The Incoterms®, a contraction of the English terms “International Commercial Terms”, constitute a codified set of standard contractual provisions relating to the transport of goods.
Defined by the International Chamber of Commerce (ICC), Incoterms® are revised every 10 years in order to reflect the evolution of international trade practices.
These rules of use define in a codified way the conditions of delivery of the goods within the framework of a sales contract.
More precisely, the Incoterms® make it possible to determine the mutual obligations of the seller and the buyer, the distribution of transport costs, as well as the place of delivery which represents the point of transfer of risks from the seller to the buyer.
Assessed at the first point of entry into the customs territory of the Union (TDU), the customs value is a free-at-border value (of the Union).
Pursuant to Article 71§1 e) of the Union Customs Code (UCC), transport and insurance costs, as well as loading and handling costs associated with the transport of imported goods, are included elements of the price to be added to the customs value.
Thus, the transport costs borne by the buyer for the transport of the goods to the place of introduction into the Union, which have not already been included in the price paid or payable, are to be added to the customs value.
Special case of insurance: depending on the Incoterm® chosen, insurance relating to the transport of goods is not always included in the invoiced price. In this case, only the insurance relating to the main transport must be added to the price paid (art 71 of the UCC). On the other hand, if the seller includes insurance relating to intra-
Community transport in the price invoiced for the goods, these insurance costs cannot be deducted from the price invoiced (because not included in article 72 a) of the UCC).
The designated place, point of transfer of costs Made up of an acronym of 3 letters, Incoterms® are inseparable from a place (address, city, etc.) which generally designates the place where the goods are deemed to have been delivered by the seller, that is to say -stating the point where the risks are transferred to the buyer (Incoterms® E and F).
In some cases, the place following the Incoterm® designates the place of destination of the goods, up to which the seller must organize transport, and therefore the point of distribution of costs between the seller and the buyer (Incoterms® C and D).
In terms of valuation, the designated place is essential insofar as it makes it possible to identify the cost allocation point from which the transport costs are borne by the buyer, and therefore to be taken into account in the framework for determining customs value. In principle, unless the contract provides otherwise, the seller bears the costs of transport to the point of delivery, while the buyer bears the costs from the time they have been delivered to him.
Applicable to all modes of transport, the 7 so-called “multimodal” Incoterms® can also be used when the contract covers several modes of transport, which is particularly the case when goods are transported by containers
EXW – Ex Works (at the factory)
Rule which imposes the fewest obligations on the seller, whose sole responsibility consists in packing the goods and making them available to the buyer in his own premises. By virtue of this rule, the buyer thus bears all the costs and risks inherent in the loading and transport of the goods until their arrival at destination.
As the customs export formalities are the responsibility of the buyer, the latter may encounter difficulties in the seller's country to obtain proof of exit of the goods.
This is why the ICC recommends reserving this rule for national or regional trade not involving the export of goods and to favor the FCA rule under which customs clearance formalities and costs are the responsibility of the seller.
FCA - Free Carrier
Two options are possible for this Incoterms® depending on the place of delivery:
• at the seller's premises, who loads the goods onto the buyer's means of transport (FCA “seller's premises”);
• in any other place: the seller organizes the delivery of the goods to the place of embarkation where they are made available to the carrier ready to be unloaded (FCA “other agreed place”).
Under this rule, the buyer bears most of the transport, but allows him to be exempted from formalities in the exporting country, which are the responsibility of the seller.
CPT - Carriage Paid To (carriage paid to)
The seller bears the cost of transport to the place of destination but is no longer responsible for the goods, which travel at the risk of the buyer. Indeed, the transfer of risk occurs at the time of delivery, as soon as the goods are handed over to the carrier, while the transfer of costs to the buyer takes place when the goods arrive at their destination.
CIP - Carriage and Insurance Paid to (carriage paid insurance included up to)
The seller bears the costs of transport to the place of destination indicated by the Incoterms®.
A frequently used rule, especially for containerized transport, the CIP makes it possible to control the delivery of goods to a given point. As with the CPT, the costs of unloading at the agreed place of destination are only payable by the seller if the contract of carriage so provides.
On the other hand, unlike the CPT, the seller is required to take out insurance covering the risks associated with the transport of the goods to the place of destination.
With regard to Incoterms® D rules, delivery being made in the country of destination, risk is transferred there.
Under these so-called "arrival sale" Incoterms®, the goods travel at the risk of the seller who assumes all the risks and costs associated with the transport of the goods to the place of destination.
DAP - Delivered At Place (delivered to the place of destination)
This Incoterms® means that the goods are considered delivered when they are made available to the buyer at destination on the arriving means of transport, without being unloaded. Under this rule, the seller takes over the transport of the goods to the agreed point of delivery in the country of destination.
Thus, unless the contract of carriage provides otherwise, it is the buyer who is responsible for customs formalities, payment of duties and taxes due due to the importation and unloading of goods at destination.
DPU - Delivered at Place Unloaded (delivered to the place of destination and unloaded)
The DPU replaces the DAT 2010 and becomes a new rule of Incoterms® 2020.
This rule means that the goods are considered delivered, once unloaded from the means of transport and made available to the buyer at the agreed place of destination (terminal or other).
In this Incoterms® rule, delivery and arrival at destination take place at the same point. The seller therefore assumes all the risks and costs associated with the transport of the goods and their unloading to the designated place.
The DPU is the only Incoterms® rule which obliges the seller to unload the goods at destination.
DDP - Delivered Duty Paid (delivered duty paid)
Incoterms® rule which confers the maximum level of obligations on the seller, who assumes all risks and costs, including customs clearance, until the agreed place.
Thus, under this Incoterms®, the goods are delivered customs cleared, ready to be unloaded at the place of destination.
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