Companies typically use an Employer of Record for fast entry, payroll management for existing entities, and entity setup for durable presence. Taiwan's Labour Pension scheme and the deeply embedded year-end bonus culture are the two features requiring the most careful planning.

Employer of Record in Taiwan

An EOR removes the need to register for Labour Insurance, National Health Insurance (NHI), and the Labour Pension scheme directly. It suits early tech hires and companies testing the Taiwanese market; it is less suited to established entities. Taiwan's deep technology talent pool — particularly in semiconductors, hardware, and software — makes it a strategically important market for technology companies, and an EOR provides a fast, compliant entry path.

How payroll works in Taiwan

Taiwanese payroll withholds income tax at progressive rates and requires employer and employee contributions to Labour Insurance and National Health Insurance (NHI), plus a mandatory employer contribution (minimum 6 percent of monthly salary) to the Labour Pension scheme, credited to an individual employee pension account. Payroll is monthly. The Labour Pension contribution is fully portable — it belongs to the employee regardless of how the employment ends.

Payroll frequency and reporting obligations

Monthly payroll is standard, with Labour Insurance, NHI, and Labour Pension contributions remitted monthly to the respective bureaus. Annual tax reconciliation applies for most employees. Employers must register with the Bureau of Labour Insurance and the National Health Insurance Administration before the first employee starts work. The Labour Pension contribution is remitted monthly to the Bureau of Labour Funds.

Key payroll nuances

The Labour Pension contribution (minimum 6 percent employer-paid into an individual account) is a distinctive, fully portable retirement benefit that employees can supplement voluntarily. There is no statutory 13th-month payment, but a year-end bonus, particularly around Lunar New Year, is deeply embedded market practice similar to mainland China and Vietnam — it should be budgeted as expected cost in most sectors. Labour Insurance and NHI contribution rates and caps are reviewed periodically.

Pay components and employer costs

Typical pay components include base salary and the market-standard year-end bonus. Employer Labour Insurance, NHI, and Labour Pension contributions together commonly add around 15 to 20 percent on top of salary. The year-end bonus adds a further expected annual cost that needs to be budgeted — in Taiwan's technology sector, year-end bonuses can be substantial and are a key element of competitive compensation.

Benefits and leave entitlements

Statutory annual leave starts at 3 days after six months of service, rising progressively with tenure to a maximum of 30 days for employees with 10 or more years of service. Maternity leave is 8 weeks. Paternity leave is a separate statutory entitlement. Public holidays include Lunar New Year (typically several consecutive days), National Day, and other traditional observances. The Lunar New Year period is the most significant holiday cluster and affects business planning for the first quarter.

Hiring and employment contracts

Written contracts are standard practice in Taiwan. Probation periods are commonly three months, contract-defined rather than a strict separate statutory concept. Fixed-term contracts are permitted for genuinely temporary or project-based work. Termination without cause requires statutory severance calculated by tenure, in addition to Labour Pension entitlements which remain with the employee regardless of the reason for separation.

Entity setup in Taiwan

A company limited by shares registered with the Ministry of Economic Affairs (MOEA) is the standard vehicle for foreign employers. Post-incorporation, the entity registers with the Bureau of Labour Insurance, NHI Administration, and Bureau of Labour Funds before hiring. End-to-end setup typically takes six to eight weeks.

EOR vs Payroll Management vs Entity Setup — Taiwan

Frequently asked questions