DDP vs DAP vs DDU: who pays the duty?

One three-letter Incoterm on your commercial invoice decides whether you or your customer pays the duty and brokerage. Get it wrong and someone gets a surprise bill — usually the wrong party, usually the day the package arrives.

The short version

DAP and DDU are functionally the same. The 2020 Incoterms removed DDU, but you'll still see it on older paperwork.

Why this matters more than people think

Under DAP/DDU, the carrier shows up at your customer's door with a clipboard. Your customer signs, then a second bill arrives from the carrier (or a Customs broker) for the duty, tax, and brokerage. Average surprise: $80-$300 on a $500 international order. Result: refused deliveries, refund requests, support tickets, brand damage.

Under DDP, you pay everything before the goods enter the destination country. Your customer pays once, at checkout, and the package shows up — no surprise. But: you need to actually price the duty correctly. Get it wrong and your margin disappears.

When to pick each

Use DDP when:

• You sell direct-to-consumer internationally
• Your customers are price-sensitive and won't tolerate surprise bills
• You have a landed-cost calculator wired into your checkout (or you're willing to over-estimate to be safe)
• You ship lots of small parcels (DHL, FedEx International Priority — these carriers handle DDP cleanly)

Use DAP/DDU when:

• You sell B2B and your customer has their own broker
• The customer is sophisticated enough to clear (a real importer, not a consumer)
• You don't want to be the importer of record (and the legal/tax obligations that come with it)
• The destination country's duty regime is too complex to price reliably

Use EXW/FOB when:

• The customer wants their own freight forwarder to handle pickup
• You don't want responsibility for ocean/air shipping or insurance

The hidden gotcha: customs becoming the importer of record

Under DDP, you become the importer of record in the destination country. That means:

• You need a tax ID / VAT registration in many countries
• You're on the hook for customs audits, retroactive tariff changes, and disputes
• You may need a local fiscal representative (true in most EU countries)

For EU shipments, the IOSS (Import One-Stop Shop) scheme lets you collect VAT at checkout for shipments under €150 with zero extra paperwork. Use it. Above €150 the rules get more complex — talk to a customs broker.

A worked example: $200 cotton apparel order, US to Germany

• Goods value: $200
• Shipping cost: $35
• HS 6109, Germany TARIC: 12% duty
• Germany VAT: 19%

DDP path (you pay duty + VAT, customer pays $312 once):

• Duty: $235 × 12% = $28.20
• VAT: ($235 + $28.20) × 19% = $50.01
• Brokerage: $25
• Total you pay: $103.21 above what the customer paid for the goods
• Customer experience: package arrives, signs, done

DAP path (customer pays duty + VAT at the door):

• Customer paid $200 + $35 = $235 at checkout
• Carrier shows up: $103.21 due now
• ~28% chance customer refuses delivery → returned freight + restock

Most DTC brands move to DDP after their first 100 international orders because the refund-rate math is brutal under DAP.

How Atlas helps

For parcel shipments, we tag the commercial invoice with your Incoterm choice automatically and quote the duty up front using our landed-cost calculator. For ocean and air freight, we let you specify the Incoterm at booking and prepare paperwork accordingly. Get started free.