Merchant of Record (MoR)
A Merchant of Record (MoR) is the legal entity that officially sells a product to customers and to the tax authorities. The MoR collects payment, issues the invoice, remits sales tax, and is liable for chargebacks and compliance. Creators thus outsource this processing. They typically retain ownership of the product.
At a Glance
- MoR acts as the legal seller and bears tax liability.
- It handles sales tax (EU-wide via the OSS procedure), invoicing, payments, and the processing of chargebacks.
- Creators are not required to register for tax purposes in every EU country.
- A payment provider, on the other hand, only processes payments. When creators sell their own work, they remain the sellers and are liable for taxes.
How does a Merchant of Record work?
With a Merchant of Record, customers legally make their purchases from the MoR, not directly from the creators. The MoR collects the payment, reports the sales tax, issues the invoice, and pays out the net proceeds. Chargebacks, refunds, and tax filings are also handled by the MoR.
In the process, the MoR is responsible for:
- payment processing (credit card, SEPA, PayPal, Klarna, and other methods),
- the reporting and payment of the correct sales tax of the buyer's country,
- the legally compliant invoice,
- the payment of the net proceeds to the creators,
- Chargebacks, refunds, and tax filings.
Who is responsible for remitting sales tax in the case of a Merchant of Record?
The Merchant of Record collects the sales tax, not the creators. Since the Merchant of Record is legally considered the seller, it applies the tax rate of the buyer’s country and reports the EU-wide sales tax in a consolidated manner through the OSS procedure. Creators do not need to register for tax purposes in other countries for this purpose.
Background: For cross-border B2C sales of digital services, sales tax is due in the customer’s country as soon as the EU-wide threshold of 10,000 euros net per year is exceeded. Due to the combined volume, a MoR practically always exceeds this threshold. For B2B sales with a valid VAT ID number, the reverse-charge procedure applies, and the MoR does not charge sales tax in such cases.
This is a general overview and does not constitute tax advice. Please consult your tax advisor regarding your specific situation.
What is the difference between a Merchant of Record, the reseller model, and direct sales?
The “merchant-of-record” and “reseller” models mean the same thing: the platform is the legal seller and handles taxes and accounting. When selling in their own name, creators remain the sellers themselves and are responsible for all obligations. A payment service provider only processes the payment and is never the seller.
Role
Legal Seller
Sales Tax & Invoicing
Task
Merchant of Record / Reseller
Platform
Platform
MOR is the legal seller and is responsible for tax calculations and liability.
Direct sales through a platform or on one's own account
Creator
Creator
The creator sells the items themselves and is liable for taxes
Payment service providers (PSPs such as Stripe, PayPal)
Creator
Creator
PSP handles the payment exclusively
The right model depends on revenue, international reach, and the desired level of administrative effort.
Real-World Example of a Merchant of Record
Lena offers an online course and sells it to customers in Germany, Austria, France, and Spain. Without a Merchant of Record (MoR), she would have to identify the correct tax rate for each country, report sales tax via the OSS procedure, and handle chargebacks herself. With a Merchant of Record, this all happens automatically: Lena creates a product page on the MoR’s platform and directs interested customers there. Customers purchase Lena’s course, but the legal seller is the MoR. The MoR issues the invoices, remits the sales tax based on the buyer’s country, and pays Lena the net proceeds monthly. Lena only has to focus on the course.
ablefy classification
ablefy is not an affiliate network like Awin, where merchants and affiliates connect on a shared marketplace. Instead, ablefy allows you to set up your own affiliate program for your digital products, giving you full control over the program.
You set the terms yourself; multi-level commissions with up to five levels can be configured, and commission settlement is handled automatically by the system, including allocation and payment. This keeps the program directly linked to sales and shipping, without having to go through an external network. Details at
Common Misconceptions
- “MoR is the same as a payment service provider.” A payment service provider merely transfers money. MoR is the contractual partner of the customers and is subject to taxation.
- “With an MoR, I lose the rights to my product.” Generally speaking, no. The rights to the product remain with the creators; the MoR only receives the right to resell it.
- “MoR stands for ‘selling in one’s own name.’” That’s the opposite meaning. With MoR, the platform handles the sales; with direct sales, creators sell their own work.”
- “The Merchant of Record handles my marketing for me.” Not always. Often, the product owner or creator remains responsible for marketing and sales. The Merchant of Record only handles the legal aspects of the sale.
Frequently Asked Questions About Sales Platforms
How does a Merchant of Record make money?
MoR providers typically charge a fee or a percentage per transaction. The exact amount depends on the provider and the chosen model.
As a creator, do I still need to submit my own OSS report?
Not for sales made through the MoR. The MoR reports and remits the EU sales tax itself. You only need your own OSS registration for sales outside of this model.
Does the Merchant-of-Record model also apply outside the EU?
Yes. A MoR can also act as a seller in third countries such as the UK or the U.S. and assume the tax obligations there. What is covered depends on the provider and the destination country.
