DDP vs DAP: who pays the duty, and why the cheaper quote is usually DAP

The same door, a different bill

DDP and DAP are the two Incoterms that confuse buyers most, because they deliver to the same place. Both can be used with any mode of transport, and both generally transfer the risk of loss when the goods are at the buyer's disposal at the named destination, ready for unloading. The difference is a single question: who clears import customs and pays the duties and taxes.

Under DDP, the seller delivers at the named destination cleared for import, having carried out and paid for export, transit, and import clearance, and paid the applicable duties, taxes, and other customs charges, including VAT. Under DAP, the seller delivers to the named place, the buyer unloads, and the buyer handles import clearance and pays the applicable duties, taxes, and inspection fees. If a customs broker is needed, the buyer arranges for one.

The ICC's guidance reflects the split: the buyer clears imports and pays tariffs under ten of the eleven rules, and DDP alone moves both to the seller. The rules in force are Incoterms 2020, published in September 2019 and effective from January 1, 2020.

Why the DDP quote looks expensive, and why it often is not

A DDP price is a landed price. It includes the transport, the import clearance, the duty, and the taxes, and the buyer pays one number. A DAP price is a delivered price plus the buyer's own import costs, which arrive separately, later, and often larger than expected. The DAP quote looks cheaper because the duty is not in it.

The comparison that matters is the total, not the quote. A DAP price plus the duty at the classified rate, plus the broker fee, plus the clearance cost, is the real number, and for a buyer who can reclaim import VAT, the DAP total is often lower than the DDP price. The DDP seller is the importer of record, a foreign entity that frequently cannot register for or reclaim VAT in the destination country, so the irrecoverable VAT gets priced into the goods and the buyer pays it as an unrecoverable cost.

The ICC's guidance says DDP should be used only where the seller can, directly or indirectly, obtain import clearance in the destination country. A seller who agrees to DDP without that ability is agreeing to a term they cannot perform, and the shipment sits at the border while the two sides argue about whose problem it is.

The question to ask before you choose

Ask who is the importer of record. Under DDP, it is the seller, or someone the seller appoints. Under DAP, it is you. The importer of record is the party CBP holds responsible for the entry, the classification, and the duty, and the party that has to be able to answer CBP's questions.

Ask whether you can reclaim the VAT. If you can, and the seller cannot, DAP with you as importer of record is usually the better commercial outcome, even though the DDP quote looks simpler. If you cannot reclaim VAT anyway, and you want zero customs involvement, DDP is the better choice, provided you have checked that the seller can actually clear the goods.

And ask what happens when the duty changes between the quote and the delivery. Under DAP, the duty is yours, and a rate change lands on your invoice. Under DDP, the duty is the seller's, and a rate change lands on theirs. The duty that was paid is also the duty that drawback may or may not refund, and the refund rules changed with the 2025-2026 duties, so the term you choose decides what you can claim back later.