Hiring in Taiwan: EOR Guide & Compliance Overview

Overview

If you are hiring your first 1-10 employees in Taiwan, using an EOR is usually the lowest-risk option because onboarding often starts in 2-6 weeks, while entity setup can take several months.

Taiwan punches far above its weight in semiconductors, electronics, and hardware engineering. TSMC alone employs over 70,000 people, and the broader tech ecosystem — IC design houses, ODMs, PCB manufacturers — creates a talent pool that’s globally competitive in chip design, firmware, and embedded systems. For companies that need hardware-adjacent engineering talent and can’t or won’t hire through a Chinese entity, Taiwan is the market.

In practice, teams apply this guidance faster when they pair it with best EOR options for Taiwan, remote roles in this market, and the Employer of Record glossary.

Employer costs are moderate. Labor Insurance and National Health Insurance (NHI) together run approximately 11% of salary, plus a 6% mandatory pension contribution to the Labor Pension Fund. Total employer burden lands around 17% above gross salary — comparable to Singapore’s CPF but spread across three separate programs with different caps and calculation bases. Severance is straightforward: 0.5 months’ average salary per year of service under the Labor Pension Act (applicable to employees hired after July 2005), with no cap on total severance.

Entity setup is manageable but not instant. Foreign companies typically establish a branch office or a subsidiary (limited company, 有限公司). Branch registration takes 4–8 weeks through the Investment Commission of the Ministry of Economic Affairs (MOEA), which reviews the investment application and requires a minimum operating fund. Subsidiaries require at least one shareholder and a resident director. The real bottleneck for foreign nationals is the work permit: Taiwan’s Ministry of Labor requires employer sponsorship and imposes salary minimums (TWD 47,971/month for general professional work permits). EOR solves both the entity and work permit problem for companies starting small.

Key Employment Facts

Employer Cost

Total mandatory employer cost: approximately 17–18% above gross salary. The Labor Pension Fund at 6% is the largest single component and has no cap, meaning it scales linearly with salary. For a senior engineer earning TWD 150,000/month, that’s TWD 9,000/month in pension contributions alone before you add LI and NHI.

Hiring Through an EOR

EOR onboarding in Taiwan takes 5–10 business days for local nationals. The process includes employment contract execution (bilingual Mandarin/English, with the Mandarin version governing in labor disputes), Labor Insurance enrollment, NHI registration, and Labor Pension Fund account setup. Taiwan requires employers to start LI and NHI coverage on the first day of employment — there’s no grace period, and late enrollment triggers penalties.

For foreign nationals, the work permit process adds 3–6 weeks. Taiwan’s Ministry of Labor (MOL) issues work permits tied to the sponsoring employer (the EOR entity). Requirements include: proof that the position cannot be filled by a Taiwanese national (for most categories), minimum salary of TWD 47,971/month for professional work, authenticated educational credentials, and a health examination completed in Taiwan. The EOR handles the MOL application, but candidates from countries without Taiwanese diplomatic recognition may face additional documentation requirements at the TECO (Taipei Economic and Cultural Office) in their home country.

Two common pitfalls. First, Taiwan’s overtime rules are strict and tiered: the first 2 hours of overtime on a regular workday pay at 1.34x, hours 3–4 at 1.67x, and rest day overtime starts at 1.34x for the first 2 hours and 1.67x thereafter. If your team works overtime regularly, the EOR must calculate and pay these premiums correctly — underpayment is a labor inspection trigger. Second, unused annual leave must be either carried over (by agreement) or paid out at the end of the year at the employee’s daily wage rate. There’s no “use it or lose it” — the employer always pays.

When to Set Up Your Own Entity

Taiwan offers R&D tax credits under the Statute for Industrial Innovation: companies can deduct 15% of qualifying R&D expenditure from corporate income tax (up to 30% of tax liability). If you’re hiring a significant engineering team and doing product development in Taiwan, the tax credit combined with a 20% flat corporate tax rate makes entity setup financially attractive beyond the EOR breakeven point.

Termination Rules

Taiwan’s Labor Standards Act specifies the grounds on which an employer may unilaterally terminate an employee. This is an enumerated list — termination outside these grounds is unlawful.

Statutory grounds (Article 11): Employer faces business contraction or suspension; force majeure makes it impossible to continue business; business changes that make the employee’s role redundant; employee is unable to perform duties; business changes requiring a reduction in workforce (with genuine excess headcount). Article 11 terminations require advance notice (10–30 days depending on tenure) and severance payment.

Severance pay (Articles 16–17): For Article 11 no-fault terminations: 1 month’s average wage per year of service, with no cap. For employees under the new Labor Pension Act (post-July 2005): 0.5 months’ average wage per year of service. Notice periods: 10 days (3 months–1 year tenure), 20 days (1–3 years), 30 days (3+ years). The employer can substitute pay in lieu of notice.

Immediate termination grounds (Article 12): For serious misconduct — deliberate breach causing employer loss, criminal conviction, violence, unauthorized absence for 3+ consecutive days or 6 non-consecutive days in a month. No notice or severance required.

Dispute resolution: Employees can file for wrongful dismissal mediation through the local Labor Affairs Bureau within 30 days of dismissal. The mediation process is faster than court proceedings (typically 2–4 weeks). Unresolved disputes proceed to the civil courts. Remedies: reinstatement or back wages from dismissal date through resolution.

Budget: notice period pay + severance (0.5 months per year) + accrued unused leave payout (unused leave must be paid out, not forfeited). For a 5-year employee at TWD 100,000/month average wage: severance = TWD 250,000 ($7,600) under the new pension system.

