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Incoterms DDP and DAP

Incorrect Incoterms cost you revenue: In this article, you’ll learn how Incoterms DDP and DAP differ—and how you, as a Swiss merchant, can make the right choice for your online store.
Annett Lüpke - Product Consultant  |  28.05.2026  |  Time to read 15 Min
Two hands holding a checklist, the checklist says customs clearance
Table of Contents

Why Incoterms Are Crucial in Cross-Border E-Commerce

You’ve optimized your online store, got shipping costs under control, and have a great product range—yet your international orders still aren’t running smoothly. Customers in Germany, Austria, or France are abandoning their carts, complaining about unexpected additional charges, or leaving poor reviews after receiving their packages. The reason is often not the product, but the choice of the wrong Incoterms.

Comparison of DAP and DDP: On the left, a man receives a parcel from a courier while reviewing customs or tax documents; on the right, a woman comfortably accepts a parcel directly from the courier.

Incoterms determine who bears which costs in international trade, who handles customs formalities, and when the risk transfers to the buyer. For online stores that ship cross-border to individual customers, two Incoterms are particularly relevant: DAP (Delivery at Place) and DDP (Delivered Duty Paid). Choosing between these two isn’t just a logistics issue—it directly impacts your conversion rate, your customer experience, and ultimately your revenue.


What Are Incoterms? – Short & Simple

Incoterms stands for “International Commercial Terms”—international trade clauses developed by the International Chamber of Commerce (ICC). They define the rights and obligations of sellers and buyers in international trade.

Specifically, Incoterms govern:

  • Who bears the transportation costs

  • Who pays customs duties and taxes

  • Who handles which formalities

  • At what point the risk transfers from the seller to the buyer

There are currently eleven Incoterms (as of Incoterms 2020). For online shops that deliver cross-border to private customers, two clauses are particularly relevant: DAP and DDP. Other Incoterms such as FOB, CIF, or EXW are primarily designed for traditional B2B trade, container transport, or pickup arrangements and are hardly practical in e-commerce with private customers.


Important to know

Incoterms are voluntary clauses—they only have legal effect if they are expressly agreed upon in the sales contract or in the terms of delivery. In e-commerce with private customers, this means: If you do not make a clear statement regarding DDP or DAP in your shop, misunderstandings will arise regarding customs, import duties, and delivery—and thus dissatisfied customers. 

Important to know

Incoterms are voluntary clauses—they only have legal effect if they are expressly agreed upon in the sales contract or in the terms of delivery. In e-commerce with private customers, this means: If you do not make a clear statement regarding DDP or DAP in your shop, misunderstandings will arise regarding customs, import duties, and delivery—and thus dissatisfied customers. 

 


Incoterm DAP explained: Delivery at Place

Definition

DAP stands for “Delivery at Place.” Under DAP, sellers deliver the goods at their own expense and risk to the agreed destination. Transportation costs are therefore included. Not included are import duties in the destination country: import taxes (e.g., import sales tax, any customs duties) and customs formalities are entirely the responsibility of the buyer—that is, your customers.

Who pays with DAP – and what that means

In practical terms, DAP means the following for your customers: As soon as import duties are incurred in the destination country, they are asked to pay upon receipt of the shipment—either at the doorstep or when picking it up from the carrier. In technical jargon, this is called the COD procedure (“Collect on Delivery”).

Real-world example: You are a Swiss online retailer and are shipping an order worth CHF 150 to a customer in Munich. With DAP, you deliver to the customer’s doorstep. Depending on the origin of the goods and the applicable free trade agreement, customs duties may or may not apply. As a rule, however, the customer must pay the German import sales tax as well as any customs clearance or handling fees to the delivery service—without having expected this at checkout. The result: frustration, a bad review, and no repeat purchase.

