What Is DDP (Delivered Duty Paid)?

Delivered Duty Paid (DDP) is one of the seven Incoterms 2020 rules from the International Chamber of Commerce (ICC) for any mode of transport, written as DDP followed by the named place of destination. ICC Academy describes it as the rule with the maximum obligation for the seller and the minimum for the buyer.

Who does what under DDP:

• Carriage: the seller arranges and pays for transport by road, rail, air, sea or inland waterway, or a combination, to the agreed destination.
• Customs: the seller carries out and pays for export and import customs clearance.
• Duties and taxes: ICC's tariff guidance says the seller is responsible for all duties, taxes and import formalities in the destination country.
• Delivery and risk: the seller delivers, and risk passes, when the goods are at the buyer's disposal at the agreed point in the destination, ready for unloading.
• Insurance: not mandatory, though the seller carries the risk up to the destination.
• Buyer: unloads the goods as part of taking delivery and pays for unloading unless the seller's contract of carriage covers it. ICC Academy adds that the buyer must assist the seller in obtaining documents or information that import customs require.

• Import clearance by a foreign seller. ICC Academy notes that some import customs authorities require the local importer to carry out import clearance. In those cases DDP cannot be used, and DAP is the appropriate rule.
• Import VAT and local taxes. Dutch government guidance from the Netherlands Chamber of Commerce (KVK) says that if the destination country charges import VAT, the seller must register with that country's tax administration or use a local tax representative, and that some countries may require a local branch. It calls DDP rare in trade between unrelated businesses.
• Tariff changes. ICC's tariff guidance says that under every other Incoterms rule the buyer bears the import burden, including compliance with new or changing tariff schedules. Under DDP that sits with the seller, and the guidance gives using DAP instead of DDP as an example of avoiding seller exposure.

This is general information, not legal, tax or customs advice.

ICC Academy says the key difference between DAP and DDP lies in import customs clearance. Both deliver at the named destination, ready for unloading. Under DAP the buyer carries out and pays for import clearance. Under DDP the seller does.

A manufacturer sells a distributor abroad 50 units at $300 each, DDP the distributor's warehouse: 50 x $300 = $15,000.

• Freight to the warehouse is $800.
• Import duties and taxes for the shipment are estimated at $1,500 (an illustrative figure).
• The DDP price has to cover $15,000 + $800 + $1,500 = $17,300, and the manufacturer, not the distributor, pays the duties actually assessed.

The Incoterms page covers how Shopify defines DDP, how to mark the commercial invoice and how B2B tax exemptions apply to duties. Two label rules matter once you charge duties and import taxes at checkout. Shopify says you then need DDP shipping labels instead of standard shipping labels for your international orders, because with a standard label the customer is still charged duties and import taxes at delivery and pays them twice. It also says to verify that duties and import taxes have been collected on each international order before you purchase a DDP label.

Uncap's guide to the anatomy of a private order portal notes that cross-border shipments also need a commercial invoice, a required document for export and import clearance that customs officials in the buyer's country use to assess import duties and taxes. It covers Shopify Markets, which allows market-specific pricing, currency and product availability from a single Shopify backend.

• DAP (Delivered at Place)
• EXW (Ex Works)
• Importer of record
• Customs broker
• Landed cost

• ICC Academy: DAP and DDP Incoterms 2020 explained
• ICC: Using the Incoterms 2020 Rules to Manage Tariff Risk (PDF)
• Shopify Help Center: Carriers and shipping terms for international orders