What is an Importer of Record (IOR)?

An Importer of Record (IOR) is the legal entity responsible for importing goods into a country. The IOR handles customs clearance, pays import duties and taxes, ensures compliance with local import regulations, and assumes liability for the shipment.

If you're reading this on a contractor management site, you're probably wondering why this matters. The reason: IOR is often confused with EOR (Employer of Record) because both use "of Record" terminology. But they operate in completely different domains—one is logistics, the other is HR. This quick explainer clarifies the distinction.

How IOR actually works

When you ship goods internationally, someone must be the legal importer in the destination country. This entity is responsible for customs clearance, paying duties and taxes, and ensuring compliance with local import regulations.

If you have a legal entity in the destination country, you can be your own IOR. If you don't, you need a third-party IOR service. The IOR acts as the legal importer on your behalf, handling all customs and compliance requirements.

The practical process is straightforward. You ship goods to a customer or warehouse in another country. The IOR receives the shipment, clears it through customs, pays the required duties and taxes, and delivers the goods to the final destination. You reimburse the IOR for duties, taxes, and their service fee.

IOR vs EOR vs MoR: Three different services

These three "of Record" services are completely different:

IOR (Importer of Record) handles importing physical goods legally. Domain: logistics and customs. Typical cost: $50-200 per shipment plus 1-5% of shipment value.

EOR (Employer of Record) employs workers legally. Domain: HR and employment. Typical cost: $49-99 per employee per month.

MoR (Merchant of Record) sells products legally. Domain: commerce and payments. Typical cost: 3-7% of revenue.

The "of Record" terminology creates confusion, but these services operate in completely different domains. They don't overlap. IOR is for logistics. EOR is for employment. MoR is for commerce.

When you actually need an IOR

You need an IOR when shipping physical goods internationally and you don't have a legal entity in the destination country. Common scenarios include selling physical products to international customers, shipping equipment to remote offices, or sending samples or prototypes to partners abroad.

Classic IOR scenario: a U.S. hardware company sells devices to customers in Europe. They don't have a European entity, so they can't be the legal importer themselves. They use an IOR service to handle customs clearance and compliance for European shipments.

IOR services are also useful for temporary imports (shipping demo equipment to trade shows), high-value shipments (where customs compliance is critical), or regulated products (medical devices, electronics) where import requirements are complex and strictly enforced.

Understanding the costs

IOR services typically charge $50-200 per shipment plus a percentage of the shipment value (1-5%). For a $10,000 shipment, expect $150-700 in IOR fees, plus the actual customs duties and taxes (which vary by country and product category).

The IOR assumes liability for the shipment. If customs issues arise, compliance violations occur, or import restrictions prevent entry, the IOR is legally responsible. This is why they charge a premium—they're taking on significant risk.

For frequent international shipping, establishing your own legal entity in key markets may be more cost-effective than using an IOR for every shipment. The break-even point depends on your shipment volume and how many destination countries you use regularly.

IOR and contractor management: Not related

If you're managing contractors or employees, IOR is not relevant. IOR is for importing physical goods. EOR is for hiring people. They're completely separate.

The confusion arises because both IOR and EOR use "of Record" terminology, but they solve completely different problems in different domains. For contractor management, you need contractor management software (to organize contracts, payments, and documentation) or potentially an EOR (if you want to employ contractors as full-time employees). You don't need an IOR unless you're also shipping physical goods internationally.

The only scenario where both might matter: you're a hardware company with international contractors who need equipment shipped to them. In that case, you'd use contractor management software for the people and an IOR for the equipment shipments. But these are separate needs.

Frequently asked questions

Can I use my freight forwarder as an IOR?

Some freight forwarders offer IOR services, but not all. Check with your current forwarder. If they don't offer IOR services, they can usually recommend a partner who does or can coordinate with an IOR on your behalf.

What happens if customs rejects my shipment?

The IOR is responsible for resolving customs issues. They work with customs authorities to address problems, provide additional documentation, or arrange return or disposal of the shipment if it can't be cleared. The IOR assumes this liability.

Do I need a separate IOR for every country?

Yes, if you don't have legal entities in those countries. Each country has its own import regulations and customs procedures. You need an IOR with local expertise and official registration in each destination country.

Can the recipient be the IOR?

Sometimes. If the recipient has a legal entity in the destination country and is willing to handle customs clearance, they can act as the IOR. This is common in B2B shipments where the receiving company has the necessary legal registration.

Is an IOR the same as a customs broker?

Related but different. A customs broker helps navigate customs procedures. An IOR is the legal importer responsible for the shipment. They often work together—the IOR is the legal entity, the customs broker handles the paperwork and procedures.

The bottom line

Importer of Record services are valuable for businesses shipping physical goods internationally without local legal entities. They handle customs clearance, compliance with local regulations, and liability for the shipment. Costs are $50-200 per shipment plus 1-5% of shipment value.

But IOR is completely irrelevant for contractor or employee management. That's EOR territory. The "of Record" terminology creates understandable confusion, but the services operate in entirely different domains—logistics and customs versus HR and employment.

Know your needs. If you're shipping goods internationally without local entities, you might need an IOR. If you're managing contractors or employees, you need contractor management software or an EOR. Don't confuse the two—they solve completely different problems.