DAP is not the standard recommendation for B2C exports from Switzerland

It can only work in select cases where customers consciously accept the additional effort:

  • You offer unique or innovative goods for which customers are willing to accept import duties and delivery costs

  • You deliver to B2B customers who can handle import processes themselves

You clearly and unambiguously communicate DAP, potential additional costs, and delivery processes in your shop


Incoterm DDP explained: Delivered Duty Paid

Definition

DDP stands for “Delivered Duty Paid” and is the most comprehensive Incoterm of all: Sellers assume all costs and risks up to delivery at the named destination in the importing country—including all customs duties, taxes, and formalities. In short: DDP feels like a domestic delivery to your customers. They pay the final price at checkout and receive the goods without any additional payment upon delivery.

Who pays with DDP – and what that means

With DDP, you, as the merchant, are responsible for ensuring that all import duties incurred in the destination country are correctly processed: import sales tax, customs duties (if applicable, depending on free trade agreements and the origin of the goods), and any handling fees. You can factor these costs into your product prices or include them in a transparent shipping surcharge.

There are two main ways to handle DDP:

  • DDP with VAT registration in the destination country: either full VAT registration per destination country or a simplified procedure such as IOSS for the EU, UK VAT for the UK, or a comparable registration, e.g., for Norway. In this case, you list the local VAT directly on the customer invoice and remit it to the tax authority.

  • DDP without your own VAT registration: Your service provider handles the import duties and charges them back to you. You factor these costs into your selling prices accordingly.

Practical example: You are a Swiss merchant and are shipping a package with a net value of EUR 120—excluding shipping costs and local VAT—to a customer in Germany. With DDP or an IOSS solution, you ensure that German VAT is already factored in at the time of sale and correctly remitted. Since the net value of the goods alone is below EUR 150, IOSS can be used for VAT processing. This means: The gross sales price, including shipping costs and local VAT, may total more than EUR 150. Only the net sales price itself may not exceed EUR 150 under IOSS. You should keep an eye on any potential changes to the current duty-free threshold. Your customer receives the package without having to pay anything extra—the result: a transparent purchasing process, fewer delivery issues, and a higher likelihood of positive reviews.

DDP and IOSS: How They Work Together When Exporting from Switzerland

Since July 1, 2021, the EU has implemented the IOSS (Import One-Stop-Shop) system. For Swiss merchants who regularly ship goods with a net value of up to EUR 150 (excluding shipping and VAT) to the EU, IOSS enables efficient prepayment of EU VAT. This significantly simplifies DDP processing: The tax is paid centrally, and the delivery becomes a sure thing.

For shipments with a net value of goods exceeding EUR 150, full, traditional import customs clearance is required—this, too, can be handled smoothly with the right logistics partner.


DDP vs. DAP – A Direct Comparison

The following table shows the key differences at a glance:

Criterion

DAP – Delivery at Place

DDP – Delivered Duty Paid

Meaning

Delivered to the destination

Delivered, customs cleared – all-inclusive

Who Pays Shipping

Seller

Seller

Who pays import duties?

Buyer (recipient)

Seller (merchant)

Who handles customs formalities?

Seller

Seller

Customer experience

Potentially worse (back payment)

As seamless as a domestic order

Risk of abandoned cart

High (unexpected costs)

Low (transparent final price)

Conversion rate

Lower

Higher

Operational complexity (merchant)

Low

Medium to high

Costs for merchants

Low

Higher (predictable)

Shipment held at the border

Possible

Much less common, but not impossible

Must-have for scaling

No

Yes

 


Why you sell more with DDP

The checkout effect: Transparency beats surprise

In e-commerce, there’s one ironclad rule: Unexpected costs during or after checkout kill conversion. Studies (e.g., Baymard Institute) show that “unexpected costs” are one of the most common reasons for abandoned carts. With DAP, this is exactly what happens: “ ” Your customers click “Order,” see a final price—and days later receive a request for additional payment from the carrier or have to pay directly at the door.

With DDP, the price your customers see at checkout is the price they pay. Period. That builds trust—and trust is the currency of international e-commerce.

