EOR vs PEO, own company or contractor: which one fits?

Four ways to employ someone abroad

The options differ in one main point: who is the legal employer. That decides who signs the contract, who runs the payroll and who carries the duties of an employer.

Sources: IRS, Third party payer arrangements: professional employer organizationsChecked 4 Oct 2026

EOR vs PEO: the main difference

An EOR and a PEO both take over payroll and HR tasks. The difference is who employs the person. Read how an EOR works.

Employer of record (EOR)

The EOR, or its local partner, employs the person. It signs the employment contract, runs the payroll and pays the employer costs. You direct the daily work. You pay the EOR the salary, the employer costs and its fee.

Professional employer organisation (PEO)

A PEO handles payroll administration and tax reporting for its clients. It is typically paid a fee based on payroll costs. Under US federal tax law, the client generally stays the employer, and it stays liable for the employment taxes.IRS, Third party payer arrangements: professional employer organizations, IRS, Certified professional employer organizationChecked 4 Oct 2026

Certified PEO (CPEO)

In the US, the IRS can certify a PEO. A certified PEO is treated as the employer for federal employment taxes. This applies only to the wages that it pays.IRS, Third party payer arrangements: professional employer organizationsChecked 4 Oct 2026

So a PEO works with your own company, which stays the employer. An EOR does not need your company in the country. This is why companies use an EOR to hire in a country where they have no company.

The PEO rules above are US federal tax rules. Other countries have their own rules for employers and for the supply of workers. See the section on local rules below.

What an EOR costs

In our 10 countries, EOR providers publish fees of US$197 to US$796 a month for each employee, at the ECB rate of 30 Sep 2026. Some providers give a price only in a quote.

On top of the fee, you pay the gross salary and the employer costs that the law requires. The employer costs are 4.0% of the gross salary in India to 50.9% in Brazil. You pay them with every option except a contractor. See the all-in cost in each country.

With your own company, you pay no EOR fee. But you pay to set up and run the company, and for payroll, accounting and HR support.

Sources: Boundless pricing, Oyster pricing, European Central BankChecked 1 Oct 2026

Your own company in each country

With your own company, you employ people directly. In some countries, a foreign company can also register as an employer with no local company. Our country guides list what each way needs:

Germany

You set up a company, such as a GmbH, and employ people directly. A GmbH needs at least €25,000 of share capital. You also need payroll, accounting and HR support in Germany.Limited Liability Companies Act (GmbHG), section 5Checked 1 Oct 2026

United Kingdom

You can register a private limited company online with Companies House for £100. Each share can have any value. The company must then register as an employer with HMRC before the first payday.Register your company, Limited company shareholders, Register as an employerChecked 1 Oct 2026

Canada

You can incorporate a federal company online with Corporations Canada for CA$200. The company must also register in each province where it does business. It needs a CRA business number and a payroll program account before its first payroll remittance is due.Corporations Canada, fees, Corporations Canada, register in a province, CRA, employers' guide T4001Checked 1 Oct 2026

India

A private company needs at least 2 directors. At least one of them must stay in India for 182 days or more in the financial year. The law sets no minimum capital. The online form SPICe+ also registers a new company with EPFO and ESIC.Companies Act, 2013, sections 2 and 149 (PDF), PIB, SPICe+ company registration, 24 Feb 2020Checked 1 Oct 2026

Philippines

Your own Philippine company: Foreign investors can own up to 100% of most businesses. A company that is more than 40% foreign-owned and sells to the Philippine market needs a paid-in capital of at least US$200,000. The minimum is US$100,000 for some firms, such as firms where most of the direct employees are Filipino, with at least 15 of them. A branch of your company: A foreign company needs a licence from the Securities and Exchange Commission (SEC) to do business in the Philippines. The SEC filing fee for a branch office is 1% of the money that the company sends in, and at least ₱3,000.Republic Act No. 11647, Foreign Investments Act amendments, Republic Act No. 7042, Foreign Investments Act, section 3, Republic Act No. 11232, Revised Corporation Code, section 140, SEC, applications of foreign corporationsChecked 1 Oct 2026

