- INCOTERMS 2020
– EXW or Ex-Works
– FCA or Free Carrier
– CPT or Carriage Paid To
– CIP or Carriage and Insurance Paid To
– DDP or Delivery Duty Paid
– DPU or Delivered At Place Unloaded
– DAP or Delivered At Place
All about incoterms 2020
The incoterm is a key element for the import customs value, and a good knowledge of the incoterms’ rules can help you to optimize your goods’ customs value.
It distributes rights and obligations along the supply chain between the seller / sender and the buyer / recipient. Indeed, according to the chosen term, some elements supported by the seller are already included in the price (invoiced for the goods) actually paid or to pay, which is the basis of the transaction value.
Nowadays, there are 11 different incoterms, divided between 2 families : the usable terms for transport by sea and by inland waterways, and the usable terms for all modes of transport.
EXW or Ex-Works
The goods are available in the seller’s premises on a fixed date, and the buyer has to organize and pay for the transport. The buyer also bears the risks until the goods final destination. Export and import charges, associated customs formalities and related duties and taxes are the buyer’s responsibility.
FCA or Free Carrier
The seller delivers the goods to the selected carrier, paid by the buyer. During this operation, the risk transfers. Export formalities and costs, and the payment of export duties and taxes associated, are the responsibility of the seller. The buyer pays for the transport to its activity place, takes care of the import customs formalities and pays for the import duties and taxes. In its 2020 version, the FCA offers an additional bill of lading option on board : the parties may agree that the buyer gets the bill of lading.
CPT or Carriage Paid To
The shipping costs to the port of destination are the seller’s responsibility. The risk transfer takes place when the goods are then supported by the carrier mandated by the buyer. The insurance fees are the responsibility of the buyer.
CIP or Carriage and Insurance Paid To
Same conditions than for the CPT, but the seller must take out an insurance for the risk of loss or damages, covering everything that might happen to the goods during transit. In its 2010 version, this incoterm was limited to the subscription of a minimum insurance policy, but since January 1, 2020, the required insurance coverage is a back to back insurance.
DDP or Delivery Duty Paid
Goods aredelivered to destination, ready to be unloaded. The seller carried out the customs clearance for import and export, and paid the duties and taxes associated to these operations. Generally, the buyer bears the unloading costs, unless the contract between the two parties stipulates otherwise. The buyer has no obligation to cover the inspection costs, and it’s therefore the seller who bears the pre-shipment inspection costs, required by the authorities of the concerned country.
DPU or Delivered At Place Unloaded
In addition to the main transport, the seller takes care of the organization and the payment for the goods’ unloading at destination and for the transport to the unloading address established with the buyer. The risk transfer is effective when the goods have been made available for the buyer at the said terminal. The buyer performs the import formalities and pays the duties and taxes associated.
DAP or Delivered At Place
The seller takes care of the transport of the goods until the established delivery point, chosen by the buyer, and therefore assumes the costs and risk up to this point. Once arrived to destination, the goods are available and the buyer has to organize the unloading, the import formalities and to fulfill the duties and taxes associated.
FAS or Free Alongside Ship
The seller bears the transport costs to the port of embarkation, carries out the export formalities and pays the fees, the duties and the taxes associated. The goods are then delivered alongside the ship in the boarding port, and the transfer of risk takes place at this moment. The buyer then supports the loading and the maritime transport costs, plus the unloading and the transport costs from the destination port to its place of activity.
FOB or Free On Board
Goods are delivered on the ship designated by the buyer, and the transfer of risk and cost takes place at this moment. The seller pays the transport fees to the port of embarkation and the loading costs, carries out the formalities and pays the fees, the duties and the taxes associated.
CFR or Cost and Freight
The transfer of risk takes place when the goods are delivered on the boat in the port of embarkation. The seller assumes the transport costs to the port of destination and the loading costs. The seller also takes care of the export formalities and pays the duties and taxes associated. The buyer supports the costs from the arrival of the goods at the port of destination, carries out the import customs formalities and pays the duties and taxes associated.
CIF or Cost, Insurance and Freight
Same model as for CFR, except that the seller also bears the insurance costs of the good during transport. .
French customs summary table for Incoterms 2020
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