Conversion Rate

If you actively communicate DDP in your store, in ads, and in product descriptions, it can have a measurable impact on your performance:

  • Higher click-through rate (CTR) on Google Ads and social media ads because your message specifically addresses a pain point

  • Lower checkout abandonment rate because there are no hidden costs

  • Higher repeat purchase rate, because the shopping experience matches that of a domestic order

  • Better recommendation rate (Net Promoter Score) and more positive reviews

  • Explicitly state in your shipping terms: “All taxes and duties included”

  • Include a trust badge on your product page, such as “Shipping includes customs clearance”

  • Use this information in your Google Ads: “No additional charges – taxes included”

  • Integrate DDP messages into your email flows and post-purchase communications

Customer Experience: The Difference Between "Delivered" and "Delighted"

When it comes to customer experience, the moment of delivery is often decisive. A shipment that arrives without additional payment, follow-up inquiries, or a trip to a pickup location conveys reliability and professionalism. This is exactly where DDP builds trust and encourages repeat purchases: For your customers, an international purchase doesn’t feel like the hassle of importing, but rather like a normal online order.

DDP as a Marketing Tool

DDP isn’t just a logistics solution—it’s a competitive advantage you can actively market:

  • Explicitly state in your shipping terms: “All taxes and duties included”

  • Include a trust badge on your product page, such as “Shipping includes customs clearance”

  • Use this information in your Google Ads: “No additional charges – taxes included”

  • Integrate DDP messages into your email flows and post-purchase communications


DDP in day-to-day operations: Challenges & Solutions

Challenge 1: Choosing the right customs clearance method

DDP can be implemented differently depending on the target market, merchandise value, and shipment volume. Options include VAT registration in the destination country, simplified procedures such as IOSS for EU shipments up to a net merchandise value of EUR 150, or a service provider solution where your logistics partner handles the import duties and passes them on to you.

Important for exports to the EU: There is no longer a VAT exemption threshold. The current customs duty exemption threshold of up to EUR 150 net goods value is also set to be abolished—making a scalable DDP solution all the more important. Consolidated customs clearance for exports is possible; there are suitable models depending on volume and product portfolio.

Graphic comparing single and consolidated shipments: On the left, multiple parcels are processed separately through customs with individual documents; on the right, several parcels are grouped together, cleared through customs with one document, and save time and costs.

 

Challenge 2: Data Maintenance and System Integration

DDP only works if your customs agent or logistics provider receives the correct export master data. This data is the foundation for a smooth export process. This means: You must store the following information for all items in your shop or PIM (Product Information Management):

  • HS code (customs tariff number)

  • Country of origin of the goods

  • Correct product description in English

  • Net value of goods in the relevant local currency

  • Net weight

This process can be largely automated via an API interface or a CSV export to your logistics partner. The initial setup takes time—but pays off quickly.

Challenge 3: Cost Calculation and Price Adjustment

For you as a merchant, DDP means a higher initial effort: You must accurately calculate import duties, customs clearance costs, service provider fees, and potential registration models and integrate them into your pricing or shipping logic. For a growing cross-border business, this effort is the right approach because it enables predictable processes and scalable pricing logic.

The specific costs depend on the target market, merchandise value, product category, shipping model, shipment volume, and service provider, and should be calculated on a case-by-case basis. With higher volumes, significantly better terms are usually negotiable.

Especially in the early stages, it can make sense not to pass on all additional costs in full to your customers. Instead, you can absorb a portion of these costs through your margin, your marketing budget, or a market entry budget. This lowers the barrier to entry, builds volume, and lays the groundwork for better terms with your shipping provider.

