Learn/Incoterms

DDP vs DAP: Who Clears Customs and Pays the Duty?

Under DAP (Delivered At Place), the seller delivers goods to the named destination ready for unloading, but the buyer handles import clearance and pays duties and taxes. Under DDP (Delivered Duty Paid), the seller also clears imports and pays the duty — the maximum obligation a seller can take.

One line on the invoice, one big operational difference

Commercially the terms differ by exactly one block of work: import clearance, duties, and taxes. Operationally that block is the hardest part to perform from abroad. A DDP seller must clear customs in a country where it may have no legal presence — needing an importer of record, possibly a tax registration, and a broker willing to file for a foreign entity. This is the DDP trap: VAT/GST paid by a non-resident seller is often unrecoverable, quietly adding 15–25% to landed cost in many markets.

DAP keeps the natural division: the seller manages transport (which it can control), the buyer manages its own country's customs (which it is legally equipped for). Most B2B trade that wants 'delivered' service is better served by DAP than DDP.

Where each term actually gets used

DDP dominates cross-border e-commerce and spare-parts logistics, where the shipper wants the receiver to experience a domestic-style delivery with no surprise charges — and where sellers build duty into price and use specialised IOR (importer of record) services. DAP dominates B2B container trade. For forwarders, a DDP request is a margin opportunity wrapped in a compliance obligation: it bundles brokerage, duty outlay financing, and delivery — priced properly it is excellent business; priced casually it is how desks discover unrecoverable VAT the hard way.

Frequently Asked Questions

Who pays import VAT under DDP?

The seller — and in many countries a non-resident seller cannot recover it, unlike a domestic importer who offsets it. That is why 'DDP excluding VAT' appears on many quotes, and why DAP is often smarter for B2B trade.

Under DAP, who is the importer of record?

The buyer. The buyer (or its broker) files the import entry and pays duties and taxes. The seller's obligation ends with goods arriving at the named place ready for unloading.

Can a seller do DDP without a local entity?

Sometimes — via an importer-of-record service or a broker filing for a foreign importer where the regime allows it. It adds cost and compliance risk, which is exactly what the DDP premium should be pricing in.

What is the difference between DAP and DPU?

Unloading. DAP delivers ready for unloading by the buyer; DPU (formerly DAT) requires the seller to unload at the named place. DPU is the only Incoterm that puts unloading on the seller.