Incoterms for webshops: Who pays customs duties and shipping?

When a webshop sends packages from an EU country to countries outside the EU, the choice in practice often comes down to two incoterms: DAP (Delivered at Place) and DDP (Delivered Duty Paid). With DAP, the customer generally pays any customs duties and import VAT on delivery, whereas with DDP, you pay as the sender.

In both cases, you pay for transport to the agreed place of delivery; whether you charge the customer for shipping at checkout is up to you.

Here’s help with choosing your incoterm and specifying it when you book freight in Shipmondo.

Most incoterms aren’t designed for webshops

Incoterms 2020 comprises 11 rules, including DAP and DDP, but they also cover transport needs other than packages from a webshop. For example, FOB and CIF apply to sea and inland waterway transport, while other rules are used for agreements where the buyer arranges a larger part of the transport themselves.

For a webshop shipping parcels, DAP and DDP are typically the most relevant incoterms to use.

The first step is to clarify whether you or the customer will cover the import costs.

With DAP, the customer pays the import costs, and that could cost you the customer

DAP can be a sensible choice when the customer can handle the import costs and you’ve clearly agreed on who is responsible.

The advantage for you is that, as a rule, you don’t have to pay the customer’s customs duties and import VAT. Your total cost of delivery may therefore be lower than with DDP, but DAP doesn’t necessarily make the shipping itself any cheaper.

The downside is that the customer may face a bill for customs duties, VAT and fees that wasn’t included in the amount at checkout. If your communication isn’t clear, the bill may come as a surprise, and you risk uncollected or refused packages, returns and bad reviews.

For example, if you sell spare parts from an EU country to a business in the UK, DAP may be a good fit if the customer already handles imports and wants to use their existing agreements.

That’s why you should make payment responsibility clear before the purchase. State what your price covers and which import costs the customer will have to pay themselves. The three letters DAP aren’t in themselves an explanation that every customer will find easy to understand.

With DDP, you cover the customs duties, and the customer knows the total price

With DDP, you can offer the customer an all-in price with no follow-up bill for customs duties and import VAT.

This lets you make the price at checkout the price the customer actually pays. That removes one possible reason for refused packages and lays a better foundation for a good delivery experience.

In return, you need to keep your finances under control. Customs duties, import VAT and relevant import fees must be included in your calculations so you know what’s left on the order. You can factor the costs into the product price or the shipping price rather than letting them eat into an already thin margin.

Imagine you sell home accessories from a warehouse in the EU to private customers in Switzerland. Before you promise an all-in price, you need to know the relevant import costs for your specific products and delivery terms, not just the cost of sending the package.

DDP also requires a carrier and a shipping product that support it. Also make sure that the necessary import and VAT arrangements in the destination country are in place; a setting at booking won’t in itself meet the local requirements.

How to choose between DAP and DDP

Choose DAP or DDP based on your customer type, finances and destination, not on the shipping price alone.

When comparing DAP vs. DDP, it helps to start from a typical order rather than choosing one solution for all customers. Use the table to assess what suits your sales.

Criterion	DAP is relevant when…	DDP is relevant when…
Customer type	You sell to B2B customers who are able and willing to handle the import.	You sell to consumers and want to show the final price at checkout.
Order value and margins	You can't factor the import costs into a profitable price, and the customer accepts paying them.	You know the costs and can factor them in without eroding your earnings.
Destination, e.g. Norway, the UK and Switzerland	You've clarified import responsibility with the customer for that specific country.	Your shipping product supports DDP to the country, and you've clarified the local requirements.
Product type and duty rate	The customer is in a position to handle the import of your goods.	You've looked into your products' duty rates and other import costs, so the price can be set on an informed basis.
The cost of a refused package	The customer knows and accepts the import costs, and you've assessed the risk of extra expenses.	Return shipping, handling and lost sales make it important to eliminate unexpected import bills as a reason for refusal.

Do the math on a concrete example, too. If, for example, you have EUR 30 left on an order after cost of goods, pick and pack, and shipping, and import costs reduce that amount by EUR 12, you’re left with EUR 18. The figures are only an example; use your own costs and compare them with what a refused order would cost you.

Look into the products and the destination separately. Just because a product ships from an EU country doesn’t automatically mean it can be imported duty-free; the product’s origin and any trade agreements can also play a role.

Our recommendation: If you sell to consumers outside the EU, DDP is usually the best starting point for a predictable customer experience. If you sell B2B, DAP is often sufficient when the customer is able and willing to handle the import.

Special rules apply if you ship to private consumers in Norway.

How to specify your incoterm when you book freight in Shipmondo

You specify DAP or DDP in the Incoterms field of the booking in Shipmondo, provided the carrier and shipping product support it.

Check that your choice matches what the customer was told at checkout. If you’ve promised to cover the import costs, the booking must reflect that too. Make this check part of your workflow, especially when you start shipping to a new country or switch shipping products.

When you have customs documents filled in automatically, your choice carries over: with DDP, you as the sender are responsible for customs duties and import VAT; with DAP, the costs fall to the receiver. So check payment responsibility, even when your customs documents are filled in automatically.

The options depend on the carrier and the specific shipping product. PostNord supports DAP and DDP on a range of export products, including PostNord Home, PostNord Service Point and PostNord Parcel, across PostNord Denmark, Sweden, Norway and Finland. With DSV XPress, you can choose between DAP and DDP for shipments outside the EU.

If you use Shipmondo’s API, you can also specify the incoterm for supported carriers. Here, the choice is set in the term_of_trade field, so your booking follows the agreed split of import costs.

Start by choosing the solution that suits your customers and finances. Then create your account, and keep the same terms consistent from checkout to freight booking.