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Deciding Between DDU and DDP

Often, shippers ask us to define the difference between Delivery Duty Unpaid (DDU) and Delivery Duty Paid (DDP).
When shipping a package DDU, the seller is responsible for the safe delivery of goods, paying all transportation expenses, and assuming all risks during transportation. Once the goods arrive at the delivery point, the buyer becomes responsible for paying import duties as well as further transport costs.

customs money packages calculate dutiesWith DDP, the seller accepts all the responsibility, risk, and costs associated with transporting goods until they are received by the buyer. The seller pays for shipping costs, export and import duties, insurance, and any other expenses incurred during shipping to an agreed-upon location in the buyer’s country.

When you sell globally, there is no avoiding value-added taxes (VAT). Depending on the market and destination, both DDP or DDU will work, and in some cases a combination will be best. Whether you ship DDU or DDP will be based on the de minimis value set by each market you are shipping to. For example, in both Australia and Russia, duties and taxes don’t kick in until the package value reaches $1,000 USD. But in Brazil, the de minimis value is just $50 USD for DDU entry, and in the EU it’s as low as $25 USD.

The most crucial step to satisfying your international customer is to eliminate any surprises. Regardless of destination, shoppers want to have a complete understanding of the impact of DDU or DDP on their order in the product selection process. The responsibility and charges of duties and taxes should be clearly stated before they are asked to click “pay” at checkout.

It is vital to set the right expectations for the consumer and let her decide if she prefers a landed costs model such as DDP, or pay the potential duties and taxes at arrival with DDU.

That said, your best bet is to work with a shipping partner who understands the duties, tariffs, taxes, and de minimis values of each market you ship to.

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