1. Introduction: Why Companies Close Entities (But Keep Talent)
Businesses, especially Singapore-headquartered mid-sized firms, sometimes decide to close their Taiwanese entities to streamline operations, reduce overhead, or pivot market focus. However, the local team’s operational know-how, client relationships, and regional insights are often pivotal for broader growth across Asia.
Retaining your Taiwanese staff ensures continuity in service delivery, preserves institutional knowledge, and positions you for future re-entry. This guide explains how to close a company in Taiwan while maintaining employment continuity. We’ll walk through legal obligations, talent risks, and how leveraging an Employer of Record (EOR) Taiwan enables you to hire in Taiwan without entity, seamlessly transfer employees after entity closure, and retain critical talent.
2. What Happens When You Close a Company in Taiwan
Legal & Compliance Requirements
In Taiwan, entity closure—whether a branch or subsidiary—follows a structured winding-up process governed under the Company Act and Civil Code:
- Appoint a liquidator, often overseen by the court
- Liquidator handles asset disposal, settling liabilities, and filing tax declarations with CPA audit reports
- De-registration filings with the Ministry of Economic Affairs (MOEA) after full compliance
A foreign branch typically closes within 6 months, while a subsidiary may take 12–18 months, depending on debt resolution and compliance complexity .
Employee Obligations
Under Taiwan’s Labor Standards Act (LSA) and related statutes, you must:
- Valid termination grounds: Only under LSA Articles 11 or 12—operational needs, business transfer, force majeure, misconduct, or redundancy
- Provide advance notice based on tenure:
- <3 months: no notice
- 3 mo–1 yr: 10 days
- 1–3 yrs: 20 days
- 3+ yrs: 30 days
- Pay severance:
- LSA-covered years: 1 month’s salary per year
- LPA pension years: ½ month per year (capped at 6 months total)
- Report layoffs to authorities 10 days in advance and settle final wages—including unused leave and overtime—immediately or by next payday
- Issue service certificates upon request
Failing to follow these obligations can generate employee claims, fines, or even legal scrutiny.
3. Risks of Talent Loss During Entity Closure
Closing your entity without retaining talent can lead to:
- Business disruption: Loss of client contacts, local market intelligence, and delivery capacity
- IP or knowledge loss: Departing employees may take institutional knowledge with them
- Costly rebuilds: Re-establishing presence in Taiwan later means high recruitment costs and ramp-up delays
4. Retaining Employees Without a Legal Entity: What Are Your Options?
1. Independent Contractors
- Pros: Fast and flexible
- Cons: High misclassification risk, no statutory benefits, and limited employee loyalty
2. Form a New Entity
- Pros: Full oversight and legal control
- Cons: 3–6 months setup, significant cost, and structural requirements
3. Employer of Record (EOR) — Best Practice
An EOR becomes the legal employer in Taiwan while you manage day-to-day operations. Staff receive compliant contracts, benefits, and statutory protections—all without you managing the entity.
For a tailored solution, check AYP’s Employer of Record Taiwan service.
5. How EOR Helps You Retain Employees in Taiwan
AYP’s EOR Explained — In Simple Terms
AYP becomes your legal employer in Taiwan, handling:
- Local employment contracts
- Payroll, withholding taxes, and pension fund filings
- Statutory benefits and severance payments
- Compliance tasks, HR assistance, and administrative support
Meanwhile, you continue to direct daily operations and staff performance.
Transition Process: Step-by-Step
- Identify key employees you want to retain
- Issue termination with proper notice
- Onboard with AYP under new EOR contracts
- Maintain benefits and protections seamlessly—no service interruption
- Operate as usual: You manage, AYP administers
This enables you to hire in Taiwan without entity, retain employees without entity, and ensure employee transfer after entity closure is clean and compliant.
The AYP Advantage:
- Rapid onboarding—3–5 business days
- Full compliance with LSA, LPA, and payroll regulations
- Regional experience—ISO-certified across APAC
Learn more via our EOR Taiwan solution.
6. Case Study: Retaining Talent During Closure
- Company: Singapore-based SaaS provider
- Team: 15 Taiwanese employees
- Challenge: Liquidate Taiwanese subsidiary while retaining regional support capabilities
- Solution: Engaged AYP EOR prior to termination
Results:
- 100% employee retention
- No interruption in client deliverables
- Compliant transition: notice, severance, filings managed
- Full dissolution completed in 10 months
“AYP preserved our Taiwan team through the whole process—no business gaps, no legal stress.” — Head of APAC Operations
7. Key Considerations Before Closing an Entity
- Timing matters: Start EOR transfer before issuing termination letters
- Strict legal compliance:
- Legal grounds under LSA Articles 11 & 12
- Accurate notice and severance pay
- Layoff reporting and filings
- Transparent communication:
- Explain EOR benefits to employees
- Reassure them about continuity and protections
- Coordinate with AYP for smooth onboarding
- HR & Payroll alignment:
- Complete final payroll cycles and transfers
- Ensure pension transfers and statutory contributions are seamless
- Clarify transition timeline to both staff and AYP
8. Conclusion: Shut Down with Confidence, Keep Your Team Intact
Closing your Taiwan entity doesn’t mean losing your workforce. An Employer of Record in Taiwan, like AYP, allows you to:
- Cut entity upkeep costs
- Retain top regional talent
- Stay compliant with Taiwan labor laws
- Preserve clients, IP, and market credibility
By partnering with AYP, you can close a company in Taiwan, retain employees without entity, and maintain a competitive edge—with no compromise.
9. Call to Action: Speak to AYP’s Local Experts
Preparing to close your Taiwan entity, but want to keep your team?
✅ Book a free EOR + closure consultation
✅ Get a complimentary cost simulation
✅ Find out how AYP can onboard your team in days—not months
Retain Your Team Without a Local Entity →
