DDP or DAP: who pays the import duties on your parcels

A customer orders $90 from your store. The parcel arrives, the carrier asks for $38 before handing it over. They refuse. The parcel goes back, and you have paid for shipping twice without selling anything.

This has a name: you shipped DAP without telling your customer. This guide covers the difference between DDP and DAP, the confusion that costs more than the choice itself, and how to decide by destination and basket size.

This guide covers shipments leaving the EU (United Kingdom, Switzerland, United States, Brazil…). If you ship from one EU country to another, there are no import duties and the question does not arise.

Quick answer: DDP means the store pays import duties and import VAT; DAP means the customer pays them on arrival, plus a carrier clearance fee. DDP protects the buying experience and cuts refused deliveries, but exposes you to import VAT that is not always recoverable. The most expensive mistake is not picking the wrong one: it is confusing the Incoterm, a clause in your sales contract, with your carrier's billing option, which is only an instruction about who receives the invoice. Get them out of sync and you pay for a promise you did not keep.

DDP and DAP: the real difference

Both are Incoterms, the rules published by the International Chamber of Commerce that split costs and responsibilities between seller and buyer. The version in force is Incoterms 2020. Both require the seller to deliver the goods to the destination. They part company on the last metre only: import clearance.

Under DAP, the price your customer sees at checkout is not the price they will pay. Under DDP, it is.

What about DDU?

You will often see "DDU", for Delivered Duty Unpaid, in carrier portals and shipping software. That is the old name. The International Chamber of Commerce removed it from the Incoterms in 2010, merging it with three other D terms into the new DAP. DDU has not been an official Incoterm for fifteen years, even though the habit outlived it.

The obligations are the same: the seller delivers to the destination, the buyer clears customs and pays the duties. If your interface offers DDU, read DAP. But in your terms of sale and your contracts, write DAP: that is the term with an enforceable definition today.

What this means in practice: the choice is made shipment by shipment, when you create the label. In ParcelRush it is a single option to tick before buying the label, and it carries through to the customs documents produced with it.

The confusion that costs more than the choice

Here is the point almost no guide covers, and the one that causes most of the damage in practice.

The Incoterm and your carrier's billing option are two different things.

The Incoterm is a clause in the contract between you and your customer. It lives in your terms of sale and decides who legally bears what.

The billing option is an instruction you give the carrier when you create the shipment, telling it who to invoice for duties. At DHL Express it is called Duty Taxes Paid: the carrier advances the duties and import VAT, then bills them back to you with a service charge on top. UPS lets you nominate shipper, receiver or a third party. At FedEx the choice is made on the air waybill, and if you select nobody, the receiver pays by default.

DHL states explicitly that its duty billing services should not be confused with Incoterms: the first is an instruction to the carrier, the second is part of the contract between sender and recipient.

The consequences are very concrete:

• You can switch the billing option on while your terms of sale say nothing about DDP. You pay the duties, nothing obliges you to, and you have no basis to pass them on.
• You can advertise DDP to your customer and forget to set the option on the shipment. They get a payment request at the door, the exact thing you promised to spare them.
• In a dispute, the contract decides, not the shipping label.

If you advertise "duties included", write it into your terms of sale and set the option on every shipment. Both, every time.

What each option actually costs

Under DAP your customer pays three things on delivery: import duties, destination import VAT, and a carrier clearance fee. That last one is what hurts. It is a flat amount per shipment, unrelated to the value of the goods. On a €30 order it can exceed the duty itself.

Under DDP you pay the same amounts, plus a carrier charge for advancing them. The figure is in your contract rate card: check it, because it varies a lot by destination and by negotiated terms.

The calculation that matters is not which one is cheaper per parcel. It is this one: what does a refused delivery cost you? Outbound carriage, return carriage, stock tied up for weeks, a refund, and a customer who will not come back. Against that, the DDP charge is usually cheap.

The same logic now applies in the other direction: since 1 July 2026, parcels entering the EU from outside pay a €3 flat duty per tariff category, covered in The EU's €3 customs duty.

How to decide

There is no single answer, there is a rule per flow.

Choose DDP when you sell to consumers, when your positioning rests on the buying experience, or when you ship to destinations where the clearance fee is large relative to your average order value. It is also the right call if you sell on marketplaces that require a final price with no surprises.

