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 we're explaining IOR. The reason: IOR is often confused with EOR (Employer of Record) because both use "of Record" terminology. But they operate in completely different domains—logistics vs HR.

This is a quick primer to clarify the distinction. If you're shipping physical goods internationally, IOR is relevant. If you're managing contractors or employees, it's not. Let's break down what IOR actually does and when you might need one.

How IOR 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 the shipment complies with local 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 process is straightforward. You ship goods to a customer or warehouse in a foreign country. The IOR receives the shipment, clears customs, pays 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

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

When you need an IOR

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

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

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

Costs and considerations

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 actual duties and taxes (which vary by country and product category).

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

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

Why IOR isn't relevant for contractors

If you're managing contractors or employees, IOR is not relevant. IOR is for importing physical goods, not managing people. The confusion arises because both IOR and EOR use "of Record" terminology, but they solve completely different problems.

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 be relevant: 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.

Common questions

Can I use my freight forwarder as an IOR? Some freight forwarders offer IOR services, but not all. Check with your forwarder. If they don't offer IOR, they can usually recommend a partner who does.

What happens if customs rejects my shipment? The IOR is responsible for resolving customs issues. They'll work with customs authorities to address problems, provide additional documentation, or arrange return/disposal of the shipment if necessary.

Do I need an IOR for every country? Yes, if you don't have entities in those countries. Each country has its own import regulations, so you need an IOR with local expertise and 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 be the IOR. This is common for B2B shipments.

The bottom line

Importer of Record services are valuable for businesses shipping goods internationally without local entities. They handle customs clearance, compliance, and liability, letting you focus on your core business. Costs are $50-200 per shipment plus 1-5% of shipment value.

But IOR is not relevant for contractor or employee management. That's EOR territory. The "of Record" terminology creates confusion, but the services operate in completely different domains—logistics vs HR.

Know your needs. If you're shipping goods internationally, 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.