GlossaryEN1 min readUpdated: Jun 13, 2026

Incoterms VAT Risk

Incoterms allocate transport costs and risk of loss or damage, but do not determine tax liability in themselves.

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Last updated: 13 June 2026Published: 27 January 2026

Source: https://iccwbo.org/resources-for-business/incoterms-rules/

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Incoterms 2020 Simulator: Who bears costs & risk?

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Definition & Explanation

Incoterms allocate transport costs and risk of loss or damage, but do not determine tax liability in themselves. VAT responsibility is governed by national tax law and the place of supply. Under certain Incoterms such as DDP (Delivered Duty Paid), the seller assumes import VAT and customs clearance costs in the destination country—combining the two regimes and shifting tax payment risk to the seller. Thus, the party ultimately responsible for taxes depends on both the chosen Incoterm and the applicable tax jurisdiction.

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Incoterms VAT Risk

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Related Terms

Incoterms Trade Finance

Incoterms financing

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FCA and CMR

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Incoterms Freight Forwarder Management

Incoterms 2020 Simulator: Who bears costs & risk?

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