What is delivered duty paid (DDP) shipping and why it’s often preferred

Different delivery methods have different customs duty and import tax implications for cross-border ecommerce sellers and their customers. With some shipping and delivery methods, customers must pay duties, taxes, or other import charges upon arrival of the shipment. This can be an unwelcome surprise. 

Given the current turbulent tariff environment, businesses should do everything in their power to minimize tariff surprises. Shipping delivered duty paid (DDP) can help.

• Incoterms impact your tax compliance. Incoterms like DAP (delivered at place) and DDP (delivered duty paid) dictate whether the importer or consumer is liable for import duties. Shifting to DDP requires sellers to accurately classify items with Harmonized System (HS) codes to calculate taxes up front.
• DDP shipping can improve the cross-border customer experience. When shipping DDP, the seller calculates and pays all applicable duties, import fees, and taxes before the shipment leaves. This reduces unexpected delivery fees and package rejections for the buyer.
• Major shipping carriers support automated DDP billing. Platforms like DHL, FedEx, UPS, and ShipStation allow ecommerce sellers to switch billing preferences so that duties and taxes are paid by the sender rather than the recipient.

International commercial terms, or Incoterms, are standardized delivery terms that identify the party responsible for customs clearance, import, insurance, and shipping costs for cross-border shipments. Incoterms also determine when liability shifts from the seller or shipper to the buyer, or vice versa.

There are currently 11 Incoterms, seven of which cover any mode of transport:

• CIP: Carriage and insurance paid to (insert place of destination)
• CPT: Carriage paid to (insert place of destination)
• DAP: Delivered at place (aka, DDU, delivery duty unpaid) (insert place of destination)
• DDP: Delivered duty paid (insert place of destination)
• DPU: Delivered at place unloaded (previously DAT, or delivered at terminal) (insert place of destination)
• EXW: Ex works (insert place of delivery)
• FCA: Free carrier (insert named place of delivery)

Four Incoterms apply to sea and inland waterway transport only:

• CFR: Cost and freight (insert named port of destination)
• CIF: Cost, insurance, and freight (insert named port of destination)
• FAS: Free alongside ship (insert named port of loading)
• FOB: Free on board (insert named port of loading)

Sellers set the Incoterms and should do so with care: Different Incoterms place different obligations on buyers and sellers, and this can have an enormous impact on customer experience.

The most common Incoterms for cross-border ecommerce sales are DAP and DDP.

With DAP: 

• The seller arranges shipping, pays transportation costs, and handles the export process. 

• The buyer handles the import process, pays all applicable customs duties and import taxes, and unloads the shipment at the destination.

DAP can be a fine option if sellers clearly communicate the process and set customer expectations. However, shipping DAP can lead to disgruntled customers and rejected shipments when a customer expects their package to be delivered to their doorstop, without extra costs, and instead gets a message that it’s being held at customs until they pay all associated duties and taxes.

For B2C cross-border transactions, shipping DDP is generally the better option. 

With DDP:

• The seller must handle all shipping logistics and customs clearance, and collect all applicable taxes and fees from the customer at checkout. 

• The buyer gets no unwelcome surprises upon delivery. 

DDP is the only Incoterm under which the seller is responsible for shipping, including payment of applicable customs duties and import taxes. This can increase risks. The main benefits to choosing DDP are expedited customs clearance (DDP shipments are less likely to be held up at customs) and improved customer satisfaction (customers won’t receive unexpected tax bills).

That said, DDP isn’t necessarily the best option for all businesses or transactions. If the seller passes on the import costs, the higher upfront cost can cause price-sensitive shoppers to abandon their carts at checkout. There are also costs associated with correctly calculating customs duties and taxes, and incurring those costs may not be worthwhile for one-off sales to certain destinations. For this reason, it’s not uncommon for sellers to ship DDP into some countries but not others.

Overall, transitioning from DAP to DDP can help secure customer loyalty and grow international sales. 

Deciding whether to ship DAP or DDP is a key consideration for global sellers. Other questions to consider include:

• Can you ship what you sell into the destination country?
• Are the goods subject to customs duty and/or value-added tax (VAT)?
• How long will it take to ship goods there?
• How do changing tariff policies impact your supply chain?

This last point is especially important today because of the numerous tariff policy changes implemented since President Trump returned to the Oval Office in January 2025. 

For example:

• The U.S. eliminated its $800 de minimis exemption for all countries in 2025.

• The EU ended the customs duty exemption for imports valued at or less than €150 on July 1, 2026. 

• The U.S. Supreme Court invalidated U.S. tariffs established under the International Emergency Economic Powers Act (IEEPA). U.S. Customs and Border Protection is refunding IEEPA tariffs.

• U.S.-Canada tariffs are in flux.

For an overview of the latest tariff changes, read Tariffs in 2026: How new trade rules impact your business.

Whether you ship DDP or DAP, it’s extremely important for the importer of record to accurately identify the contents of each shipment with country-specific Harmonized System (HS) codes, along with the country of origin. This ensures the correct duty rates are assigned to each shipment. 

Avalara helps businesses of all sizes improve accuracy, reduce duty costs, and accelerate customs clearance by automating tariff code classification. We offer three options to meet different needs:

• Avalara Automated Tariff Code Classification
• Avalara Self-Serve Tariff Code Classification
• Avalara Managed Tariff Code Classification

“The Self-Serve Tariff Code Classification tool has transformed the way our merchants approach international shipping,” says Shea Felix, Vice President of GlobalPost International, an international and domestic shipping carrier for small to medium-sized businesses. “It’s an easy, accurate, and cost-effective solution that has streamlined the process, enabling our customers to expand their operations without the fear of customs-related complications.”

Want to learn more? Check out our Avalara Tariff Code Classification solutions.

What’s the difference between DDP and DAP shipping?

With delivered duty paid (DDP) shipping, the seller is responsible for paying all customs duties, import taxes, and shipping logistics before a shipment leaves. With delivered at place (DAP) shipping, the buyer is responsible for paying any applicable import taxes and duties once the shipment reaches customs.

Why should ecommerce sellers choose DDP over DAP?

Ecommerce sellers should consider switching to DDP shipping to provide a more seamless customer experience. By calculating and collecting all duties and taxes at checkout, sellers prevent surprise fees upon delivery, reduce the rate of rejected packages, and build loyalty with international customers. That said, DDP isn’t right for all businesses or transactions.

Which major carriers support DDP shipping?

Most major shipping providers like DHL, FedEx, ShipStation, and UPS support DDP shipping. 

This article has been updated.