EOR vs Your Own Entity? The Cost for One Employee Abroad

In this guide

An employer with one person to hire abroad gets quoted two things: a monthly fee from an Employer of Record, and a setup fee from a formation agent. The setup fee looks smaller, and it is the wrong number.

We run payroll and employment in 150+ countries and sell both sides of this decision, so we have no reason to steer the answer. Local currency converts at European Central Bank reference rates of 8 September 2026, indicatively only.

The EOR vs. own entity question is almost always framed around setup cost. It should not be.

Is an Employer of Record cheaper than setting up your own entity for one employee? An Employer of Record (EOR) becomes the legal employer of your worker in their country while they work for you day to day. Registering your own company abroad is cheap, usually a few hundred dollars. Keeping it compliant is not, and runs roughly USD 1,200 to USD 6,700 a year before anyone is paid. The entity is cheaper only when that annual running cost falls below twelve times your monthly EOR fee, which for one employee it often does not.

1. The Only Calculation That Matters

Both routes pay the same salary and the same employer social contributions. Those are set by the country rather than the model, so they largely cancel out. Any table where the EOR column includes salary and the entity column does not compare two different things.

The remaining difference comes down to two things:

• Entity route: one-time setup, plus an annual cost to keep the company registered, filed and running payroll.
• EOR route: a monthly fee per employee.

So the break-even is:

Months to break even = setup cost ÷ (monthly EOR fee − monthly entity running cost)

The trap sits in the denominator, where if your entity's monthly running cost exceeds the EOR fee, the subtraction goes negative and there is no break-even point at all. Holding the entity longer widens the gap. For one employee that is the normal outcome in several countries, which is why asking "how many months until the entity pays for itself" assumes the conclusion.

2. What the Government Actually Charges

Every figure below comes from the authority that levies it, at its current published rate.

United Kingdom

• To register: GBP 100 digital¹
• Annually, government only: GBP 50 confirmation statement¹
• Minimum capital: none²

Germany

• To register: EUR 225 register, plus EUR 75 register data³ and mandatory notary⁴
• Annually, government only: EUR 19.80 transparency register⁵
• Minimum capital: EUR 25,000 subscribed, EUR 12,500 paid in⁶⁷

Singapore

• To register: SGD 315, being SGD 15 name and SGD 300 registration⁸
• Annually, government only: SGD 60 annual return⁸
• Minimum capital: SGD 1

Japan

• To register: JPY 150,000 registration and license tax for a kabushiki kaisha, JPY 60,000 for the simpler godo kaisha⁹, plus JPY 30,000 to 50,000 notary for a KK¹⁰
• Annually, government only: JPY 70,000 corporate inhabitant per-capita levy¹¹
• Minimum capital: JPY 1

Japan charges a flat annual tax whether or not you make a profit. The corporate inhabitant per-capita levy is JPY 70,000 a year in Tokyo at a capital of JPY 10,000,000 or less and 50 or fewer employees.¹¹ A dormant subsidiary with no revenue still pays it. The band is measured on capital plus capital reserve, so a reserve on top of small stated capital can push you into the JPY 180,000 band.

Germany's EUR 12,500 is share capital. It stays on the balance sheet and you can spend it afterwards. What it does is block you: the registration application cannot be filed until the money is paid in,⁷ into an account in the name of a company that does not legally exist yet. The bank account normally holds up the incorporation.

The United Kingdom raised its fees on 1 February 2026, incorporation to GBP 100 and the confirmation statement to GBP 50.¹ Most comparison pages still quote the older GBP 50 and GBP 34.

3. The Annual Running Cost Is What Decides It

Registration is one small payment. Keeping the entity alive means buying, every year, whatever the local companies act requires.

Which Countries Require a Local Director

Some countries require a director who lives there. If your company has nobody there, and for a first hire it usually does not, you have to buy that person.

