Hello,
This is Attorney Kyusung Lee from WEON Law.

Today, I would like to introduce three methods that foreigners can consider when starting a business in Korea. Each method has its own characteristics, as well as differing requirements and procedures, so it is important to carefully review them and choose the option that best suits your needs.

By the end of this article, I hope you will have a clearer understanding of the most suitable way to establish your business in Korea. Should you have any questions, please feel free to reach out to me.

Contact Attorney Kyusung Lee
T. 02-6264-7604
E. kslee@weonlaw.co.kr

< Three Ways for Foreigners to Enter the Korean Market >

① Establishing a domestic corporation under the Foreign Investment Promotion Act (FIPA)
② Setting up a branch office of a foreign corporation under the Foreign Exchange Transactions Act
③ Setting up a liaison office of a foreign corporation under the Foreign Exchange Transactions Act

① Establishing a Domestic Corporation under the Foreign Investment Promotion Act

Process:
Foreign Investment Declaration ▶ Fund Transfer ▶ Corporate Registration ▶ Business Registration ▶ Foreign-Invested Enterprise Registration

This is the only method among the three that qualifies as foreign direct investment (FDI). The minimum investment amount is KRW 100 million. There are no restrictions on the corporate name, and business activities are permitted within the approved scope.

The legal responsibilities are limited to the local corporation, which is independent under the law. Borrowing is possible based on the creditworthiness of the local corporation, and corporate tax obligations apply.

Corporate tax is assessed on the total income generated both domestically and internationally by the local corporation. However, foreign-invested enterprises and small and medium-sized enterprises may benefit from tax incentives under the Restriction of Special Taxation Act.

② Setting Up a Branch Office of a Foreign Corporation under the Foreign Exchange Transactions Act

Process:
Domestic Branch Registration ▶ Corporate Registration ▶ Business Registration

This method does not qualify as foreign direct investment. Only the same name as the head office is permitted, and operations are restricted to the approved business scope.

However, there is no minimum investment amount requirement. Accounting records must comply with Korean accounting standards, and there is no obligation for external audits. Corporate tax rates are the same as those for method ①, and branch offices are subject to tax on income derived from domestic sources. In some countries, a branch tax may also apply. There are no specific tax benefits for this method.

③ Setting Up a Liaison Office of a Foreign Corporation under the Foreign Exchange Transactions Act

Process:
Domestic Liaison Office Registration ▶ Registration of Unique Identification Number

Like method ②, this method does not qualify as foreign direct investment. Only the same name as the head office is permitted. However, liaison offices cannot generate income and are limited to conducting communication and coordination activities.

As a result, there is no minimum investment amount, and the establishment process is relatively simple. There are no obligations for accounting record maintenance or corporate tax payments. Income is not subject to taxation, nor are there any tax benefits available.

Frequently Asked Questions

▶ What types of visas are available to foreigners working for a foreign-invested enterprise?
Key personnel in management, administration, or production technology roles who are dispatched from the head office to a foreign-invested enterprise established under the Foreign Investment Promotion Act may obtain a D-8 (Corporate Investment) visa.

▶ What visas are available to foreigners dispatched to a branch office of a foreign corporation?
Individuals who have worked for at least one year at the head office, branch, or other business office of a foreign public institution, organization, or company may qualify for a D-7 (Intra-Company Transfer) visa if they are dispatched to work in Korea as essential personnel.

Today, we have reviewed three ways for foreigners to enter the Korean market.

Each process involves specific documents and requirements, so it is advisable to proceed with the help of experts who are well-versed in these areas.

At WEON Law, Attorney Kyusung Lee, who has extensive overseas study experience and legal expertise, works directly with clients to ensure their business in Korea is successfully established.

Please feel free to visit our office if you need assistance at any time.

Thank you.

Contact Attorney Kyusung Lee
T. 02-6264-7604
E. kslee@weonlaw.co.kr