Setting up an entity abroad typically costs $60,000 to $120,000 before you hire anyone, with legal, accounting and filing costs every year after. Relocating an employee adds more again. And the cost most plans omit entirely is leaving: dissolving a UK company takes at least three months and £4,000, and several countries take considerably longer.
Here is where the money actually goes, and which of it you can avoid. Last updated September 2026.
| Cost | Scale | Avoidable? |
|---|---|---|
| Entity setup | $60,000 to $120,000 | Yes, if you only need people |
| Ongoing compliance | Tens of thousands a year | Yes, via an EOR |
| Relocating an employee | Often more than a local hire | Often, by hiring locally |
| Premises | Highly variable by city | Frequently, with remote work |
| Exit | Months and legal fees | Yes, if you never incorporated |
1. Entity setup and ongoing compliance
Registration fees, legal drafting, local accounting, a corporate bank account, and filings that continue whether or not the market performs.
Every country has its own rules. A US business expanding into the UK takes on PAYE, National Insurance contributions and GDPR obligations. None of those exist at home, and all of them require someone who understands them.
Timelines matter as much as fees. Incorporating takes months in most countries and over two years in some. A Wholly Foreign-Owned Enterprise in China has historically taken many months and needs someone managing it daily from head office.
The full comparison against the alternative is in EOR vs owned entity.
2. Relocating people
Two routes into a market: hire locally, or send someone. The second is frequently more expensive than the first, even where the destination has a lower cost of living.
What you are actually paying for:
- Visa and immigration costs, including sponsor licence and skills charges
- Relocation and shipping
- Housing support, often for a year or more
- Schooling and family support
- Language and cultural training
- Tax equalisation, which is administratively complex and easy to get wrong
Immigration has also become harder. The UK now requires degree-level roles and a salary of at least £41,700 to sponsor someone, which removed well over a hundred occupations from eligibility. See UK Skilled Worker sponsorship in 2026 and preparing employees for overseas assignments.
3. Keeping up with the rules
Not a one-off cost. Tax rates, employment law and reporting requirements change constantly, and in fast-moving economies they change quickly.
Someone has to track those changes in every country you operate in and apply them. Done in-house, that is a role. Done badly, it is a fine.
The main exposures are in the five compliance risks of hiring abroad.
4. Premises
Rent, utilities, insurance, security, fit-out. The attractive markets are frequently the expensive ones: Hong Kong, Singapore, Luxembourg and Switzerland all combine strong business environments with high occupancy costs.
High living costs also feed into salaries, since people need to be paid enough to live there.
This is the cost most easily avoided. If the work does not require a physical office, not having one removes the largest fixed commitment on this list.
5. Leaving
The cost almost no plan includes.
Dissolving a UK company takes at least three months and costs £4,000 or more. Elsewhere it takes longer, with statutory severance, tax clearances and filing obligations that continue until the entity is formally closed. Some jurisdictions require record retention for years afterwards.
If there is a reasonable chance the market will not work, this figure belongs in the business case from the start.
How do you avoid most of it?
By separating the decision to enter a market from the decision to commit to it.
Most of the costs above come from the structure rather than from the people. An Employer of Record employs your staff legally in the country without you incorporating, so there is no setup cost, no ongoing filing obligation, no premises requirement and no liquidation if you leave.
You still pay salaries, employer contributions and a per-employee fee. What disappears is everything attached to owning a company you may not need.
Above roughly 15 employees in one country, or wherever you need to trade locally, incorporating becomes the right answer. Below that it usually is not.
Country-level costs and requirements are in CountryPedia, and our employment cost calculator covers total cost per hire.
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Frequently asked questions
How much does it cost to expand into a new country?
Setting up an entity typically runs $60,000 to $120,000 before you hire anyone, plus ongoing legal, accounting and filing costs. Hiring through an Employer of Record has no setup cost and is charged per employee.
What is the most underestimated cost?
Exit. Dissolving an entity takes months and carries statutory severance, tax clearances and legal fees. It rarely appears in a business case, and it determines how expensive a wrong decision becomes.
Is it cheaper to relocate someone or hire locally?
Usually cheaper to hire locally, even where the destination has a lower cost of living, once visa costs, relocation, housing, schooling and tax equalisation are counted. Relocation makes sense when you need a specific person rather than a specific capability.
Can we avoid setting up an entity?
If you only need people in the country, yes. An Employer of Record employs them for you. You only need an entity if you must trade locally, meaning invoice customers, hold licences or sign contracts requiring a local entity.
How long does it take to set up abroad?
Months in most countries, and over two years in some. Hiring through an Employer of Record typically takes days to a few weeks, which is why many companies use one to enter a market and incorporate later if it works.
What ongoing costs come with a foreign entity?
Local accounting and legal support, annual filings, corporate tax compliance, payroll registration and maintenance, and the internal time spent tracking regulatory change. These continue regardless of whether the market performs.
