DDP or DDU: who actually pays customs duty on a parcel?
By OneEasyStop Logistics TeamPublished 3 min read
The one-line difference
The incoterm decides who is billed, not how much is owed. The duty and tax are the same either way; DDP moves the payment to checkout and DDU leaves it with the recipient.
| DDP (Delivered Duty Paid) | DDU / DAP (unpaid) | |
|---|---|---|
| Who pays duty and tax | Sender, at checkout | Recipient, on arrival |
| Cost at checkout | Higher. Includes the estimate | Lower, excludes duty and tax |
| Recipient experience | Nothing to pay | Carrier contacts them for payment |
| Delay risk | Low | Higher. Parcel waits for payment |
| Refusal risk | Low | Significant on retail shipments |
| Best for | B2C and retail | B2B where the buyer clears goods |
Why DDU costs retailers more than it saves
DDU looks cheaper because the duty line disappears from checkout. What replaces it is a message from a carrier to your customer, asking for money before a parcel they have already paid for will be released.
A meaningful share of those customers refuse. The parcel then travels back at your cost, you refund the order, and you have paid outbound freight, return freight and a clearance fee for a sale that no longer exists. On low-value retail orders that reversal is usually worse than the duty would have been.
DDU works well in one specific case: B2B, where the buyer has an import account, expects to clear goods, and may reclaim the tax.
How the total is built
- Customs value: the declared value of the goods, often plus freight and insurance depending on the destination's valuation basis.
- Duty: a percentage set by the HS code and the trade relationship between origin and destination. A trade agreement can reduce this to zero, but only with a valid proof of origin.
- Import tax: VAT, GST or equivalent, charged on the customs value plus the duty. This compounding is why tax is usually the bigger line.
- Clearance fee: a flat carrier charge for presenting the entry. It appears on nearly every dutiable parcel and is the line most often mistaken for an error.
De minimis: the threshold that changes everything
Most countries waive duty, and sometimes tax, below a value threshold. Those thresholds move with policy. The EU and the UK have both changed theirs in recent years, and low-value consignment reliefs have been narrowing globally.
Because of that, a static table of thresholds on a web page is wrong within months. We resolve the current threshold for the specific lane at quote time instead.
Choosing, in practice
- Selling to consumers → DDP. Your customer should never be asked for money after checkout.
- Shipping to a business that imports regularly → DDU is fine and often preferred.
- Sending a genuine gift → DDP, and describe the contents accurately. "Gift" as a goods description is a customs hold waiting to happen.
The incoterm is set when the label is bought and cannot be changed in transit, so it is worth getting right at the point of sale.
Full detail on the customs, duties and taxes page, and the paperwork side on labelling and packaging criteria.