Incoterms rule
DDP — Delivered Duty Paid
DDP is the term that asks the most of a seller, including acting on the import side of a border it may have no standing to act at. It is agreed casually far more often than it is workable.
The most that can be asked of a seller
Under DDP the seller takes the goods all the way to the named destination and deals with the import side as well: clearance, duties and taxes on entry, and any permit or licence the goods need to be admitted. For a buyer it is the simplest possible arrangement — the goods appear, cleared.
It is popular with buyers for that reason, and popular with sellers who quote it without examining what it commits them to. That gap is where the problems live.
Being the importer is not a formality
Acting as importer means having standing in the destination country: an identification recognised by that country's customs authority, and the ability to make declarations and answer for them. A seller with no establishment there may simply not be able to do it, or may only be able to do it through arrangements it has not put in place.
The failure mode is predictable. The goods arrive, nobody with authority is available to clear them, storage begins to accrue, and the parties negotiate a fix under time pressure — usually by having the buyer clear goods it did not agree to clear, on terms nobody has priced.
Tax is where DDP usually fails
Duty is often the smaller part. Import taxes are the part that catches a seller out, because whether a non-established seller can recover them, and whether it must register locally in order to do so, is a question of that country's tax rules.
That question has no general answer and this page will not give one. It varies by jurisdiction, by the nature of the transaction and by how the parties are established, and it should be put to a tax adviser or the relevant authority before the term is agreed — not after an irrecoverable charge has landed on an invoice.
The clause that is not a rule
Contracts frequently carry constructions such as delivered duty paid but excluding local taxes. They are attempts to solve exactly the problem above, and they are not part of the rule set. What they mean is whatever the parties can later agree they meant.
If the commercial intent is that the seller pays duty but not import tax, that intent belongs in a clause of its own, spelled out, rather than in a modification of three standardised letters. Modified terms defeat the reason standardised terms exist.
What to consider instead
Where the buyer is established in the destination country, DAP achieves nearly the same commercial outcome while leaving import clearance with the party that can actually perform it. Where the seller genuinely can act as importer — because it has a local entity, a registration, or a representative appointed for the purpose — DDP is workable and predictable.
The test is not what the buyer would prefer. It is whether the seller has the standing to do what the term commits it to. Establish that first; agree the term second.
In practice
What this means for a shipment.
- The rule's intent is that the seller delivers to the named destination with import clearance completed and import charges paid; the sale contract governs the parties
- Unloading at the destination is not included, exactly as with DAP
- The seller needs standing to act on the import side in the destination country; without it the term cannot be performed
- Whether a non-established seller can recover import taxes, and whether local registration is required, varies by jurisdiction and needs professional confirmation
- Avoid modified constructions such as duty paid excluding taxes; write the intended split as its own contract clause
- Where the buyer is established locally, DAP usually delivers the same commercial result with far less exposure
- Requirements for permits, licences and admissibility vary by commodity and destination and must be confirmed for the specific goods
Original explanation, written for shippers and not a source of legal or tax advice. The Incoterms rules are an International Chamber of Commerce publication protected by copyright and revised periodically; consult the current ICC text and name the applicable version in the contract.
Use the reference
Apply the definition to the actual contract and shipment.
A reference explains the role of a rule or document. The applicable edition, terms and requirements still need to be confirmed for the case.
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