Incoterms 2020 for companies in Spain: chart, customs value, import VAT and EXW vs DDP

Incoterms 2020 are the 11 International Chamber of Commerce rules that, in a sales contract, set where the seller delivers the goods, when risk passes to the buyer and who pays for transport, insurance and customs.

For a company in Spain, the chosen rule also drives customs value, import VAT, revenue timing and how much cash a shipment ties up.

Below: what Incoterms 2020 are and what they do not cover, a chart of all 11 delivery terms, how to choose between EXW, FCA, FOB, CIF, DAP and DDP, how the rule affects customs value, duty and VAT on imports into Spain and the VAT exemption on exports, and a worked example of a €400,000 shipment under EXW and DDP: landed cost, cash gap and margin.

The supply contract and customs clearance are handled by a lawyer and a customs representative; this article is about how delivery terms show up in a company’s money.

What Incoterms 2020 are and what they do not cover

Incoterms® are rules of the International Chamber of Commerce (ICC): eleven three-letter trade terms for business-to-business contracts for the sale of goods.

The current version is Incoterms 2020, which entered into force on 1 January 2020.

There is no “Incoterms 2025” or “2026”: if a supplier writes that in a quote, it is a mistake, and the contract should say “Incoterms 2020”.

Older versions, such as 2010, can still be used, but only if the year is stated expressly in the contract.

A rule only works once it is written into the contract: the three letters, a precise place and the version, for example “FCA Valencia, terminal X, Incoterms® 2020”.

Without the place, half of the rules lose their meaning: it is unclear where risk passes and up to which point the seller pays for carriage.

The key point for a finance team: Incoterms answer only three questions: what the seller and the buyer must do, where risk passes and who bears which costs.

According to the ICC introduction to Incoterms 2020, the rules are not in themselves a contract of sale and do not deal with the price, the time, place, method or currency of payment, the transfer of ownership, remedies for breach, the effect of sanctions, tariffs and import or export bans, or the applicable law.

All of that goes into the supply contract itself, and that is a lawyer’s job.

This explains a common confusion in search queries such as “EXW transfer of title”. Incoterms do not decide it.

Ownership passes under the contract and the applicable law; the risk of loss passes under the chosen rule.

If no rule is chosen and the contract is governed by the 1980 UN Convention on Contracts for the International Sale of Goods, to which Spain acceded (in force since 1 August 1991), risk passes under its Articles 66–69.

Incoterms 2020 chart: the 11 delivery terms

Seven rules apply to any mode of transport: EXW, FCA, CPT, CIP, DAP, DPU and DDP; four apply only to sea and inland waterway transport: FAS, FOB, CFR and CIF.

In the 2020 version DPU replaced DAT.

The groups are easy to read by first letter: E — goods are collected at the seller’s premises; F — the buyer pays for main carriage; C — the seller pays for it, but risk is already with the buyer; D — the seller delivers and carries the risk to destination.

“Not required” means the rule does not oblige either party to insure the cargo. The party carrying the risk in transit should insure it; more on that below.

In the 2020 version all costs under each rule are listed in articles A9 and B9 of the rule: compare them line by line with the commercial offer.

How to choose a rule: EXW, FCA, FOB, CIF, DAP or DDP

The further down the chart, from E to D, the more work and risk sit with the seller and the higher its price.

The choice is not a legal formality but an allocation of money and risk: who pays for carriage, who waits for the goods and who is liable if the cargo is lost.

EXW or FCA

EXW is the lowest price and the heaviest load on the buyer: it collects the goods at the seller’s site, loads them and handles export clearance in the seller’s country.

For imports from outside the EU this is awkward: a foreign buyer struggles to act as exporter in another country.

For a Spanish exporter, EXW is risky for another reason: the export VAT exemption depends on documents handled by the buyer (see the VAT section).

That is why FCA usually works better in international deals: the seller clears export, and risk passes on handover to the buyer’s carrier.

FOB or FCA, CIF or CIP

FOB and CIF were designed for bulk cargo loaded onto a ship in port.

Where containerised goods are handed to a carrier at a terminal or warehouse before loading onto the ship, the ICC advises the seller to sell on FCA rather than FOB terms: otherwise the seller carries the risk while the container sits at a terminal it no longer controls.

By the same logic, CPT and CIP suit containers better than CFR and CIF.

Since 2020, FCA allows the parties to agree that the buyer will instruct its carrier to issue the seller an on-board bill of lading, which is needed when payment is by letter of credit.

The difference between CIF and CIP is insurance.