Statutory Benefits

Labor Insurance (LI): Comprehensive social insurance covering sickness, injury, disability, maternity, and unemployment. Total premium: ~12% of insured salary (employer pays ~70%, employee ~20%, government ~10%). Employer share: approximately 7.7–8.4% of insured salary (capped at TWD 45,800/month). Covers medical treatment for work injuries, short-term disability benefits, and maternity benefits.

National Health Insurance (NHI): Mandatory universal health coverage. Premium based on insured salary bracket; employer’s share is approximately 60% of the premium (~3.3% of salary). Coverage is comprehensive — major hospitals, outpatient care, prescriptions, dental. Enrollment must begin on the first day of employment; late enrollment triggers retroactive penalties.

Labor Pension Fund (new system, post-July 2005): 6% mandatory employer contribution on total monthly wages, no cap. Contributions are deposited into the employee’s individual Labor Pension Bureau account — the employee owns the account and takes it upon any separation. Not severance; a separate mandatory obligation.

Occupational Accident Insurance: Employer-funded at 0.2–0.9% depending on industry (separated from LI since May 2022). Must be enrolled from day one. Covers medical treatment, injury leave benefits, disability payments, and death benefits for work-related incidents.

Annual leave: Tiered by tenure — 3 days (6 months–1 year), 7 days (1–2 years), increasing to 15 days (5–10 years) and up to 30 days (15+ years). Unused leave must be either carried over by agreement or paid out at the end of each year. There is no “use it or lose it” — the employer always owes compensation for accrued untaken leave.

Maternity leave: 8 weeks at full pay (employer-funded, reimbursable from NHI for employees with 6+ months of insurance coverage). Paternity leave: 5 days at full pay.

Work Visas and Immigration

Most EOR hiring in Taiwan is of Taiwanese nationals. For foreign professionals, the Ministry of Labor (MOL) issues work permits tied to the sponsoring employer (the EOR entity). Taiwan does not recognize diplomatic relations with most countries, so permit applications are processed through the MOL’s online portal rather than requiring embassy attestation for most nationalities — but TECO (Taipei Economic and Cultural Office) involvement is required for citizens of non-diplomatic-recognition countries for initial entry.

General professional work permit: For roles requiring at least a bachelor’s degree in a relevant field. Minimum salary: TWD 47,971/month (subject to periodic adjustment). Requirements: authenticated degree credentials, proof the role cannot be filled locally, health examination completed in Taiwan. Processing: 3–6 weeks after submission.

No labor market test exception: Certain highly specialized roles in science, technology, and innovation are exempt from the local availability test. Applicants earning above TWD 96,000/month also receive expedited processing.

Permits are valid for up to 3 years and tied to the sponsoring employer. Changing EOR providers requires a new work permit application. Renewal must be initiated before the permit expires — a lapse in authorization creates legal exposure for both the employee and the EOR entity.

Frequently Asked Questions

Can I hire someone in Taiwan to work remotely for my overseas company without EOR or entity?

Technically, a Taiwanese national can work as an independent contractor for a foreign company with no local presence. But if the relationship looks like employment — fixed hours, company equipment, integration into company processes, single-client dependency — the tax authority and labor inspectorate can reclassify it. The contractor would owe unreported withholding tax, and you’d face penalties for unregistered employment (no LI, NHI, or pension contributions). For ongoing full-time roles, EOR is the compliant path. For genuine project-based consulting, contractor agreements work — just make sure the engagement is structured to pass scrutiny.

How does Taiwan’s new Occupational Accident Insurance Act affect my EOR employees?

Since May 2022, occupational accident insurance is a standalone program separated from Labor Insurance. All employees must be enrolled regardless of age or citizenship (previously, LI had an age cap). The employer pays 100% of the premium (0.2–0.9% of insured salary depending on industry). Coverage includes medical benefits, injury/illness leave benefits, disability payments, and death benefits. The practical impact for EOR: the EOR entity must enroll your employees in this separate program from day one, and failure to enroll results in the employer being fully liable for all accident-related costs without insurance coverage. Confirm your EOR has updated their Taiwan enrollment process post-May 2022.

What does the year-end bonus actually look like in practice?

The “year-end bonus” (年終獎金) isn’t legally required, but it’s so embedded in Taiwanese work culture that its absence is a dealbreaker for most candidates. Standard practice is 1–2 months’ base salary, paid before Lunar New Year. Top-performing tech companies regularly pay 3–6 months; TSMC’s average has historically exceeded 4 months. If your employment contract or company policy mentions a year-end bonus, it becomes contractually binding. Most EOR contracts specify a guaranteed minimum (typically 1 month) plus a discretionary component. Not offering at least 1 month puts you at a severe disadvantage in Taiwan’s competitive talent market.

To connect this guidance with live hiring demand, see hiring your first international employee and remote jobs by country.

Further Reading

• Deel EOR Review — Taiwan onboarding and APAC coverage
• Remote EOR Review — Owned-entity model and compliance in Taiwan
• Multiplier EOR Review — Asia-Pacific specialization including Taiwan
• Hiring in South Korea — Comparable APAC tech market with higher termination protection
• Hiring in Japan — Highest-cost APAC market with the strictest dismissal rules
• Compare EOR providers
• Best EOR by country
• Hiring your first international employee

Anchal Katyal · Founder, eorHQ

Anchal has spent over a decade in product strategy and market expansion across Asia and the Middle East. She evaluates EOR providers on compliance depth, entity ownership, payroll accuracy, and in-country support quality.

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