Netherlands

Your own company as the employer: A foreign company can register with the Belastingdienst as an employer and run a Dutch payroll, with no Dutch company. Your company then has all the duties of a Dutch employer. A Dutch company (BV) or a branch: A civil-law notary sets up a BV and registers it with KVK. The starting capital is at least €0.01. A foreign company with a Dutch branch has a permanent establishment and must register in the Handelsregister.Belastingdienst, you choose to withhold payroll taxes, Belastingdienst, registering as an employer from abroad, Business.gov.nl, the private limited company (BV), KVK, starting a BV, Business.gov.nl, registering a foreign companyChecked 2 Oct 2026

Singapore

A private limited company needs at least S$1 of share capital and at least 1 director who is ordinarily resident in Singapore. It appoints a company secretary within 6 months. ACRA charges S$15 for the name and S$300 for the registration. Foreigners must use a corporate service provider to register.ACRA, share capital, Companies Act 1967, section 145, ACRA, company directors and other officers, ACRA, service and transaction fees, ACRA, requirements and eligibilityChecked 2 Oct 2026

Brazil

A limited company (Ltda) can have one member. A foreign company that is a member needs a Brazilian tax number (CNPJ) and a representative who lives in Brazil. The managers can live abroad, with a representative in Brazil. The company reports the foreign investment to the Central Bank. A foreign company needs a federal authorisation to operate in Brazil through a branch.Civil Code, articles 1.052 and 1.134, DREI, manual for limited companies (PDF), Banco Central, Resolução BCB 278/2022Checked 2 Oct 2026

Spain

Your own company as the employer: A foreign company can register with the Seguridad Social as an employer, with no Spanish company. It needs a representative with an address in Spain and a Spanish tax number (NIF). It must also withhold income tax from the salary. A Spanish company (SL): A sociedad limitada needs a capital of at least €1. Until the capital and the reserves reach €3,000, at least 20% of the profit goes to a legal reserve. A public deed sets up the company, and it registers in the Registro Mercantil. Each partner needs a Spanish tax number (NIF).Ministry of Labour, a company abroad with a worker in Spain, Real Decreto 1415/2004, contribution collection, article 16 (BOE), Personal Income Tax Act (LIRPF), articles 93 and 99 (BOE), Companies Act (LSC), articles 4, 20 and 33 (BOE), Agencia Tributaria, the tax number (NIF) of a personChecked 2 Oct 2026

Mexico

A company has no legal minimum capital. A sociedad anónima needs at least 2 shareholders. A company with foreign investment registers in the National Foreign Investment Register within 40 working days, and it renews the registration each year. A foreign company that does business in Mexico on a regular basis needs an authorisation and a branch or an agency in Mexico.General Companies Act (LGSM), articles 62 and 89 (Orden Jurídico Nacional), Foreign Investment Act, articles 17, 32 and 35 (Orden Jurídico Nacional)Checked 2 Oct 2026

A local payroll company can run the payroll for your company. It does not employ the person, so your company keeps all the duties of an employer. Each country guide has a section on when a payroll company is enough.

Contractors: when the status is wrong

A contractor works for themselves and sends you invoices. You pay no employer costs. But in each of our countries, the law looks at how the work is done, not only at the contract. A person who works like an employee can count as one.

Germany

A freelancer sends you invoices. This works only when the person is really independent. If the person works on your instructions and as part of your organisation, the law treats the work as employment. Then social contributions are due.Social Code IV (SGB IV), section 7Checked 1 Oct 2026

United Kingdom

A contractor sends you invoices. When the contractor works through their own company, the off-payroll working rules (IR35) can apply. A public sector client, or a medium or large private client, must decide if the work counts as employment for tax. For a small private client, the contractor's company decides.Understanding off-payroll working (IR35)Checked 1 Oct 2026

Canada

A contractor sends you invoices. The CRA looks at the whole working relationship in two steps. First, it asks what both sides intended. Then it looks at control, tools and equipment, helpers, financial risk, investment and the chance of profit. In Quebec, the CRA applies the Civil Code instead: it looks at the work, the pay and the relationship of subordination.CRA, employee or self-employed (RC4110)Checked 1 Oct 2026