Under CIF the seller by default insures the cargo on the minimum Institute Cargo Clauses (C) cover, named perils only; under CIP, since 2020, on cover (A), close to “all risks”; the sum insured is at least 110% of the contract price.

For expensive equipment, cover (C) is too little: a CIF buyer should negotiate cover (A) or insure the cargo itself.

DAP or DDP

Under DAP and DDP the seller carries the goods to destination and bears the risk in transit.

The difference is import: under DAP the buyer clears and pays for import, under DDP the seller does, including duties and taxes in the country of import.

For a supplier outside the EU, DDP into Spain means customs and tax obligations in Spain, and for the Spanish buyer it means less control over how its goods are declared. More in the next two sections.

Importing into Spain: customs value, duty and the DUA

Goods from outside the EU are released for free circulation on a customs declaration, called the DUA (Documento Único Administrativo) in Spain.

Duty and VAT are calculated on the customs value, and Incoterms affect it directly: the rule determines which costs are already in the price and which have to be added or deducted.

Under the Union Customs Code (Regulation 952/2013), the primary basis for customs value is the transaction value (Article 70).

Added to it, if not already in the price, are the costs of transport and insurance and loading and handling up to the place where the goods enter the EU customs territory (Article 71(1)(e)).

Excluded are transport after entry into the EU, import duties and taxes in the EU, and interest under a written financing arrangement (Article 72).

In practice:

• EXW, FCA, FOB. Everything the buyer paid up to the EU border is added to the price: pre-carriage to port, freight, insurance. The customs value is higher than the contract price.
• CFR, CIF, CPT, CIP to an EU port. The price is already close to customs value: transport and insurance to the place of entry are in it.
• DAP, DPU, DDP to a warehouse in Spain. Transport after entry is deducted from the price, and under DDP also duty and VAT if included. To deduct them, the costs must be shown separately on the invoice; without a breakdown, customs may calculate duty on the full price.

Who pays the duty is not decided by the contract alone.

A customs debt on release for free circulation arises when the declaration is accepted; the declarant is the debtor and, under indirect representation, so is the person on whose behalf the declaration is made (Article 77 UCC).

As a rule the declarant must be established in the EU (Article 170), a customs representative may act directly or indirectly (Article 18), and the company needs an EORI number (Article 9).

Duty is paid within the period set by customs, no more than 10 days after notification of the debt (Article 108); against a guarantee, payment can be deferred for 30 days (Articles 110–111). The duty rate depends on the product code in TARIC, not on Incoterms.

VAT on imports and exports

Import VAT in Spain

Import VAT becomes chargeable at the same moment as customs duties, even if the duty rate is zero (Article 77 of the Spanish VAT Act, LIVA).

The base is the customs value plus duties and charges other than VAT itself, plus ancillary costs (commissions, packing, transport and insurance) up to the first place of destination in the EU shown on the transport document (Article 83 LIVA).

The standard rate is 21% (Article 90 LIVA). So VAT is charged on the duty as well, and on delivery from the port to your warehouse if the warehouse is the stated destination.

Import VAT is payable by the importer, and the law treats the consignee as importer: the buyer, the owner or a consignee acting in its own name (Article 86 LIVA). This matters for DDP; see below.

For a Spanish company, import VAT is not a cost but cash in circulation: it is paid at customs and deducted in the Form 303 return. How long it is tied up depends on the regime.

An importer with a monthly VAT period may, instead of paying VAT at customs, include it in the return for the month in which it receives the customs assessment, where it is deducted at once (Article 74.1 of the VAT Regulation).

The option is chosen by a census filing in November for the following year.

A monthly period applies to companies whose prior-year turnover exceeded €6,010,121.04, to members of the monthly refund register (REDEME) and to VAT groups (Article 71.3 of the Regulation).

A company with a quarterly period pays VAT at customs and waits for the deduction until its next return: that is the cash gap the example below shows.

DDP: who pays the VAT

The search question “does DDP include VAT” has a short answer: under DDP the seller pays import duties and taxes, including VAT, unless the contract says otherwise.

For Spain, that is not the whole story.

A supplier outside the EU that wants to act as importer needs an EORI number, a representative in the EU and, to recover the VAT it paid, a Spanish VAT registration or a refund procedure.

The onward sale of the goods in Spain by a non-established seller to a Spanish business falls under the reverse charge, with the buyer accounting for VAT (Article 84.One.2 LIVA), and non-established businesses recover VAT through a special procedure (Articles 119 and 119 bis LIVA).

That is why suppliers often offer “DDP, VAT unpaid”: duty included, VAT paid by the buyer as importer.

