VAT AND THE DDP INCOTERM

As mentioned, the DDP Incoterm is the only Incoterm in which export and import clearance procedures are the responsibility of the seller. This has implications for value added tax (VAT).

Specifically, under the DDP Incoterm, it is the seller, i.e. the company shipping the goods, that pays the VAT.

In practice, transport companies often bear the costs of customs clearance procedures and then charge them to the company that has shipped the goods.

For goods exported to E.U, it is possible for the seller to reclaim VAT in certain cases.

Among other things, the seller must be liable for VAT in his country, the recipient of the goods must be a professional customer liable for VAT, and the amount of VAT to be recovered must exceed a certain threshold.