EXW, FCA and DAP differ in which party to the sale contract is responsible for transport and for export and import clearance: under EXW the buyer clears the goods for export and import, under FCA the seller clears export, and under DAP the seller delivers to the destination but the buyer handles import clearance (duty and VAT). An Incoterms rule does not change customs law or replace the declaration.
Contents
In brief — what you will learn
- ✓ Who clears goods for export and import under EXW, FCA and DAP
- ✓ What Incoterms do not regulate, and why they do not replace customs law
- ✓ How the rule affects customs value and which documents must match
What Incoterms are and what they do not regulate
Incoterms 2020 is a set of eleven three-letter trade rules published by the International Chamber of Commerce (ICC). Between the parties to a sale contract they set when delivery takes place, who bears cost and risk, and who deals with export and import clearance. They do not govern when title to the goods passes – that must be dealt with in the contract (trade.gov).
Nor do Incoterms change customs law. Towards the authorities the declaration is made by the declarant or their representative, and liability follows from the legislation – see the differences between direct and indirect representation. For a wider overview of all the rules, read Incoterms Rules – International Sales Terms.
EXW, FCA and DAP compared
| Rule | Delivery and transfer of risk | Export clearance | Import clearance |
|---|---|---|---|
| EXW (Ex Works) | Goods placed at the buyer's disposal at the seller's premises, not loaded onto the buyer's vehicle | Buyer | Buyer |
| FCA (Free Carrier) | Goods handed to the carrier or person named by the buyer at the agreed place | Seller | Buyer |
| DAP (Delivered at Place) | Goods ready for unloading at the agreed destination (the seller does not unload them) | Seller | Buyer (duty and VAT) |
EXW: the buyer is responsible for export
Under EXW the seller only makes the goods available at its premises, and the buyer is responsible for export formalities. According to the ICC this can cause problems on both sides – for instance, the seller can end up as the exporter on the declaration if the buyer is not established in the seller's country – so the ICC encourages traders to consider FCA instead of EXW where goods cross a border (ICC Academy).
FCA: the seller clears export
Under FCA the seller hands the goods to the buyer's carrier and, in every version of the rule, completes the export formalities itself; risk passes to the buyer on handover (ICC Academy). Import clearance is still the buyer's job.
DAP: delivery to the destination without import clearance
Under DAP the seller arranges transport and bears risk up to the agreed destination, but import clearance, duty and VAT are the buyer's. This is a common source of misunderstanding – if the seller is also to cover import charges, you need DDP. We compare the two in DDP or DAP for Exports to the UK.
Incoterms in UK–EU trade after Brexit
The Incoterms rules have not changed, but since Brexit every movement between the UK and the EU needs two separate declarations – export and import – in two customs systems. In practice, the contract should name not only the rule and place (for example "FCA Poznań, Incoterms 2020") but also the party responsible for each clearance – see Exporting to the UK – Who Is Really Responsible for Clearance and Documents.
When importing into Great Britain, the buyer (or their representative) needs a GB EORI number and a declaration in CDS – see how to get an EORI number in the UK. When importing into the EU, the import declaration is filed in the member state and import VAT is settled under its rules.
Incoterms and customs value
The trade rule affects how much of the transport cost is already in the price. In the EU, the price actually paid is supplemented by transport and insurance costs and loading and handling charges up to the place where the goods enter the Union customs territory (Article 71(1)(e) UCC). In the UK, delivery costs up to the point where the goods are introduced at the UK border are included in the customs value (GOV.UK). That is why, under DAP, the invoice should separate the cost of carriage after the border. More in Customs Value of Goods – How to Calculate It and Customs Value and DDP in the UK.
Documents and a checklist before the first delivery
- An Incoterms 2020 rule with a named place of delivery, written in the contract and on the invoice.
- A commercial invoice with the transaction value and a goods specification with the CN/HS code.
- A CMR consignment note, AWB or bill of lading – consistent with the invoice on goods and quantities.
- The EORI numbers of the parties filing declarations and, if you claim a preference, proof of origin.
- Proof of handover or delivery, depending on the rule.
Inconsistencies between the invoice and the transport document are among the most common reasons clearance is held up, so check the full set before loading. In the EU, documents and information relating to customs formalities must be kept for at least 3 years (Article 51 of the Union Customs Code); in the UK, documents for goods declared to HMRC are kept for 4 years and VAT records for at least 6 years (GOV.UK).
Summary
Choosing between EXW, FCA and DAP decides how costs, risk and clearances are split between the parties to the contract, but it does not remove obligations towards the authorities. For cross-border movements FCA is usually the safer choice than EXW. If you are not sure which rule to put in a contract with a UK or EU counterparty, get in touch – we will check who should file which declaration. See also our services.
Legal basis and sources
Frequently asked questions
What is the difference between EXW and FCA for export clearance?
Under EXW export formalities fall on the buyer, which can be awkward when the buyer is outside the seller's country. Under FCA the seller always clears the goods for export, and risk passes to the buyer when the goods are handed to the carrier. That is why the ICC encourages traders to consider FCA instead of EXW where goods cross a border.
Who is responsible for import clearance under DAP?
The buyer. Under DAP the seller delivers the goods to the agreed destination and bears cost and risk up to that point, but does not unload them or clear them for import. Duty, VAT and the import declaration are the buyer's, so the contract should say who instructs the customs agent.
What is the difference between DAP and DDP?
Under DDP the seller clears the goods for import and pays import charges; under DAP the buyer does. In trade with the UK this means that under DDP the seller must arrange the UK import declaration, so it is an organisational decision, not only a pricing one.
Which documents are needed for export clearance under FCA?
Usually a commercial invoice with the transaction value, a goods specification with the CN/HS code, a transport document (CMR, AWB or bill of lading) and the exporter's EORI number. Proof of origin is only needed if the buyer wants to claim a customs preference.
Did Brexit change the Incoterms rules?
No, the rules are the same. What changed is that a movement between the UK and the EU needs two declarations – export and import – in two customs systems, so the contract must make clear which party is responsible for each.
Does the Incoterms rule affect customs value?
Indirectly, yes. In the EU, transport and insurance costs up to the point where the goods enter the Union customs territory are added to the price (Article 71(1)(e) UCC), and in the UK delivery costs up to the UK border. How much of that is already in the price depends on the rule, so the invoice should itemise these costs.
Related guides
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