By Clint Reid / Duties and Taxes / 1 March 2019 / 0 min
Last updated on September 6th, 2022 -
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.
Incoterms (International Commercial Terms) is a series of 11 internationally recognized, universal terms that define and clarify the obligations between buyers and sellers. This set of keywords is published by the ICC (International Chamber of Commerce).
DDU (Delivery Duty Unpaid): The buyer (receiver) is responsible for all the duties, taxes, and clearance fees.
DDP (Delivery Duty Paid): The business (seller) is responsible for all the duties, taxes, and clearance fees.
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.
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.
Customers do not want to be surprised by 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:
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 platform||DDP shipping platform description||Selector|
|DDP with Ship Station||Bill duties and taxes to payor of shipping charges||Checkbox|
|DDP with UPS||Bill Duty and Tax To||Dropdown: Shipper|
|DDP with DHL Online Shipping||Bill Duties and Taxes To (In the payment options section)||Dropdown: Shipper|
|DDP FedEx Ship Manager||Bill duties/taxes/fees||Dropdown: Shipper|
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.
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.
|Carrier||DDP description||DDP fee|
|UPS||Duty and Tax Forwarding Surcharge||$15 USD|
|DHL||Duties and Taxes Paid (DTP)||$15 USD|
|FedEx||Bill Duty and Tax to Shipper||$0 USD|
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.
Clint Reid is the founder and CEO of Zonos, a St. George-based technology company on a mission to create trust in global trade. During Clint’s previous experience working in international logistics at DHL and UPS, he repeatedly witnessed the pain and frustration on the faces of global business owners losing money due to refused packages and hidden international costs. Clint decided to take a chance and started Zonos with the mindset that many cross-border problems could be solved with technology. Today, Zonos helps thousands of companies to sell cross-border.