When a foreign individual or foreign company wishes to start a business in Korea, one of the most common options is to establish a Korean corporation. Unlike a Korean branch of a foreign company, a Korean corporation established with foreign investment is a separate legal entity incorporated under Korean law and is subject to the Korean Commercial Act and Korean tax laws.

However, a company does not automatically qualify as a “foreign-invested company” under the Foreign Investment Promotion Act simply because its shareholders are foreign nationals or foreign entities. The company must satisfy certain requirements regarding the amount of investment, shareholding, or participation in management. It must also complete the required procedures, including foreign investment notification, remittance of the investment funds, corporate registration, business registration, and registration as a foreign-invested company.

The overall process generally proceeds as follows:

Foreign Investment Notification → Remittance of Investment Funds → Corporate Registration → Business Licenses and Permits → Business Registration → Opening of a Corporate Bank Account → Registration as a Foreign-Invested Company

The process itself may not appear complicated, but the documents that must be prepared overseas vary depending on whether the investor is a foreign individual or a foreign company. Errors in notarization or apostille procedures may delay the corporate registration process.

Additional explanations or supporting documents may also be required if the name of the investor differs from the name of the remitter, or if the amount reported in the foreign investment notification does not match the actual amount remitted.

Below is a faithful English translation, keeping the original structure, numbering, and bullet points while using natural legal/business terminology suitable for Hwaum’s materials.

1. What Is a Foreign-Invested Company?

1.1. A Korean Company with Foreign Shareholders

A foreign-invested company is not a separate type of company. Under the Korean Commercial Act, it takes the form of an ordinary stock company, limited company, limited liability company, etc. Among these, a company in which a foreign investor makes an investment in accordance with the requirements prescribed by the Foreign Investment Promotion Act and which is registered as a foreign-invested company is referred to as a foreign-invested company.

In practice, stock companies are the most commonly used form. This is because the liability of shareholders is limited to the amount of their investment, and the shareholding structure, composition of directors and officers, capital increases, and transfer of shares can be managed relatively clearly.

A foreign-invested company is also different from a Korean branch of a foreign company. A Korean branch is part of the foreign head office, whereas a foreign-invested company is a Korean legal entity that is a separate legal and economic entity from the foreign investor, with its own rights and obligations.

1.2. In Principle, the KRW 100 Million and 10% Shareholding Requirements Must Be Met

For a foreign national or foreign company to acquire shares in a newly established Korean company and have the investment recognized as a foreign investment, the following two requirements must generally be satisfied.

First, the investment amount must be at least KRW 100 million per foreign investor.
Second, the foreign investor must own at least 10% of the total voting shares or total equity contribution of the company.

Even if the shareholding is less than 10%, the investment may still be recognized as a foreign investment if the foreign investor owns shares or equity interests and dispatches or appoints an executive who can participate in important management decisions. However, even in this case, the investment amount must still be at least KRW 100 million. InvestKorea

For example, if a foreign company contributes the entire KRW 100 million capital of a Korean company and holds 100% of its shares, this would constitute a typical foreign-invested company. On the other hand, if a foreign investor invests KRW 50 million and acquires 100% of the shares, it is possible to establish the Korean company itself under the Commercial Act, but generally it cannot be registered as a foreign-invested company under the Foreign Investment Promotion Act.

Accordingly, an investment that does not satisfy the foreign investment requirements may, depending on the transaction structure, be subject to reporting requirements for the acquisition of domestic securities by a non-resident under the Foreign Exchange Transactions Act.

1.3. The Establishment Process Has Two Additional Steps Compared to a General Company Establishment

The incorporation registration and business registration of a foreign-invested company are basically the same as those for an ordinary Korean company. However, foreign investment notification is added at the beginning of the general incorporation process, and registration as a foreign-invested company is added at the end.

KOTRA generally guides the process for establishing a new foreign-invested company in the following order:

Foreign investment notification
Remittance of investment funds
Corporate registration
Required business licenses and permits
Business registration
Opening of a corporate bank account
Registration as a foreign-invested company

A simple establishment in which all overseas documents and the business premises are prepared in advance and no separate business license or permit is required may be completed in approximately two weeks. However, the actual timeframe may be longer depending on the issuance of apostilles, the bank's customer due diligence process, required business licenses and permits, and whether the tax office conducts an on-site inspection. InvestKorea

2. What Should Be Decided Before Establishment?

2.1. Check the Business Purpose and Whether Foreign Investment Is Restricted

First, you should determine the business that the Korean company will actually conduct and check whether the relevant industry is subject to foreign investment restrictions or separate licensing requirements.

