Guides / Incoterms and customs · Updated 30 September 2026

Incoterms and customs: who clears goods and pays duty

The three-letter trade term in your contract decides more than who pays for the lorry. It sets out who files the export declaration, who handles import clearance and who pays the duty. Here is how the common terms split those jobs in UK–EU trade.

This guide is also available in Polish.

Why the trade term decides who deals with customs

Incoterms are a set of rules, published by the International Chamber of Commerce, that set out what the seller and the buyer are each responsible for when goods are delivered under a sales contract. They are three-letter codes that say where the goods are handed over, who arranges transport and insurance, and where risk passes. The current version is Incoterms 2020, which has 11 terms: seven usable for any form of transport and four for sea and inland waterway freight only. You may still see older 2010 terms on paperwork, so it pays to state the version in your contract.

What matters for customs is that each term also allocates the formalities. Since the UK left the EU single market and customs union, every consignment between Great Britain and the EU needs an export declaration on one side and an import declaration on the other. The Incoterm you agree tells you which party is expected to arrange each of those, and who pays any import duty and taxes. Get it wrong and goods can sit at the border while seller and buyer argue about who should have filed what.

Who clears what under the common terms

HMRC's customs valuation guidance summarises the main terms. The table below follows that guidance for the terms most used in UK–EU road freight.

HMRC's summary does not spell out the import side for DAP, so do not rely on assumptions: write into the contract who lodges the import declaration and who pays duty and import VAT. If you are weighing the two terms most often used by exporters, see a side-by-side look at DAP and FCA for UK exports.

EXW: the term that looks simplest and often is not

Under Ex Works the seller only makes the goods available at its own premises. The buyer carries the transport, the risk and, in principle, the export formalities in the seller's country as well as the import formalities at home. For a cross-border UK–EU sale that means a foreign buyer is expected to handle an export declaration in a country where it may have no presence, and gov.uk's own guidance flags that a buyer using EXW needs to understand UK customs procedures. In practice many traders pick FCA instead, because it keeps export clearance with the seller, who is best placed to do it.

DDP: maximum convenience for the buyer, maximum exposure for the seller

Under Delivered Duty Paid the seller clears the goods for export and for import, pays any duties and carries all costs and risks to the named place. Gov.uk stresses that a seller choosing DDP must be fully aware of the import clearance procedures in the destination country. For a UK seller shipping DDP into an EU member state, or an EU seller shipping DDP into Great Britain, that means taking on the importer's role in a foreign customs system, with the registrations and tax obligations that come with it.

Why the choice matters for EORI and declarations

The party that is responsible for a declaration generally needs the customs identifiers to make it. Gov.uk says you need a GB EORI number if you move goods between Great Britain (or the Isle of Man) and any other country, including the EU. A business not established in the UK should also get one for activities such as making a transit declaration or an entry summary declaration; if it cannot apply, it must appoint someone to deal with customs on its behalf, and that appointee needs the EORI. See our glossary entry on EORI for the basics.

• Under FCA, CPT, CIP or DPU a UK exporter files the UK export declaration, and the EU buyer handles the EU import.
• Under EXW the buyer must arrange the UK export too, which is awkward if it has no UK presence.
• Under DDP the seller must be able to act as, or appoint a representative for, the importer in the destination country.
• Whoever imports into Great Britain lodges an import declaration on CDS; see our guide to CDS import declarations.

If you use a customs agent, the type of representation matters too. Under direct representation the importer remains liable for the declaration; under indirect representation the agent is jointly liable with the importer.

Incoterms also appear on the declaration itself

The trade term is not only a contract matter. On a UK import declaration in CDS, a delivery terms code in Data Element 4/1 must be provided where the goods are valued using Method 1 (the transaction value). The entry combines the Incoterm code with the location where it applies. HMRC also notes that the Incoterm does not restrict which valuation method can be used: goods sold delivered duty paid, for example, can still be valued under Method 1. Make sure the term on the invoice matches what was agreed and what is declared.

Practical steps before you agree a term

1. Decide which party can realistically file the export declaration and which can file the import declaration.
2. Check both parties hold the EORI numbers they will need, or have a representative who does.
3. Name the Incoterm, the precise place and the version (for example Incoterms 2020) in the contract and on the invoice.
4. Agree in writing who pays import duty and VAT where the term leaves room for doubt, particularly under DAP.
5. Consider whether a customs agent is needed on either side; our guide on whether you need a broker can help.

Gov.uk's advice is short and sensible: agree the terms, but make sure both sides know what they mean in practice and that each can actually do what it has agreed to do.

Related guides

• Shipping goods from Poland to Northern Ireland: VAT, XI numbers and EORI

• Buying from Polish suppliers: a UK importer's guide

• Customs value for UK imports: the six valuation methods explained

Sources

• Customs valuation: Incoterms (GOV.UK)
• Choosing the right Incoterms for your goods (business.gov.uk)
• Delivery terms for Data Element 4/1 of CDS (GOV.UK)
• Get an EORI number (GOV.UK)

General information, not legal, tax or customs advice. Rules change; confirm current requirements on gov.uk or with a registered agent before you ship.