International shipping, customs and tax terms explained

DDU / DAPCharges may be due on delivery

DDU means Delivered Duty Unpaid. It is an older term removed from the official Incoterms® rules and largely replaced by DAP — Delivered at Place.

Under DAP, the seller arranges transport to the named destination and carries the transport risk until the goods arrive there, ready for unloading. The buyer handles import clearance and normally pays import VAT, customs duty and clearance fees.

In simple terms: Your order is shipped to you, but you may have to pay import charges before or upon delivery.

DDPDelivered Duty Paid

The seller arranges transport, handles export and import clearance and is responsible for applicable import duties and taxes. The goods arrive ready for unloading and the customer should not normally receive another customs bill. DDP gives the seller the greatest responsibility under the Incoterms® rules, but local law can make it difficult for a foreign seller to act as importer or pay certain taxes.

In simple terms: Import charges are handled in advance, so there should normally be no unexpected customs payment at the door.

IOSSImport One-Stop Shop

IOSS is an EU VAT scheme for eligible distance sales of non-excise goods imported from outside the EU in consignments with an intrinsic value not exceeding €150. VAT is collected at checkout, reported through IOSS and a valid IOSS number is passed electronically for customs clearance.

IOSS deals with VAT. It does not necessarily cover customs duty, postal charges, brokerage or other costs. The temporary EU €3 customs duty applying to certain qualifying imports from 1 July 2026 is separate from IOSS VAT.

In simple terms: Eligible EU VAT is collected at checkout, but other customs charges may still apply.

PDDPPostal Delivered Duties Paid

PDDP is a service offered by some postal operators and carriers; it is not an Incoterms® rule. Depending on the service, specified import VAT, customs duty and postal fees are calculated or collected in advance and paid through the postal network. Destinations, limits, fees and covered charges depend on the operator.

In simple terms: A postal service lets specified import charges be handled before delivery.

DPUDelivered at Place Unloaded

The seller transports the goods to the named destination and unloads them. The buyer normally handles import clearance, duty and tax. DPU is the only current Incoterms® rule requiring the seller to unload at destination.

In simple terms: The seller delivers and unloads; the buyer handles customs and import charges.

EXWEx Works

The seller makes the goods available at its premises or another named place and does not normally have to load the collecting vehicle. The buyer arranges collection, transport and normally both export and import formalities, carrying most costs and risks.

In simple terms: The buyer handles almost the entire shipping process.

FCAFree Carrier

The seller delivers export-cleared goods to the buyer's nominated carrier at the agreed point. Risk transfers there and the buyer handles the main transport and import process. The named point matters because it identifies where risk changes hands.

In simple terms: The seller hands the export-cleared shipment to the buyer’s chosen carrier.

CPTCarriage Paid To

The seller hands the goods to its chosen carrier and pays transport to the named destination. Risk transfers to the buyer when the carrier receives the goods, which can be earlier than the place to which the seller pays freight. The buyer normally handles import clearance and charges; the seller does not have to provide cargo insurance.

In simple terms: The seller pays freight, but the buyer takes the transport risk when the carrier receives the goods.

CIPCarriage and Insurance Paid To

CIP works like CPT, but the seller must also arrange the required cargo insurance. The seller pays transport to the named destination while risk transfers when the goods are handed to the carrier. The buyer normally handles import clearance and charges.

In simple terms: The seller pays freight and insurance, but risk transfers when the carrier receives the goods.

FASFree Alongside Ship

For sea or inland-waterway transport only. The seller places export-cleared goods alongside the buyer's nominated vessel at the named port. Risk transfers there; the buyer loads the goods and arranges the main transport, insurance and import clearance.

In simple terms: The seller brings the goods alongside the ship; the buyer handles loading and transport.

FOBFree on Board

For sea or inland-waterway transport only. The seller puts export-cleared goods aboard the buyer's nominated vessel. Risk transfers when they are aboard; the buyer arranges the main transport, insurance and import process.

In simple terms: The seller gets the goods aboard the ship; the buyer takes responsibility from there.

CFRCost and Freight

For sea or inland-waterway transport only. The seller puts the goods aboard the vessel and pays freight to the named destination port. Risk transfers aboard the vessel at the port of shipment. The seller does not have to provide insurance; the buyer handles import clearance and charges.

In simple terms: The seller pays ocean freight, but the buyer carries the risk during the voyage.

CIFCost, Insurance and Freight

CIF is similar to CFR, but the seller also obtains the required cargo insurance. The seller pays transport to the destination port, while risk transfers when the goods are aboard the vessel at the port of shipment. The buyer handles import clearance and charges.

In simple terms: The seller pays ocean freight and insurance, but the buyer carries the risk after loading.

HS code / commodity code / tariff code

An HS code classifies goods under the World Customs Organization's Harmonized System. The international classification is standardised to six digits; countries and customs unions add digits for their own commodity or tariff codes.

