Difference Between DDP and DDU

DDP and DDU are among the many international commercial terms that are recognized by ICC and used commonly in international trade and transactions. International commercial terms are acronyms made up of three letters and reflect common trade practices. These incoterms are accepted by authorities and those involved with international trade. DDP stands for delivery duty paid while DDU stands for delivery duty unpaid. Both terms are incoterms but have many differences that will be talked about in this article.

DDU and DDP are important when one is shopping on the internet. If you see DDU mentioned in front of an item, you can be sure that the burden of importing the item in your country lies on you as delivery duty is unpaid and you have to calculate import taxes and delivery costs in addition to the price of the item that has been displayed on the site. Though, DDP mentioned against an item means that all duties have been paid, you must remain cautious, and check with the site. This you can do either by emailing, or by mentioning the item with its product code and the meaning of DDP or DDU mentioned against its name.

In a DDU transaction, the seller pays for everything prior to arrival in buyer’s country but all duties and import taxes become buyer’s responsibility once the product has entered buyer’s country. In a DDP deal, the seller undertakes to pay all duties till the product reaches the buyer. However, these are generic terms and the devil is always in the detail. As such it is important to get to all the details before finalizing an international deal.

DDP means that the vendor or seller assumes all liability and costs associated with international transportation. DDP is similar to FOB (freight on board) or Ex Works. If both parties agree on DDP, the buyer can relax as he does not have any responsibility towards transportation cost until the product/s have arrived in his country. Though, delivery within the country is the responsibility of the buyer. However, it is best to have all details worked out before undertaking any international transaction.