International ShippingWho pays duties and taxes? DDP vs DDU explained
Import duties and VAT can be paid by your customer on delivery (DDU) or by you up front (DDP). How each works, how Octoship estimates the bill, and how to pick per order.
When a package crosses a border, the destination country may charge import duties (a tariff on the goods) and taxes like VAT or GST. Someone has to pay them before the package is released — either your customer at the door, or you when you buy the label. That choice is called the incoterm, and Octoship lets you set it per shipment.
DDU vs DDP at a glance
| DDU / DAP (duties unpaid) | DDP (duties paid) | |
|---|---|---|
| Who pays duties and taxes | The recipient, on delivery | You, when you buy the label |
| Customer experience | May owe fees plus a carrier handling charge before delivery | Nothing to pay — the box just shows up |
| Label price | Shipping only | Shipping plus estimated duties and taxes |
| Refused-package risk | Higher — surprise fees are the top reason for refusals | Low |
| Availability | Every international service | Select courier services from UPS, FedEx, DHL Express and others |
How Octoship calculates duties and taxes
When you enter a destination, an HS code and a declared value for each item, Octoship estimates the duties and taxes for that country and shows them on the rate screen next to each service. With DDP selected, the estimate is added to the label price; with DDU, it's shown so you can warn your customer. The more accurate your HS codes and values, the closer the estimate.
- 1Fill in the customs details
Item description, HS code, country of origin and value for each line. Saved product info fills these in automatically.
- 2Choose who pays
Under Duties & taxes, pick Recipient pays (DDU) or I'll pay (DDP). Services that don't support DDP are hidden when DDP is selected.
- 3Compare the landed cost
Each rate shows shipping, estimated duties and taxes, and the total. Sort by total to see the true cheapest option.
- 4Buy and ship
For DDP shipments, the carrier bills the duties and taxes to us and we settle them against your account. Any difference between the estimate and the final assessment shows up as a duty adjustment.
Which should I use?
- Use DDP for higher-value orders, repeat customers, and destinations where buyers expect a seamless checkout — the EU, UK, Australia and Canada are common examples.
- Use DDU for low-value orders that fall under the destination's duty-free threshold, or when you've collected tax at checkout through a scheme like the EU's IOSS (see shipping to the EU, UK and Canada).
- Set it automatically with an automation rule: for example, “DDP for orders over $150 going to the UK, DDU everywhere else.” Rules live in Settings → Automation and can match on destination country, order value or carrier.
If you use DDU, say so clearly at checkout — something like “Duties and taxes may be due on delivery.” Surprise fees are the most common reason international customers refuse packages, and a refused package usually comes back to you slowly, with return postage on top.
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