Employer of Record in Taiwan

Expanding your team into Taiwan offers access to a highly skilled and innovative workforce, but successfully onboarding employees requires careful adherence to local employment regulations. Companies typically have several avenues for establishing a presence and hiring staff in the country, each with its own set of complexities and advantages. Understanding these options is crucial for compliant and efficient market entry.

When considering hiring employees in Taiwan, companies generally have three primary approaches:

• Establishing a Local Legal Entity: This involves setting up a subsidiary, branch office, or representative office in Taiwan, which requires significant time, capital, and administrative resources to register, comply with corporate governance, and manage ongoing operations.
• Utilizing an Employer of Record (EOR): This solution allows you to hire employees in Taiwan quickly and compliantly without the need to establish your own local entity. A service like Rivermate acts as the legal employer, handling all local employment responsibilities.
• Hiring Independent Contractors: While this offers flexibility, it's essential to distinguish between genuine independent contractor relationships and employment to avoid misclassification risks under Taiwanese labor laws, which can lead to severe penalties.

How an EOR Works in Taiwan

An Employer of Record simplifies global expansion by taking on the legal and administrative burdens of employment. In Taiwan, an EOR assumes responsibility for:

• Local Employment Contracts: Ensuring all contracts are compliant with Taiwanese labor laws, including specific clauses for working hours, holidays, and termination.
• Payroll Processing and Tax Filings: Managing accurate salary payments, withholding and remitting local income taxes, social security contributions, and other mandatory levies to the relevant Taiwanese authorities.
• Benefits Administration: Providing and managing statutory benefits such as national health insurance, labor insurance, and pension contributions, as well as any agreed-upon supplemental benefits.
• HR Compliance and Support: Navigating the complexities of Taiwanese labor regulations, including leave policies, anti-discrimination laws, and dispute resolution.
• Onboarding and Offboarding: Handling the administrative processes for bringing new employees on board and managing compliant termination procedures.

Benefits for Companies Looking to Hire in Taiwan Without Establishing a Local Entity

Opting for an EOR service offers significant advantages for businesses aiming to tap into Taiwan's talent pool without the overhead of a full corporate setup:

• Rapid Market Entry: Hire employees in Taiwan within days or weeks, rather than the months typically required to establish a legal entity.
• Reduced Administrative Burden: Delegate complex payroll, tax, and HR compliance tasks to local experts, freeing up your internal teams to focus on strategic business objectives.
• Guaranteed Compliance: Mitigate the risk of non-compliance with Taiwan's intricate labor laws, which can be costly and time-consuming.
• Cost-Effective Expansion: Avoid the substantial costs associated with entity registration, office setup, and ongoing corporate governance.
• Flexibility and Scalability: Test the Taiwanese market or scale your team up and down with greater ease, without the long-term commitments of a permanent establishment.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Taiwan includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Taiwan.

Taiwan's tax system is residence-based, taxing residents on worldwide income and non-residents on Taiwan-source income. The tax year aligns with the calendar year. Employers must fulfill social security obligations, including contributions to labor insurance, national health insurance (NHI), labor pension, and employment insurance, with rates varying by program and employee salary levels.

Employers are responsible for withholding income tax from employees' salaries based on progressive rates for 2025, with brackets from 5% to 40%. They must file monthly withholding returns by the 10th of the following month, distribute annual tax statements by January 31, and file annual income tax returns by March 31. Employees can claim deductions such as standard, itemized, and special deductions, which reduce taxable income.

Foreign workers are taxed based on residency status, with tax treaties potentially reducing liabilities. Companies with a permanent establishment are subject to corporate income tax, and expatriate allowances may be taxable depending on circumstances. Compliance with deadlines and proper reporting are essential to avoid penalties.

Taiwan's salary landscape in 2025 reflects a competitive and evolving market, especially in technology, finance, manufacturing, marketing, and healthcare sectors. Average annual salaries vary by role and industry, with tech roles like software engineers earning between TWD 800,000 and 1,500,000, and data scientists between TWD 900,000 and 1,600,000. Finance, manufacturing, and healthcare roles also offer competitive compensation, with salaries generally increasing with experience and location, notably in Taipei.

Employers must adhere to the statutory minimum wage of TWD 27,470 monthly (TWD 183 hourly). Compensation packages often include bonuses such as year-end (1-2 months' salary), performance, attendance, and festival bonuses, along with allowances for transportation, meals, and housing. Payroll is typically processed monthly via bank transfer, with mandatory withholding for taxes and social insurance. Salary trends forecast continued growth driven by economic strength, increased demand for tech talent, and a focus on comprehensive benefits and performance-based incentives.

Taiwan's labor laws provide comprehensive leave policies for employees, with annual paid leave increasing with tenure. Minimum annual leave ranges from 3 days for 6 months to 1 year of service, up to 15 days for 5-10 years, and up to 30 days for employees with over 10 years, including additional days per year beyond 10 years. Unused leave can be carried over or compensated financially if not used.

Public holidays include New Year's Day, Lunar New Year, Peace Memorial Day, Children's Day, Tomb Sweeping Day, Labor Day, Dragon Boat Festival, Mid-Autumn Festival, and National Day. When holidays fall on weekends, employees typically receive a compensatory day off, with pay guaranteed for holidays worked.