Such a change to the rule must be spelled out in the contract, and the structure agreed with a tax adviser before the deal.

Exports and EU supplies

A supply of goods leaving the EU is exempt from VAT (Article 21 LIVA) if exit is evidenced: the seller keeps invoices, contracts, transport documents and proof of exit for the whole limitation period.

If the non-resident buyer exports the goods itself, they must be taken to customs within one month, the export declaration must name the Spanish supplier with its tax number and the invoice reference, and the buyer must send the supplier a copy endorsed by the customs office of exit (Article 9 of the VAT Regulation).

Under EXW the buyer controls that chain: if it does not send the document, the Spanish seller risks a 21% VAT assessment on the price.

A supply to another EU country is exempt if the buyer has a VAT number from another EU member state, the seller reports the transaction in its Form 349 recapitulative statement and can prove transport under Article 45a of EU Regulation 282/2011 (Article 25 LIVA, Article 13 of the VAT Regulation).

When the buyer arranges transport (EXW, FCA), the evidence is also in its hands, so the contract should require it.

The financial side: revenue, insurance, cash gap and margin

When to recognise revenue

Under Spanish revenue recognition rules (ICAC resolution of 10 February 2021, Article 10), revenue from a sale of goods is recognised when the customer obtains control; the indicators are that significant risks and rewards have passed to the customer, it has physical possession, it has accepted the goods, the seller has a right to payment and the customer has legal title.

Incoterms set the first indicator, the moment risk passes, so they directly decide in which month and year the revenue falls.

A hypothetical example: a Spanish SL sells a €300,000 shipment to a customer outside the EU at a 25% margin.

The goods leave the warehouse on 20 December and reach the customer on 28 January. Under FCA or FOB, risk passed in December: revenue and €75,000 of profit fall in this year.

Under DAP or DDP, risk stays with the seller until arrival: revenue moves to next year, and with it corporate income tax at the standard 25% rate, €18,750.

This matters for annual accounts, bank covenants and management reporting: shipments in transit at period end belong in the seller’s inventory, not in revenue.

How revenue differs from profit and EBITDA is covered in Revenue, income, profit and EBITDA.

Insurance

Whoever carries the risk insures.

Under EXW, FCA, FOB, CFR and CPT the risk in transit is with the buyer, and the rule does not oblige the seller to insure, so the buyer needs its own policy or an open cargo policy.

Under CIF and CIP the seller arranges insurance but the buyer is the beneficiary, and CIF cover is minimal.

Under the D rules, risk in transit is with the seller, and insurance is built into its price.

A sum insured of 110% of value covers not only the goods but part of the expected profit.

Worked example: EXW vs DDP for a €400,000 shipment

A Spanish SL buys a shipment of equipment from a manufacturer outside the EU for delivery to its warehouse near Valencia.

The supplier quotes two prices: €400,000 EXW and €452,000 DDP. All rates are hypothetical, for illustration; real ones come from the forwarder, the insurer and TARIC. The EXW calculation:

On paper EXW is €9,989 (2.3%) cheaper than DDP. But under EXW the buyer pays earlier and waits longer. Payment terms in both cases: 30% deposit on order.

Under EXW the remaining 70% and transport are paid on shipment (day 30), duty and port charges on release (day 67); under DDP the 70% is paid on delivery to the warehouse (day 70).

The company collects from its own customers on day 172. With financing at 6% a year:

What the calculation shows:

• The DDP premium is the price of risk and cash. Including financing, EXW is €7,602 cheaper, but only if the buyer can manage transport, insurance and customs and has €535,000 available at peak. If it has to borrow at a higher rate, the gap narrows.
• Deferred import VAT removes €92,633 from the peak. For a company on a monthly VAT period, import VAT barely touches cash; on a quarterly period it is a one-to-two-month cash gap worth a fifth of the shipment. How to measure and close it is covered in Cash gap.
• Without a breakdown on the DDP invoice, duty is overpaid. If customs value is taken as the full €452,000 price without deducting post-entry delivery and duty, duty comes to €18,080, €1,345 more. Under DDP that is the seller’s cost, but it is priced in to the buyer.
• Calculate margin on landed cost, not on the supplier’s price. Comparing €400,000 EXW with €452,000 DDP head-on is a €52,000 error; the right comparison is €453,537 against €461,139.

For regular purchasing, this calculation belongs in a financial model: the Incoterms rule, payment terms and the VAT schedule become inputs, and you can see how much working capital a year of purchases needs.

