Incoterms are international standardized agreements between seller and buyer regarding goods transport, establishing who bears responsibility for carriage, costs and risk during shipment. Incorporating a specific Incoterms® rule in general terms and conditions prevents misunderstandings about delivery and transport obligations between Dutch and international trading partners. Our Dutch attorneys in Amsterdam shall discuss the most relevant aspects of the Incoterms, and how this is connected to Dutch law.
Entrepreneurs engaged in international trade make arrangements about product transport to their clients or suppliers. The International Chamber of Commerce (ICC) has standardized these delivery conditions in Incoterms®. By incorporating a specific Incoterms® rule in your general terms and conditions, you create legal clarity about transport obligations. The current version Incoterms® 2020 contains 11 different rules, each establishing a different division of responsibilities according to Article 6:217 of the Dutch Civil Code (BW).
Why Include Incoterms® in General Terms and Conditions Under Dutch Law?
Contractually embedding Incoterms® creates binding agreements about transport responsibilities that prevent disputes arising over costs and risks during international carriage.
Incorporating Incoterms® in general terms and conditions provides legal protection for both parties according to Article 6:231 BW. Therefore, these terms form an essential component of international sales contracts. Entrepreneurs use general terms and conditions to legally anchor standard business processes. For international trade, this means you need not renegotiate Incoterms® with each transaction.
The advantages of this contractual embedding are concretely measurable. In 75% of international trade disputes, ambiguity about transport responsibilities plays a role. Dutch exporters who structurally incorporate Incoterms® in general terms and conditions report 60% fewer discussions about transport costs with foreign customers. Moreover, this reduces administrative burdens because delivery arrangements are standardized.
General terms and conditions with Incoterms® regulate who arranges transport to which location, when risk of loss or damage transfers from seller to buyer, who arranges transport insurance and who bears responsibility for import and export documents. However, Incoterms® explicitly do not regulate when ownership transfers, price agreements, payment terms or warranties in case of breach.
Which Incoterms® Rule Fits Your General Terms and Conditions in the Netherlands?
Select the Incoterms® rule that aligns with your business model and the service you wish to provide. Dutch law firms such as Adriaanse van der Weel advise entrepreneurs about the most suitable delivery terms for their specific situation. Namely, the choice between minimal obligations (EXW) and maximum service (DDP) determines your competitive position.
Minimal Obligations: Ex Works (EXW)
Under Ex Works (EXW), you as seller make goods available at your business premises according to the agreed location. The buyer arranges complete transport from that moment. This means minimal obligations for you as Dutch exporter. However, EXW does not suit export outside the EU because the foreign buyer must then engage a Dutch party for export declaration.
Moreover, EXW often creates problems with VAT zero-rating. You as seller must prove that goods leave the EU to issue an invoice with 0% VAT. Under EXW, the buyer handles export declaration, making you dependent on the buyer for Confirmation of Exit evidence. Nonetheless, Dutch entrepreneurs sometimes choose EXW for trade within the EU with established relationships.
Balanced Distribution: Free Carrier (FCA) Under Dutch Law
Free Carrier (FCA) offers a more balanced distribution of responsibilities. You as seller handle export declaration and load goods onto the buyer’s means of transport. FCA exists in two variants covering different situations.
FCA-A suits full containers (Full Container Load). You load goods at your business premises into the buyer’s arranged transport. From that moment, costs and risk transfer to the buyer. Dutch exporters use FCA-A in 65% of container export within Europe.
FCA-B is suitable for consolidation shipments where multiple small loads combine in one container (Less than Container Load). You transport goods to a consolidation warehouse where the buyer becomes responsible for further processing. This variant occurs in 40% of export to Asia from Dutch ports.
Maximum Service: Delivered Duty Paid (DDP)
Delivered Duty Paid (DDP) means you bear all transport responsibilities until the buyer’s premises. You arrange both export and import, pay all duties and deliver goods at the final destination. This gives your client maximum service and you a competitive advantage.
However, DDP brings complexity. You must comply with local legislation in the destination country according to local import rules. In the United States, for example, you must register with the American tax authorities for import VAT. Moreover, some countries require a local establishment for importers. Nonetheless, Dutch exporters increasingly use DDP to distinguish themselves from competitors who only offer EXW or FCA.
A Dutch machinery parts company from Rotterdam supplied a Moldovan customer according to DDP Strada Industriala 203, Chișinău, Moldova, Incoterms® 2020. The Dutch seller arranged complete transport from Rotterdam, paid € 3,200 import duties and ensured local customs clearance within 14 days. Consequently, the company won the contract over three competitors who only offered FCA.
How Do You Formulate Incoterms® Legally Correctly in General Terms and Conditions in the Netherlands?
Legally binding Incoterms® require precise location specification because the place of delivery determines when risk and costs transfer from seller to buyer according to Article 6:2 BW.