The complete code therefore depends on the country. Classification can affect duty, tax, restrictions, licences, documents, trade-agreement treatment and statistics.

VAT — Value Added Tax

A consumption tax used in the UK, EU and many other countries. Depending on the order and destination, it may be included in the price, collected at checkout or collected on import. VAT is separate from customs duty, although both can apply.

GST — Goods and Services Tax

A consumption tax used in countries including Australia, New Zealand, Canada and Singapore. It may be included in the price, collected at checkout or charged on import. Systems and rates vary and regional taxes can also apply.

EORI — Economic Operators Registration and Identification

An EORI number identifies businesses and certain other parties dealing with UK or EU customs. It may be needed to import or export, make declarations, use customs systems, apply for decisions or appoint a representative. The required EORI depends on where the business operates and where the goods move.

IOR — Importer of Record

The person or organisation legally responsible for the import entry under the destination's rules. Responsibilities may include authorising the declaration, providing accurate product and valuation data, meeting import requirements, keeping records and paying duties, taxes and fees. It may be the buyer, seller or another authorised party.

Customs duty

A charge on certain imported goods. It can depend on the tariff code, customs value, origin, destination, trade agreements and available reliefs. It is separate from VAT or GST.

Import tax

A general description for taxes charged when goods enter a country, including import VAT, GST, sales tax, excise or other national and regional taxes. It is not necessarily the same as customs duty.

Excise duty

A special tax on goods such as alcohol, tobacco, fuel, energy products and some vaping products. Excise goods can be excluded from simplified schemes and may need extra licences or documents.

De minimis threshold

A value below which a shipment may receive simplified treatment or relief from particular charges. Duty, VAT or GST, declaration and handling thresholds can differ. Not every country provides the same relief, low-value goods can still face charges and the rules can change.

Customs clearance

The process of declaring goods and obtaining permission for them to enter or leave a country. It can involve declarations, invoices, classification, origin, value, licences, payment and inspection. Missing or inaccurate information can delay the shipment.

Customs clearance fee

A charge for processing an imported shipment, imposed by a postal operator, courier, broker or government authority. It is separate from customs duty and import tax.

Brokerage fee

A courier or broker charge for preparing documents, lodging the declaration, advancing charges, communicating with customs and clearing the shipment. It can apply even when customs duty is zero.

Declared value and customs value

The declared value is the amount stated on customs information. Customs value is the value determined under the destination's valuation rules for calculating charges. It may adjust for transport, insurance, royalties, packaging, assists and other costs. Customs may request evidence or reassess it.

Intrinsic value

Generally the value of the goods themselves, excluding separately stated transport and insurance. The exact calculation depends on the rule. It is particularly relevant to IOSS and other low-value arrangements.

Country of origin

The country determined under the applicable customs origin rules—where goods were wholly obtained, produced, manufactured, sufficiently worked or substantially transformed. It is not necessarily the dispatch country and can affect duty, marking, restrictions and preferences.

Preferential origin

Origin that can allow reduced or zero duty under a trade agreement. The product must meet the agreement's rules and the required proof and records must be available. Dispatch from an agreement country does not by itself qualify the goods.

Non-preferential origin

Origin used for measures outside a reduced-duty trade preference, including marking, restrictions, quotas, anti-dumping measures and statistics.

Proof of origin

Evidence showing where goods originate. Depending on the rules, this can be a certificate, origin declaration, statement on origin, importer's knowledge or supporting manufacturing and supplier records. It is not always the same as a commercial invoice.

Commercial invoice

A document supporting an international sale and customs clearance. It commonly includes seller and buyer details, product descriptions, quantities, prices, currency, codes, origin, shipping terms, transport and insurance costs, export reason and total value.

Pro forma invoice

A preliminary document sometimes used for quotations, samples, gifts, temporary exports or goods supplied without a standard sale. Customs can still require a realistic value when the goods are free.

Customs declaration

The official data submitted about imported or exported goods, including parties, descriptions, codes, value, quantity, origin, transport, procedure and permits. The person submitting or authorising it is responsible for accuracy.

Landed cost

The complete cost of getting a product to its destination: product price, transport, insurance, duty, VAT or GST, brokerage, clearance, handling and other import-related charges.

In simple terms: The full cost of the order after transport and import charges.

COD — Cash on Delivery / Collect on Delivery

A service under which the carrier collects an amount from the recipient before delivery. It may cover the goods, transport or another sender-requested amount. It does not automatically include customs duty and import tax.

B2C — Business to Consumer

A sale from a business directly to an individual. Consumer, VAT and low-value import rules can apply specifically to B2C orders.

B2B — Business to Business

A sale from one business to another. Customs, VAT, invoicing, registration and record-keeping requirements can differ from consumer orders.