DDP and DAP
An overview of the Incoterms DDP and DAP
DAP stands for Delivery at Place. That is to say:
- For deliveries on the basis of the incoterms DAP, the seller is responsible for the delivery of the goods including transport costs to the named destination, i.e. the buyer's premises. However, the costs of carrying out all necessary import formalities are explicitly excluded. All duties and taxes in connection with the import in the country of destination must be paid by the buyer or recipient. If an order exceeds a certain value of goods (in Switzerland 65 CHF, in the EU there is no VAT exemption limit anymore), the order becomes subject to VAT. The consignment is therefore cleared through customs in the country of destination.
DAP Incoterms: Who pays? If VAT and/or customs duties are above the exemption limits, all duties must be paid at the door upon receipt of the shipment. If the recipient is not present at the time of the delivery or the outstanding amount cannot be paid, an advice note will be left to collect the shipment.
However, most shoppers are unaware that they a) ordered from abroad and b) become liable for VAT outside the EU zone. If the Incoterm is not clearly defined when ordering in the online shop, your customers will be rightly annoyed! Of course, this leads to dissatisfied customers and bad ratings for your online shop.
- The subject of customs clearance is central to every online shop!
DDP stands for Delivered Duty Paid. That is to say:
- For deliveries on the basis of the incoterms DDP, the seller must deliver the goods at his own cost and risk to a destination in the country of importation, must complete all the formalities involved and pay all import duties in addition to all costs. DDP is similar to DAP, but includes the payment of customs and taxes ahead of delivery.
DDP Incoterms: Who pays? The customer does not have to pay anything when receiving the shipment, as the goods are delivered duty free, like with a national delivery. The shipper is responsible for customs clearance, and this means that if import duties are incurred, these will be charged to the sender (customs and VAT).
Since July 1, 2021 there is a new regulation in the EU for shipments from third countries like Switzerland. If you regularly ship goods up to a value of EUR 150, you can make use of the Import-One-Stop-Shop (IOSS) portal. More information about what IOSS is and how you can benefit from it as a Swiss retailer can be found on our blog.
- DDP is clearly ahead in customer satisfaction. Be sure to mention DDP in your terms of delivery. This way your customer can get comprehensive information before ordering and you increase your repurchase rate.
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The Incoterms DDP at a glance
- Consignments are no longer held at the border because of missing documents.
- Shipments are delivered duty paid—your customer does not have to pay customs duties, VAT or customs fees. He gets his package delivered like a national consignment.
- If you mention DDP delivery in your online shop, you can convince foreign shoppers to buy from you.
- If you clearly state that the final price includes customs duties and VAT during the check-out process, your customers will finalise their orders much more often.
- Depending on the shipping method, the recipient may not necessarily be at home when the parcel arrives (e.g. delivery without signature). This ensures greater customer satisfaction.
Book a consultation today to see Swiss Post's DDP solutions for yourself.