Is an own Indian subsidiary cheaper than an EOR?
The question every finance department reaches within about ten minutes, usually with a spreadsheet already open and the wrong two numbers in it.
Last manually reviewed:
So which works out cheaper, EOR or your own entity?
For a handful of people, EOR. For a permanent India operation you intend to grow, your own entity — but the crossover sits later than most cost models put it, because this is not a fee-against-fee comparison. A subsidiary brings a fixed statutory apparatus with it: an India-resident director, an annual statutory audit, Registrar filings and intercompany pricing documentation. None of it gets smaller because the team is two people.
- EOR costs a stated fee per person per month — ours is €399 — plus salary and statutory contributions at cost.
- A subsidiary costs a compliance floor that is the same whether it employs two people or twenty [1][2][3].
- Charging an Indian subsidiary's costs back to its European parent is an international transaction, and carries its own annual accountant's report [4].
- We can price our side exactly and will not pretend to price yours — the euro figures for a subsidiary come from your own advisers, not from us.
Side by side
The obligations, not the invoices. Where a row cites a source, the number or the duty comes from the statute rather than from us.
| Your own Indian subsidiary | EOR through us | |
|---|---|---|
| Time to a first working day | Incorporate, then register for provident fund, state insurance, professional tax and withholding. Weeks at best, and it starts with appointing advisers. | Days. The entity exists, the registrations are running, and the desk is already in the building. |
| Who employs | Your subsidiary. Every employer obligation under Indian law is yours, exercised at a distance. | Our Bangalore partner. The statutory obligations sit with the employer; day-to-day direction of the work stays with you. |
| Governance you have to staff | At least one director who stays in India for a total of not less than 182 days during the financial year [1]. That is a real position, filled by a real person, every year. | None. You appoint nobody and you sit on no board. |
| Audit and annual filings | A statutory auditor appointed at the first annual general meeting and running to the sixth [2]. The annual return, and the adopted financial statements filed with the Registrar within thirty days of the meeting [3]. | None on your side. One invoice a month, in EUR, USD or AED. |
| Intercompany pricing | Charging costs back to the parent is an international transaction: an accountant's report is required for every tax year in which one occurs [4], on top of the pricing analysis behind it. | You buy a service at a stated price under a Dubai contract. There is no related-party pricing exercise between you and us. |
| Payroll contributions | You register for them and remit them: provident fund, state insurance at 3.25% employer contribution [5], professional tax, withholding tax. | The same statutory contributions, remitted by us and billed to you at cost, with our service fee stated as its own line. |
| Getting out again | A company is wound up or struck off. That is a process with its own timetable, its own filings and its own advisers. | Thirty days' notice. |
| Where it genuinely wins | A permanent, growing India presence — hiring in your own name, your own brand in the market, your own profit and loss. At that size the fixed apparatus is worth carrying. | One person to a handful, a first move into India, or one specific person you do not want to lose. |
Rows carrying a citation state a statutory duty, not our opinion of it. The rows without one describe how our own engagements are set up.
Where the money actually goes
Three cost buckets. Most comparisons model the first accurately, the second optimistically, and the third not at all.
One-off, and roughly as expected
Incorporation, the statutory registrations, a bank account. This is the number people anchor on because it is the one an Indian firm will quote in an email, and it is genuinely bounded.
Recurring, and larger than modelled
The audit [2], the Registrar filings [3], the resident director [1], adviser retainers, and the pricing documentation for anything charged back to the parent [4]. This bucket barely moves with headcount, which is exactly why it decides the answer at small scale.
The one nobody models
Attention. Somebody in Europe ends up owning an Indian compliance calendar, chasing an auditor across a time zone and answering questions about a company they have never visited. It is not a line item, and it is not free.
What this means for your decision
Four things worth doing before the spreadsheet decides for you.
Ask for the annual floor, not the setup fee
Any Indian firm will quote incorporation gladly. The number that decides this is what year two costs with no employees at all — audit, filings, director, retainers. Ask for that figure in writing and compare it against a per-person fee.
Treat the resident director as a position
Someone must actually stay in India for 182 days or more in the financial year [1]. Either that is one of your people, with everything that implies, or it is a service you buy — and then it belongs in the recurring column at its real price.
Model the exit at the same time as the entry
Companies are much easier to open than to close. If the India plan is a two-year experiment, the cost of unwinding it belongs in the comparison from the start rather than as a surprise in year three.
