Key considerations when choosing between establishing a Legal entity or registering as a Foreign employer in a new market

If you are wondering whether to register a legal entity when entering a new market or register as a foreign employer, you have come to the right place! There are some key considerations to be aware of and below you find a brief overview.

When to set up a Legal entity in a new market?

First of all, you need to ask yourself if the company intends to have a permanent establishment in the new market, office or branch for instance. If the answer is yes, you might be required to register a legal entity. Depending on the nature of the business activities, it might as well be necessary to create a legal entity to fulfill tax obligation. It can also help protect the parent company concerning legal liabilities from business operations in the new market. Some business activities, such as opening bank accounts, entering into contracts, and securing business licenses, may similarly require the creation of a legal entity. It can furthermore facilitate law compliance, invoke credibility and trust and give a wider access to local markets.

When to register as a Foreign employer in a new market

If the market expansion strategy is to explore or test the new market, hiring employees as a foreign employer might be a better option and allows you to assess business opportunities before making a more substantial commitment. In the same way, it could be advantageous for companies engaging in occasional projects or assignments in a new market. In terms of flexibility regarding administration, a foreign employment set-up can be preferred. Particularly for industries with fluctuating demand or seasonal variations. This argument can likewise be used in terms of cost management.

If a company is seeking to hire a specialized talent, the foreign employer arrangement allows you to access local talent pools with no immediate need for local infrastructure. The same goes for global operations and companies with a distributed workforce, it allows the company to maintain agility and adaptability in terms of business requirements.

Whatever choice you ultimately make, Internago is your trusted partner, supporting you in all the steps of establishing a legal entity or registering as a foreign employer. We also provide local and international payroll and bookkeeping services.

Interested in learning more? Please visit Internago or our Payroll Portal.

For further inquiries, contact us at


Recent Posts