DDP & DDU Shipments


The two different options are to ship cross-border either “Delivery Duty Paid” (DDP) or “Delivery Duty Unpaid” (DDU). The exception is cross-border transactions which occur within the EU where they operate as part of the single market under 'distance selling'.

DDU

DDU is sometimes referred to as Delivered At Place (DAP). If you ship DDU, the customer will be responsible for VAT and possible duty. Before receiving their package, they will need to pay those charges to their local tax authority.

This will obviously not be a positive customer experience and is likely to lead to increased returns and refused deliveries.

DDP

DDP clearly provides a much better experience for customers in that they don’t incur any unexpected additional costs or delays. When you ship DDP, you become the importer of record and take on the responsibility for VAT and duty. There are two different ways for you to manage that process.

If you don’t have VAT registrations in the EU countries and you don’t want to register, you can choose to use a customs broker, typically your carrier. They will manage VAT and customs fees and invoice you on a regular basis.

If you have VAT registrations in any of the EU countries and you have the fiscal representatives that may be required, the process will be the same as it is today. Fruugo will collect local VAT at the point of sale and pass that on to you to offset sales VAT against import VAT on your tax return. We will do this if we hold the details of your local tax registrations, so please ensure that we have your up to date registration details.

DDP Costs & Fruugo Customs Charge

For most sellers, using a customs agent will be the easiest way to manage the charges related to shipping DDP in each country. That service will obviously come with a cost. To help mitigate that cost, Fruugo will add a customs charge amount equivalent to the local VAT to the product price for UK to EU and Worldwide to UK sales, and pay that back to sellers that are shipping their orders using DDP. You will then receive the customs charge as part of your regular payment.

We realise that the local VAT won’t cover 100% of the cost of shipping DDP. Customs agents will charge VAT on the customer-facing price, so their charge will be a few percent higher than the VAT for the product. That additional cost is most likely going to be significantly lower than the cost of dealing with refused and returned orders if shipping DDU (Delivery Duty Unpaid).

We are finalising our process and payment solution for reimbursing import VAT on goods Delivered Duty Paid and will send a comprehensive update over the coming days. More information is available from our Account Management team.

DDU Costs

Fruugo will pay for and administrate customer requests for refunds of VAT and duty to help alleviate some of the friction, but you should still expect increased returns if you ship DDU.

Marketplace Tax

In some countries there has been a change to the taxation law which means that the retailer is no longer responsible for the remittance of sales tax / VAT to that country where the sale is made on a marketplace. The marketplace instead charges sales tax/VAT on the order and remits it under their tax registration for that country, and thus handles the tax responsibility for the retailer. It allows retailers to trade to these countries more easily.

As a seller you will still need to provide the documentation required for international shipments, but you will need to document that Fruugo has collected the sales tax on your customs declaration and consignment with their courier, including Fruugo’s relevant tax IDs. Ideally you should include the Fruugo invoice/packing slip in the parcel and stick it on the outside of the parcel where possible.

More information see: Marketplace Tax Responsibility