Purpose of the hire
Product, support, research, or sales each create different commercial and tax questions. Name the purpose in writing.
Market entry
Test a market with people, before you build a company there.
An employer of record can employ the first local team while you learn whether the market deserves a subsidiary. Keep employment, commercial activity, and tax presence as separate questions.
Split the operating need
Write two lists: what employment covers, and what it does not
Usually inside an EOR engagement
- A local employment contract for a defined role
- Gross-to-net payroll and employer contributions
- Statutory leave and required benefits administration
- Documented change and offboarding process
Usually outside employment alone
- Customer contracts in the local companyβs name
- Regulated licences, import registrations, or a local lease
- A local bank account for the parentβs own entity
- A conclusion that no permanent establishment exists
Tax presence is a separate analysis. Hiring through an EOR does not, by itself, close a permanent-establishment question. See EOR and permanent establishment.
A useful market-test design
Define the test, the duration, and the exit or conversion path
Teams get stuck when the first hire is treated as a permanent operating model. Write the review date at the same time as the start date.
Duration and headcount range
A dated plan with a low and high headcount is more useful than a single βwe will seeβ statement.
What would trigger an entity
Examples: local contracting, a licence, banking, a lease, or a documented cost crossover. There is no universal headcount rule.
How people would transfer
Preserve compensation, service history, and accrued balances where local law or the agreed transfer requires it. Sequence payroll registrations before the employing party changes.
Market-entry questions
Keep employment and presence distinct
Does EOR replace a local subsidiary for market entry?+
EOR can cover local employment. It does not replace a local contracting entity, licence, bank account, lease, or tax presence analysis where those are required for the business activity.
When should we move from EOR to our own entity?+
Review the model when the market becomes durable, local contracting or licensing is required, provider limits interfere with the work, or a documented cost model supports the change. Headcount can influence cost; it should not be the only trigger.
Can salespeople work through an EOR during a market test?+
Employment can often be arranged. Authority to bind the company, local customer contracts, and permanent-establishment analysis still need tax and legal review. See the go-to-market industry page.
Map the market test
Tell us the country and what
Tell us the country and what
the first team will actually do.
We will separate employment administration from the commercial and tax questions that still need advisers.
Last reviewed: 29 September 2026. General operational information only; not legal or tax advice.