For international deliveries, it is important to understand how customs duties and taxes are handled. Three common delivery terms according to Incoterms are DDP, DAP, and EXW. This guide will help you understand the differences between these options.
This article contains only examples and should not be considered as tax advice. To determine taxes and regulations for the country or areas you are shipping goods to, please contact the relevant country's tax authority or a local customs expert.
What are DDP, DAP, and EXW?
- DDP (Delivered Duty Paid - Sender pays): The sender pays all costs, including customs duties and import taxes. The sender handles the entire customs clearance. The recipient receives the goods without any extra cost upon delivery.
- DAP (Delivered at Place - Recipient pays): The sender is responsible for transportation to the specified destination. The recipient is responsible for paying customs duties and taxes upon arrival. The recipient must handle customs clearance themselves.
- EXW (Ex Works - Buyer picks up the goods): The seller makes the goods available at their location (warehouse, factory, etc.). The buyer covers all transportation costs, including customs, taxes, and freight. The buyer is responsible for export and import clearance.
Comparison:
| DDP (Sender pays) | DAP (Recipient pays) | EXW (Buyer picks up) | |
|---|---|---|---|
| Customs duties | Paid by sender | Paid by recipient | Paid by buyer |
| Import taxes | Paid by sender | Paid by recipient | Paid by buyer |
| Customs clearance | Handled by sender | Handled by recipient | Handled by buyer |
| Transportation responsibility | Sender | Sender | Buyer |
| Extra delivery costs | None | Yes, customs and tax | Yes, full transport cost |
If your recipient, for example, in Norway has not already negotiated the price with the carrier's customs agent, there is an opportunity for them to lower the administrative fee charged by the carrier to the recipient under DAP.
How are customs duties and taxes calculated? Customs duties and taxes vary between countries and are calculated based on several factors, such as the value, origin, and classification (HS code) of the goods.
Example: A phone imported to Canada has 0% duty, while a t-shirt has 18% duty. The import tax in Canada is a fixed rate of 5%, regardless of the goods.
Minimum value for customs duties and tax: This table is just an example and should not be considered tax advice. To determine the minimum value for the country or region you are shipping goods to, please contact the relevant country's tax authority or a local tax expert.
Not all products and sales are subject to customs duties and import taxes. Many countries and regions have a minimum order value, known as the de minimis (minimum value), before customs duties and import taxes are applied.
| Country | Minimum value for customs duties | Minimum value for tax |
|---|---|---|
| USA | 800 USD | 800 USD |
| Canada | 20 CAD | 20 CAD |
| Mexico | 50 USD | 117 USD |
| Australia | 1,000 AUD | 0 AUD |
| China | 50 CNY | 50 CNY |
| Hong Kong | 0 HKD | 0 HKD |
| Ireland | 150 EUR | 22 EUR |
| Japan | 10,000 JPY | 10,000 JPY |
| Sweden | 1,600 SEK | 300 SEK |
| Switzerland | 5 CHF | 5 CHF |
| Norway | 350 NOK | 350 NOK |
Minimum values vary depending on the country or region, and some have specific rules that affect the minimum value depending on where the delivery is coming from.
If you are unsure of the minimum value for the country or region you are delivering to, check the country's tax authority website or consult a local tax expert.
Extra fees for DDP: Some transport companies charge additional fees for customs clearance. Example:
- UPS
- Customs & Tax Fee: 5%, but at least 231 SEK
- FedEx
- Customs & Tax Fee:
- 0 - 513.5 SEK: 30% of Customs & Tax, at least 51.5 SEK
- 513.5 - 6160 SEK: 154 SEK
- More than 6160 SEK: 2.5%
- Customs & Tax Fee:
- DHL Freight
- Norway: Greater of 375 SEK or 5% of customs & tax
- UK: Greater of 570 SEK or 5% of customs & tax
- Other Europe: Greater of 415 SEK or 5% of customs & tax
- DSV
- Norway: Greater of 800 SEK or 5% of customs & tax
- Switzerland: Greater of 800 SEK or 5% of customs & tax
Pros and Cons of DDP:
Pros:
- ✅ No unexpected fees – The recipient only pays the specified price at the time of purchase.
- ✅ Faster delivery – No delays in customs handling.
- ✅ Convenient – The recipient does not have to deal with customs clearance.
Cons:
- ❌ Can be more expensive – The sender includes the customs cost in the price.
- ❌ Limited options – The DDP option is not available with all carriers.
If you are unsure about customs duties and fees, choose DAP if you want the lowest initial cost.
Frequently Asked Questions:
-
Q: What happens if I choose DAP but don’t pay the customs duties?
- A: The package may be returned or destroyed by the customs authority.
-
Q: Can I negotiate customs costs?
- A: No, customs duties are set by authorities and must be paid according to law.
-
Q: Which carriers offer DDP via Sendify?
- A: Currently, only FedEx and UPS offer DDP via Sendify.
With Sendify, you can easily book shipments and choose between DDP and DAP to get the best solution for your business. By understanding these options, you can make better decisions for international shipments and avoid unexpected costs.