EOR vs Setting Up a Company in Thailand: Guide for Foreign Businesses

Foreign companies cannot directly employ Thai residents. To hire in Thailand, you need either your own registered company or an Employer of Record (EOR) that employs staff on your behalf.

However, the choice between these two options comes down to what you need to do in the country. An EOR is sufficient if you simply need to hire employees. On the other hand, if you are looking to conduct commercial activities like invoicing Thai customers or holding assets, you will need to register a Thai company.

This guide walks you through both routes. We’ll outline what each involves, what it costs, and how to decide which best aligns with your situation.

Understanding Your Options: EOR VS Company Setup in Thailand

1. Thai Employer of Record

An EOR is a company that already has a legal presence in Thailand. When you use an EOR, your employees are technically employed by the EOR’s Thai entity, but they work for you.

You direct their day-to-day activities, set their responsibilities, and manage their performance. The EOR handles the employment contract, payroll, tax withholding, social security contributions, and if you are hiring foreigners, work permit sponsorship.

This matters especially because foreign companies cannot directly employ Thai residents. Thai labor law requires a local employer to provide compliant contracts and make statutory contributions. Without a Thai entity, an EOR is your only legal path to hiring. 

This model works well when your Thai team servers your business outside of Thailand. For example, a development team building products for overseas markets, or customer support staff handling inquiries from other countries. 

The revenue stays outside Thailand, so you don’t need a local commercial presence. You’re essentially accessing Thai talent without establishing Thai operations.

It’s also worth noting that an EOR works differently from a payroll bureau or a Professional Employer Organisation (PEO). The EOR removes the need for a Thai entity altogether by placing employment under its own registered company.

2. What Company Registration Involves in Thailand for Foreigners

Registering a company in Thailand gives you a permanent legal presence. You can open bank accounts, sign contracts with Thai customers, lease property, import goods, and apply for business licenses. Your company exists as a Thai legal entity, subject to Thai corporate law and taxation.

The complexity, however, comes from Thailand’s Foreign Business Act. Any company with 50% or more foreign ownership is classified as a “foreign company” and restricted from operating in many service and retail sectors without specific approval. 

Most foreign businesses navigate this through one of three routes: 

• BOI promotion: which grants 100% foreign ownership for qualifying industries like tech and manufacturing
• Foreign Business License: which requires demonstrating that your business brings specialized skills or technology
• Thai-majority structure: where Thai shareholders hold at least 51% of equity.

Out of these 3 options, BOI promotion offers the most flexibility. However, it requires a qualifying business activity and meaningful investment. In comparison, Foreign Business Licenses (FBL) take months to obtain and are not available for all sectors. 

Thai-majority structures are faster but require finding legitimate Thai partners. This is because Thailand is actively screening out nominee and shelf-company structures. Through the DBD Biz Regist system and tighter bank onboarding checks, authorities now verify who funds as well as who controls the company. Thai shareholders must also demonstrate genuine financial participation.

Recommended reading: Guide to Company Registration in Thailand for Foreigners

What Drives the Decision Between Employer of Record and Company Incorporation in Thailand

The question is not really “EOR or company?” The question is: what do you need to do in Thailand, and what is the simplest structure that allows you to do it legally?

When an EOR is Sufficient

An EOR works when your Thai presence is about people rather than commercial operations. Common situations include: 

• Building a remote engineering or product team
• Hiring customer support staff
• Placing a regional manager while you evaluate the market
• Getting staff on the ground while your company registration is in progress.

In these cases, the EOR handles employment compliance while you retain operational control. Your costs are predictable (a monthly fee per employee plus their salary and statutory contributions), and you can scale up or down without the fixed overhead of maintaining a company.

When You Need a Company

Certain activities require a Thai legal entity, and no EOR arrangement can substitute. You need your own company:

• If you will invoice Thai customers or enter contracts with Thai businesses
• If your business requires licensing or regulatory approval (this includes fintech, recruitment agencies, education services, logistics, and trading)
• If you need to hold assets in Thailand such as equipment, inventory, or property leases
• If you plan to import goods.

