DDP or DAP: who clears the goods and who keeps the VAT
Two Incoterms differ by a single obligation, and that obligation is customs clearance on arrival. DAP leaves it with the buyer; DDP puts it on the seller. Sellers compare the two as if they were shipping options and pick whichever quote is lower, which is how a 4% saving on freight turns into a 21% loss on VAT.
The one line that differs
| Obligation | DAP | DDP |
|---|---|---|
| Carriage to the named place | Seller | Seller |
| Export clearance | Seller | Seller |
| Risk passes | At the named place, goods ready for unloading | Same |
| Import clearance | Buyer | Seller |
| Duty and import VAT | Buyer | Seller |
| Unloading at destination | Buyer | Buyer |
Everything above the bold rows is identical. That is the whole difference, and it is worth stating plainly because DDP is often sold as “door to door” and DAP as something less complete. Both are door to door. Only the paperwork at the door differs.
Why DDP quietly costs you the VAT deduction
Import VAT is deductible by the importer of record — the party in whose name the declaration is lodged and who holds the customs document. Under DDP that is the seller, so the seller holds a deduction right in a country where it may have no registration and cannot use it. The cost does not vanish; it is priced into your invoice.
Take goods at 10 000 €, 4% duty, 21% VAT.
- DAP. You clear the goods. You pay 400 € duty and 2 184 € import VAT, and you deduct the VAT on your next return. Real cost: 400 €.
- DDP. The supplier clears and bills you a single price with everything inside. If it cannot deduct the 2 184 €, that amount is in the price you pay — and you have no customs document in your name to deduct it yourself.
The same goods, roughly the same freight, and a difference of two thousand euros hidden inside a number that looked simpler. Put both variants through the landed cost calculator with the VAT deduction ticked and unticked — the gap it shows is exactly this.
When DDP is the right answer anyway
DDP is not a trap, it is a transfer of work. It earns its price in three situations:
You are selling to consumers. A private buyer cannot deduct anything, so nothing is lost, and a parcel that arrives without a customs bill is worth real money in refused deliveries avoided. For consignments up to 150 € this is what IOSS exists for — see the low-value import calculator.
You have no presence and no EORI in the destination. If clearing would mean registering somewhere for a handful of shipments, paying someone else to own the problem is rational.
The supplier is registered where you are shipping. Then it can deduct the import VAT, and DDP costs you only duty plus a handling margin. This is the case worth asking about explicitly, because the answer changes the arithmetic completely.
What to ask before agreeing to DDP
Four questions, in the order that resolves the most.
1. Whose EORI goes on the declaration? If it is the supplier’s or the forwarder’s, you are not the importer of record. See the EORI number for why that matters.
2. Is the import VAT included, and is it recoverable by anyone? “All taxes included” is not an answer. Ask whether the supplier is VAT-registered in the destination country.
3. Which commodity code will be declared? Under DDP somebody else chooses it, and an over-declaration costs you through the price while an under-declaration is a liability that can follow the goods. Finding your HS code is worth doing even when you are not the one filing.
4. Who pays if the shipment is held? DDP makes clearance the seller’s obligation, not the seller’s risk of your demurrage. Spell out storage and detention.
The variant that is not really DDP
A common arrangement from Chinese suppliers is quoted as DDP but works as consolidated clearance: many buyers’ goods enter under one declaration in a low-friction port, and you receive a domestic delivery with no import document in your name at all.
It is cheap, it is fast, and it leaves you with goods on your books that have no traceable import. There is no VAT to deduct, no evidence of origin for a later audit, and no defence if the declared value turns out to have been a fiction. If a DDP quote is far below the duty and VAT you calculated, this is usually why — the quote is not cheaper, it is a different transaction.
Ask for the customs entry number. A legitimate DDP supplier can produce one.
A rule of thumb
Selling B2B and able to reclaim VAT: prefer DAP and clear in your own name. The paperwork is one form and the deduction is worth more than the convenience.
Selling B2C, or importing occasionally into a country where you have no registration: DDP, and price the handling fee in rather than pretending it is not there.
Either way, compare the two on landed cost per unit, not on the shipping line of the quote. That is the number that decides whether the product works.
Frequently asked questions
No, and that phrasing is a warning sign. DDP includes all import charges, VAT among them. A quote that excludes taxes is DAP with extra steps, and the difference will appear as an invoice you were not expecting.
Normally not. The deduction belongs to the importer of record named on the customs document. Without that document in your company’s name there is nothing to attach to your return.
Neither by default, but note that Amazon will not act as importer of record. You or your supplier must clear the goods before they reach the fulfilment centre, so the choice is between clearing yourself under DAP or paying the supplier to do it under DDP.
No. They allocate cost, risk and obligations for transport and clearance. Ownership transfers under the sale contract, which is a separate matter and often a different moment.
At the named destination, with the goods ready for unloading — identically for both terms. Unloading is the buyer’s in both cases, which surprises people who read DDP as “everything is handled”.