Sick leave entitlements consist of 30 days of half-pay leave annually, with the option for unpaid leave up to one year within two years. Parental leave includes 8 weeks of maternity leave (full pay if over six months employed), 7 days of paternity leave (full pay), and unpaid parental leave up to two years per child. Additional leave types include bereavement, marriage, and optional study or sabbatical leave, depending on employer policies.

Taiwan's employee benefits are governed by mandatory labor laws and market practices. Employers must provide statutory benefits such as labor insurance, national health insurance (NHI), labor pension, paid leave, statutory holidays, and overtime pay. These benefits ensure coverage for work-related injuries, health, retirement, and leave entitlements, forming the baseline for employee compensation.

Key mandatory benefits include:

• Labor insurance covering injuries, sickness, maternity, disability, old age, and death.
• NHI offering comprehensive health coverage.
• Labor pension contributions based on a percentage of salary.
• Paid leave, including annual, sick, and parental leave.
• 12 paid statutory holidays annually, with compensation for holiday work.
• Overtime pay rates: 1/3 extra for the first 2 hours, 2/3 extra thereafter.

Taiwan's employment agreements must comply with the Labor Standards Act (LSA), which sets minimum standards for wages, working hours, and termination. These agreements define employment terms, including contract type, essential clauses, probation periods, confidentiality, non-compete clauses, and termination procedures, ensuring legal validity and protecting both parties' rights. Properly drafted agreements help prevent disputes and clarify roles and expectations, fostering a positive work environment.

Taiwan primarily recognizes two contract types: fixed-term and indefinite-term, each affecting termination rights and obligations. Fixed-term contracts specify a set duration, while indefinite contracts continue until terminated. Key employment conditions, such as wages, working hours, and termination notice periods, are regulated under the LSA.

Employers should ensure employment agreements include clauses on probationary periods, confidentiality, non-compete restrictions, and clear termination procedures, all aligned with Taiwanese labor law to mitigate legal risks.

Taiwan's remote work landscape is expanding, driven by technological progress and employee demand for better work-life balance. While there is no specific legislation for remote work, existing labor laws such as the Labor Standards Act, Gender Equality Act, Personal Data Protection Act, and Occupational Safety and Health Act apply, requiring employers to ensure legal compliance, data security, and safe working conditions. Employers are responsible for providing necessary equipment, maintaining communication, and establishing clear performance metrics for remote staff.

Flexible work arrangements are increasingly adopted, including options like telecommuting, flexible hours, and hybrid models, enabling employees greater control over their schedules and locations. Key considerations for employers include compliance with labor laws, data privacy, ergonomic support, and clear policy frameworks. The following table summarizes common flexible arrangements:

Overall, Taiwanese companies are encouraged to proactively develop policies that address legal obligations, data security, and employee management to optimize remote work benefits.

In Taiwan, employment termination must adhere to strict legal procedures, including proper notice, severance pay, and legitimate grounds. Notice periods vary by tenure: no notice for less than 3 months, 10 days for 3 months to 1 year, 20 days for 1-3 years, and 30 days for over 3 years. Employers can opt to pay employees in lieu of notice, covering the equivalent salary for the notice period.

Severance pay is mandatory for layoffs due to reasons like business closure or downsizing. It is calculated based on the employee’s average monthly wage over the last six months and their length of service, with a cap at six months' wages unless specified otherwise. The calculation differs depending on whether the service began before or after July 1, 2005.

Employers can terminate employees with cause (e.g., misconduct, incompetence) or without cause (e.g., business closure, workforce reduction). Procedural compliance includes documentation, providing written notice or payment in lieu, calculating severance accurately, issuing employment certificates, and reporting mass layoffs to labor authorities if applicable. Employees are protected against wrongful dismissal, with options for reinstatement, compensation, or legal action if unfairly terminated. Ensuring lawful procedures minimizes legal risks for employers.

Taiwan is experiencing a shift towards flexible work arrangements, with many opting for freelance or independent contracting roles. This trend is fueled by the demand for autonomy, specialized skills, and the need for businesses to access agile talent solutions. Employers must navigate the legal landscape, focusing on proper worker classification to avoid legal and financial risks. The distinction between an employee and an independent contractor hinges on factors like control, integration, exclusivity, risk, tools, payment structure, and the nature of work. Courts in Taiwan often use a "subordination test" to assess these relationships.

Key elements of independent contractor agreements in Taiwan include defining the scope of services, deliverables, payment terms, confidentiality, and intellectual property rights. Properly drafted contracts ensure clarity and protect both parties. Intellectual property created by contractors typically belongs to the creator unless otherwise specified in the contract. Tax obligations for contractors include income tax and potentially business tax (VAT) if income thresholds are met. Contractors must manage their own insurance, including National Health Insurance, as they are not covered by the engaging party's labor insurance.

Independent contractors are prevalent in various industries, particularly where specialized skills are required. Common sectors include technology, creative services, consulting, education, healthcare, media, and professional services. This flexible workforce model allows businesses to engage skilled professionals on a project basis, adapting to changing demands and fostering innovation.

Taiwan offers various work visa options tailored to different employment scenarios, including work permit-based visas, specialized/technical personnel visas, investment visas, intra-company transferee visas, and teaching visas. Employers must secure a valid work permit before applying for the appropriate visa, which facilitates legal employment for foreign professionals.

Key data points include:

Employers must ensure compliance with application procedures and renewal timelines to maintain legal employment status. Long-term residency and work rights are also available through extended permits, contingent on continued compliance and employment duration.