What is an Importer of Record? And Do You Need One?

Here’s a quick definition of Importer of Record:

Importer of Record (IOR): An authorized person or entity that takes responsibility for an import.  (e.g. the person or business putting their name on the shipping paperwork as the consignee or importer) 

Another common definition in the logistics industry is: the person or entity putting their name or company name on the import paperwork

If you’re looking to have a more holistic understanding of what an IOR is (and does), this article will cover:

What do IOR service providers do?

Generally speaking, IOR providers are companies that provide services relating to the import side of a shipment – including but not limited to – acting as the Importer of Record, procuring the necessary paperwork, applying for the relevant import permits, and arranging for customs clearance.

The IOR provider you choose should be an expert on the commodity you’re looking to ship and should also be able to provide any additional logistics & compliance services you may need.

Unless you have experience shipping internationally, you shouldn’t hire one provider for IOR services and another for freight and custom clearance services. This is because coordinating between multiple providers is risky and drastically increases the likelihood for them to make operational and documentation mistakes during handoffs.

To minimize the mistakes caused by mismanaging multiple vendors, our clients typically hire us to provide technology IOR services and also rely on us to manage the following:

  • Advise on whether IOR services are needed
  • Evaluate the import feasibility based on hardware conformity, encryption, and local rules
  • Analyze the bill of materials to compile a list of requirements for a successful import
  • Harmonize the HS codes and pull ECCN numbers for each item in the shipment
  • Provide a trading company that fulfills the above list of import requirements on behalf of our clients
  • Manage the door to door logistics and customs brokerage services to execute a successful deployment

Do you even need an Importer of Record?

Before we jump into the scenarios where you’ll likely need an IOR, we’ll discuss the situations where you might not need one at all. For example, in countries like the United States, Canada or any country in the European Union (EU), you can be the IOR simply by owning a registered business entity. We typically refer to the US, Canada, and EU as “open markets” due to the relative ease of conducting international trade in these countries.

However, for any countries outside the US, Canada, and EU, it is highly likely that you’ll need to hire an IOR, which we’ll discuss further in later sections.

Importer of Record for the United States, Canada, or European Union

Whenever a potential or existing client tells us they need IOR services in the EU, Canada, or US, we first always ask them if they have a registered business entity in those countries.

Having a registered business entity in the US means you’ll have a Tax ID [EIN], in Canada you’ll have a Canadian Business Number [BN], and in the EU you’ll have a VAT ID or EORI number. If you have any of the above in those countries, you are 100% eligible to be the IOR in those markets.

In fact, if you are importing equipment for your company’s own use into the EU, or Canada, we always recommend that you should be the IOR. By acting as the IOR, specifically in the EU and Canada, you will put yourself in a position to reclaim 100% of the import taxes (VAT or GST) paid [if eligible]. This also means you can avoid paying the extra cost to hire an IOR Provider to act as your importer. For more information on what VAT is and how it can be reclaimed, click the button below to download our VAT Reclamation Guide.

The above is extremely important to note because if you use an IOR provider to import your equipment, you will not be able to reclaim the import VAT or GST.  Since an IOR provider will never take ownership of your equipment, they cannot reclaim the VAT or GST that was paid during the import in a compliant manner.

Some IOR providers advertise the ability to reclaim import VAT or GST on your behalf, however this is a loose interpretation of the VAT/GST rules and the results may vary.

So your company CAN act as the IOR, what do you do now?

All you need to do now is to hire a company to manage the door to door logistics and customs clearance on your behalf, which technology shipping providers can typically assist with. You’ll just have to provide them your US Tax ID [EIN], Canadian Business Number [BN] or EU VAT ID / EORI #.

If you think you can be the IOR in the countries you’re looking to import into but want a professional opinion for safe measure, feel free to reach out to us. We provide our consulting services free of charge and can answer any questions regarding IOR you may have.

When your company is the IOR, remember to request the customs documentation from the provider you work with, so you’ll have it for your records and you’ll also put yourself in a position to reclaim the VAT or GST.

Importer of Record services for the rest of the world

The reason we’re designating the remaining 192 countries under the “rest of the world” category is because you’ll likely need an IOR provider when importing into any country that isn’t the US, EU, or Canada. There are rare exceptions to the rule, like Singapore, Japan and Australia to name a few.

But generally speaking, besides the few exceptions, the rest of the countries in the world are often considered “complex markets” because executing an import into those destinations often requires more than just operating a valid business entity.

Meaning, in addition to having a business entity, there are different import authorizations, licenses, and permits that need to be obtained prior to the shipment being imported (which vary based on the destination.) For example, in Brazil, companies that want to import technology hardware are required to be RADAR registered, which can take up to a year to obtain and will limit the value of H/W you are able to import.

But these complex markets are where IOR providers have found their niche – they provide companies the expert services needed to simplify the international supply chain.

So, if you’re looking to import into any country in South America, Africa, Asia Pacific, or Eastern Europe, we highly advise that you speak to an expert prior to shipping.

Here are questions you should ask yourself before deciding whether you need to hire an IOR:

  • Do you know if any import permits and licenses are required and if there are, will you be able to procure them on your own?
  • Can you properly classify your equipment with an HS Code and ECCN number?
  • Can you identify the country of origin, material composition, or electrical specifications of each device in your shipment?
  • Can you take responsibility of the equipment during the import process and answer any questions that may arise during customs clearance?

If you answered no to any of the questions above, it’s best to discuss your exact project details with an IOR service provider.

Importer of Record services for technology hardware

Importing technology hardware is vastly different from importing any other type of commodity. Each country has its own import regulations that vary based on the hardware-specific part #, ECCN classification, and HS code.

Furthermore, technology hardware is high-value, mission critical, and fragile. If anything goes wrong during the shipping or import process, a lot of additional time and resources will be needed to send replacement hardware.

These various reasons are why you will almost always need to hire an IOR when shipping technology hardware internationally (besides when shipping to the US, Canada, or EU.)

For example, even in many of the closed markets where our clients do operate business entities, those business entities typically don’t hold the proper import authorizations needed to satisfy the import requirements in those markets.

Just to name a few examples, below is a list of countries with their respective license requirements:

South America:

  • Brazil: RADAR Registration
  • Mexico: Import Licenses
  • Argentina: Import Licenses, Electrical Security Authorizations

Asia:

  • China: Import Authorization, CCC Certificates
  • Hong Kong: HKTID Permits
  • Philippines: NTC Permits
  • India: IEC Codes, WPC Licenses
  • Russia: EAC Certificates, FSB Notifications

To manage these complex permits and import requirements, companies utilize our IOR, compliance, and logistics services to swiftly, seamlessly and securely deploy IT Equipment globally.

The bottom line for shipping technology hardware is:

If you’re planning to ship IT Equipment to a country outside the US, Canada, or European Union (i.e. complex markets), it’s best to speak to a technology shipping and IOR expert to go over the exact details of the deployment.

In our next post we discuss why Importer of Record Services are important and how IOR services can be used to solve business problems here.

If you have any questions/comments or have a project you’re looking to deploy, feel free to email us at ior@fgx.com and we’ll get back to you.