When a freight forwarder quotes you DDP (Delivered Duty Paid) or DAP (Delivered at Place), they are referring to Incoterms® 2020 rules.
- With DAP, the buyer (your customer) is responsible for clearing the goods at the border and pays any import duties, taxes, and related charges.
- With DDP, the seller (you) clears the goods and pays the import charges.
This means a small duty can cost your customer more in fees than in duty. In the Us, FedEx charges 2.50% of the duty and tax, or $17.50, whichever is greater. On a $40 duty bill, the $17.50 fee adds 44% to the total.
What each Incoterm obligates you to do, what the major carriers charge to collect, and three checks that tell you which one you are shipping today.
DAP makes your customer the importer, DDP makes you the importer
The ICC's Incoterms® 2020 rules explian the distinction between the two; "The key difference between Incoterms DAP and Incoterms DDP lies in import customs clearance."
As explained,uUnder DAP, the buyer carries out and pays for import clearance. Under DDP, the seller handles and pays for export, transit, and import clearance formalities.
Everything else about the two terms is similar. In both cases, the seller delivers the shipment to an agreed destination, essentially delivered to your door. The difference is who handles customs clearance and pays the import costs.
However, DDP is not universally available simply by request. The ICC notes that foreign sellers can face legal restrictions that stop them from acting as an importer in the destination country. DDP is not available to you everywhere just because you want it.
Your customer's bill is your duty estimate plus the carrier's fee for collecting it.
Carriers pay the customs authority so your goods keep moving. They then recover that money from whoever the account says to bill, and they charge for the service.
The charge goes by different names:
- FedEx calls it a disbursement fee or advancement fee.
- DHL sells it as Duty Tax Paid and Duty Tax Processing.
- Royal Mail calls it a handling fee.
They work the same way; Percentage-based landed-cost estimates often fail to account for carrier minimum fees. The minimum is what a percentage-based landed-cost estimate misses.
The collection fees have minimums, so the smallest duties cost the most
These are the published rates, taken from each carrier's own pages.
DHL Express:
- Duty Tax Paid is 2% of the duty and tax amount, minimum €17.00.
- Duty Tax Processing, which bills the recipient or a third party, is 2%, minimum €15.00.
FedEx, on fees adjusted from 20 July 2026:
- 2.50% or USD 17.50 in the United States.
- 3.10% or CAD 12.00 in Canada.
- 2.90% or AUD 24.00 in Australia.
- 5.00% or SGD 24.00 in Singapore.
Royal Mail:
- A flat £8 handling fee where customs charges apply,
- £12 on Parcelforce products,
- £25 where the goods are worth over £900
- and a full customs declaration is needed.
Run the percentages against the minimums.
If duty and tax on a US shipment come to $40, FedEx's 2.50% fee is $1.00, so the $17.50 minimum applies instead. The customer pays $57.50. This is a worked example based on a stated duty amount, not a customer result.
If duty and tax total $1,000, the 2.50% fee is $25.00; the minimum never applies. The fee is 2.5% of the bill, not 44% of it.
The smaller the duty, the larger the fee becomes as a share of it. This combination became more common in the EU from July 2026, for the reason stated in the next section.
Selling DDP and billing DDP are two different settings
DHL sets this out on its own duty billing page:
"The Incoterms are part of the contract between the sender and the recipient."
A duty billing service, DHL writes, "is an instruction from the shipper to DHL Express as to whom customs clearance services and import duties should be billed."
DDP can appear on your website, in your terms, and in the Incoterm field of your commercial invoice.
If your carrier account still bills duties to the receiver, your customer gets the bill. The Incoterm is a contract term between you and your buyer. The billing instruction is a setting on your carrier account. Changing one does not change the other.
The EU removed the threshold that made DAP safe below €150
One rule of thumb was to keep orders under €150, where there was no duty to collect, and ship DAP. That threshold is gone.
Since 1 July 2026, the EU's €150 customs duty exemption no longer exists. In its place is a temporary flat duty of €3 per item on low-value consignments sold at distance, which the European Commission has said runs until 1 July 2028. The declarant pays it.
Two additional changes are worth implementing in your calendar:
From 1 November 2026, member states must begin collecting an EU-wide handling fee on direct-to-consumer parcels from outside the EU. The Commission sets the amount and reviews it every two years. As of September 2026, the amount has not been published, so treat any figure you see as unconfirmed.
