Table of contents
1. Domestic
business forms of foreign companies
2. How
to install/establish a domestic branch (office), required documents
3. How
to set up a contact office, required documents
4. Tax
from Branch and Contact Offices
1. Domestic
business forms of foreign companies
There are mainly two ways for foreign companies to establish a business in Korea: (1) Establish a foreign investment firm, and (2)
establish a branch office in Korea.
1.1. Foreign
Investment Firm
A foreign investment corporation is a
corporation that is invested by a foreigner and becomes a shareholder. This is
a way for foreign law persons to establish new corporations in order to enter
the country.
The established corporation is an
independent corporation separate from a foreign branch and is the same as a
general law in Korea. It is characterized by the fact that the shares of the
corporation are mainly owned by foreign companies and are often elected by
foreign officers. Foreign-Investment Corporation has the advantage of securing
local and independent growth of business, as well as being able to participate
in domestic and local companies as shareholders.
Foreign-invested companies are based on the
Foreign Investment Promotion Act, and the established capital must be at least
KRW 100 million. Please refer to the links below for details on the
establishment of a foreign investment firm.
1.2. Korean
Branch Office
Foreign companies can establish branches in
Korea based on the Foreign Exchange Transaction Act. The Korean branch, or
local branch, is divided into branches and liaison offices, depending on
whether they are engaged in profit activities. Whether it is a branch or a
liaison office, it tends to be referred to as a branch office in Korea, but it
is strictly divided by law, so please note that the installation/establishment
method and tax handling methods are completely different.
(1) Branch
(Sales Office)
The branch is the name of the Foreign Exchange
Transaction Act, and the sales office is the name of the commercial law, and
the branch and sales office have the same meaning. Branch (Sales Office) refers
to the domestic branch of a foreign company that operates in Korea. To
install/establish a branch office, you must be registered as a company or a
limited company in the same form as the company of the foreign headquarters.
However, unlike the regular registration of a corporation, you do not have to
have an initial capital when starting it.
(2) Contact
office
The liaison office is a domestic branch
that does not operate in Korea. Mainly perform reverse operations such as
market research, city center research, data collection, after-sales,
advertising, etc. It is mainly used as a preliminary stage for overseas flag
industry, or as a way to enter the country by international organizations and
non-profit public interest organizations. You do not need to register a
separate corporate registration, and you will be issued a unique number card
according to your business registration card.
2. Branch
(Sales Office) Installation
2.1. Procedure
To register or install a domestic branch,
complete the necessary documents and report the establishment of a local branch
of a foreign company, and apply for registration of the office. You can
register a business entity only after the registration is completed.
|
Procedure |
| 1 |
Installation
of Korean branch of foreign company and appointment of representatives |
| 2 |
Other
than Designated Foreign Exchange Bank or Finance |
| 3 |
Korean
office of foreign company established in court of jurisdiction |
| 4 |
Application
for Business Registration |
(1) Notification of the installation of a
foreign company
Generally, you must issue a notification of
the installation of a local branch at the designated foreign exchange bank.
However, in the following cases, you must submit a notification to the Ministry
of Finance and Finance, not to the foreign exchange bank.
1. Banking and other banking
businesses such as financing, brokerage of overseas finance, card business,
installment financing, etc.
2. Business-related to securities
and insurance business
3. It is not allowed under the
provisions of other laws such as the Foreign Investment Promotion Act.
(2) Application
for registration at a foreign company office
Under the Foreign Exchange Transaction Act,
falls into “branches” or “business offices” under the Commercial Code. When
applying for registration, you must apply for registration with a foreign
company office. You can apply at the registry office of a competent court with
a local branch.
(3) Application
for Business Registration
The jurisdiction tax office will apply for
registration of a foreign corporation's domestic business office within 20 days
from the start of business. Please refer to the link below for more information
on the business registration application.
Please check the procedure for registration
of corporation business at once.
2.2. Required
documents
(1) Branch notification and registration
application documents
The accompanying documents required to
declare the installation of a domestic branch and apply for registration are as
follows.
|
Required documents
|
Description
|
|
Office
Establishment Notification for Foreign Companies
|
Exchanges Regulations
No.
