DDP Import from China: Services, Documents and Limits

DDP stands for "Delivered Duty Paid". Under Incoterms® 2020 the seller makes the import-cleared goods available at the named place of destination, on the arriving vehicle and ready for unloading. Up to that point the seller bears cost and risk, plus export and import formalities, customs duty and import VAT. This article explains who does what in a DDP import of apparel from China, which documents are needed and how DDP differs from DAP, FOB and EXW. It is no substitute for customs or tax advice.

Who is responsible for what under DDP?

Under DDP almost the entire chain sits with the seller. You are left with the delivery address, receiving the goods and checking them. For a DDP import through us, the split looks like this:

• Producer in China: manufacturing, packing and carton marking as specified, handover for transport
• Our team in China: on-site checks during and after production, aligning the commercial invoice and packing list, arranging export clearance
• DS Trading as importer: transport, EU customs declaration, payment of duty and import VAT, delivery to your address, invoice from Germany
• You: exact delivery address with receiving hours, unloading, checking the goods on arrival

According to the ICC description, unloading is not automatically part of DDP. If your address has no loading ramp or forklift, or palletised goods have to go up to a higher floor, raise it before the order. For parcel shipments by courier the question rarely comes up.

Why does the place of delivery have to be named precisely?

The named place sets how far the seller's costs and risk extend. "DDP Germany" is not enough. The quote and contract should contain a full address, such as your warehouse, your office or your end customer. Once the goods are with the carrier, a change of address often cannot be carried out. If delivery goes to an address other than your billing address, an event venue for example, buyer and consignee are listed separately in the documents.

Which documents does a DDP import from China need?

For customs clearance, the commercial invoice, packing list and transport document have to match. The EU customs declaration relies on them, and every inconsistency costs time.

• Commercial invoice: seller, buyer and importer, description of goods including material, tariff code, quantity, unit price, total value, currency and delivery term, with freight shown separately
• Packing list: number of cartons, contents per carton, gross and net weight, carton dimensions, identical to the carton marks
• Transport document: bill of lading for sea freight, air waybill for air freight
• Export declaration in China, filed on the export side
• EU customs declaration with the importer's EORI number, in Germany through the ATLAS system

Typical mistakes are carton numbers swapped between packing list and carton, three different weights on three documents, a description of goods without the material, or the same invoice number used for two shipments. Customs notices such discrepancies, and the goods wait until they are resolved. That is why we compare invoice, packing list and cartons with each other before shipping.

How are customs value and import VAT calculated?

The customs value is normally the transaction value, meaning the price actually paid for the goods, plus freight and insurance up to the EU border. The duty rate is applied to that value. Import VAT is then calculated on the customs value plus duty plus transport costs to the first destination in the EU. In Germany it is 19 per cent for clothing; other EU countries apply their own rates.

With DDP through us, we import the goods for our own company and pay duty and import VAT. Customers in Germany receive an invoice with German VAT, which they deduct as input VAT in the usual way. For businesses in other EU countries, VAT treatment depends on the delivery route and destination country; we clarify how it appears on the invoice before you order and state it in the quotation. Due dates and input VAT deduction at import are explained in EORI and import VAT, and all cost blocks together are covered in import costs.

Some suppliers suggest putting a lower value on the invoice to reduce duties. That is tax evasion, and customs can reclaim duties years later. The value we declare is always the real one.

How is clothing classified for customs?

Every product needs a tariff code: eight digits in the EU Combined Nomenclature and ten digits in TARIC. The code sets the duty rate and whether special measures apply. For clothing, these features matter most:

• Construction: knitted garments fall under chapter 61, woven garments under chapter 62.
• Material: a cotton T-shirt belongs under 6109 10, a polyester one under 6109 90.
• Type of garment: hoodies and sweatshirts fall under 6110, caps under 6505. Many headings also distinguish between men's and women's wear.

Many garments in chapters 61 and 62 carry a duty rate of 12 per cent; caps are considerably lower. A wrong code leads to queries, back payments or duties paid in excess. A common case is a code that does not match the material, for instance a polyester jersey declared under the cotton heading. The fibre composition therefore belongs in the description of goods and on the care label. In unclear cases you can apply to customs for Binding Tariff Information. Current rates are listed in the European Commission's TARIC database.

Do I need my own EORI number for DDP?

Not with DDP through DS Trading. The EORI number identifies the importer to customs, and under our DDP the importer is us. The customs declaration runs under our number, and you do not need a customs agent of your own either.

EORI number, VAT ID and national tax number are often mixed up. The EORI number goes into the customs declaration, the VAT ID onto invoices between businesses in different EU countries. A national tax number is not meant for cross-border transactions. Anyone importing on their own account needs their own EORI number, which German customs issues free of charge.

What should you check in DDP offers from China?

Many Chinese suppliers and forwarders offer DDP. Often a forwarder then declares the goods under its own EORI number as importer, and you see neither the customs declaration nor the declared value. In that case, ask who the importer is in the eyes of customs, which value and tariff code are declared, and who is liable if customs reclaims duties later. The ICC itself notes that DDP becomes difficult for sellers who cannot handle import clearance in the destination country.

With us, a German company is the importer and also your contracting party. German law applies and the place of jurisdiction is Hamburg. What that looks like day to day is described on the page China import with a contact in Hamburg.

What is the difference between DDP, DAP, FOB and EXW?

The terms differ in where cost and risk pass to you and who handles customs clearance. Going down the list, you have less and less to organise yourself:

• EXW (ex works): the seller makes the goods available at the factory. Collection, export clearance in China, freight, insurance and import are up to you. Handling export clearance in China as a foreign buyer is difficult, so EXW rarely fits.
• FCA (free carrier): the seller hands the export-cleared goods to the forwarder you nominate. From there you bear cost and risk.
• FOB (free on board): the seller delivers the export-cleared goods on board the vessel at the Chinese port. Sea freight, insurance, import and duties are yours. FOB is intended for sea transport only.
• DAP (delivered at place): the seller delivers to your address. Import clearance, duty and import VAT are yours.
• DDP (delivered duty paid): the seller delivers cleared to your address and pays the duties and taxes.

Many prices from China are FOB prices. For a fair comparison with a DDP quote, add freight, insurance, duty, clearance and delivery. How the choice between sea and air changes that calculation is covered in sea freight or air freight.

How does delivery to Switzerland work?

We deliver to Switzerland DAP. We bring the goods to your address; you or your customs agent handle import clearance and Swiss VAT, and we supply the documents for it. Since 1 January 2024 Switzerland no longer charges import duty on industrial products, and that includes clothing. Import VAT is still due.

What does DDP not cover?

DDP covers transport, risk and duties and taxes. Whether the goods may be sold in the EU is a separate matter. Textile labelling with fibre content, mandatory product safety information and notes on the packaging have to be right before the goods leave China. What that involves is covered in our article on textile labelling.

How we organise customs and delivery for you is described on the pages customs clearance and shipping & logistics, and for businesses ordering regularly under B2B textile import. Send questions about your article through the contact page; you will get a reply within 48 hours.