Calculation example: As a Swiss merchant, you ship 80 packages per month to Germany with an average net merchandise value of EUR 120. Through IOSS, you deduct the 19% German VAT at the time of sale, which is therefore neutral for you—that amounts to approximately EUR 22.80 per order. In addition, you factor your service provider’s administrative DDP fee—for example, EUR 1.40 per shipment—into your selling prices. This results in monthly administrative costs of around EUR 112—predictable for you and with no additional payment required by your customers upon delivery. Compared to DAP, this is significantly more customer-friendly: With DAP, the customer would often have to pay a handling fee averaging about EUR 6.00 on top of the VAT of around EUR 22.80 at the doorstep—totaling around EUR 28.80 upon receipt. With IOSS/DDP, you avoid these surprise costs and create a more transparent customer experience—a win-win for both the merchant and the customer. 

Challenge 4: Returns with DDP

An often underestimated question: What happens when customers from abroad return a DDP shipment from Switzerland? Basically, you also need a streamlined process for re-importing the goods into Switzerland and for any necessary correction or refund of VAT already paid in the destination country. Work with your logistics or tax partner to develop a clear returns solution—ideally with pre-printed return labels, clear tracking back to the original order, and clearly communicated processes for your customers.


When DAP Can Still Make Sense

DAP is not the standard recommendation for B2C exports from Switzerland. However, there are situations where DAP can work as a deliberate exception:

Unique or innovative products 

If you sell products for which customers are willing to bear the import costs—perhaps because the goods are otherwise hard to find—DAP can be an option. Prerequisite: You must communicate additional costs and the delivery process transparently.

B2B Business

In B2B e-commerce, DAP is more commonly accepted than in B2C business because business customers are often familiar with customs and import processes and can claim the import sales tax as input tax under certain conditions. Nevertheless, DDP should not be underestimated in B2B shipping either—especially for customer gifts, samples, repairs, or branch deliveries, where a smooth receipt is crucial. For deliveries to EU business customers, the recipient’s EORI number should also always be provided so that the customs clearance process can be handled smoothly.

Market Entry

The same applies when entering the market: For B2C shipments from Switzerland, DDP is generally a must and our clear recommendation. DAP is not a simple stopgap solution, but is only justifiable if you consciously decide against DDP and clearly communicate the additional costs and hassle to customers in your shop.

Niche products with high value

For very high-priced products (e.g., art, luxury goods, industrial components) where buyers expect to handle customs clearance themselves, DAP may be appropriate. Here, too, make sure to communicate this transparently in your shop.


Best Practices for Online Retailers in Cross-Border E-Commerce

1. Determine your Incoterm before launching in a new market

Before actively entering a new market such as Germany, Austria, France, Italy, or another EU country, make a conscious decision about which Incoterm to use. Analyze your average shopping cart value, the import duties incurred in the target market, your margin situation, and relevant shipping data such as gross weight and shipping box dimensions. A vague Incoterm strategy is more expensive than a clear one.

2. Communicate actively in your store

Make DDP a visible selling point. Include the note “All taxes and duties included” on the product page, at checkout, and in the order confirmation. Customers who see this convert faster and complain less often.

3. Maintain your product data

Clean export master data is the foundation of every DDP transaction. Ensure that your product data is maintained centrally—ideally in the PIM—is up-to-date, and usable by your logistics partner. This improves not only customs clearance but also the quality of your shipping documents.

4. Choose the right logistics partner

DDP customs clearance only works with a partner who masters the processes. Check price-performance, possible surcharges, effective weight or volumetric weight billing, transparent cost structure, web shop or API integration, experience in high-volume e-commerce, and clear SLAs (Service Level Agreements) for customs clearance times.

Are you wondering if your current logistics partner is DDP-capable? Our practical guide to switching logistics partners shows what really matters when making your selection.

5. Use IOSS for exports from Switzerland

If you regularly ship goods with a net value of up to EUR 150 (excluding local VAT and shipping) to EU countries, register with IOSS. This significantly simplifies VAT processing, speeds up the customs process at the EU border, and prevents delays. You can find more information in our blog on OSS and IOSS.

6. Test and optimize your checkout

Measure how Incoterm messages affect your conversion rate. A/B test phrasing such as “Free shipping and no additional fees” vs. “Taxes and fees included.” Small texts in the right place can have a big impact.

