What is DDP (Delivery Duty Paid)?

Delivered Duty Paid (DDP) is a delivery agreement whereby the seller assumes all of the responsibility, risk, and costs associated with transporting goods until the buyer receives or transfers them at the destination port. This agreement includes paying for shipping costs, export and import duties, insurance, and any other expenses incurred during shipping to an agreed-upon location in the buyer's country. Delivered duty paid (DDP) places the maximum responsibility on the seller. In addition to shipping costs, the seller is obligated to arrange for import clearance, tax payment, and import duty. The risk transfers to the buyer once the goods are made available to the buyer at the port of destination. The buyer and seller must agree on all payment details and state the name of the place of destination before finalizing the transaction.

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Key takeaways:

This term places the maximum obligations on the seller and minimum obligations on the buyer.

No risk or responsibility is transferred to the buyer until the delivery of the goods at the named place of destination.

DDP terms can be a very big risk both in terms of delays and in unforeseen extra costs and should be used with caution unless the rules and regulations in the buyer's country are very well understood.

DDP can be used for any mode of transport.

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Seller's obligations under the DDP Incoterm:

Goods, commercial invoice and documentation

Export packaging and marking

Export licenses and customs formalities

Pre-carriage and delivery

Loading charges

Main carriage

Proof of delivery

Import formalities and duties

Cost of all inspections

Delivery to named place of destination

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Buyer's obligations under the DPU Incoterm:

Payment for goods as specified in sales contract

Assist seller in obtaining any documents or information necessary for export or import clearance formalities

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The differences between DDP (Delivered Duty Paid) and DAP (Delivered at Place):

Under DDP, the Buyer is only responsible for unloading. The Seller is responsible for everything else including packing, labeling, freight, Customs clearance, duties, and taxes. Conversely, under DAP, the buyer is responsible for not only the unloading, but the Customs clearance, duties, and taxes as well.

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Notes:

DDP is the only Incoterms rule that places responsibility for import clearance and payment of taxes and/or import duty on the seller.

Depending on the type of product and where it’s sold, safe delivery by air or sea can be difficult. DDP is essentially a shipping agreement that ensures sellers don’t take the money and run.

If a buyer has to pay customs fees, there’s a chance the sale won’t happen because they don’t know the cost of these fees. With sellers and shippers paying international fees, DDP allows for a smoother purchasing experience because the buyer doesn’t have to worry about paying the fees.