Released On 1st Oct 2019

What’s the Difference between an Importer of Record and a Customs Broker?

Millions of dollars’ worth of goods move around the world every single day, arriving at airports, sea ports and in vehicles over land. At some point in their journey all goods are required to go through some sort of clearance process when crossing national borders, regardless of the nature of the goods. 

Most goods are unremarkable and require minimal preparation for import; the process to clear is well documented and straightforward. However, when goods such as IT or medical goods require clearance then it becomes a little more complicated. 

This is where the difference between an Importer of Record and a Customs broker become a little clearer. 

The role of the Customs Broker

The Customs broker acts on behalf of an importer or exporter. This is a person or entity that is licensed by the local customs authority. 

In order to become licensed, they must demonstrate that they have a general knowledge of customs law, tariff coding, tariff schedules, the import and export processes and regulations. Their knowledge must also cover the required documentation and how it should be correctly submitted. A customs broker is responsible for submitting all documentation for clearing goods through the local customs department.

The role of the Importer of Record (IoR)

The Importer of Record is often the owner or purchaser of the imported goods and must be a legal entity within the country the goods are being imported into. The IoR is legally responsible for the import processes and procedure of the goods and the application to import, as well as clearing the goods and paying the taxes and duties. 

So…what is the difference?

A Customs broker isn’t the legal importer of the goods, isn’t responsible for paying the taxes and duties and isn’t legally required to ensure the goods get to their listed end destination. They will generally clear goods such as clothing, commodity items and goods that are not restricted by Customs law in any way.

A third-party Importer of Record is generally required when the seller or buyer does not want to be the legal importer or exporter of the goods, and does not want to get involved in the legal process. 

This typically occurs when the movement of the goods is restricted or heavily regulated, such IT or medical items. The process to import such items can be lengthy and complex, and has many legal requirements such as ensuring the commodity coding is correct, and the goods are declared with the correct classification and value. 

There is often pre-shipment paperwork that must be submitted, for example end-user undertakings declaring where and for what purpose the goods will be used; import permits; equipment certification; letters of conformity etc. 

Submitting these documents requires in-depth knowledge of the import procedures and forms of that product type.  The payment of taxes and duties is also the responsibility of the Importer of Record as well as doing the last-mile delivery.

Can a customs broker also be the importer of record?

The simple answer is yes, they can but it would mean that they are required to take on the responsibility of an importer of record, which includes any pre-shipment paperwork and preparation. They would also have to list their company as the importer of record. A customs broker acting in the additional capacity of the importer of record would be required to deliver the goods to the end-user. Typically, a customs broker wouldn’t have the resource to do this. 

Generally, a registered Importer of Record will act as a general customs broker, but it’s rarer for it to be the other way round as the process is more complicated; knowledge and skill is required to import controlled goods. Additionally, the imported goods become a taxable asset of the company listed as the importer of record, which adds an in-country financial complexity to the process.

Mouse & Bear Solutions has extensive experience of acting as an Importer of Record to 160 countries globally. Please email iorsolutions@mouseandbear.com, call 01935 848526 or send the enquiry form below.

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