Professional Employer Organization(PEO)
A PEO enters a co-employment relationship with a client company, sharing employer responsibilities such as payroll and benefits. Unlike an EOR, a PEO typically requires the client to already have its own legal entity in the country, and the client remains a co-employer of record.
A Professional Employer Organization (PEO) enters a co-employment arrangement with a client company: the PEO becomes the employer of record for tax and HR-administration purposes, while the client retains full control over day-to-day work direction and business operations. Unlike an EOR, a PEO requires the client company to already have a registered legal entity in that country - a PEO offloads HR administration (payroll, benefits, compliance) for an existing domestic or in-country workforce, it does not enable hiring in a new country from scratch.
This is the key practical distinction from EOR: PEO is a domestic/in-country HR-administration solution for companies that already have a legal presence, while EOR is specifically the solution for entering a new country without one. Many growing companies use both models together - a PEO for their home-country team's HR administration, and EOR for each new international market they expand into.