost alone rarely settles which rule to use. Three things matter more: whether the seller can lawfully and efficiently act as importer, whether its duty and tax figures are reliable, and how likely the buyer is to refuse delivery. Each factor is covered below, followed by a checklist you can run against any lane.

Importer of record and tax registration

Before quoting DDP, confirm that the seller can serve as IOR in the destination market, or appoint an eligible party to do so. Next, check whether import tax paid by the seller is recoverable. That usually depends on local VAT or GST registration and ongoing returns. Without either, the seller absorbs tax it cannot reclaim and may breach local rules. Incoterms 2020 does let parties vary DDP (for instance, by excluding VAT), but any such variation must be written expressly into the contract.

Tariff classification and landed-cost accuracy

Under DDP, every classification, valuation and origin decision belongs to the seller, as do post-entry adjustments, penalties and audits. Missing or outdated tariff codes, weak preferential-origin evidence or stale duty rates produce wrong landed-cost quotes, and margins quietly absorb the gap. On DAP terms those mistakes belong to the buyer and its broker, though the seller should still supply accurate commercial invoices and product data. Keeping that data consistent from one shipment to the next is easier when it lives in a single system, and our guide to freight and logistics software explains what to look for.

B2B versus eCommerce shipments

Experienced trade buyers generally have brokers, tax registrations and input-credit recovery in place, so DAP works well for them. Consumers have none of that, and unexpected charges at the door lead to refused parcels, which pushes online retailers towards DDP. National rules also shape the decision. Australia, for example, requires registered overseas vendors to collect GST at the point of sale on low-value imported goods, while the United States suspended its de minimis duty-free treatment for low-value shipments in 2025. Confirm current requirements for each market you serve.

Decision checklist: DAP or DDP?

Run through these questions for every lane and customer:

• Can the seller act as, or appoint, the IOR at destination?
• Is the seller registered for VAT/GST there, and can it reclaim import tax?
• Have tariff codes, customs values and origin data been verified for this market?
• Is the named place defined precisely, including who unloads? (Use DPU if the seller unloads.)
• Does the buyer have a broker and the capacity to clear and pay promptly?
• How high is the refused-delivery risk, and who covers return or storage costs?
• Is the sale B2B, or to consumers covered by point-of-sale tax rules?
• Does the carrier billing instruction match the Incoterm in the contract?

If the answer to any of the first three questions is 'no', choose DAP.

Frequently Asked Questions