What is DDP? Who Pays Duty and Tax in International Shipping

What is DDP?

DDP (Delivered Duty Paid) is an Incoterm where the seller delivers goods to the buyer’s destination and pays all costs, including transport, import duties, and taxes, while the buyer simply receives the goods.

DDP places maximum responsibility on the seller. It is the opposite of EXW and represents the highest level of service – and risk – in international trade.

How DDP Works

The seller manages the entire journey, from factory to final destination, including the import process in the buyer’s country.

Seller’s responsibilities under DDP:

Export packaging and documentation
Export customs clearance
All transport to named destination
Import customs clearance at destination
Payment of all import duties, VAT, and taxes
Delivery to the named place
Bear all risks until goods are delivered

Buyer’s responsibilities under DDP:

Unload goods at the named destination (unless otherwise agreed)
Receive the goods

Risk transfer point: When goods are placed at the buyer’s disposal at the named destination, ready for unloading.

Key Differences Between EXW, DAP and DDP

	EXW	DAP	DDP
Export clearance	Buyer	Seller	Seller
Main transport	Buyer	Seller	Seller
Import clearance	Buyer	Buyer	Seller
Import duties & taxes	Buyer	Buyer	Seller
Unloading at destination	Buyer	Buyer	Buyer
Seller’s risk level	Lowest	Moderate	Highest
Buyer’s risk level	Highest	Low–Moderate	Lowest

See also: What is DAP? | What is EXW? | Incoterms 2020: Complete Guide

When DDP Makes Sense

DDP works best in specific, limited scenarios – not as a default arrangement for regular commercial trade.

DDP is appropriate for:

Low-value shipments where import duties are minimal and predictable
Replacement parts and spare parts deliveries
Free samples and marketing materials
Situations where the buyer has no import experience and the seller has an established legal presence in the destination country
E-commerce fulfilment where the seller operates cross-border logistics infrastructure

DDP is not appropriate for:

Regular high-value commercial imports
Shipments where the seller has no legal entity in the destination country
Any situation where the seller cannot legally act as importer of record
Shipments into markets with complex, unpredictable, or frequently changing duty structures

What DDP Actually Costs the Seller

DDP is often quoted as a single all-in price, but several hidden cost drivers affect the final cost:

Import duties volatility

Tariffs may change after pricing is agreed, increasing seller exposure.

VAT exposure

In many markets, import VAT must be paid upfront and may not be recoverable for foreign sellers, making it a sunk cost embedded in the price.

Importer of Record (IOR) requirement

To clear goods, the seller must act as – or appoint – the Importer of Record. In many countries, this requires a locally registered entity, adding cost and compliance complexity.

The Risk Buyers Often Miss

DDP reduces operational workload – but does not eliminate legal exposure.

Buyer may still be liable

Customs authorities may hold the importer accountable for classification, valuation, and compliance – even if duties were paid by the seller.

DDP in Practice: China–Viet Nam Shipments

For Vietnamese importers sourcing from China, DDP is widely marketed by Chinese forwarders as a simple, all-inclusive service.

It works well for small or infrequent shipments. For regular commercial imports:

The seller or their agent must act as importer of record
Import VAT (typically 8–10%) is embedded in pricing
Classification differences may create duty discrepancies

For recurring shipments, DAP (Delivered at Place) or FOB (Free On Board) with a local customs broker often provides better cost control and compliance visibility.

Decision Insight: DDP vs DAP vs FOB

If you prioritise convenience and have low shipment value, DDP simplifies operations.

If you need cost transparency, compliance control, and scalability: DAP or FOB is usually more effective than DDP for regular commercial imports

FAQ

Is DDP the same as door-to-door shipping? Not exactly. Door-to-door is a service description – it tells you about the physical journey. DDP is a trade term – it defines who pays for what and who bears risk. A door-to-door service can be structured under several Incoterms, including DAP or DDP.
Can the seller exclude VAT from DDP? Yes. It can be structured as “DDP (VAT unpaid)” if agreed.
What is the difference between DDP and DDU? DDU (Delivered Duty Unpaid) was a term under Incoterms 2000, replaced by DAP in Incoterms 2010. Under DDU, the seller delivered to destination but did not pay import duties – which is the same structure as DAP today. DDU is no longer a valid term under current Incoterms rules.
Who is the importer of record under DDP? The seller or their appointed agent.

See also: What is FOB? | What is CIF?

Vantage Logistics advises on Incoterm structuring for cross-border shipments across ASEAN, including China – Viet Nam routes where DDP, DAP, and FOB carry different cost and compliance implications.

Contact our team for a practical assessment of your shipping terms and total landed cost.

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