• Singapore requires at least one director ordinarily resident there, from incorporation and continuously.¹² Nominee services publish SGD 2,000 to SGD 3,500 a year, and several require you to buy their accounting.
• Australia requires a proprietary company to have at least one director ordinarily resident there.¹³
• The United Kingdom requires only that one director is a natural person, with no residency test.¹⁴
• Germany does not require a resident managing director.¹⁹
• Japan dropped the resident representative director requirement for subsidiaries in March 2015,²⁰ which formation pages still get wrong. It holds only for a subsidiary you incorporate. A branch office is a separate route and must register a representative in Japan.²²

Singapore also requires a resident company secretary,¹² where the United Kingdom expressly does not require a private company to have one.¹⁵

Regional Examples: UK, Singapore, and Germany

Ranges run from a lean build to a fuller outsourced one. Government fees carry a source below; the rest come from providers' published schedules, and the chamber's own, checked in September 2026.

These figures shift year to year, so treat them as a budgeting range. A single figure is one provider's published price.

United Kingdom, the cheapest case.

• Confirmation statement GBP 50
• Registered office GBP 35 to GBP 47
• Accountancy, covering accounts, the corporation tax return and payroll, GBP 720 to GBP 4,200
• Payroll software GBP 0 to GBP 114
• Employers' liability insurance, compulsory once you have staff, from about GBP 80

Total GBP 885 to GBP 4,491 a year, roughly USD 1,199 to USD 6,083, assuming no statutory audit.

Check that before relying on it. A subsidiary loses the small company audit exemption unless the worldwide group is also small, and the guarantee route that would rescue it is open only to parents established under United Kingdom law.¹⁸ A foreign parent cannot use it, and an audit adds several thousand pounds.

Singapore, where the requirements bite.

• Annual return SGD 60
• Resident director SGD 2,000 to SGD 3,500
• Company secretary SGD 350 to SGD 720
• Registered office SGD 400
• Accounting and tax filing SGD 900 to SGD 3,000
• XBRL accounts preparation SGD 500
• Payroll SGD 300

Total SGD 4,510 to SGD 8,480 a year, roughly USD 3,563 to USD 6,699.

Two Singapore details trip up foreign parent companies, both pushing the total up. A subsidiary whose shares are held by a corporation is not an exempt private company, so it loses the filing relief most cost guides assume and must file accounts in XBRL, a structured digital format.¹⁶

The audit exemption is also tested on the group, on the parent's worldwide figures, so a small subsidiary of a large parent still needs an audit. The total above assumes none.

Germany, expensive to open and cheap to hold. Tax adviser fees follow a statutory scale.¹⁷

• Transparency register EUR 19.80
• Company register and accounts filing EUR 21 to EUR 31
• Chamber of commerce dues, EUR 132 in the lowest Hannover band, set by each of the 79 chambers
• Payroll EUR 6 to EUR 30 per employee per month, so EUR 72 to EUR 360 for one person
• Bookkeeping EUR 451 to EUR 2,707, on a EUR 100,000 basis
• Annual accounts EUR 369 to EUR 1,476, on the same basis

A written agreement can exceed that scale, so treat the top of this range as a conservative ceiling. Total EUR 1,065 to EUR 4,726 a year, roughly USD 1,237 to USD 5,489, excluding the tax adviser's return work and the German business address a foreign parent must rent.

4. EOR vs Own Entity: Where the Math Flips

Plug in the fee you were quoted. Our published Employer of Record pricing starts at USD 250 a month, with cost varying by country, region and service scope,²¹ so the table runs that floor and two higher points. Your quoted fee moves the answer more than the country does.

Annual entity running cost against annual EOR cost, one employee, salary and contributions excluded from both sides:

All three rows assume no statutory audit. Add one and every verdict moves toward the EOR.

Down the first column, an entity for one person cannot win in Singapore at any level of thrift: the leanest complete build still lands above USD 3,000, and the resident director is more than 40 percent of it. The same entity that loses against USD 250 a month wins against USD 700.

Setup costs are absent from that table on purpose. Except in Germany, where the notary fee is the main cost variable, setup costs are typically recovered within the first month under either model.

For a country not listed here, book a demo and we will cost it with you.

5. What the Arithmetic Leaves Out

Real costs sit outside the tables, on both sides.

On the entity side. Your own time is not counted, nor the cost of closing, nor the potential for director liability: in Singapore, if a company trades for more than six months without a resident director, a member who knows becomes personally liable for debts contracted after that point.¹²

Timelines are underestimated most: roughly 4 to 8 weeks in the United Kingdom, 6 to 12 weeks in Singapore and 8 to 14 weeks in Germany before you can legally pay anyone.

