What is a Merchant of Record?
A Merchant of Record (MoR) is the legal entity that is the counterparty to a transaction and generally carries the tax, invoicing and compliance obligations for it.
Definition
The Merchant of Record is the party whose name is on the transaction. It invoices, collects or pays, and answers to tax authorities and regulators for its role in that transaction.
Merchant of Record is a commercial term, and most laws do not define it. Its legal effect comes from the contracts and from tax rules.12 For example, EU VAT law treats a business that acts in its own name on behalf of someone else as if it received and supplied the service itself.1
In creator payouts, an MoR stands between your business and your payees. You fund the payouts. The MoR contracts with and pays every creator, and handles the invoices, tax details and compliance checks around them.
How the model works
- You agree the work and the fee with the creator, as before
- You send the payout list to the MoR and fund the total
- The MoR buys the service from each creator and pays them
- The MoR sells the service on to you and invoices you for it
What an MoR takes over
- The payment relationship with each payee
- Invoices for every payout, often as self-billed invoices13
- Collection of the payee tax details needed for invoices, and the correct VAT treatment
- AML and sanctions checks on payees
- Liability for the payout-related obligations it takes on
One counterparty in your books
Because the MoR is your counterparty for the payouts, every payout document in your books comes from the same supplier, in the same format. You no longer collect, check and archive hundreds of creator invoices with different formats and tax treatments.
When an MoR makes sense
An MoR is most useful when you pay many individuals in many countries, when creators often send incomplete invoices, or when your finance team spends more time on payout paperwork than on finance. Instead of handling payout paperwork and checks for thousands of payees, you deal with one supplier: the MoR.
How Talentir helps
Talentir is the Merchant of Record for creator payouts: one counterparty instead of thousands. Talentir issues the self-billing invoice with the VAT treatment for every payout and runs the AML checks, as set out in our agreement. See Merchant of Record
Further reading
- Merchant of Record for Payouts: What It Is and Why It Matters
- 10 best merchant of record platforms for global businesses
Related topics
Merchant of Record vs. payment provider
A payment provider moves money on your behalf. A Merchant of Record also becomes the legal counterparty and takes on the obligations around the payment.
Self-billing
Self-billing means the buyer creates the invoice on behalf of the supplier, so creators do not have to write an invoice themselves.
DAC7 (EU platform reporting)
DAC7 makes digital platforms report what their sellers earn to EU tax authorities, including platforms outside the EU with EU-resident sellers.
Liability in creator payouts
When a creator payout breaks tax or compliance rules, the business that paid can be held responsible. A Merchant of Record can take on much of that liability, within the limits of its contract and the law.