Importer of Record explained: Definition and responsibilities

The Importer of Record (IOR) is the entity – a business or an individual – legally responsible for importing goods into a country.

Imagine you've secured a lucrative deal with an overseas supplier, poised to catapult your business. The excitement is palpable. But then, reality sets in. A mountain of paperwork, confusing customs regulations, and the possibility of fines threaten to derail your triumph immediately.

An Importer of Record is your ally. By assuming legal responsibility for your imports, a qualified IOR facilitates a seamless entry of your products into foreign markets.

This guide will explain the definition of Importer of Record, its responsibilities, and common questions, giving you the confidence to navigate the global marketplace. After all, when taking your business worldwide, ignorance isn't bliss, it's expensive.

What is an Importer of Record?

The Importer of Record is the entity legally responsible for importing goods into a country. They serve as the primary point of contact for customs authorities and take responsibility for ensuring that all imported items comply with the destination country's import regulations.

Imagine a US-based company that wants to import furniture from China. They can act as their own IOR if they have a US presence. However, if they don't, they'll need to appoint someone else in the country to handle the import process on their behalf – who will then be responsible for upholding compliance with all US import rules.

Who can be the Importer of Record?

While the IOR might seem like a single, fixed role, the truth is more nuanced. It depends on a complex interplay of factors, including the origin and destination markets, import regulations, and the willingness of involved parties to assume legal responsibility.

Here's a closer look at the potential candidates for the role.

1. Owner and purchaser

The owner and purchaser is any party with a financial interest in the goods being imported. This could be the owner, purchaser, buying or selling agent, or someone importing on consignment. 

This is the most logical choice when the business has a registered presence in the destination country. It could be a subsidiary, branch office, or a legally registered entity allowed to conduct import activities.

However, keep in mind that some countries have specific requirements for entities acting as IORs. For example, Brazil requires that they possess a CNPJ number, a tax ID specific to Brazilian businesses. Foreign companies without a CNPJ number must appoint a local representative to be the Importer of Record.

2. Exporter

In some cases, the exporter can act as the IOR for the importer. This is more common when the buyer is a smaller company or doesn't have a presence in the importing country.

Important note: This arrangement requires a high level of trust and clear contractual agreements between the exporter and importer, as the latter assumes the legal and financial liabilities of the import.

3. Consignee

The consignee is the entity that receives the imported goods. While they are not always the IOR, they can assume this role under certain circumstances. For example:

• The consignee is a subsidiary or closely affiliated branch of the importing company. This allows for streamlined import processes within the same organization
• The consignee has the necessary import licenses and permits. If the imported products require specific authorizations, the consignee possessing these can take on IOR responsibilities

4. Custom brokers

Customs brokers are licensed professionals specializing in navigating customs regulations and procedures. They can be the IOR on behalf of importers after obtaining a power of attorney. Custom brokers leverage their expertise to achieve compliance and expedite customs clearance.

While customs brokers offer valuable expertise, the importer remains ultimately responsible for the accuracy of documentation and payment of duties and taxes.

Choosing the right Importer of Record depends on your business's unique needs, import experience, and risk appetite. Don't underestimate the complexity of international trade adherence to regulations. Evaluate your options and select the one that best mitigates risk and supports your import strategy.

Are you aware of the potential pitfalls of cross-border transactions? Discover the common risks for buyers and suppliers.

Importer of Record responsibilities

Being an IOR is a commitment to ensuring every import shipment follows a complex web of laws and procedures. Take a look at the key Importer of Record responsibilities involved.

Valuation and classification

The IOR must determine the value of imported goods and classify them under the correct Harmonised System of Nomenclature (HSN) code. This step is crucial for calculating duties and taxes while maintaining compliance with trade regulations.

Duty and tax assessment and payment

The Importer of Record calculates and pays all applicable import duties, taxes, and fees associated with the shipment. This task requires a thorough understanding of tariff schedules, preferential trade agreements, and applicable exemptions.