The formulation in general terms and conditions must satisfy three essential elements. First, you mention the chosen Incoterms® rule with the official abbreviation (for example FCA, CPT or DDP). Next, you specify the exact location where transfer occurs. Finally, you explicitly mention the version ‘Incoterms® 2020’ to prevent misunderstandings.
Correct Formulation Per Incoterms® Type
For transport by all means of transport, you use formulations such as:
- “EXW Factory Street 5, Utrecht, Netherlands, Incoterms® 2020”
- “FCA (A) Industrial Road 12, Eindhoven, Netherlands, Incoterms® 2020”
- “CPT 319 Company Street, New York City (NY), USA, Incoterms® 2020”
- “DAP Industriestraße 45, Munich, Germany, Incoterms® 2020”
For transport exclusively by sea and inland waterway, you specify:
- “FOB Rotterdam, Netherlands, Incoterms® 2020”
- “CFR Singapore, Tanjong Pagar Terminal, Incoterms® 2020”
- “CIF Hamburg, Germany, Incoterms® 2020”
Additionally, you can establish supplementary agreements in general terms and conditions. For example, with DDP: “DDP (VAT and other local taxes excluded)” if you pay import duties but not local taxes. However, some countries require importers to pay all taxes, making this clause not always legally enforceable.
What Transport Insurance Belongs with Which Incoterm® in the Netherlands?
The insurance obligation varies per Incoterms® rule and significantly influences your liability. Under CIP (Carriage and Insurance Paid To) and CIF (Cost Insurance and Freight), the seller must obligatorily arrange cargo insurance for the buyer. Since Incoterms® 2020, CIP requires insurance coverage according to Institute Cargo Clauses (A), providing all-risk coverage.
Under CIF, conversely, minimal coverage according to Institute Cargo Clauses (C) suffices. These clauses cover only fire, explosion, stranding, sinking, capsizing and collision. Damage from war, strikes or riots requires supplementary insurance. Furthermore, Institute Cargo Clauses do not cover delay or damage from inherent defect in the goods.
Under other Incoterms such as EXW, FCA, CPT, DAP and DDP, insurance is not mandatory. However, both parties can arrange cargo insurance for the portion of transport over which they bear transport risk. Dutch exporters in 85% of cases still arrange insurance under CPT and DAP to limit liability risks.
Combining Incoterms® with VAT Obligations and Customs Formalities Under Dutch Law
The chosen Incoterm® determines who handles export declaration, which directly affects whether you as seller may apply the VAT zero-rate according to the Dutch Tax Authority and Article 9 Turnover Tax Act.
For export to countries outside the EU, you may issue an invoice with 0% VAT if you prove goods leave the EU. However, under EXW, the buyer handles export declaration, meaning you do not possess this evidence yourself. The Dutch Tax Authority then views the sale as domestic supply and you must pay 21% VAT.
Therefore, lawyers advise agreeing on at least FCA for export outside the EU. Under FCA, you as seller handle export declaration and automatically receive Confirmation of Exit evidence. This document proves export and justifies the VAT zero-rate. Dutch entrepreneurs who switched from EXW to FCA reported 90% fewer problems with VAT inspections.
Export Documents and Import Formalities
The seller handles export declaration at Dutch Customs under FCA, FAS, FOB, CPT, CIP, CFR, CIF, DAP, DPU and DDP. The seller must also request export licenses if required for specific goods. Under DDP, responsibility extends further: you also arrange import in the destination country, pay import duties averaging from € 250 and ensure import documents.
The buyer, conversely, arranges import in the destination country under all Incoterms except DDP. This means paying import taxes, requesting import licenses and following local customs procedures. Dutch importers pay an average of € 480 per shipment in import duties and administrative costs for import from Asia.
Incoterms® and International Payment Methods in General Terms and Conditions in the Netherlands
Some Incoterms® combine poorly with specific payment methods such as Letter of Credit (L/C) or documentary collection. Under these payment methods, the buyer pays only after the seller presents specific trade documents to their bank. A crucial document is the transport document, for example a Bill of Lading (B/L) for sea transport.
Under EXW, FAS and FOB, the buyer arranges transport and therefore possesses the transport document. As seller, you cannot present this document to your bank, making payment via L/C risky. However, Incoterms® 2020 offers a solution under FCA: you can agree that the buyer’s carrier issues an on-board B/L to you. Record this agreement explicitly in your general terms and conditions.
Under CPT, CIP, CFR, CIF, DAP, DPU and DDP, the seller arranges transport and therefore possesses transport documents. These Incoterms® combine well with L/C and documentary collection. Dutch exporters therefore use CPT or CIP in 70% of transactions with L/C payment.
Practical Pitfalls with Incoterms® in General Terms and Conditions in the Netherlands
Chinese forwarders sometimes charge unexpected costs for Less than Container Load (LCL) shipments: the China Import Service Fee (CISF). A Chinese supplier receives compensation from a Chinese forwarder for awarding the transport. Ultimately, the Dutch importer pays these costs. Prevent this by agreeing FCA or FOB in general terms and conditions with designation of a Dutch forwarder who arranges transport.
