What is a local entity?

A legal body registered in the country of hire, such as a subsidiary or branch, that employs the staff directly. It is the alternative to an employer of record.

What is the difference between a subsidiary and a branch?

A subsidiary is a separate local company. A branch is part of the foreign company. Availability depends on the country; Poland, for example, allows non-EU entrepreneurs a branch only where international agreements do not preclude it.

Do I need a local director?

It varies by country. Check the national registry for the legal form you plan to use rather than assuming.

Does having an entity avoid permanent establishment questions?

No. An entity is a local presence, and tax exposure is assessed separately. See the permanent establishment guide.

When is an EOR better than an entity?

Usually for a first or small hire, or a trial, where fixed setup and running costs would outweigh the benefit. This is RemoteStaffingWiki’s judgement, not a rule.

How hard is it to close a local entity?

It is a formal process. In Poland a limited liability company must go through liquidation and be deleted from the National Court Register.

Local Entity

A local entity is a legal body a foreign business registers in the country where it wants to hire, so that the entity itself employs the staff. It is the alternative to using an employer of record, which employs the worker for you. The common forms are a subsidiary, which is a separate local company, and a branch, which is part of the foreign company. Which are available depends on the country.

Subsidiary and branch

Common local presence options

Option	What it is	Example from the sources
Subsidiary	A separate local company with its own legal personality	Poland: limited liability company registered in the National Court Register; India: company registered through SPICe+
Branch	An office of the foreign company, not a separate company	Poland: non-EU entrepreneurs may establish a branch if ratified international agreements do not preclude it

Availability, scope and registration route differ by country.

What registration involves

The Polish government’s business portal says a limited liability company registers in the National Court Register (KRS), must have share capital of at least PLN 5,000, and can be formed by notarial deed or online through the S24 system if contributions are in cash. Poland’s trade promotion agency adds that registration in the Register and the Court and Commercial Monitor leads to the issue of the tax (NIP) and statistical (REGON) numbers, and that a separate business bank account is normally needed.

In India the Ministry of Corporate Affairs describes SPICe+ as an integrated web form for company incorporation. Part B covers registration with the Registrar, allotment of a Director Identification Number, PAN and TAN, and GSTIN (optional), ESIC and EPFO registrations. Documents signed by a foreign-national subscriber may need to be notarised or apostilled, and the form must be digitally signed by the director and a professional.

Setup costs: a worked example

The Polish trade agency’s guide lists the official fees for a limited liability company with the minimum PLN 5,000 of share capital: a notarial tariff of PLN 160 for the notarial route, PLN 500 for the inscription in the National Court Register and PLN 100 for the Court and Commercial Monitor, plus a tax on civil law transactions of 0.5% of the share capital after those fees, which it puts at around PLN 20 for PLN 5,000. These are government and notary charges only. Advisers, accountants and a registered address are separate costs, so treat the figure as a floor, not a budget.

Timing also needs allowing for. In India, a name reserved through SPICe+ Part A is held for 20 days from approval, and extensions are available for a fee. A business that needs a hire to start quickly should compare that lead time with an EOR, which employs the worker under its own existing entity.

Ongoing obligations

Governing bodies. A Polish limited liability company has a general meeting and a management board, and a supervisory board or audit committee where share capital exceeds PLN 500,000 and there are more than 25 shareholders.
Accounts. A Polish limited liability company must keep full accounting books, prepare financial statements and periodically check its assets and liabilities.
Registered address. In India the registered office address needs matching proof, and form INC-22 is filed within 30 days if it differs from the correspondence address.
Payroll registrations. Employer registrations such as EPFO and ESIC are requested during incorporation in India; other countries have their own.

Local-director and residency requirements vary by country; check the national registry before assuming either way.

Permanent establishment

Setting up an entity is a clear local presence, but tax exposure can also arise without one. See permanent establishment and remote hiring and permanent establishment risk.

When a local entity beats an EOR

RemoteStaffingWiki’s judgement is that an entity is worth considering when headcount in a country is large and stable enough to justify fixed running costs, when the business wants to sign local contracts or hold local assets, or when it wants direct control of employment terms. For a first hire or a trial, an EOR avoids the setup. The EOR vs local entity comparison sets the two side by side.

Exit and wind-down

Closing an entity is a process of its own. In Poland a limited liability company is dissolved on listed grounds such as a resolution of the general meeting, must then go through liquidation, trade as “in liquidation”, file the opening of liquidation, and apply for deletion from the National Court Register. The same point applies elsewhere: budget time and professional fees for closure as well as for setup.

Sources

References checked on 1 November 2026