Delivered Duty Unpaid (DDU)

In international trade, the seller and the buyer have to settle on terms of duties, import clearance and taxes before the transaction takes place. It not only defines who has better control on the trade but also clarifies the risks involved in delivering goods to a destination.

In 1936, the International Chamber of Commerce (ICC) was formed in Europe to promote wealth by creating standards for international trade, also known as the Incoterms. The Incoterms are contract conditions that outline a set of rules that will specify who will bear the costs and risks involved in international transactions.

The guidelines are subject to changes on account of ICC and were last changed in 2020. The organisation simplifies matters for businesses by standardising its terms to ease out legal and logistical intricacies. Delivery duty unpaid (DDU) is a part of the Incoterms. 

Delivery duty unpaid means the seller has the responsibility and risks involved in delivering goods to a destination, while the buyer becomes responsible for paying import duties and further transport costs.

What does DDU mean? Let’s go through the responsibilities of the seller and buyer to get a better understanding.

The seller is responsible for delivered duty unpaid shipping, among other things, these include:

• Presenting goods and commercial documents required as needed for the sales contract

• Making arrangements for export clearance and related formalities

• Making arrangements for transportation of the goods to the destination specified in the contract

• Paying for the transportation cost of the goods up to the destination

• Calculating risks and manage them till the destination

• Presenting buyers with transport documents to take possession of the goods at the destination

The buyer’s responsibilities include:

• Making payment for goods as per the sales contract

• Collecting all commercial documentation, licences, and authorisations needed for import

• Arranging for import clearance at buyer’s own risk and cost

• Taking the delivery of the goods from the seller from a specified destination point

• Understanding risks of transportation from the time it is made available at the destination

• Paying for transportation costs, duty fees, import customs formalities and other related charges 

The seller is also responsible for DDU shipments and assumes all risks involved up to unloading. Delivered duty unpaid explained by its function as delivered-at-place (DAP), while the buyer bears the risk and cost of the unloading.

Delivered duty unpaid vs delivered duty paid

DDU means that it’s the customer’s responsibility to pay for any of the destination country’s duties, customs charges and taxes. As per international trade, these should be paid to release the shipment after it arrives.

Delivered duty paid (DDP) indicates that it’s the seller’s responsibility to cover duties, import clearance, and taxes to send a product to the destination country.