An importing company from the Netherlands received an unexpected invoice of € 850 CISF for an LCL shipment from Shanghai under CFR terms. After legal advice, the company changed its general terms and conditions to FCA Shanghai, Yangshan Container Terminal, Incoterms® 2020 with a Dutch forwarder they contracted themselves. Consequently, they avoided € 3,400 in unexpected costs over six months.
Reference in Contracts and Quotations
General terms and conditions with Incoterms® become legally binding once both parties accept them according to Article 6:231 BW. Therefore, refer explicitly to your general terms and conditions in quotations and confirm in writing that the counterparty has received them. In disputes, you thereby prove that Incoterms® were contractually agreed.
Moreover, you must use Incoterms® consistently in all documents. Mention the same Incoterms® rule in your quotation, order confirmation, general terms and conditions and invoice. Contradictory references lead to legal discussions about which delivery terms apply. Courts then apply Article 6:230 BW and assess which terms applied at acceptance.
Difference Between Incoterms® 2010 and Incoterms® 2020 in Terms and Conditions in the Netherlands
The ICC revises Incoterms® every ten years. The 2020 version brought important changes compared to 2010. DAT (Delivered at Terminal) was replaced by DPU (Delivered at Place Unloaded), whereby delivery is no longer limited to terminals but can also concern other locations. This change provides more flexibility in general terms and conditions.
Additionally, Incoterms® 2020 increased the insurance obligation under CIP from Institute Cargo Clauses (C) to (A). This means sellers must insure more extensive all-risk coverage. Dutch exporters reported 15% higher insurance premiums after this change. However, this reduces disputes about coverage in case of damage.
Finally, Incoterms® 2020 introduces explicit rules about own transport. Under FCA, buyer and seller can agree that the seller transports goods with own means to the agreed location. This option is now formally stated in the ICC publication, creating legal clarity.
Legal Advice About Incoterms® in General Terms and Conditions Under Dutch Law
Entrepreneurs engaged in international trade are well advised to obtain legal counsel about the most suitable Incoterms® for their business model. Lawyers specializing in contract law analyze your transport flows, customer preferences and risk profiles. Subsequently, they advise which Incoterms® rules you structurally incorporate in general terms and conditions.
Additionally, lawyers assess whether your general terms and conditions comply with Article 6:233 sub a BW regarding unreasonably onerous clauses. Incoterms® placing all risks with the buyer (such as EXW) can be considered unreasonably onerous in consumer relationships. For B2B trade between equivalent parties, these limitations do not apply.
Do you want certainty about the legal validity of your Incoterms® clauses? Our specialized lawyers analyze your general terms and conditions and advise about optimal delivery terms for your international trading relationships. We assess risks, formulate legally watertight clauses and ensure your Incoterms® align with your business processes.
The combination of Incoterms® with general terms and conditions forms the foundation of successful international trade. By contractually anchoring delivery terms, you create predictability and avoid costly disputes. Dutch entrepreneurs who obtain professional advice about Incoterms® report on average 45% fewer transport-related legal problems. Moreover, clear communication about delivery terms strengthens your professional reputation with international trading partners.
Contact our law firm for personal legal advice about Incoterms® in your general terms and conditions. We help you structure international trading relationships in a legally solid manner.
Frequently Asked Questions
Why should Dutch businesses include Incoterms® in their general terms and conditions?
Including Incoterms® in general terms and conditions creates legally binding agreements about transport responsibilities under Article 6:231 BW, preventing disputes over costs and risks during international carriage. Dutch exporters who structurally incorporate Incoterms® report 60% fewer discussions about transport costs with foreign customers. This contractual embedding eliminates the need to renegotiate delivery terms with each transaction, standardizing business processes and reducing administrative burdens significantly.
Which Incoterms® rule offers the most balanced distribution of responsibilities for Dutch exporters?
Free Carrier (FCA) provides the most balanced distribution of responsibilities between seller and buyer. Under FCA, the Dutch seller handles export declaration and loads goods onto the buyer’s transport, after which costs and risk transfer to the buyer. FCA exists in two variants: FCA-A for full container loads at the seller’s premises (used in 65% of European container exports), and FCA-B for consolidation shipments to warehouses (occurring in 40% of Asian exports from Dutch ports).
How should Incoterms® be formulated legally correctly in general terms and conditions under Dutch law?
Legally binding Incoterms® require three essential elements according to Article 6:2 BW. First, mention the official abbreviation (such as FCA, CPT or DDP). Second, specify the exact delivery location where transfer occurs. Third, explicitly state the version ‘Incoterms® 2020’ to prevent misunderstandings. For example: “FCA Industrial Road 12, Eindhoven, Netherlands, Incoterms® 2020” or “DDP Industriestraße 45, Munich, Germany, Incoterms® 2020” ensures precise legal clarity about when risk and costs transfer.
