Three Ways to Start Business in Korea
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Foreign Direct
Investment Company -
Branch -
Liaison office
Establishment of New Company
It is a way of operating your business in your company’s name after establishing a Korean company (branch or separate independent entity) under Korean law as the governing law.
Where a foreign company is an investor, such company established in Korea will become a subsidiary of the overseas headquarter and the subsidiary’s accounting system will need to conform to the overseas headquarters’ accounting policy and laws of the country in which the overseas headquarter is located. However, the subsidiary’s income generated from Korean source will be taxed in Korea.
Where a foreign company is an investor, such company established in Korea will become a subsidiary of the overseas headquarter and the subsidiary’s accounting system will need to conform to the overseas headquarters’ accounting policy and laws of the country in which the overseas headquarter is located. However, the subsidiary’s income generated from Korean source will be taxed in Korea.
Companies established in this way can be registered as foreign direct investment (“FDI”) companies.
Once registered, FDI companies can – depending on investment terms and conditions – receive the relevant local government’s favorable tax treatment or incentives such as D-8 visa; FDI companies can also be guaranteed of safe overseas wire transfer / remittance.
Once registered, FDI companies can – depending on investment terms and conditions – receive the relevant local government’s favorable tax treatment or incentives such as D-8 visa; FDI companies can also be guaranteed of safe overseas wire transfer / remittance.
If not registered as FDI companies, there is no minimum capital requirement applicable in which case you can decide in your discretion the amount of investment actually necessary to operate your business in Korea and make such investment in the form of capital. In this case, you will need to undergo certain procedures such as non-resident’s share acquisition filing.
Establishment of Branch
It is a way of operating business by establishing a foreign company’s branch (sales office) in Korea.
Such branch can conduct the overseas headquarters’ for-profit activities in Korea. One can appoint a separate representative from the overseas headquarter to manage its Korean branch. Branch’s legal conducts are deemed as the relevant overseas headquarters’ legal conducts. Thus, all rights and obligations of Korean branch will be attributed to the overseas headquarter.
Such branch can conduct the overseas headquarters’ for-profit activities in Korea. One can appoint a separate representative from the overseas headquarter to manage its Korean branch. Branch’s legal conducts are deemed as the relevant overseas headquarters’ legal conducts. Thus, all rights and obligations of Korean branch will be attributed to the overseas headquarter.
Liaison office
Unlike branch (sales office), liaison office cannot engage in for-profit activities. Instead, it can only engage in market research, R&D, advertisement, and other forms of information collection.