Importer of Record (IOR)
The Importer of Record (IOR) is the entity legally responsible for ensuring that goods shipped across borders comply with local import laws and regulations. This includes paying customs duties and import taxes, filing the required customs documentation, and ensuring the goods meet local standards.
The IOR can be the seller, the buyer, or a designated third party, depending on the shipping terms agreed between the parties.
Why it matters
When you sell physical goods internationally, every shipment needs an IOR in the destination country. Without one, goods can be held at customs or refused entry. For foreign companies without a local legal entity in the destination country, designating a third-party IOR service is often the practical solution.
IOR and Incoterms
The trade terms (Incoterms) you agree with your customer determine who takes on the IOR role:
- DDP (Delivered Duty Paid) - The seller acts as IOR and is responsible for all duties, taxes, and customs clearance. This gives buyers a seamless experience but puts the compliance burden on the seller.
- DAP (Delivered at Place) - The buyer acts as IOR and handles duties and clearance upon arrival. This is simpler for the seller but can create friction for the buyer.
IOR vs Exporter of Record
The Exporter of Record (EOR) is the equivalent role on the origin side: the entity responsible for ensuring the goods legally leave the country of export. A single shipment has both an EOR (in the origin country) and an IOR (in the destination country).
IOR and tax compliance
The relationship between the IOR role and indirect tax obligations depends on both the shipment structure and the type of tax in the destination country.
VAT and GST countries
VAT and GST work the same way in this context: both are collected at the border as import tax, and the IOR pays them.
Under DDP with the seller as IOR: Import VAT/GST is due when goods enter the country, and the IOR pays it at the border. To reclaim that import VAT/GST, the seller typically needs a local registration, which then requires filing returns. In practice, DDP almost always triggers registration and filing obligations for the seller.
Under DDP with a third-party IOR: The third party pays import VAT/GST using their own registration, removing that specific burden from the seller. However, the seller may still have VAT/GST obligations from their ongoing sales in that country, depending on sales volumes, customer types (B2B vs B2C), and local rules. Some third-party IOR providers also offer fiscal representation to handle the seller's VAT/GST obligations, but that is a separate service.
Under DAP: The buyer acts as IOR and handles their own import VAT/GST and customs obligations. The seller has no IOR-related VAT/GST exposure, though they may still have registration obligations based on their sales activity.
US sales tax
US sales tax is not collected at the border, so the IOR role has no direct impact on sales tax obligations. Sales tax in the US is determined entirely by nexus: whether your business has sufficient economic or physical presence in a given state. Acting as IOR does not create nexus on its own, but the broader sales activity that comes with selling into the US may.
If you regularly sell goods internationally, consult a tax advisor to assess your indirect tax obligations in each destination country.