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DDP (Delivered Duty Paid): Meaning, Risk Transfer, and When to Use It

DDP is the Incoterm where the seller pays freight, insurance, import duty, and taxes and delivers cleared goods to the buyer's door. Includes DDP vs DAP comparison and landed cost math.

Updated 2026-08-163 min read
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DDP (Delivered Duty Paid)

DDP stands for Delivered Duty Paid. It is the Incoterm 2020 rule in which the seller is responsible for delivering the goods to a named destination, cleared for import, with all duty, taxes, and clearance charges paid. The buyer walks away with clean title and no customs exposure.

What DDP includes (seller pays)

  • Ex-works pickup and export packing
  • Export customs clearance and any export licence fees
  • International freight (ocean, air, road, or multimodal)
  • Insurance if agreed (DDP does not require insurance; add "insured to destination" in the contract if you want it)
  • Import customs clearance in the destination country
  • Import duty (MFN + all overlays)
  • Destination VAT, GST, or sales tax
  • Any inland delivery from port to the buyer's door

What the buyer pays

Only unloading at the destination address, unless the contract specifies "DDP unloaded" which pushes that too onto the seller. Everything else is on the seller.

DDP vs. DAP vs. DAP-cleared

The three closest-cousin Incoterms confuse buyers. Cheat sheet:

  • DDP: seller pays duty, taxes, everything.
  • DAP (Delivered At Place): seller delivers to destination but buyer clears customs and pays duty/tax.
  • DAP-cleared (informal): DAP with customs clearance handled by seller but duty/tax invoiced back to buyer. Not a formal Incoterm; avoid unless the contract spells it out.

The DDP-IOR trap

The most-audited failure pattern in cross-border ecommerce: a foreign seller quotes DDP but does not have a US importer of record on file. When CBP requests the entry summary, no bond backs the entry, and the customs broker retroactively names the US buyer as IOR. The buyer receives an unexpected 7501 with Section 301 and Section 122 charges plus PSC exposure.

Fix: name the DDP seller as IOR in writing on the commercial invoice and confirm the seller either has a Continuous Bond of Importer or is filing under Indirect Representation with the broker as attorney-in-fact. See the DDP indirect representation guide for the refund-claim mechanics when a US-facing 7501 is filed under a DDP contract.

DDP landed cost math (worked example)

Scenario: US buyer orders 1,000 units at 50 USD FOB Shanghai. Freight 3,200 USD, insurance 150 USD, MFN 3.7 percent, Section 301 List 3 25 percent, Section 122 10 percent, MPF 0.3464 percent, HMF 0.125 percent.

  • Merchandise value: 50,000 USD
  • Freight and insurance: 3,350 USD
  • CIF for duty: US uses FOB for appraisement, so duty base = 50,000 USD
  • MFN duty: 50,000 x 3.7 percent = 1,850 USD
  • Section 301: 50,000 x 25 percent = 12,500 USD
  • Section 122: 50,000 x 10 percent = 5,000 USD
  • MPF: 50,000 x 0.3464 percent = 173.20 USD (subject to statutory min/max)
  • HMF: 50,000 x 0.125 percent = 62.50 USD
  • Total DDP landed at buyer's door: 50,000 + 3,350 + 1,850 + 12,500 + 5,000 + 173.20 + 62.50 = 72,935.70 USD

Compare against DAP quote at 53,350 USD where the buyer separately faces the 19,585.70 USD in duty and fees at customs clearance. Same all-in cost, different cash-flow and refund-claim exposure.

Use the LandedFees calculator to model DDP vs. DAP for your specific HTS and origin.

Related terms

Primary sources

  • Incoterms 2020 Rules, International Chamber of Commerce: iccwbo.org
  • 19 CFR 141.1 (Importer of Record): ecfr.gov
  • CBP Informed Compliance Publication, "Customs Value": cbp.gov

Frequently asked questions

Who pays import duty under DDP?

The seller. DDP is the only Incoterm where the seller assumes full responsibility for import clearance, duty, VAT/GST, and any other destination-country taxes. The buyer receives goods with title clear and no residual customs obligation.

What is the difference between DDP and DAP?

Under DAP (Delivered At Place) the seller delivers to the named place but the buyer is the Importer of Record and pays duty, taxes, and clearance fees. Under DDP the seller carries those costs. Everything upstream (freight, insurance) is identical.

Can a foreign seller be Importer of Record on a DDP shipment to the US?

Only under narrow conditions. A non-resident IOR needs a US customs bond and either a resident agent for service of process or a licensed customs broker acting as attorney-in-fact. Most non-US sellers use a US broker under Indirect Representation, which shifts refund-claim rights and creates the DDP-IOR trap this site covers in detail.

Does DDP work for high-tariff origins like China?

Mathematically yes, but the seller must build every layer (MFN, Section 301, Section 122, Section 232, MPF, HMF) into the sales price. Underquoted DDP prices from Chinese sellers are the single largest cause of downstream chargebacks and disputed invoices in cross-border ecommerce.

Is DDP allowed under USMCA?

USMCA does not restrict Incoterm choice. DDP is fully compatible. Where USMCA preference qualifies (through Rules of Origin plus a Certification of Origin), the seller pays zero MFN duty and can pass a cleaner DDP price to the buyer. That combination is why USMCA-qualified DDP from Mexico or Canada often beats DAP from Asia even after freight.

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