DDP (Delivered Duty Paid) is the Incoterms® 2020 rule under which the seller delivers the goods to the named place in the buyer's country cleared for import, with all import taxes, including customs duty and VAT, paid. It places the maximum obligation on the seller. Unloading from the arriving means of transport, however, is the buyer's responsibility unless the contract states otherwise.
What does the seller take on under DDP?
Among the eleven rules in Incoterms® 2020, DDP is the exact opposite of EXW. The seller takes the goods from its own warehouse to the buyer's address and handles all the official formalities along the way:
- Export customs clearance and any transit formalities in third countries,
- The main carriage and all freight up to the place of destination,
- Import customs clearance, customs duty, VAT and other taxes levied on import,
- All risk of damage to or loss of the goods up to the moment of delivery.
Risk passes when the goods are placed at the buyer's disposal at the named place, on the arriving means of transport and ready for unloading; the logic is explained in the transfer of risk in Incoterms entry. The seller has no obligation to take out insurance, but since the risk of the journey lies entirely with the seller, taking out a policy is in its interest.
Why do importer status and VAT cause problems?
The difficult part of DDP is not the transport but the import declaration. In many countries, the declarant on the import declaration must be a person established in that country. In Türkiye, Article 62 of Customs Law No. 4458 (Gümrük Kanunu) requires the declarant to be established in the Customs Territory of Türkiye where the declaration places specific obligations on a particular person. The ICC also points out that in some countries foreign persons are completely prohibited from handling import customs and tax formalities.
VAT is the second sticking point. The seller pays the import VAT, but to be able to deduct it, the seller must be registered for VAT in that country. Otherwise, the tax paid becomes a direct cost for the seller; nor can the buyer deduct it, as the tax was not paid in its name. For example, on a machine sold to Türkiye on DDP terms with a customs value of EUR 200,000, VAT at 20% on a base that includes customs duty amounts to at least EUR 40,000. If the parties want to leave this tax to the buyer, they should write an explicit clause in the contract, such as "DDP, import VAT for the buyer's account"; the cleaner solution is often DAP.
When is DDP risky?
- If the seller has no company, VAT registration or representative in the country of destination to handle the import on its behalf.
- If the product requires a licence, certificate of conformity or prior authorisation in the country of destination; these documents are often issued in the name of the local importer.
- If there is uncertainty about the customs value, GTİP (Turkish HS/tariff code) classification or additional duties; any tax difference arising later remains with the seller.
- If it is hard to price waiting at customs, inspection, storage charges and vehicle demurrage.
DDP or DAP?
| Parameter | DDP | DAP |
|---|---|---|
| Import customs clearance | Seller | Buyer |
| Customs duty and import VAT | Seller | Buyer |
| Point at which risk passes | At the place of destination, ready for unloading | At the place of destination, ready for unloading |
| Need for establishment in the country of destination | Arises for the seller | Does not arise |
| When it suits | The seller has a presence in the target country | Door-to-door transport, customs handled by the buyer |
When deciding between the two rules, the DAP vs DDP and DAP delivery term entries can be read together.
How should it be written in the contract?
The place of destination should not be left as a city name; a full address should be given: "DDP, buyer's warehouse, [full address], Incoterms® 2020". If unloading is to be left to the seller, if one of the import taxes is to be excluded or if the waiting time at customs is to be limited, these are written in separate sentences. Incoterms rules only govern delivery and the allocation of costs and risk; the transfer of ownership and payment terms are left to the other clauses of the contract.
How does Voltim Global support this?
In a door-to-door delivery set-up, Voltim Global clarifies at the quotation stage in whose name the import declaration will be lodged and which party will bear the taxes. Customs clearance in the country of destination is tied into the transport plan with the support of customs brokerage.