On the EOR side. The fee is not always the whole invoice. In our experience, many providers hold a refundable deposit of one to one and a half months of total employment cost, and currency conversion carries a margin above the mid-market rate that is built into the converted amount rather than shown as a line. Some charge onboarding or offboarding fees. Get all of them in writing.

Germany locks up EUR 12,500 before you can register, and an EOR deposit locks up roughly a month of cost. Neither is an expense, and both are cash you cannot use elsewhere.

One risk sits outside both columns. Running someone through a contractor arrangement or a foreign payroll instead of either model creates misclassification risk and permanent establishment exposure, where the tax authority treats your activity as a taxable presence of the parent.

Both can cost far more than either model in this article. We cover it in our guide to permanent establishment risk, and the exit side in employee termination laws, where severance in some markets exceeds a year of either model's cost.

6. How We Handle the Two Routes

We sell both routes, which is why the table concedes where it does. Our Employer of Record covers the no-entity route from USD 250 a month,²¹ through our own entities in Singapore, Hong Kong, Taiwan, Malaysia, Vietnam, and mainland China, and over 600 local compliance partners elsewhere. Our Global Payroll service covers the other route, once the entity is established, across 130+ currencies and in markets worldwide. We are also ISO 27001 certified and run payroll in 150+ countries.

Most companies run these in sequence: hire the first person through an EOR while the market is unproven, then incorporate once headcount or permanence makes the fixed base worth carrying. Across several people the arithmetic changes shape, and we analyze the numbers by headcount in our direct payroll comparison.

Talk to our team about both routes

Frequently Asked Questions

Q1. Is an EOR cheaper than a local entity for one employee?

It depends on your quoted fee more than the country. At USD 250 a month, an entity cannot win in markets that require a resident director, such as Singapore, where the nominee alone costs more than a year of that fee. At USD 700, it is usually cheaper on paper in the UK and Germany.

Q2. How much does it cost to set up a company abroad?

The government registration fee is small: GBP 100 in the United Kingdom and SGD 315 in Singapore. Germany and Japan cost more because notarization is compulsory, and Germany requires EUR 12,500 paid in before registration can be filed. What decides the comparison is the annual running cost, roughly USD 1,200 to USD 6,700 a year.

Q3. What is the biggest hidden cost of running your own foreign entity?

The resident director requirement, where it exists. Singapore demands a director ordinarily resident there, from incorporation and continuously, so a foreign parent has to buy one. Nominee services publish SGD 2,000 to SGD 3,500 a year, over 40 percent of the entity's total annual cost, and the reason Singapore fails against a low EOR fee.

Q4. How long does it take to set up an entity and pay someone?

Roughly 4 to 8 weeks in the United Kingdom, 6 to 12 weeks in Singapore, 8 to 14 weeks in Germany. Registration is rarely the bottleneck. Bank accounts, identity verification and apostilled parent documents are. Germany adds another, because registration cannot be filed until EUR 12,500 is paid into a bank account.

Q5. Do I need a local director to open a company abroad?

In Singapore and Australia, yes. A locally resident director is a legal requirement from the date of incorporation in both countries. In the United Kingdom, Germany, and for a Japanese subsidiary, no residency condition applies. A Japanese branch office is a separate structure with its own local representative requirement.

Q6. At what point should we switch from an EOR to our own entity?

When the entity's annual running cost drops below twelve times your monthly EOR fee, and you are confident enough in the market to accept a setup timeline measured in months and a slower exit if needed. In practice, that threshold typically arrives at three to five employees in a single market, not one.

Q7. Does Slasify support both models?

Yes. Our Employer of Record employs people where you have no entity, from USD 250 a month, through our own entities across Asia and over 600 local partners elsewhere. Our Global Payroll service runs payroll through entities you already own, so we price both routes for the same hire.

Send us the country, the salary and your quote, and we will show you which side of the line it falls on. Book a demo and we will work through it.

Run the numbers with our team

Government fees, statutory fee scales and provider price ranges reflect published Companies House, ACRA, German federal, Japanese national and Tokyo Metropolitan schedules as of September 2026. Currency conversions use European Central Bank reference rates of 8 September 2026 and move daily. Confirm current figures before committing to either route.