Expanding into Taiwan offers businesses access to a highly skilled workforce and a strong economy. However, companies must consider whether to set up a legal entity or use an Employer of Record (EOR) is more cost efficient to hire employees.

Beyond cost and efficiency, businesses must also consider regulatory approval—foreign investment in Taiwan often requires government approval, adding extra steps and delays. This article compares cost, efficiency, and regulatory complexity, highlighting why an EOR is often the smarter choice.

1. Cost Comparison: EOR vs. Establishing a Local Entity

The Cost of Setting Up a Legal Entity in Taiwan

Starting a legal entity in Taiwan involves significant upfront and ongoing costs, including:

• Foreign Investment Approval Costs – Time and legal fees for submitting an application to Taiwan’s Investment Commission (IC).
• Business Registration Fees – Company licensing, legal paperwork, and administrative expenses.
• Office Setup Costs – Rent, utilities, and infrastructure.
• Legal & Compliance Costs – Hiring lawyers and accountants to ensure compliance.
• HR & Payroll Management – Setting up payroll systems, processing salaries, and handling taxes.

💰 Estimated Initial Setup Costs: $10,000 – $30,000
💰 Ongoing Costs (Annual): $20,000 – $50,000 (HR, tax compliance, payroll, office rent, etc.)

The Cost of Hiring Through an Employer of Record (EOR)

An EOR eliminates upfront costs because you don’t need to establish a local entity or seek foreign investment approval. The EOR hires employees on your behalf, handling payroll, tax compliance, and HR management while you focus on operations.

💰 Estimated Cost: A fixed monthly fee per employee (typically 8-15% of gross salary) or a simple flat service fee as that provided by 宏才有限公司.
💰 Ongoing Costs: Only employee salaries + EOR service fees, with no extra legal or administrative expenses.

✅ Conclusion: An EOR is significantly more cost-effective, as it eliminates entity setup, approval, and administrative expenses.

2. Efficiency: How Quickly Can You Start Hiring?

Time & Resources Needed to Set Up a Local Entity

• Foreign Investment Approval – Must apply to the Investment Commission (IC) before registering a business, adding 2-4 weeks (or longer depending on the individual case).
• Business Registration – Takes 3-6 months for full company setup, including tax and banking.
• Requires Internal HR & Legal Teams – Managing payroll, contracts, and compliance increases overhead.

How an EOR Enables Faster Hiring in Taiwan

• No Foreign Investment Approval Needed – You can skip regulatory delays and hire immediately.
• Start Hiring in 2-4 Weeks – The EOR handles all HR, payroll, and compliance requirements.
• No Local Entity Setup Required – Focus on business growth instead of administrative tasks.

✅ Conclusion: Using an EOR allows businesses to enter Taiwan faster and with minimal regulatory hurdles.

3. Regulatory Consideration: Foreign Investment & Compliance Risks

Challenges of Setting Up a Legal Entity

• Foreign Investment Approval Required – Must obtain Investment Commission (IC) approval before registering a business.
• Industry Restrictions – Some industries have foreign ownership limits or require extra approvals.
• Labour Law Compliance – Must adhere to Taiwan’s employment laws, tax regulations, and social security contributions.
• Ongoing Tax & Legal Obligations – Requires accountants and lawyers to manage compliance.

How an EOR Simplifies Compliance

• A Local Company Ready to Start Hiring for You – The EOR acts as the legal employer, bypassing the need for setting up an entity.
• Full Compliance Management – The EOR ensures payroll, benefits, and tax filings are handled correctly.
• Lower Legal Risks – The EOR stays updated on Taiwanese labour laws, reducing compliance burdens.

✅ Conclusion: An EOR eliminates compliance and legal risks, making it the simplest and fastest way to hire in Taiwan.

Final Verdict: Why an EOR is the Smarter Choice for Most Businesses

Who Should Choose an EOR?

✅ Global businesses – Expand into Taiwan with minimal risk and administrative effort.
✅ Remote-first companies – Hire talent quickly without dealing with entity setup.
✅ Startups and SMEs – Test the Taiwan market before committing to a full expansion.

When to Consider Setting Up a Local Entity?

🔹 Requires a physical presence in Taiwan (e.g., manufacturing or retail).
🔹 A large workforce (>50 employees) and need full legal control.
🔹 Direct control over corporate tax and financial structuring.

Conclusion

For most companies, using an EOR is the fastest, most cost-effective, and simplest way to hire employees in Taiwan. Instead of spending months on foreign investment approval and entity setup, an EOR allows businesses to:

✅ Hire top talent immediately without deep diving into the local regulations.
✅ Stay fully compliant with Taiwanese labour laws.
✅ Reduce administrative costs and focus on business growth.

If you’re expanding into Taiwan, an EOR is your low-risk, high-speed solution to hiring and scaling your team. 🚀

Next Steps

Want to hire employees in Taiwan without the hassle of setting up an entity? Contact Wanch today and start hiring within weeks!