Note which way the door swings cheaply
Starting on EOR and incorporating later is routine: the employments move across when your entity is ready. Incorporating first and discovering the plan has changed is the expensive order to do it in.
What we put in front of your finance team
- Our service fee, the salary and the statutory contributions as three separate lines, so the comparison is like for like rather than one bundled rate against an itemised one.
- A written description of the contracting chain, for whoever is modelling the alternative.
- A straight answer when your own entity is the better call. At the size where it is, we would rather say so than sell around it.
Follow-up Questions
At what headcount does an own entity win?
There is no honest single number, and anyone offering one is quoting their own compliance costs as if they were yours. The variables are how permanent the presence is, whether you need to hire in your own name in the Indian market, and how much appetite there is for owning a foreign compliance calendar. Get a real annual quote for a dormant Indian company and compare it against a per-person fee — that arithmetic is specific to you and takes an afternoon.
Can we start on EOR and incorporate later?
Yes, and it is the sequence we would suggest for most companies. The team is working while the entity question is still being decided, and when your subsidiary is ready the employments move across to it. Nothing about starting this way makes incorporating later harder.
Is EOR not just payroll with a markup?
Payroll is the visible part. The fee covers being the legal employer in India and carrying the obligations and liability that come with that role, plus the HR administration. A workstation in our Bangalore office is available alongside it, which is not something a payroll platform can offer at all. If all you need is a payroll run, you already have an Indian entity and this comparison does not apply to you.
Do you have a cost model we can put in the board pack?
We will give you our own numbers exactly and we will not model your subsidiary, because the inputs are your advisers' fees, your structure and your assumptions rather than anything we can see. Ask an Indian firm for a written annual quote, put our fee beside it, and the comparison becomes real rather than illustrative.
Sources
All sources retrieved and checked against the cited passages on 6 August 2026.
- [1] Companies Act, 2013 (Act 18 of 2013), s. 149(3) — resident director. India Code, Ministry of Law and Justice (PDF) — https://www.indiacode.nic.in/bitstream/123456789/2114/5/A2013-18.pdf S. 149(3), p. 106: “Every company shall have at least one director who stays in India for a total period of not less than one hundred and eighty-two days during the financial year”, with a proviso applying it proportionately in a company's year of incorporation.
- [2] Companies Act, 2013, s. 139(1) — appointment of auditors. India Code, Ministry of Law and Justice (PDF) — https://www.indiacode.nic.in/bitstream/123456789/2114/5/A2013-18.pdf S. 139(1), p. 96: “every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting till the conclusion of its sixth annual general meeting”.
- [3] Companies Act, 2013, ss. 92(1) and 137(1) — annual return and filing of financial statements. India Code, Ministry of Law and Justice (PDF) — https://www.indiacode.nic.in/bitstream/123456789/2114/5/A2013-18.pdf S. 92(1), p. 69: “Every company shall prepare a return … containing the particulars as they stood on the close of the financial year”. S. 137(1), p. 95: the adopted financial statements “shall be filed with the Registrar within thirty days of the date of annual general meeting”.
- [4] Income-tax Act, 2025 (Act 30 of 2025), ss. 1(3) and 172 — commencement and the accountant's report on international transactions. Gazette of India Extraordinary, Part II Section 1, No. 35 of 21 August 2025 (PDF) — https://egazette.gov.in/WriteReadData/2025/265620.pdf S. 1(3), p. 1: “Save as otherwise provided in this Act, it shall come into force on the 1st April, 2026.” S. 172, p. 201: “Every person who has entered into an international transaction or specified domestic transaction during a tax year shall obtain a report from an accountant and furnish such report on or before the specified date”. Note the renumbering — cost models written against the Income-tax Act, 1961 cite sections that no longer apply.
- [5] Employees' State Insurance Corporation — contribution rates. Ministry of Labour & Employment, esic.gov.in — https://www.esic.gov.in/contribution “Currently, the employee's contribution rate (w.e.f. 01.07.2019) is 0.75% of the wages and that of employer's is 3.25% of the wages paid/payable in respect of the employees in every wage period.”
This page sets out obligations under Indian company and tax law as they apply to a subsidiary, and how our own engagements are set up instead. It is general information, not legal or tax advice, and it deliberately names no euro figure for a subsidiary — have your own advisers quote and assess your specific case.
Put a real number beside a real number
Tell us the roles and the timeframe and we will give you our side itemised — fee, salary, contributions — so your finance team can compare it against an actual quote instead of an estimate.