Delivered Duty Paid (DDP) is an incoterm used when the seller delivers goods b2b to their overseas customers premises, as part of an international movement of goods. The seller is responsible for customs procedures including the import entry in the customers country, insurance and freight to the customers premises.
Several UK sellers of goods to the EU were approached by their EU customers after Brexit to change the sales contract terms to DDP. The sale is a zero rate export for the UK seller because the goods physically move from the UK to a place overseas. The sale is declared only in box 6 (net sales) of the UK VAT return. However some businesses are not aware that DDP terms require that the overseas seller registers for VAT in their customers country, as the transaction becomes a domestic sale, and local VAT must be charged.
The impact of DDP therefore can be substantial for the UK seller, including engaging a local Customs agent to submit the import entries, paying import VAT and possibly customs duty, registering for the equivalent of VAT overseas, submitting VAT returns in the customers country, and potentially employing a local fiscal representative.
If you require further information including possible alternative models for sales of goods overseas, please speak to the VAT team.