India

No single law sets the test. The Labour Codes define an employee widely: a person employed for hire or reward, on terms that are written or only implied. So a long-term contractor who works like an employee is a risk under all four Codes.Code on Social Security, 2020 (PDF), Code on Wages, 2019 (PDF)Checked 1 Oct 2026

Philippines

The Supreme Court uses a four-fold test: who selects and engages the worker, who pays the wages, who can dismiss the worker, and who controls the work. Control is the most important element. The Court also looks at the economic realities of the relationship.Supreme Court, Sonza v. ABS-CBN, G.R. No. 138051 (2004), Supreme Court, Francisco v. NLRC, G.R. No. 170087 (2006)Checked 1 Oct 2026

Netherlands

The Belastingdienst looks at 3 features of employment: the authority of the employer, the duty to do the work in person, and pay for the work. All facts count. Since 1 January 2025, the Belastingdienst enforces these rules again. Since 1 January 2026, it can give fines for wrong classification in serious cases.Belastingdienst, employment relationships, Belastingdienst, enforcement of employment relationshipsChecked 2 Oct 2026

Singapore

MOM says that no single test decides between an employee and a contractor. It looks at control (who hires, pays and directs the person), at who owns the tools and the workplace, and at the economic facts, such as who takes the profit or the loss.MOM, contract of serviceChecked 2 Oct 2026

Brazil

An employee is a person who works for an employer in a regular way, under its direction and for a salary. Direction through digital tools counts too. A contract that hides an employment is void. The Supreme Court has not yet decided its case on contracts with a person's own company (Tema 1389).Consolidation of Labour Laws (CLT), TRT-4, the Supreme Court case on PJ contracts (Tema 1389), 19 Jun 2026Checked 2 Oct 2026

Spain

The law presumes an employment contract when a person works for pay within the organisation and under the direction of another. A self-employed person who earns at least 75% of the income from one client is economically dependent (TRADE), with extra rights.Workers' Statute (Estatuto de los Trabajadores), Self-Employed Workers' Statute (LETA), article 11 (BOE)Checked 2 Oct 2026

Mexico

A worker is a person who does personal work under the direction of another, for a salary. The law applies the same effects to any such relationship, whatever the contract says.Federal Labour Act (LFT), SEP copy (PDF)Checked 2 Oct 2026

Local rules for an EOR

In some countries, an EOR arrangement falls under the rules for agency work, contracting or the supply of workers. These rules can ask for a licence or limit how long one person works for you. Some ban the arrangement for some work.

Germany

Yes, but check the agency work rules first. An EOR arrangement can count as temporary agency work. Then the provider needs an AÜG licence, and one worker can work for the same client for at most 18 months in a row.Temporary Agency Work Act (AÜG), section 1, Temporary Agency Work Act (AÜG), section 8Checked 1 Oct 2026

United Kingdom

Yes. Many providers employ people in the UK through their own UK companies. But check the agency work rules first. If they apply, the worker gets the same basic conditions as a direct recruit after 12 weeks.Agency Workers Regulations 2010, regulation 3, Agency Workers Regulations 2010, regulation 5, Agency Workers Regulations 2010, regulation 7, Conduct Regulations 2003: guidance, Licences for employment agenciesChecked 1 Oct 2026

Canada

Yes. Several providers employ people in Canada through their own Canadian companies. But check the agency licences in Ontario and Quebec before you sign.Ontario, licensing temporary help agencies, Employment Standards Act, 2000 (Ontario), section 1, CNESST, the licence obligation, Government of Quebec, 27 Nov 2019, Alberta, employment agency licence, British Columbia, licensing employment agenciesChecked 1 Oct 2026

India

Several providers say that they employ people in India through their own Indian companies. But check the contractor licence under the OSH Code before you sign.Occupational Safety, Health and Working Conditions Code, 2020 (PDF)Checked 1 Oct 2026

Philippines

Several providers say that they employ people in the Philippines through their own Philippine companies. But the Labor Code bans labour-only contracting, so ask each provider how it meets the DOLE contracting rules.Labor Code of the Philippines, DOLE 2022 edition (PDF, ILO NATLEX)Checked 1 Oct 2026

