Incoterms: Convenience vs Compliance in Cross‑Border Trade
This is the third and final article in our Incoterms blog series. In this article, we focus on the D-Group (arrival terms) which are often marketed as “delivered to your door” solutions because the seller manages most of the transport up to the destination.
“Delivered to my door” may sound like the safest option. In practice, D‑Group terms shift work onto the seller but do not erase legal and tax exposure for the buyer. Import registrations, customs valuation, VAT/GST treatment, and the paper trail still have to meet the rules of the destination country. This article explains how the D‑Group rules actually allocate risk and responsibility, and why the apparent convenience can backfire if the structure isn’t compliant.
The D‑Group at a Glance
D-Group Incoterms push responsibility closer to the destination, but the key differences are when risk transfers and who handles import formalities.
DAP (Delivered at Place): Risk transfers to the buyer when the goods arrive at the named place ready for unloading. The buyer unloads, handles import customs, and in practice the buyer is the Importer of Record (IOR).
DPU (Delivered at Place Unloaded): Risk transfers only once the goods are unloaded at the named place, meaning the seller must deliver and unload, and the buyer takes over after unloading. The buyer still handles import customs and is typically the IOR.
DDP (Delivered Duty Paid): Risk transfers after the goods are delivered with import clearance completed and duties/taxes paid. The seller unloads and handles import customs, but in reality it’s rare for a non-resident seller to act as the true IOR because they often lack the required registrations/Power of Attorney.
DAP vs DPU - Where Unloading Meets Liability
DAP is typically chosen when the buyer wants to retain control over compliance. The buyer, as Importer of Record, manages customs clearance and VAT using their own registrations, which usually results in a cleaner audit trail and more predictable tax treatment. The main risks under DAP are operational rather than legal: unexpected destination charges and free-time overruns can arise if import documents or approvals are not ready when the cargo arrives.
DPU is better suited for project sites or locations without unloading equipment or labor, as the seller is responsible for delivering the goods fully unloaded. The trade-off is that unloading shifts physical handling risk to the seller at the most damage-prone moment. Any damage during discharge is the seller’s responsibility, often leading to disputes around claims and documentation. DPU should only be used when the unloading method, site conditions, and insurance coverage are clearly defined in advance, with proper evidence procedures in place such as photos, incident notes, and timely insurer notification.
DDP Under a Microscope
Under DDP the seller promises everything (clearance, duties, and taxes) so the goods arrive post‑customs. The friction is legal: in many countries a non‑resident seller can’t lawfully act as Importer of Record without tax registration, a local representative, and a customs broker PoA.
Where those are missing, shortcuts appear: undervaluation (split invoices to show a lower customs value), borrowed IDs, or an unrelated third party declared as importer.
These tactics may get cargo released, but they leave the buyer exposed when authorities audit often months or years later. There’s also a VAT problem: if the seller isn’t registered locally, input VAT may be unrecoverable or mis-declared, distorting landed cost and creating liability.
Regional Watch-outs
EU: Expect an EORI (Economic Operators Registration and Identification) and usually VAT registration for the importer; security filings are moving through ICS2 (Import Control System 2) phases. A non‑resident seller doing “true DDP” often needs a fiscal representative (verify feasibility before agreeing).
UK: The importer needs a GB EORI (Great Britain EORI) and customs declarations via CDS (Customs Declaration Service). Non‑established traders face practical hurdles reclaiming VAT; DDP claims should be checked against the seller’s UK VAT setup.
US: Importer must have an ID number and arrange a customs bond; advance filing (ISF 10+2 - Importer Security Filing) ties responsibility to the supply chain parties. Non‑resident Importer of Record (IOR) is possible but demands the right broker and bonds; verify who is declared importer on CBP (U.S. Customs and Border Protection) entries.
GCC (Gulf Cooperation Council; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE): Local‑entity rules and VAT systems vary; in practice, “true DDP” without a licensed local importer is difficult. Confirm the import sponsor/agent and how VAT is declared and paid.
If a Supplier Insists on DDP
Before you accept DDP, request hard evidence: local registrations (EORI/GB EORI/VAT or equivalent), who will be declared IOR on the customs entry, the valuation method with an itemized commercial invoice (showing freight and insurance), the customs broker’s PoA, and proof of duty/VAT payment in your name or the seller’s (as applicable). Confirm security/advance filings are made on time and align your contract clauses so Incoterms match the reality of importer identity and declarations.
Why FortuneSix
Most shipping failures are not about price, they’re about structure. We design D‑Group deals so responsibility matches capability: buyer remains IOR where that keeps audits clean;. If DPU is chosen, unloading and insurance are engineered; and DDP is used only when the seller is genuinely able to be IOR with every registration and filing in place.
As FortuneSix, we bring law-first structuring, origin-to-destination coordination and a transparent cost picture under one accountable team. We help you pin down the named place, confirm who is IOR, pre-prepare key documents, and keep an eye on cut-offs and the last free day so demurrage and detention are less likely to spiral. If “delivered” terms mask shortcuts, we reframe the deal to keep it compliant and predictable. Share your next “delivered” quote; we’ll turn it into a plan you can sign off on with confidence.
Contact us to discuss your next shipment.