Incoterms 2020 responsibility and cost matrix
| Item | DDP | DAP | FOB |
|---|---|---|---|
| Export clearance | Seller | Seller | Seller |
| Main carriage | Seller | Seller | Buyer |
| Import clearance | Seller/forwarder | Buyer | Buyer |
| Duty and import VAT | Seller | Buyer | Buyer |
| Risk transfer | Named destination, ready for unloading | Named destination, ready for unloading | On board vessel at port of shipment |
The ddp vs dap importer of record question matters more inside the EU than in most markets. Both terms put the goods at your site, and both leave the seller on the hook for carriage. Both terms are also defined in the Incoterms 2020 rules published by the International Chamber of Commerce. However, they split the customs debt, and inside a customs union that split has consequences.
| Point | DAP | DDP |
| Import declaration filed by. | The buyer, as importer of record. | The seller, directly or through a representative. |
| Import VAT accounted for by. | The buyer, and usually recoverable by the buyer. | The seller, who must hold a local registration or a fiscal representative. |
| Duty paid by. | The buyer. | The seller. |
| Risk passes. | At the named place, before unloading. | At the named place, before unloading. |
| Practical effect for a one-off order. | Simpler for the seller, standard for the buyer. | Simpler for the buyer, heavier for the seller. |
Why the EU makes this sharper than it looks
Inside the EU the buyer often already holds an EORI number and a VAT registration. In that case DAP is the cleaner choice, because the buyer can absorb the customs debt as ordinary business. Therefore many EU importers ask for DAP almost by default.
However, a seller outside the customs territory cannot simply declare under DDP. To file, that seller needs a valid party inside the territory. In practice that means a fiscal representative, a local entity, or a broker acting under a direct or indirect representation arrangement.
The VAT point that causes the surprise
Duty is a real cost, and it leaves the business forever. Import VAT behaves differently, because a VAT-registered buyer usually recovers it. So under DAP the buyer pays it, then reclaims it, and the net cost is close to nil.
Under DDP the seller has to account for that same VAT first. If the seller holds no local registration, the cash flow lands on the wrong party. In addition, reclaiming it can be awkward, which is why DDP quotes sometimes look high and still lose money.
Where the responsibility actually sits
Recall that the term allocates costs and risk, and the customs law allocates the debt. Those two things are related, and they are not identical. The importer of record named on the declaration stays liable even when someone else agreed to pay.
Consequently, a buyer who accepts DDP should still confirm who is named. If the seller’s representative files, ask to see the arrangement in writing. The EU’s own import guidance service sets out the importer’s obligations in the same terms. That single check prevents the worst outcome, where a buyer learns of a customs debt during an audit.
How to compare two quotes fairly
Ask for the delivery place on both quotes. A quote to a port and a quote to a factory gate are different offers, even when the terms look identical. Furthermore, ask who is named as the importer of record, because that decides who answers later questions.
Then compare the two figures only after those answers align. Otherwise you are comparing a wider scope against a narrower one, and the cheaper number wins for the wrong reason. In practice, this single step resolves most of the confusion around the two terms.
Unloading is not part of the term
Both DAP and DDP place the goods at the named place, ready for unloading, and both stop short of unloading them. However, many contracts assume the seller’s driver will help. That assumption is not in the rule.
Therefore name the unloading method in the contract. Say whether a tail lift, a forklift or a crane is needed, and who provides it. This matters for heavy crates and for sites without a loading bay.
What we ask before we quote
First, tell us your EORI number, or tell us that you will appoint a representative. Second, name the delivery place precisely, because a port and a factory gate are different places. Third, say whether you want the quote on a DAP or a DDP basis.
Then we can quote on one basis and stay consistent across shipments. For the wider Incoterm context behind this EU case, see our DDP vs DAP and who is the importer of record guidance.
Frequently asked questions
These are the questions EU buyers ask most often about this split of duties.
Can a Chinese supplier act as importer of record under DDP?
Only through a party established in the customs territory. That party is usually a fiscal representative, a local entity or an appointed broker. Without one, the terms of the contract cannot be carried out.
Is DAP always cheaper than DDP?
Not always, and not by the same margin. The quoted figures differ because the two terms cover different costs. Compare them on the same basis and on the same delivery place before you judge.
Who pays import VAT under DAP?
The buyer pays it at declaration and usually recovers it through the VAT return. The net cost then depends on the buyer’s VAT position, not on the supplier’s.
Does risk pass at a different moment under the two terms?
No. Under both terms risk passes when the goods are placed at the named place, before unloading. The difference sits in the customs debt, not in the moment of risk.