Regulation (EU) 2026/2108 was published in the Official Journal on 19 September 2026. It makes platforms and distance sellers shipping from outside the EU the importer, carrying the customs data, the duty, and the product compliance.
In interim final rules published on 24 June 2026, the US moved in the same direction. Customs and Border Protection suspended the de minimis exemption indefinitely for merchandise arriving through all modes other than the international postal network. Shipments that used to clear on a Section 321 release now carry duty and data.
The EU and the US have both ended duty-free treatment for low-value parcels. A consignment that used to arrive with no duty to collect now has duty to collect, including the collection fee.
DDP can strand your import VAT if you are not registered
DDP makes you the importer. That only saves you money if you can recover the import VAT where the goods land.
HMRC's guidance is direct: "You can reclaim the VAT incurred on the imported goods you own as input tax subject to the normal rules." The conditions are that you own the goods, are VAT registered, and hold the import VAT statement as evidence.
A UK trader who is not VAT registered "still has to pay the import VAT, but you will not be able to reclaim it."
The same logic runs through EU case law. Recovery goes to the person who owns the goods at import and is named as importer on the customs declaration. In DSV Road, the Court of Justice refused deduction to a party liable for the tax purely as a transporter.
Put those together, and the DDP trap is clear. If you are named importer in a country where you hold no VAT registration, the import VAT is a cost to you. Your buyer cannot reclaim it either, because they were not the importer.
There are three paths. Two of them keep the VAT recoverable.
- Ship DAP and let your buyer be the importer.
- Ship DDP with your own registration in the destination, so you are the importer and the deduction right is yours.
- Or ship DDP with no registration, and write off the import VAT.
The second path gets skipped when a registration is mistaken for a company. Being VAT registered in a market, holding an importer code there, and appointing a fiscal representative are administrative steps. Incorporating a subsidiary is separate, and the first three do not require it.
What is available still depends on the country and on whether you are established there. Some markets will not let a non-established business act as importer at all, and some require a fiscal representative before they will. Check per market before you assume the VAT comes back.
When DAP is the better call
DDP is not automatically right, and three situations genuinely favour DAP.
- Your buyer is VAT registered where the goods land. When a B2B buyer is the named importer, the import VAT is recoverable. If you assume that role under DDP without your own VAT registration, neither of you can recover the VAT.
- The destination restricts foreign importers. The ICC notes that foreign sellers can face legal restrictions that stop them from acting as importer in the destination country. Where that applies, DAP is the only option.
- The shipment is large, and the buyer has a broker. For a high-value consignment, the broker’s percentage fee is small relative to the duty, and a buyer with its own customs broker will often clear it faster than your carrier will.
For consumer shipments, the balance goes the other way, because a consumer cannot recover import VAT and did not agree to become an importer.
Three checks that tell you which one you are actually shipping
You can do all three this week without buying anything.
- Check the Incoterm field. Pull a commercial invoice from a shipment that went out last week and read what is in the Incoterm field. Not what your policy page says. What the document says.
- Check the billing instruction. Ask your carrier account manager which party duties and taxes are billed to on your account, broken down by service and destination. Get it per lane, because accounts are often set up differently per country.
- Check what the customer paid. Take three delivered orders from last month in three different countries. Ask whether the recipient was asked for anything on receipt. If any of them were, you are shipping DAP in that lane, whatever your website says.
Where these answers disagree, the billing instruction decides who gets asked for money.
Be the importer in your own name, without a local company
STREAM sets up the structures that let you import in your own business name:
- VAT or GST registration
- Your EORI or local importer code
- Fiscal representation where a non-established business needs one, and
- Deferment or postponed VAT accounting.
Your goods are declared under your importer code, while STREAM pays the applicable duty and import VAT on your behalf.
STREAM does not become your importer of record - you do. That’s what keeps the import VAT recoverable by your business. STREAM prepares and files the returns to help you recover it, globally. Book a demo
Final thoughts
DAP and DDP decide who clears the goods and pays the import charges. Either way, the carrier's collection fee is added on top, and for small duties, it is usually the flat minimum rather than the percentage.
For consumer shipments, DAP is rarely worth saving, because a customer who asked for money at the door can refuse the parcel.
How to implement this:
- Pick one lane this week.
- Run the three checks on it.
- If the Incoterm field and the billing instruction disagree, fix the billing instruction before you touch the website copy.
This post is general information, not tax or legal advice. Rules and rates are those published as at 22 September 2026 and vary by jurisdiction.
