When do you graduate from an EOR to your own Chile entity?

The table below uses CLP 560,000 as an illustrative CLP equivalent of the Teamed fee. This is illustrative. The actual CLP amount depends on the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up.

All entity cost figures in this table are typical ranges. They cover payroll, bookkeeping, statutory filings, and HR admin for a small Chilean company. They are illustrative, not law figures. Actual costs vary with your outsourcing model and benefits programme.

The statutory costs sit on both sides of the comparison. Employer work accident insurance under Ley 16.744 starts at a base rate of 0.9%, plus a variable rate set by risk class. The employee pays 7% for health, and AFP pension and unemployment insurance sit alongside it. Chile has no single consolidated employer social security percentage. These rates apply whether you use EOR or your own entity. They do not move the crossover much. They do add filing work on the entity side.

Run the Crossover Calculator with your own headcount and salary band.

1. Calculate the EOR cost

   Multiply the Teamed fee (from $599 USD) by your planned Chile headcount. This is the fixed variable cost. It grows linearly as you hire.

2. Estimate the entity fixed overhead

   Typically CLP 2,500,000 to 4,500,000 per month for a small Chilean company. This covers payroll, bookkeeping, SII filings, AFP and health administration, and first-point HR. It does not grow much until headcount exceeds twelve.

3. Find the crossover headcount

   The crossover is where EOR monthly cost equals entity monthly overhead. For most Santiago tech salary bands, this is around six to nine employees. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a headcount threshold. Local substance, public procurement eligibility, and the severance exposure that accrues from day one are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   The electronic incorporation takes a day or two. The bank account and tax start are the real wait. Allow around four to eight weeks before first payroll on your own entity, and start the GEMO process while EOR keeps running.

These are typical ranges, not law figures. There is no law that sets what a Chilean SpA costs to form. The range reflects real professional services market rates in Santiago. It varies with share structure and how much you outsource.

Why the bank account matters for payroll

Empresa en un Día gives you a legal company in a day or two. The bank account is the real gate. Most Chilean banks need a fully registered company with its RUT and SII tax start before opening a business account, and foreign-owned companies face extra know-your-customer checks. Expect 3 to 6 weeks for the account, longer if directors are not Chile-resident. That turns a one-day incorporation into a 4 to 8 week wait before first payroll if the sequence is not managed tightly.

These figures are typical market ranges for a small Chilean company with 1 to 12 employees. They are illustrative, not law figures. Actual costs depend on whether you outsource or hire in-house, and the makeup of your payroll and benefits programme.

Above 12 employees, dedicated in-house HR and finance capacity typically becomes necessary. The cost band widens at that point. Private health top-ups through an ISAPRE, common in competitive Santiago hiring, add cost per employee and sit outside the overhead estimates above.

Most cost comparisons skip the personal liability dimension because it is hard to put a number on. It is worth naming before you decide.

Personal duties of the legal representative

Every Chilean company appoints a representante legal who answers for the company's labour and tax compliance under the Código del Trabajo and the rules enforced by the Dirección del Trabajo. That person signs the contracts, runs the payroll filings, and is the named point for any inspection. The duty is personal. It does not transfer to a payroll bureau or an accountant.

The compliance treadmill

• Written contract deadline: a signed contract must reach the worker within 15 days of the start date. Miss it and the Dirección del Trabajo can fine the company and presume the worker's stated terms.
• Monthly social security: AFP pension, health, and unemployment contributions fall due each month. Late payment draws interest and Dirección del Trabajo penalties.
• Severance on exit: a business-needs dismissal triggers 30 days of last salary per year of service, capped at 330 days, plus 30 days notice or pay in place of it.
• Wrong-ground penalty: if a labour court finds the ground improper, severance rises by 30% for a business-needs ground, 50% for an unjustified fixed-cause ground, and 80% for an improper misconduct ground. It rises by 100% where a misconduct claim lacks plausible motive.
• Annual leave and rest rules: 15 days of paid leave accrue per year after one year of service, tracked per employee.

Each filing is individually manageable. Stacked across a year, they consume real management attention and carry personal risk on every missed deadline. An EOR carries all of these on its own entity (Código del Trabajo, Art. 162 to 168).

• Under 5 Chile employees at typical Santiago salaries: EOR is cheaper every month. The entity overhead has nothing to amortise against at that headcount.
• Market validation phase: you are hiring 1 or 2 people to test commercial fit. Entity setup commits capital and management attention before you know whether Chile will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
• Severance exposure on early exits: every employee on your own entity accrues 30 days per year, capped at 330 days. If headcount might shrink, the EOR absorbs that exit cost rhythm for you.
• Uncertain headcount trajectory: Chile is a priority market but you have not committed to long-term growth. EOR keeps your options open.

• Sustained headcount above 8 Chile employees at typical salaries: the entity overhead amortises across enough people that per-head cost falls below the EOR fee.
• Local substance requirements: regulated sectors such as financial services and mining contracting expect a registered Chilean entity with a physical presence and a local legal representative. EOR employment does not provide that substance.
• Public procurement eligibility: ChileCompra and Mercado Público tenders often require a locally registered supplier with a Chilean RUT. An EOR employer does not qualify as a local registered business for these purposes.
• Stable, growing team: when headcount is settled and unlikely to shrink, the day-one severance accrual becomes a known long-term cost rather than a near-term exit risk.
• Multi-year growth plan: you have line of sight to 10 or more Chile employees over 24 months. Starting formation early means your entity is ready before the crossover, not after it.

The technical mechanic is contract novation: the employment contract transfers from Teamed's partner entity to your new Chilean company on a set date. All terms carry across. Salary, AFP and health contributions, annual leave, and the continuous service date all stay unchanged. The employee sees a different employer name on their liquidación. Nothing else changes.

What we do operationally:

• Stand up your Chile entity through GEMO, typically around 4 to 8 weeks, while EOR keeps running in parallel.
• Register the new SpA for SII tax, AFP, health, and unemployment insurance with the relevant authorities and funds.
• Open the entity bank account and payroll mandate.
• Novate every active employment contract on a single effective date, preserving each worker's accrued service for severance.
• Migrate ongoing benefits, including any ISAPRE cover, without a lapse.
• File final EOR-period filings and open new filings on the entity from the novation date.
• Keep the same People Ops specialist as the post-graduation primary contact.

The Graduation Model exists because every other EOR makes this hard. We treat the move as something we help you plan for from the day you hire your first employee through us.

Real HR and legal experts handle your Chile hires from the first contract through every monthly filing and any contested exit. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the work accident insurance line at 0.9%, the health contribution at 7%, and the 15 days of annual leave accruing per worker. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. Run the Crossover Calculator to see the month the model flips. Start from the Chile hiring overview. Key sources: Dirección del Trabajo and SUSESO social security.