Choose DDP or DAP for duties on international Shopify orders
If you ship internationally, your customer may be charged duties and import taxes when the parcel arrives. The two ways to handle that are called incoterms: DDP, delivered duty paid, where the seller takes on the import costs, and DAP, delivered at place, where the customer pays them on delivery. The choice decides who pays, when, and whether the parcel can get stuck at the border.
Written · Shopify admin, desktop steps · 5 minutes read
The worked example
| Order | $180.00 of products to the United States |
| Duty | 12% example rate = $21.60 |
| Import tax | 5% example rate = $9.00 |
| Duties total | $30.60 |
| DDP, paid at checkout | $210.60 |
| DAP, due at the door | $30.60 + $12.00 broker fee = $42.60 |
Download the record: ddp-dap-comparison.csv (201 bytes).
A side-by-side record for the two example orders in this tutorial, showing the duties collected at checkout under DDP and the amount due at the door under DAP. The DAP total includes the $12.00 broker fee.
1Decide who pays the duties
Under DDP, the seller assumes responsibility for any import costs that might be payable when goods cross borders, such as duties, import taxes, or brokerage fees, and collects payment for these charges during checkout. Under DAP, the seller is only responsible for shipping the product, and the customer pays the import costs to the carrier on delivery.
2Turn on collecting duties at checkout
If you choose DDP, activate collecting duties and import taxes at checkout in your Shopify admin. You need Harmonized System (HS) codes on your products so the duties can be calculated, and some checkout customizations, destinations, and order types are not supported, so read the considerations first.
3Check the Duties line on each order
When duties are collected on an international order, a Duties line item is included in that order's details. Verify that duties and import taxes have been collected on each international order before you buy the label.
4Buy a DDP label for a DDP order
After you start charging duties at checkout, switch to DDP shipping labels instead of standard labels for your international orders. DDP labels are supported only for specific carriers when you buy labels through Shopify's carrier accounts: Canada Post for USA destinations, DHL Express, DHL Express Canada, and DHL eCommerce.
5Mark the commercial invoice to match
Every international order requires a commercial invoice. If the order has paid duties and import taxes, mark the terms of delivery on the commercial invoice as DDP. If it has not, mark it as DAP.
6Update your shipping policy
After you activate charging duties and import taxes at checkout, update your shipping policy and your notification templates so customers know your policies and charges for international sales. Update the shipping policy under Settings, then Policies.
The arithmetic
The 12% duty and 5% import tax are example rates used to show the arithmetic; real rates depend on the product classification, its origin, and the destination's rules:
| Order | Duty 12% | Import tax 5% | Duties total | DDP total | DAP at door |
|---|---|---|---|---|---|
| $180.00 | $21.60 | $9.00 | $30.60 | $210.60 | $42.60 |
| $240.00 | $28.80 | $12.00 | $40.80 | $280.80 | $52.80 |
The DAP at-door column includes the $12.00 example broker fee, which some carriers charge for collecting duties on delivery. On the $180.00 order the customer pays $42.60 at the door under DAP, against $30.60 collected at checkout under DDP, a difference of $12.00 that is entirely the broker fee.
Held at the counter
A DDP order with a standard label still bills the customer at the door. If you charge duties at checkout but use a standard shipping label, your customer is still charged duties and import taxes on delivery. The label is what tells the carrier the duties are already paid.
A $0 duties order can still use a DDP label. If you ship an order with $0 duties, you can use DDP shipping labels to ensure your customers are not liable for any additional charges. If there was an error at checkout and duties were not collected, use a standard shipping label instead.
DAP can add a brokerage fee. Some shipping carriers charge additional fees for collecting duties upon delivery if the duties have not been paid in advance. Using the DAP incoterm might result in additional charges to the customer, on top of the duties themselves.
Sources
- Duties and import taxes — Shopify's help pages: the DDP and DAP definitions, the carriers that support DDP labels, and the note that duties can be collected at checkout.
- Additional tasks for collecting duties and import taxes at checkout — Shopify's help pages: DDP labels, the Duties line item check, commercial invoice markings, and the shipping policy update.