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DDU vs DDP International Shipping Terms (Delivery Duty Unpaid vs Delivery Duty Paid)

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Last updated on May 26th, 2020 -

DDU and DDP are both incoterms used loosely with international shipping in the small package industry to describe the party responsible for paying the duties and taxes.

 

What is DDU?

DDU (Delivery Duty Unpaid): The buyer (receiver) is responsible for all the duties, taxes, and clearance fees.

What is DDP?

DDP (Delivery Duty Paid): The business (seller) is responsible for all the duties, taxes, and clearance fees.

So, why should you care about DDU and DDP?

When selling internationally, someone has to pay the duties and taxes. Whether you or your customer, neither of you want to be surprised with extra costs after the shipment arrives at its destination.

When you sell cross-border, the country you ship to may impose duties and taxes on the shipment. Depending on the destination, you will have a choice between DDU or DDP. These applied duties and taxes are largely based on the declared value of what you are shipping. As each country sets its own rules and regulations, you will want to consult with an expert familiar with shipping internationally.

A critical element to selling cross-border is getting rid of surprises for your international customer. International shoppers are savvy; they want a complete understanding of the required fees and what it will take to get the package to their door. Many international shoppers will choose not to purchase if the fees and charges are not clearly communicated. This includes making it clear who is responsible for the duties and taxes.

Should I send my shipment DDU or DDP?

Unless you are feeling really generous, you do not want to pay duties, taxes, or fees on an international order if you have not collected them from the customer upfront. If you are new to international shipping or if you are unsure, send it DDU and the receiver will pay duties and taxes when the shipment has cleared customs.

If you collect the duties and taxes from your customer or you choose to absorb that cost, then send the shipment DDP.

How do I collect duties and taxes from my customer?

Customers do not want to be surprised with extra costs at the door. Giving them full visibility into duties, taxes, and fees at checkout is your best bet.

Your shopping cart platform or business model will determine how you go about collecting duties and taxes from your customers. Zonos can help with a variety of product options based on your needs, including:

How do I send a package DDP?

Each shipping system/carrier is slightly different and not all will use the term DDP. The table below illustrates a few common examples of options you may see in your shipping software when creating an international DDP shipment. Keep in mind that DDP is not available for all carriers and services, and the options displayed in your shipping software should reflect that.

The payment of duties and taxes to the destination country will be handled by your carrier, then invoiced to you on a separate freight bill. You will first often see shipping charges invoiced with a separate invoice for duties, taxes, and clearance fees to come later.

There is an exception to this process that only impacts large shippers to Australia. If you ship more than A$75,000 worth of goods annually into Australia, then you are expected to remit tax directly to the Australian government on DDU and DDP shipments. This is a new law that was enacted in July of 2018 and needs to be understood if your annual shipments to Australia are over A$75,000.

DDP shipping platformDDP shipping platform descriptionSelector
DDP with Ship StationBill duties and taxes to payor of shipping chargesCheckbox
DDP with UPSBill Duty and Tax ToDropdown: Shipper
DDP with DHL Online ShippingBill Duties and Taxes To (In the payment options section)Dropdown: Shipper
DDP FedEx Ship ManagerBill duties/taxes/feesDropdown: Shipper
Who is the importer or record if a shipment is sent DDP?

The receiver remains the importer of record if you bill duties and taxes to your parcel account. 

As long as you bill duties and taxes to your account with a parcel carrier (such as UPS, FedEx, DHL or postal consolidator), you are only acting as the payor of duties and taxes, not the importer of record.

Are there fees associated with sending a shipment DDP?

Yes. Sending a shipment DDP includes the entire total landed cost i.e. duties, taxes, DDP fee, advancement fee, and possible brokerage fees. In the U.S., UPS and DHL both charge a $15 DDP fee as seen below; FedEx and other international mail providers do not charge a fee. Keep in mind that fees assessed and terminology used can vary between carriers and the country you are shipping from. Zonos recommends you have a conversation with your carrier representative to fully understand the fees applicable to you. It’s also worth asking your representative for waivers and/or reductions on these fees.

CarrierDDP descriptionDDP fee
UPSDuty and Tax Forwarding Surcharge$15 USD
DHLDuties and Taxes Paid (DTP)$15 USD
FedExBill Duty and Tax to Shipper$0 USD

Get help selling internationally with Zonos

Want to learn more about the many cross-border technology products offered by Zonos to help you with your international ecommerce?

We have plugins, APIs, and tools that allow you to show and collect total landed cost at checkout, optimize your website for international shoppers, and stay globally compliant.

Go to our company website: www.zonos.com or contact us for more information.

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Clint Reid
By Clint Reid

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