The company's business purposes are stated in its articles of incorporation and corporate registry. If the business purposes are defined too narrowly, an amendment to the registered business purposes may be required whenever a new business is launched. On the other hand, if too many business categories unrelated to the actual business are listed, the bank may request additional explanations regarding the business during its customer due diligence process, or additional explanations may be required during business registration.

In particular, whether foreign investment is restricted should not be determined solely based on the industry name used by the business. The detailed industry code under the Korean Standard Industrial Classification, the actual nature of the business, the foreign ownership percentage, and the relevant individual laws should all be reviewed together.

2.2. Determine the Capital and Shareholding Structure

To satisfy the requirements for a foreign-invested company, the capital and number of shares should be structured so that each foreign investor meets the minimum investment amount of KRW 100 million.

For example, when a foreign company and Korean shareholders establish a joint venture, the following matters should be determined in advance:

Total capital and par value per share
Investment amount of the foreign investor and Korean shareholders
Shareholding percentage of each shareholder
Composition of the CEO and directors
Approval requirements for important decisions
Restrictions on the issuance of new shares and transfer of shares
Dividend and additional financing arrangements

For a joint venture, it is advisable to prepare a shareholders' agreement in addition to the articles of incorporation to establish provisions regarding the composition of the board of directors, consent rights for major matters, restrictions on share transfers, tag-along rights, and methods for resolving deadlocks.

2.3. Prepare the Registered Office and Actual Business Premises

The registered office address is required for incorporation registration, and in principle, a lease agreement for the business premises is required for business registration. Although the lease agreement itself does not have to be submitted at the incorporation registration stage, the registered office address must be determined. At the business registration stage, a lease agreement in the company's name or other documentation confirming the company's right to use the premises must be prepared. InvestKorea

If a lease agreement must be signed before the company is incorporated, the promoter or the prospective representative director may enter into the agreement with a provision stating that “the tenant's position will be transferred to the newly incorporated company after its establishment.” After incorporation, the agreement can then be changed to the company's name or a confirmation of succession can be prepared.

Shared offices or virtual offices may be used depending on the type of business, but they are not permitted for all industries. In the case of licensed businesses, manufacturing, medical or education-related businesses, or where an application for D-8 status is planned, an independent and actual business space may be required. This should therefore be confirmed before entering into a lease agreement.

3. How Should Overseas Documents Be Prepared?

3.1. The Required Documents Differ for Foreign Individuals and Foreign Companies

Where the foreign investor is an individual, the following documents are generally required:

Copy of passport
Proof of address that confirms the investor's overseas address
Acceptance of office, if the investor will serve as an officer or director
Power of attorney, if an agent will handle matters in Korea
Signature certificate or notarized signature documents, where necessary

Where the foreign investor is a foreign company, the following documents are generally required:

Certificate of incorporation or corporate registration certificate
Documents confirming the foreign company's current name, address, and existence
Documents confirming the person authorized to represent the foreign company
Board or shareholders' meeting resolution approving the establishment and investment in the Korean company
Power of attorney for an agent handling matters in Korea
Documents confirming the signing authority of the foreign company's representative
Articles of incorporation or shareholder structure documents, where required

The corporate systems and names of official documents issued by foreign countries vary from country to country. Therefore, rather than looking for a document with exactly the same name as a Korean corporate registry certificate, the necessary documents should be prepared in combination to prove the existence, address, authority of representation, and decision to establish the Korean company of the relevant foreign company.

3.2. Notarization and Apostille Are Different Procedures

Notarization is a procedure through which a notary verifies matters such as whether the person signing a document actually signed it or whether a particular document was prepared. An apostille is an international authentication procedure that allows the signature, seal, or stamp on a document issued or notarized in one country to be recognized as genuine in another contracting country.

Accordingly, for private documents such as board resolutions or powers of attorney of a foreign company, local notarization is generally completed first, followed by an apostille. On the other hand, official documents issued by foreign government authorities, such as corporate certificates or certificates of address, may be directly apostilled depending on the system of the relevant country.