9-8 form/Generally provided by the bank
|
|
Application
form for foreign company establishment
|
provided by the court registry.
|
| Resolution of the Board | The
meaning of the establishment of the Korean branch, the place of installation,
the name, address, and resident registration number of the representative of
the Korean branch must be entered.
|
| A
written acknowledgment of the existence of the Company | Apostille
confirmation is required, which means a certified copy of the corporate
register or the date of establishment, address and capital. |
| Articles of incorporation | Apostille confirmation is required. |
| Copy
of passport of head office representative | - |
| Korea Branch Business Plan | - |
| Korea Branch Lease Agreement | Required if renting the place of
business |
| Seal
stamp, certificate of seal, copy of resident registration, or Copy of passport | If
the representative of a domestic branch is
Korean, a seal stamp and a copy of resident registration are required. If a foreigner, a copy of the passport is required. |
| Approval
of Inauguration of Korea Branch Representative | Apostille confirmation is required. |
| Power of attorney | It is necessary when declaring a
representative. |
The required documents must be notarized or
certified as apostille as they cannot be used directly in the country. Please
refer to the link below for more information on checking the apostille.
(2) Application Documents for Business
Registration
The documents required to apply for a
foreign corporation in Korea are as follows: As with the announcement of the
establishment, documents made in foreign countries must be notarized or
confirmed by apostille.
Required documents
• Business
Registration Application Form
• Copy
of the installation/establishment certificate of foreign company
• Balance
sheet on the day of having a domestic business
• Documents
that can prove the contents of the business in Korea
• Documents
on head office registration
• Main
article articles of association (HQ)
• For
industries requiring permission, a copy of the permit (registration,
declaration) certificate
• Copy
of the lease contract of the company name if you rent a business place
3. Establishment
of Liaison Office
3.1 Procedure
Since the Liaison Office does not operate
locally, the installation method is more convenient than the one from the
branch. After reporting the registeration of a liaison office among domestic
branches, you only need to visit the tax office and apply for a unique number
for a non-profit company.
|
|
Procedure
|
|
1
|
Installation
of a foreign company's Korean contact office and representative
Senior Board
Resolution
|
|
2
|
Other than
Designated Foreign Exchange Bank or Finance
Legal Declaration of Korean Companies
|
|
3
|
Application for a unique number from the tax office
|
3.2. Required Documents
(1) Domestic branch report documents
The following documents are required to
report the establishment of a local Liaison Office As with the installation of
the branch office, documents created in foreign countries cannot be used
directly in the country and must be notarized or confirmed by the apostille.
|
Required documents
|
Description
|
|
Office Establishment Notification for Foreign
Companies
|
Exchanges Regulations No. 9-8 form Generally provided by the bank.
|
| Resolution
of the Board | The meaning of the establishment of the Korean
branch, the place of installation, the name, address, and resident
registration number of the representative of the Korean branch must be
entered. |
| A written acknowledgment of the existence of the
Company | Apostille confirmation is required, which means a
certified copy of the corporate register or the date of establishment,
address and capital. |
| Articles of
incorporation | Apostille confirmation is required. |
| Copy of passport of head office representative | - |
| Korea Branch Business Plan | - |
| Korea Branch
Lease Agreement | Required if
renting the place of business. |
| Seal stamp, certificate of seal, copy of resident registration,
or Copy of
passport | If the representative of a domestic branch is Korean, a seal stamp and a copy of resident
registration are required. If a foreigner, a copy of the passport is required.
|
| Approval of Inauguration of Korea Branch Representative | Apostille confirmation is required. |
| Power of Attorney | It is necessary when declaring a
representative. |
3. Tax Processing
Domestic offices of foreign corporations
declare VAT the same as domestic corporations and calculate and pay the
corporate tax for each business year. On the other hand, the Liaison Office is
not a place to conduct business, so there is no obligation to declare corporate
tax and VAT.
3.1. Branch (Sales Office)
The branch is recognized as a fixed place
of business under tax law as it is operating activities that generate revenue
in Korea. Accordingly, the same corporate tax rate as the domestic corporation
will be applied to the income generated from the domestic business.
Foreign-invested companies can benefit from tax reduction under certain
conditions, but foreign-company branches do not have such benefits.
Accordingly, branches are obligated to pay
value-added tax declarations, obligation to pay tax returns, withholding tax
returns, and four major social insurance subscription and payment obligations
under the tax laws of Korea. In addition, branch tax may be taxed in some
cases.
3.2. Liaison
Office
The liaison office performs preliminary and
auxiliary activities only for the headquarters, so it is not recognized as a
place of business and is not obliged to report corporate taxes and VAT. Just
like a non-profit corporation, you are obliged to obtain a unique number card,
pay a withholding tax declaration and submit a tax statement.
Since it is not a commercial business, it
is not possible to issue a tax invoice. If you do business, you must return
your unique number card and apply for business registration again to your local
office (sales office).
For any enquires regarding Korea company or branch establishment, please feel free to contact us local specialists for assistance.