What to check in the contract: common mistakes

1. No place or year. “FOB China” or “DAP Spain” is not a delivery term. You need a precise place and “Incoterms 2020”.
2. FOB and CIF for containers. Risk is left hanging at the terminal; use FCA, CPT or CIP for containers.
3. EXW for exports from Spain. The seller loses control of the export documents and, with them, of the VAT exemption.
4. DDP without a VAT check. Decide before signing who the importer is, who pays and who deducts the VAT, and how the supplier will be registered in Spain.
5. Default insurance. CIF cover (C) is not enough for valuable cargo; under the F and C rules the risk in transit is the buyer’s, so check your own policy.
6. Incoterms instead of a contract. Ownership, payment, penalties, acceptance and force majeure are written separately, and that is a lawyer’s job.
7. Price without landed cost. Offers on different rules can only be compared once brought to the same point: your warehouse in Spain, with duty, VAT and the cost of cash.
8. Revenue on the shipping date. Under DAP and DDP, revenue arises on delivery, not on shipment; at year end this shifts profit and tax.

When buying a business that depends on imports or exports, the same questions (which rules are in the contracts, where the risk on goods in transit sits, how revenue is booked at year end) are part of financial due diligence; see Due diligence in Spain.

Frequently asked questions

What are Incoterms 2020 in simple terms?

They are 11 standard delivery terms of the International Chamber of Commerce. Three letters in the contract say where the seller hands over the goods, from what moment the buyer bears the risk of loss and who pays for transport, insurance and customs. Incoterms do not decide price, payment or ownership.

Is there an Incoterms 2025 or 2026?

No. The current version is Incoterms 2020, in force since 1 January 2020. The contract should say “Incoterms 2020”; an older version can be used only if its year is stated expressly.

What is the difference between EXW and DDP?

They are the two ends of the chart. Under EXW the buyer collects the goods at the seller’s premises and pays for transport, export and import itself. Under DDP the seller delivers to destination, clears import and pays the duties and taxes of the importing country; the risk in transit is the seller’s.

Does DDP include VAT?

Under the DDP rule, the seller pays import taxes, including VAT, unless the contract says otherwise. In Spain this requires a non-EU supplier to register and appoint a representative, so the parties often agree “DDP, VAT unpaid”: the buyer pays the VAT as importer and deducts it.

What is the difference between DAP and DDP?

In both rules the seller carries the goods to the named destination and bears the risk in transit. Under DAP the buyer clears import and pays duty and VAT; under DDP the seller does. For the Spanish buyer, DAP keeps control of the import declaration and the VAT deduction in its own hands.

Do Incoterms transfer ownership?

No. Incoterms govern the transfer of risk, not of ownership. When ownership passes is set in the supply contract under the applicable law, for example with a retention of title clause until payment.

How do Incoterms affect customs value?

In the EU, customs value is the transaction price plus transport, insurance and loading up to the EU border, excluding transport after entry and duties. Under EXW and FOB these costs are added to the price; under DAP and DDP they are deducted from it if shown separately.

Key points on Incoterms 2020 for a company in Spain

• Incoterms 2020 are 11 ICC rules; they set the place of delivery, the transfer of risk and costs, but not price, payment or ownership.
• For containers, FCA, CPT and CIP work better than FOB and CIF; CIF insurance is minimal, CIP requires cover (A).
• The rule changes customs value: under EXW and FOB costs to the EU border are added to the price, under DAP and DDP post-entry transport and duties are deducted.
• Import VAT is 21% of customs value plus duty and delivery to the first destination; with a monthly VAT period it need not be paid at customs.
• Revenue is recognised when control passes: under DAP and DDP it arrives on delivery, not on shipment.
• In the worked example DDP costs €9,989 more than EXW on price and €7,602 more including financing, but removes the risk in transit and up to €92,633 of VAT from the buyer’s peak cash need.

Sources

• ICC: Incoterms® 2020, Incoterms® rules, Introduction to Incoterms® 2020, read on 8 November 2026.
• Regulation (EU) 952/2013, Union Customs Code, Articles 9, 18, 70–72, 77, 108–111, 170: EUR-Lex.
• Ley 37/1992 del IVA, Articles 21, 25, 77, 83, 84, 86, 90, 119, 167: BOE; Real Decreto 1624/1992, VAT Regulation, Articles 9, 13, 71, 74: BOE.
• ICAC resolution of 10 February 2021 on revenue recognition, Article 10: BOE; Ley 27/2014 on corporate income tax, Article 29: BOE.
• UN Convention on Contracts for the International Sale of Goods (1980), status: UNCITRAL.
• Duty rates: TARIC (European Commission). The worked example is hypothetical; freight, insurance and duty rates were chosen for illustration.