Netherlands

Several providers say that they employ people through their own Dutch companies. Dutch law sees an EOR service as the supply of workers. The supplier must register in the Handelsregister now, and from 1 January 2028 it needs a Wtta admission. Ask each provider about both.Waadi (Placement of Personnel by Intermediaries Act), articles 1, 7a and 8a, Business.gov.nl, registering a foreign company, Staatsblad 2026, 159, the start of the Wtta, Staatsblad 2025, 385, the Wtta, Business.gov.nl, suppliers of personnel must be authorised, NAU, do you need an admissionChecked 2 Oct 2026

Singapore

Several providers say that they employ people in Singapore through their own Singapore companies. MOM says that you need no employment agency licence to outsource your own staff to your customers, but its licence page does not name EORs. An EOR cannot get a work pass for a foreigner who works for an overseas company.MOM, who needs an employment agency licence, Employment Agencies Act 1958, sections 2 and 6Checked 2 Oct 2026

Brazil

Brazilian law does not name EORs. Outsourcing is legal for any activity, but the provider must direct the work. Temporary work through a registered agency is limited to 270 days. When the client directs the worker, a court can find an employment link with the client. Several providers say that they employ people through their own Brazilian companies. Ask a Brazilian labour lawyer.Lei 6.019/1974, temporary work and outsourcing, Decreto 10.854/2021, labour rules, gov.br, registration of a temporary work company, TRT-6, the Supreme Court thesis on outsourcing (Tema 725), TST, Súmula 331 (LexML)Checked 2 Oct 2026

Spain

Spanish law does not name EORs. Article 43 of the Workers' Statute allows the supply of workers to another company only through an authorised ETT, and only for temporary needs. The providers do not agree: Boundless says that it cannot act as an EOR in Spain, and Skuad says that it uses an ETT. Ask each provider how its service fits article 43, and ask a Spanish lawyer.Boundless Spain guide, Skuad Spain page, WorkMotion blog, Deel vs Remote vs WorkMotion, Workers' Statute (Estatuto de los Trabajadores), LISOS, offences and sanctions, articles 8 and 40 (BOE), Ley 14/1994, temporary work agencies (ETT) (BOE)Checked 2 Oct 2026

Mexico

Mexican law does not name EORs. It bans the subcontracting of personnel, and it allows only specialised services outside the client's main activity, from a provider in the REPSE register. The providers do not say the same thing about how an EOR fits these rules. Ask each provider about the REPSE, and ask a Mexican labour lawyer.WorkMotion Mexico page, Remote local terms, Boundless blog, EOR services in Mexico, Federal Labour Act (LFT), SEP copy (PDF), Subcontracting reform decree (DOF, 23 Apr 2021), STPS, the REPSE register, STPS rules for the REPSE register (DOF, 24 May 2021), Changes to the REPSE rules (DOF, 21 Feb 2024)Checked 2 Oct 2026

The pros and cons of an employer of record

The advantages:

• You need no company in the country.
• The EOR runs the payroll, the tax and the social insurance.
• The EOR signs a local employment contract, under the local employment rules.
• You can start with one employee.

The disadvantages:

• You pay a fee for each employee, every month: US$197 to US$796 a month for each employee in our countries.
• The fee is the same for each employee. With many employees in one country, compare it with the cost of your own company.
• In some countries, the rules for agency work or the supply of workers limit an EOR, or make it unclear.
• The EOR, not you, is the employer. You depend on its contract terms and on its local partner.

How to choose

1. Check if the person is really independentIf the person decides how to work and has other clients, a contractor can fit. Check the test of the country.
2. Count the people and the timeFor one or a few people, or a test of the market, an EOR is simple. For a large team that stays, your own company can cost less.
3. Check your company in the countryIf you have a company there, a local payroll company or a PEO can be enough.
4. Check the local rules for an EORRead the section on local rules for your country, and ask each provider how it meets them.
5. Compare the all-in costCompare the salary, the employer costs and the fees, and ask the providers for quotes.