7. Plan your returns strategy

Returns are an often underestimated cost driver in cross-border e-commerce. With DDP, you need a clear returns solution: Who covers the return shipping costs? How is the prepaid tax refunded? A well-documented returns process protects you from unpleasant surprises.


DDP and DAP in Practice: Exporting from Switzerland

Exporting from Switzerland (e.g., to DE, AT, FR, IT)

Swiss merchants exporting to EU countries must deal with EU VAT obligations. As of July 2021, the VAT exemption for small shipments has been abolished—every shipment is generally subject to VAT. For B2C shipments from Switzerland to the EU, DDP is generally the clear recommendation. For shipments with a net value of up to EUR 150, IOSS can be an efficient solution for handling EU VAT at the point of sale and avoiding additional payments upon delivery.

Especially in the DACH region (Germany, Austria, Switzerland), expectations for a seamless delivery experience are high. DAP with payment upon delivery or via invoice is significantly less tolerated here than in markets outside the EU.

Note the new TPC fee for shipments under EUR 150 to France, effective March 2026. Read more in our blog post “EU Customs Reform 2026: New TPC Fee for Shipments to France.”

Export to Non-EU Countries (UK, Norway, etc.)

For markets outside the EU, DDP also remains the recommended strategy for B2C deliveries. For the UK, UK VAT registration is recommended; for Norway, VOEC registration. This way, as a merchant, you pay the import sales tax directly—your customers receive the goods without any additional payment.


Conclusion: The Right Incoterm as a Growth Driver

The choice between DDP and DAP is not a technical detail—it is a strategic decision that directly impacts your business success in cross-border e-commerce.

DAP may seem cheaper and less time-consuming in the short term because, as a merchant, you don’t bear any import fees. But you pay for these supposed savings with abandoned carts, poor reviews, a higher return rate, and lost repeat business. The true cost of DAP is invisible—but it exists.

DDP requires a higher initial investment in data management, pricing, and fulfillment. In return, you create a scalable process and a reliable shopping experience—especially for B2C shipments from Switzerland to other countries.

The concrete recommendation: If you’re a Swiss retailer shipping to private customers abroad, DDP is generally your standard solution. DAP should only be considered as a deliberate exception—e.g., in B2B scenarios, for unique products, or in high-value niche markets—and always with transparent communication to your customers.

Summary: The most important points at a glance

  • DAP = Delivery to destination; customers bear import duties (VAT, customs duties if applicable, handling) themselves
  • DDP = Fully pre-cleared delivery; the merchant covers all costs and formalities
  • DDP increases conversion rates, customer satisfaction, and repeat purchase rates
  • DAP is only a deliberate exception—for example, in B2B shipping or for niche products
  • For B2C shipments from Switzerland to other countries, DDP is generally the clear recommendation
  • With IOSS, you simplify DDP processing for EU exports up to a net goods value of EUR 150
  • Actively communicate your Incoterm in your shop—this builds trust and increases conversions

Next steps: How to implement DDP in your shop

  1. Analyze your average shopping cart and the import duties incurred in your target markets.
  2. Define DDP as the standard solution for your B2C shipments from Switzerland – DAP should be reserved for specific exceptions.
  3. Ensure that your export master data is complete – particularly the HS code, country of origin, net value of goods in the local currency, and net weight.
  4. Include clear DDP messages on your product pages and during checkout.
  5. Register with IOSS (for EU shipments with a net value of up to EUR 150) and integrate VAT processing into your fulfillment process.

References

International Chamber of Commerce (ICC): “Incoterms 2020,” 

3. Federal Customs Administration (FCA) / Federal Office for Customs and Border Security (FOCBS): Regulations on Import Sales Tax and Customs Tariffs

European Commission: "Import One-Stop-Shop (IOSS)"

Baymard Institute: "E-Commerce Checkout Usability" (current study on reasons for checkout abandonment) 



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