Foreign Startups In Taiwan: 3 Key Questions You Need To Consider In Advance

• Published date: 08 March 2024
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Shareholders
• Law Firm: Xiri Attorneys
• Author: Ms Sabine Lin and Peter Lin

In recent years, the Taiwanese government has introduced policies (such as the Entrepreneur Visa and the Employment Gold Card) that aim to increase incentives for foreigners to come to Taiwan to start their own businesses or to recruit high-level international talents. As startup lawyers in Taiwan, we have seen increasing numbers of foreign entrepreneurs and startups landing in Taiwan. Thus, we would like to address 3 frequently asked questions that we believe every foreign entrepreneur must consider before deciding to start a business in Taiwan:

1. Which type of company best suits you?
2. How does one set up a company?
3. How long does it take to set up a company?

Foreigners in Taiwan can set up Companies, Sole Proprietorships, or Partnerships. In this article, we focus on the incorporation of a "company," which is most frequently inquired by foreigners in practice.

Which type of company best suits you?

There are 3 types of companies a foreigner may choose to start:

1. Limited Company
2. Company Limited by Shares
3. Close Company

We will elaborate on the differences between these three types of companies in our next article. For startups, we usually will recommend setting up a Close Company, considering the convenience of company management and the fact that most shareholders will be like-minded partners with the same goals. However, if there is only one founding shareholder, the founder has no choice but to set up a Limited Company under the Company Act.

How does one set up a company?

Before proceeding with the application process, the applicant must confirm that the shareholders are of non-Chinese (People's Republic of China) nationality, as the "Statute for Investment by Foreign Nationals" only applies to non-PRC individuals. PRC nationals must follow the "Measures Governing Investment Permit to the People of Mainland Area."

Secondly, there are certain industries that foreigners may not set up companies in, such as radio broadcasting, power transmission and distribution, etc. Hence, it is suggested the applicant ensures that the business they want to carry out in Taiwan does not fall within that prohibited/restricted scope.

After confirming the above two considerations, the applicant may then proceed with the application for setting up a company by following these steps.

1. Company name and pre-check. The applicant has to pick up a few names for the company and submit them to the governmental agency for a quick check. If a name has not been taken by other existing...