To learn how to calculate these costs, check out our guide: How to calculate customs duty.

Complete documentation

The IOR provides comprehensive import documentation to customs authorities. This documentation includes, but is not limited to:

• Commercial invoice: A legal document outlining the transaction between the buyer and supplier, including a detailed description of the goods, their value, and terms of sale
• Packing list: A detailed list of the contents of each package or container, including quantities, weights, and dimensions
• Bill of lading: A document issued by the carrier acknowledging receipt of the items for shipment and outlining the terms of transport
• Certificate of origin: Documents verifying the country of origin, which may be required to qualify for preferential tariff treatment under trade agreements

Regulatory compliance

The IOR ensures that the imported goods comply with all applicable laws and regulations of the destination country. This compliance includes rules related to product safety, labeling, packaging, intellectual property rights, and more.

Depending on the nature of the items, the IOR may need to comply with laws from agencies. In the U.S., for example, these could be the Food and Drug Administration (FDA) or the Environmental Protection Agency (EPA).

Record keeping

IORs must maintain accurate import records for a specified period, which varies by country. These records may be subject to audits by customs authorities.

Additional considerations:

• Incoterms: The Incoterms rule agreed upon by both parties dictates who handles import formalities and costs
• Country-specific Importer of Record requirements: They must be well-versed in the specific conditions of the destination country to meet all compliance requirements
• Power of Attorney (POA): In situations where the IOR cannot be physically present for all import procedures, a Power of Attorney authorizes a representative to act on their behalf in customs-related matters
• Customs bonds: In many countries, including the U.S., the IOR may be required to post a customs bond to cover potential duties, taxes, and penalties

Does the Importer of Record own the goods?

The IOR assumes temporary ownership of the imported goods during the customs clearance process. This allows them to legally interact with customs authorities, make import declarations, and meet all regulatory requirements.

Think of it this way: they’re like a designated driver – responsible for getting the "passenger" (the goods) safely to their destination (through customs) but don't necessarily own the passenger or their belongings.

Why is this distinction important?

• Liability: While the IOR is responsible for import compliance, the owner of the products may still be liable for other issues, such as product liability claims or contractual disputes
• Financial responsibility: The IOR is responsible for paying import duties and taxes, but the financial burden falls on the owner of the goods
• Control over goods: The owner of the items retains the right to determine their final destination, use, and disposition, even if a third party acts as the IOR

Do I need an Importer of Record?

Importing goods across borders involves numerous regulations and potential pitfalls. The responsibilities of an Importer of Record allow them to act as your safety net, ensuring compliance and preventing costly mistakes.

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Frequently Asked Questions (FAQ)

What is the difference between a consignee and an Importer of Record?

The main Importer of Record requirement is to bear legal responsibility for imported goods and associated taxes or duties, acting as the customs liaison. The consignee is the designated recipient of the shipment. While their roles may intertwine, the IOR shoulders the legal and financial burden of importing, while the consignee simply receives the items.

Who can act as an Importer of Record in EU countries?

To act as an IOR in the European Union (EU), an entity must be established within the EU and have a valid EORI (Economic Operators Registration and Identification) number. It could be an EU-based company, an EU branch of a foreign company, or a third party registered in the EU.

What is an Importer of Record number?

Think of it as a unique ID assigned by a country's customs authority. The Importer of Record number helps customs officials identify and track importers for tax and compliance purposes. While there's no single global standard, each country has its specific identifier, such as the EORI in the EU or the CBP Assigned Number in the U.S.

Who is the Importer of Record under DDP (Delivered Duty Paid)?

Even when using the DDP Incoterms, where the supplier handles import costs, an IOR is still required in the buyer's country. The supplier may appoint a local entity – such as the buyer, their subsidiary, or a service provider – to act as the IOR and manage customs clearance.

Can a freight forwarder be the Importer of Record?

A freight forwarder primarily focuses on transportation logistics and isn't an IOR. However, some freight forwarders may offer those additional services, acting as a third-party IOR and handling import compliance on behalf of the importer.