SGP

COMPANY FORMATION
회사 설립 서비스 – 한국 [회사 설립요건]2020-07-23T14:44:50+09:00

Overviews of Key Features

Classification Type Governing Law Remark
1 Foreign-invested Domestic Corporation Foreign Investment Promotion Act established as a a domestic corporation under the Commercial Act
2 Branch Foreign Exchange Transaction Act Categorized as a domestic branch of a foreign corporation
3 Liaison office

Foreign-invested Domestic Corporation

Where a foreign investor (Individual or corporation) invests at least KRW 100 million with the goal of participating in business operations and acquires at least a 10-percent share of new/existing stocks with voting rights, it is recognized as a foreign-invested company under the Foreign Investment Promotion Act and established as a domestic corporation under the Commercial Act. If a foreign individual invests more than KRW 100 million and runs a business in the form of a ‘Corporation’, it is recognized as a foreign investment in accordance with the Foreign Investment Promotion Act. (However, if an investee is a ‘Private business company’, D-8 visa, which is a corporate investment visa, cannot be issued, and trade management visa D-9 can be issued if KRW 300 million or more investments are made.)

Domestic Branch of Foreign Company

In case of operating activities that generate profits in Korea, it is classified as ‘branch’, which is not recognized as a foreign direct investment since it is a foreign company.

The ‘liaison Office’ differs in that it does not carry out business activities that generate revenue in Korea, but performs only non-commercial functions such as business contact, market research and development activities, and unlike branches, it receives unique numbers corresponding to business registration at the relevant tax office in Korea.

Comparison of foreign-invested company and a domestic branch of a foreign company

Foreign-invested company and a domestic branch of a foreign company are divided as follows
Classification Foreign-invested Domestic Corporation Domestic Branch of Foreign Company
Governing Law Foreign Investment Promotion Act Foreign Exchange Transaction Act
Corporate Character Domestic Foreign
Type Of Corporation Corporation and Private Business company Domestic Branch and Liaison Office
Relation with parent company Separate company that conducts accounting and settlement independently Consideration of the same entity as accounting and settlement
Declaration Agency Invest KOREA(KOTRA) or Foreign Exchange Bank Foreign Exchange Bank(Notification), Ministry of Strategy and Finance(Permit for the financial industry)
Investment amount KRW 100 million minimum per case, no maximum limit No limit on the amount
Tax obligation Tax obligation for all income from domestic and overseas
Corporate Tax rate: 10% for KRW 200 million or less
KRW 20 million + (Amount over KRW 200 million x 20%) for More than KRW 200 million, but not
exceeding KRW 20 billion
KRW 3.98 billion + (Amount over KRW 20
billion x 22%) for More than KRW 20 billion but not
exceeding KRW 300 billion
Tax obligation for all income from domestic
Corporate Tax rate: Same as left
An additional payment of some national branch tax
Registration Duty Corporation: Registration of establishment in court required
Private business company: Registration of establishment in court not required
Branch: Registration of establishment in court required
Liaison Office: Registration of establishment in court not required