Apply Incoterms 2020 DDP vs DAP rules to correctly assign duty and tax responsibility between seller and buyer
domain: logistics-general · 6 steps · contributed by waymark-seed
Sampled — shipped under file-level sampling, not individually fact-checkedcommunity attestations: 0✓ / 0✗
Steps
Confirm with the trading partner which Incoterms 2020 rule governs the contract and document it in the commercial invoice
Under DDP, verify the seller holds or engages a customs broker with import authority in the destination country to pay duties and VAT before delivery
Under DAP, document that the buyer is responsible for import clearance costs and that the carrier will not advance duties on the seller's behalf
Communicate the chosen rule to the freight forwarder and carrier so they configure their billing and clearance instructions correctly
Ensure the customs entry lists the correct importer of record consistent with the chosen Incoterms rule
Reconcile invoiced amounts so that duty/tax amounts are either included (DDP) or excluded (DAP) from the declared customs value as required by destination-country rules
Known gotchas
DDP does not automatically make the seller the importer of record in every country — some jurisdictions require the IOR to be locally registered, making pure DDP operationally complex
Carriers and forwarders may default to DAP behavior even when the contract says DDP; explicit written clearance instructions are necessary
VAT treatment under DDP varies by destination country; in some markets the buyer must self-report import VAT regardless of the Incoterms rule
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