What does DDP stand for?
Definition: What is DDP?
DDP is short for “Delivered Duty Paid” and is part of the Incoterms. It means that a seller of a product has to take over all costs and risks of a transport to a previously determined location, including all customs formalities and costs. Therefore, DDP is quite comfortable for the buyer. The seller has to perform many duties:
- enclose the invoice and documentation
- packaging of the products
- care for export license, export duties and export formalities
- transport to the actual means of transportation
- fees for the loading of the products
- proof of delivery
- import formalities, import tariffs and taxes
- costs of all inspections
- delivery to a previously detailed destination
The previously detailed destination can be directly at the buyer, but also any other place that seller and buyer have determined.
DDP versus DAP
DDP is mostly similar to DAP (Delivered At Place). But the seller has to shoulder the organisational effort for the customs clearance and the costs of the import tariffs as well.
Delivered Duty Paid can become slightly complicated , because the seller has to pay taxes in the import country and needs a tax representative there. Additionaly, neither seller nor buyer can claim input VAT. A clause declaring „VAT or import turnover tax is handled by the buyer“ or „VAT or import turnover tax not payed by seller“ is recommended in this case.
Be aware of import and customs procedures
In some countries the formalities for import and customs are extremely complicated. In these cases, DDP is not recommended. This should be left to the buyer, who usually has better knowledge about the local provisions.