Choose DAP when you sell to businesses that have their own customs broker and prefer to handle clearance, when order values are high enough for the flat fee to disappear into the total, or when the destination country makes DDP impractical for a non-established seller.

Check before making DDP your default: under DDP your store bears import VAT in a country where it is most likely not VAT registered. If that tax is not recoverable, it stops being an advance and becomes a permanent cost, shipment after shipment. The rule depends on the destination country and on your tax position: take it to your accountant, not to your shipping software.

To find out what is actually charged at a given destination, the European Commission runs Access2Markets, where you can look up duties and formalities by product and country from an HS code.

On the VAT side in your own country, an order shipped outside the EU is exempt, including the delivery charges invoiced to the customer: see VAT on shipping costs in e-commerce.

On two destinations, the choice is no longer yours

The rule per flow holds as long as the choice is open. On two of the most common destinations outside the EU, it no longer fully is.

United Kingdom, up to £135: you must charge UK VAT at the point of sale. For a consignment worth £135 or less, the overseas seller must register for VAT in the UK and charge it when the sale is made, not on arrival. It is a UK tax obligation, and no Incoterm exempts you from it: choosing DAP does not pass that VAT on to the customer, there is simply no import VAT left for them to pay. Above £135, the normal import rules apply again, and the DDP or DAP question is fully back on the table. The exception is business customers: if the buyer gives you their UK VAT number, the reverse charge applies and they account for the VAT.

United States: there is no longer a threshold below which the question does not arise. Until 29 August 2025, a parcel worth up to $800 entered duty free, and the choice between DDP and DAP made no difference below that amount. Executive Order 14324 suspended that exemption for every country. On 24 June 2026, US customs wrote it into their own regulations, indefinitely and for every mode of transport, mail included: the suspension would therefore survive the order being withdrawn. And it will become permanent, since the law of 4 July 2025 removes the exemption from 1 July 2027.

In practice, a $30 order is now subject to the same formalities and the same duties as a $400 one. And depending on what you sell, the postal route may be closed to you: see what still goes through by post to the United States. The choice therefore arises on every shipment to the United States, the smallest included, and that is exactly where flat clearance fees hurt the customer most under DAP.

Before you ship, check

• Your terms of sale say explicitly who pays import duties.
• The billing option is set on the carrier side, and matches what you advertised.
• Your product page and your checkout say the same thing, with no ambiguity.
• Your HS codes are correct: they determine the amount due, and therefore what your customer pays under DAP. See our guide to HS and HTS codes.
• Your commercial invoice travels with the parcel, carrying the real description, value and origin of every item.

With ParcelRush, customs documents, CN22, CN23 and the commercial invoice, are produced at the same time as the label, and an HS code is suggested for every item. That saves you the manual data gathering and cuts keying errors. It does not remove your obligations: you remain the declarant and you are responsible for the accuracy of what you declare.

That leaves the question of the form itself. It turns on the shipping channel, postal or courier, before it turns on the amount: see the form that applies to your shipment.

Sources

• Incoterms 2020, International Chamber of Commerce (ICC), the body that publishes and revises the rules.
• Duty Billing Services, DHL Express, on the Duty Taxes Paid service and the distinction from Incoterms.
• Incoterms and payment options (PDF), UPS, on nominating who pays duties and taxes.
• Who pays duties and taxes? and the duty and tax billing guide, FedEx.
• Customs procedures for import and export, European Commission, Taxation and Customs Union.
• Access2Markets, European Commission, to look up duties and formalities by product and destination.
• VAT and overseas goods sold directly to customers in the UK, HMRC, updated 13 May 2022, for the £135 threshold and the overseas seller's registration obligation.
• Indefinite Suspension of the De Minimis Exemption for Mail Shipments and New Postal Informal Entry Process, U.S. Customs and Border Protection, rule published 24 June 2026 (CBP Dec. 26-13).
• Indefinite Suspension of the De Minimis Exemption for Merchandise Arriving Through All Modes Other Than the International Postal Network, U.S. Customs and Border Protection, 24 June 2026 (CBP Dec. 26-12), which recalls the statutory end of the exemption on 1 July 2027 (One Big Beautiful Bill Act, Public Law 119-21, section 70531(b)).