Incoterms when importing into Montenegro: EXW, FOB, CIF, DAP and others

Updated: 14 November 2026

The Incoterms rule is a short code on the invoice, for example FOB Shanghai or CIF Bar. It determines who arranges and pays for transport, who bears the risk on the way and how much customs duty and VAT you will pay in the end. A wrongly chosen Incoterms rule is a common cause of unplanned costs. This guide covers what a buyer needs to know before ordering.

1. What Incoterms cover and what they do not

Incoterms are rules of the International Chamber of Commerce (ICC). The current version is Incoterms 2020, which has 11 rules. They govern:

• who arranges and pays for transport and up to which place;
• where the risk of loss of or damage to the goods passes from the seller to the buyer;
• who handles export clearance and who handles import clearance.

Incoterms do not govern the transfer of ownership, the method of payment or the price. These are agreed in the contract. The Incoterms rule should always be followed by the named place, for example “FOB Ningbo, Incoterms 2020”.

2. Rules for any mode of transport and rules for sea transport

• For any mode of transport (7): EXW, FCA, CPT, CIP, DAP, DPU and DDP.
• For sea and inland waterway transport only (4): FAS, FOB, CFR and CIF.

For containerised goods, the ICC recommends rules from the first group, for example FCA instead of FOB. The reason is that the container is handed over at the terminal, before it is loaded on board the ship. In trade with China, however, FOB and CIF are still the most commonly used in practice.

3. The most common Incoterms rules when importing from China

• EXW (factory): the seller only packs the goods. The risk passes to the buyer when the goods are ready at the factory.
• FCA (place of delivery): the seller pays for export clearance and transport to the place of delivery. The risk passes on handover to the carrier.
• FOB (port of loading): the seller pays for export clearance and loading on board the ship. The risk passes when the goods are on board.
• CIF (port of destination): the seller pays for the sea freight and insurance to the port of destination. The risk passes as soon as the goods are on board at the port of loading.
• DAP (place of destination): the seller pays for transport to the agreed place. The risk passes at the place of destination, before unloading.

Under CIF, the seller pays for transport to Bar, but the risk already passes to you at the Chinese port. The insurance the seller buys under the CIF rule is minimum cover (Institute Cargo Clauses (C)). For higher-value goods, agree on broader insurance cover.

4. How the Incoterms rule affects customs duty and VAT

The customs value of the goods is the price plus transport and insurance costs up to entry into Montenegro. Depending on the Incoterms rule, different costs are therefore added to the invoice price:

• EXW: add transport in China, export costs, sea freight and insurance to Bar.
• FOB: add sea freight and insurance to Bar.
• CIF Bar: transport and insurance to Bar are already included in the price.
• DAP place in Montenegro: transport after entry into Montenegro is not part of the customs value, provided it is shown separately on the invoice.

The VAT base is the customs value, plus duty and other charges, plus incidental costs up to the first destination in Montenegro. VAT is 21 %, or 15 % or 7 % for some goods.

5. What to watch out for

• EXW from China is risky. Export clearance in China is then the buyer’s obligation, and a foreign buyer will find it hard to carry out. FCA or FOB is better.
• CIF does not mean there are no costs in Bar. Local charges at the port of destination (discharge, document release, storage) are usually not included in the seller’s price. Ask in advance.
• DDP is rarely practical for imports into Montenegro. The seller must then take on the import obligations in Montenegro, including customs duty and VAT. Agree on it only when the seller can really do that.
• The Incoterms rule on the invoice, the contract and the bill of lading must be the same. A mismatch slows down customs clearance.
• State the place and the version: “FOB Shenzhen, Incoterms 2020”, not just “FOB”.

6. What we recommend

For most buyers in Montenegro, the simplest option is FOB or FCA (Chinese port). The supplier delivers the goods at its own port, and we arrange the sea freight to Bar, insurance, customs clearance and delivery. This way you know exactly what you pay at each step, and the customs value is easy to prove.

If you already have a quote on CIF or DAP terms, send it to us. We will check what is included in the price and what you will have to pay in Bar.

This text is for information only and is not legal advice. Rules change; for specific goods we always check the current regulations and tariff.