EOR vs setting up an entity: a decision framework

Start with duration, not headcount

If you do not know whether you will still be in the country in two years, use an EOR. Incorporation is a multi-year commitment with fixed annual costs that do not scale down.

Headcount matters second. One or two people almost never justifies an entity. Ten people in a high-salary market often does.

The five inputs

Duration of commitment. Headcount in that specific country. Salary level, because percentage-based fees and fixed entity costs cross over at different points. IP sensitivity. Speed of hire.

IP sensitivity deserves a note. Assignment through an EOR is normally effective, but it adds a contractual link, and some acquirers ask about it in diligence.

Running the comparison

Entity cost is incorporation, local director or registered agent, accounting, audit where required, payroll software, and the internal time to run it. A realistic floor is 15,000 to 40,000 USD per year before salaries.

EOR cost is fee, FX and deposit on top of salary and contributions. Compare over three years, not one.

The cases that are not close

Testing a market, hiring a single senior person, or hiring while a corporate transaction is pending all point to an EOR.

A country that is already your second largest engineering site points to an entity.

Use the tool

The decision tool asks six questions and returns a recommendation with reasoning. It is a starting point for a conversation with your tax adviser, not a substitute for one.