The underlying principle is super straightforward: an EOR lets you employ people in Thailand, but it doesn’t give you a commercial presence. If your business model requires that commercial presence, you need to incorporate a Thai company.

EOR vs Thai Company: Timeline, Costs, and Requirements

1. Timeline

This is often the deciding factor for businesses that could go either way. An EOR can typically onboard employees within one to two weeks. Company registration takes 10 to 14 weeks in most cases, and that assumes no complications with your Foreign Business Act pathway or bank account opening.

The bottleneck is usually banking. Thai banks conduct extensive due diligence on foreign-owned companies, and account opening can take four to eight weeks on its own. If you need BOI promotion or a Foreign Business License, add another two to six months for those approvals.

We regularly see companies use an EOR to hire their first employees while their company registration is in progress. This lets them move forward immediately rather than waiting months to make their first hire.

2. Capital Requirements

An EOR requires no capital commitment. You pay monthly fees based on headcount in addition to the salary and employer contributions. A Thai company requires registered capital: THB 2 million (approximately USD 60,000) for each foreign work permit you plan to sponsor, or at least THB 3 million for foreign-owned service companies under the Foreign Business Act. 

This capital stays in your company for operations, but it’s cash you must transfer to Thailand.

3. The 4:1 Ratio for Foreign Employees

If you plan to employ foreigners and sponsor their work permits through your own Thai company, you need to understand the 4:1 rule. Most Thai companies must employ four Thai nationals for every one foreign work permit they sponsor.

This creates a practical challenge. If you want to place one foreign manager in Thailand, you need THB 2 million in registered capital plus four Thai employees on payroll. This is even if your business doesn’t actually need four Thai staff. 

At minimum wage, that is around THB 44,000 per month in payroll costs before you even add the foreign employee’s salary.

An EOR avoids this entirely. The EOR already has Thai employees across its client base, so it can sponsor your foreign employee’s work permit without requiring you to hire additional staff. For companies that only need one or two foreigners in Thailand, this is often the deciding factor.

BOI-promoted companies are normally either exempt from the 4:1 ratio or have significantly reduced requirements, depending on the business.

4. Ongoing Operational Costs

With an EOR, your ongoing cost is the management fee plus the employee’s salary and statutory contributions. RecruitGo charges 10% of the payroll cost, up to a maximum of USD 250. 

That means if your total payroll cost for one employee is USD 1000, we’ll charge you USD 100 as EOR fee.

Thailand’s employer contributions are also relatively modest. Social security is capped at THB 750 per month regardless of salary, and workmen’s compensation adds another 0.2% to 1% depending on your industry.

While incorporating your own company saves you the EOR management fee, you take on significant compliance overhead. Annual expenses for accounting, bookkeeping, auditing, corporate tax filing, and registered address costs typically range from THB 150,000 to 300,000 (~USD 4,800–9,600) for small operations.

Ultimately, the crossover point depends on your headcount. For 1-10 employees, the EOR is usually more cost-effective when you factor in compliance overhead and the opportunity cost of your time managing a Thai entity. 

At 10+ employees, however, a company might make financial sense, assuming you can wait for the setup process and have the capital available.

One common scenario among foreign companies is starting with an EOR to get people on the ground quickly. Then register a company once they have validated the market and need a permanent presence.

Which Path Fits Your Situation?

Deciding between an EOR and company registration comes down to the nature of your activities in Thailand. You should start with an EOR if: 

• you are building a remote team to serve customers
• you want to test the market before committing capital
• you need to hire quickly
• you are placing foreign employees and want to avoid the 4:1 ratio requirement.

A Thai company becomes a better fit if: 

• you will sell to Thai customers
• you need business licenses
• you plan to hold assets or import goods
• you are establishing long-term commercial operations.

Consider both if you need people on the ground now, but also know you will eventually need a company. Start with the EOR for speed, then transition when your entity is ready.If you’re weighing these routes for your own expansion, RecruitGo experts can map out the best route tailored to your goals and expectations. Fill out the form below for a free consultation with our experts.