DDP vs. DDU: What's the Difference?

Edited by Aimie Carlson || By Harlon Moss || Updated on October 18, 2023

DDP (Delivered Duty Paid) means the seller covers all costs and duties, while DDU (Delivered Duty Unpaid) means the buyer is responsible for import duties and taxes.

Key Differences

DDP and DDU are both Incoterms, which are international trade terms that define responsibilities between buyers and sellers. DDP, or Delivered Duty Paid, implies that the seller assumes all responsibilities and costs up to the delivery point, including import duties and taxes. This means the buyer doesn’t have any hidden costs or responsibilities upon the goods' arrival.

On the other hand, DDU, standing for Delivered Duty Unpaid, dictates that while the seller handles delivery and shipping, the import duties and taxes fall on the buyer. Therefore, when the goods arrive at the destination, the buyer has to shoulder these additional costs.

It's crucial for buyers and sellers to be clear about these terms to avoid misunderstandings. Choosing DDP means a buyer can expect a smooth delivery without extra charges. Opting for DDU signifies that while the delivery is handled, the buyer should be ready for potential customs costs.

Businesses often make decisions between DDP and DDU based on their familiarity with local customs regulations, the nature of their relationship with their trading partner, and their willingness to handle import-related tasks. Both terms provide clear guidelines to prevent disputes and ensure a smooth trading process.

In summary, while both DDP and DDU pertain to the delivery of goods in international trade, the main distinction lies in who takes care of the import duties and taxes. DDP places this responsibility on the seller, while DDU delegates it to the buyer.

Comparison Chart

Responsibility for Duties/Taxes

Seller pays all duties and taxes.

Buyer pays duties and taxes.

Delivery

Seller covers cost up to the delivery point.

Risk for Buyer

Low, as all costs are covered by the seller.

Higher, due to potential unforeseen customs charges.

Usage

Common when seller is familiar with destination customs procedures.

Preferred when buyer can easily handle import duties and taxes.

Cost Predictability

High for the buyer as all fees are upfront.

Variable, as duties and taxes can differ.

DDP and DDU Definitions

DDP

An Incoterm where the seller pays all costs including import duties.

The company offers a DDP shipping option, so you won't face any extra charges.

DDU

An international shipping option where customs costs are separate.

With DDU, we learned to anticipate extra fees at delivery.

DDP

A trading term where goods are delivered with all charges paid by the seller.

The DDP agreement ensured we didn't have to deal with customs.

DDU

An Incoterm where delivery is made, but import duties are unpaid.

The package arrived DDU, so we had to cover the customs charges.

DDP

An international commerce term indicating all duties and taxes are seller's responsibility.

Using DDP, the supplier covered all the import duties.

DDU

A trade term indicating the buyer pays for import duties and taxes.

We were surprised by the extra fees since it was a DDU shipment.

DDP

A shipment method where the receiver isn't charged extra upon delivery.

We prefer DDP shipments for a predictable total cost.

DDU

Shipping method where the seller delivers, but doesn't cover destination charges.

The DDU terms meant we handled the import taxes ourselves.

DDP

Delivery term meaning the seller bears all risks and fees until the destination.

With DDP, we received our order without additional customs fees.

DDU

A commerce term where delivery excludes duties and import taxes.

Our DDU order had additional charges upon arrival.

FAQs

Is DDP more expensive for the buyer?

Initially, DDP might seem costlier, but it provides cost predictability by including all fees.

How do DDP and DDU impact risk management in trade?

DDP reduces risk for the buyer, while DDU might introduce risk due to variable customs fees.

Can DDU result in unexpected costs?

Yes, as the buyer is responsible for import duties/taxes which can vary.

Which term is simpler for the buyer?

DDP is simpler as it includes all costs, leaving no additional duties or taxes for the buyer.

Can DDP prices fluctuate due to changing duties?

Yes, sellers might adjust DDP prices based on updated customs duties and taxes.

Why might a seller prefer DDP?

Sellers familiar with destination customs might prefer DDP to provide a seamless experience for buyers.

Is DDP more buyer-friendly?

Generally, yes. DDP offers clarity on total costs, reducing potential surprises for buyers.

Are DDP and DDU the only Incoterms concerning duties?

No, there are other Incoterms, but DDP and DDU specifically address duties paid and unpaid.

How do DDP and DDU affect return policies?

Return policies can be more complex with DDU due to potential reimbursement of customs fees.

How do buyers know the exact DDU charges beforehand?

It's challenging; buyers may need to consult local customs or use estimation tools.

What if the buyer refuses to pay duties under DDU?

The shipment might be returned, or storage fees might accrue until duties are paid.

What does DDP cover in shipping terms?

DDP covers all costs, including shipping, handling, and import duties/taxes up to the delivery point.

When might a buyer prefer DDU?

When they're familiar with local customs procedures and can handle or anticipate the import costs.

Can sellers switch between DDP and DDU easily?

Switching requires understanding of local customs and potential impact on pricing and delivery.

How are disputes resolved under DDU?

Disputes, especially concerning unexpected fees, need to be resolved based on contractual terms.

Is DDP common in e-commerce?

Yes, many e-commerce businesses use DDP to simplify the process for international customers.

How do DDP and DDU impact customs clearance?

With DDP, the seller handles clearance; with DDU, the buyer might need to assist or pay fees.

Are there other Incoterms similar to DDP and DDU?

Yes, Incoterms include various terms like CIF, FOB, etc., each with unique responsibilities and costs.

What happens if duties are unpaid in DDU?

Goods might be held at customs, delaying delivery until duties are settled.

How does DDU impact delivery time?

DDU can potentially delay delivery if there are hold-ups in customs due to unpaid duties.

Did You vs. Have You

Inter vs. Intra

About Author

Written by

Harlon Moss

Harlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.

Edited by

Aimie Carlson

Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.