Documents prepared in countries that are parties to the Apostille Convention may be submitted to Korea after obtaining an apostille. Documents prepared in countries that are not parties to the Convention generally require local notarization or authentication followed by consular legalization by the Korean embassy or consulate general in that country. InvestKorea

3.3. Not All Documents Require an Apostille

An apostille is not necessarily required for a passport or a certificate proving the existence of a foreign company submitted at the foreign investment notification stage. A simple foreign investment notification is generally processed based on the notification form and documents proving nationality or the existence of the foreign company.

On the other hand, at the incorporation registration stage, notarization and an apostille or consular legalization are generally required for documents that verify the authenticity of signatures and authority, such as a foreign director's acceptance of office, signature declaration, proof of address, and power of attorney. Where a foreign company is a promoter, authenticated documents may also be required to verify the existence and authority of the foreign company and the authenticity of its resolution to establish the Korean company. InvestKorea

Banks may require more documents than the registry office for anti-money laundering purposes and verification of the ultimate beneficial owner. Therefore, it is advisable to confirm in advance the document requirements of the bank where the foreign investment notification will be filed, the bank where the corporate account will be opened, and the competent registry office.

3.4. Korean Translations Must Also Be Prepared

When documents written in a foreign language are submitted to the registry office or tax office, a Korean translation must be attached. An apostille is not always required for the translation itself, but the translator's identification and signature, or the translation certification procedure required by the relevant authority, must be provided.

In particular, the following information should be consistent across all documents:

English name of the foreign investor or foreign company's name
Address
Corporate registration number or passport number
Name and title of the authorized representative
Investment amount and shareholding percentage

If a passport includes a middle name but the middle name is omitted from a power of attorney or remittance documents, or if an abbreviated foreign company name and its full legal name are used interchangeably, it may be necessary to provide an explanation proving that they refer to the same person or entity.

It is therefore safest to standardize all documents from the outset based on the name shown on the passport and official corporate certificates.

4. Step 1: Foreign Investment Notification

4.1. Foreign Investment Notification Must Be Made Before the Investment

In principle, a foreign investment notification for the establishment of a new Korean company must be made before the investment funds are remitted. The notification may be made at KOTRA's Foreign Investment Comprehensive Administrative Support Center or at a foreign exchange bank.

In practice, if the investment funds will be remitted and the corporate bank account will be opened through the same bank, the foreign investment notification is often filed with that foreign exchange bank. If the investment structure is complex or consultation with multiple authorities is required, KOTRA may be used instead. InvestKorea

4.2. Documents Required for Foreign Investment Notification

In the ordinary case where shares in a newly established company are acquired with cash, the following documents are required:

Two copies of the Foreign Investment Notification Form
Passport, if the foreign investor is an individual
Certificate of incorporation, corporate certificate, or other documents proving the existence of the foreign company, if the investor is a foreign company
Power of attorney and identification of the agent, if the notification is filed through an agent
Documents regarding the investment object and its valuation, if assets other than cash are contributed

Where industrial property rights such as patents or capital goods are contributed in kind, it is also necessary to separately review whether the relevant property qualifies as an eligible contribution under applicable law and who will evaluate its value and by what method. InvestKorea

4.3. The Notification Form Must Accurately Reflect the Establishment Structure

The foreign investment notification form includes information such as the foreign investor, investment amount, proposed shareholding percentage, method of investment, and the name and business type of the target company.

Because the company has not yet been established, some information will be reported as proposed information. However, the subsequent incorporation registration and shareholder register should be consistent with the information in the notification. If the company name, investment amount, shareholding percentage, or business type changes, it should be confirmed whether an amendment notification is required.

In particular, if the investor listed on the notification form is a foreign company but the actual remitter is an individual representative of that foreign company or an affiliated company, additional explanations regarding the source of the investment funds and the payment relationship may be required.

The safest approach is for the foreign investor named in the foreign investment notification to remit the investment funds directly in its own name.

5. Step 2: Remittance of Investment Funds and Payment of Share Capital

5.1. Remit the Investment Funds in Foreign Currency and Clearly State the Purpose as Investment

The foreign investor may remit the investment funds to a temporary account or share subscription payment account opened with a domestic foreign exchange bank.

When making the remittance, the foreign investor named in the foreign investment notification should be listed as the remitter, and the purpose of the remittance should clearly state that it is an investment for the establishment of a Korean company or payment of share capital.

KOTRA advises that investment funds should be remitted in a foreign currency and that the purpose of the remittance should be stated as investment. InvestKorea

Foreign currency may also be physically brought into Korea. In this case, the foreign currency must be declared to customs upon entry into Korea and a Foreign Exchange Declaration Certificate must be obtained. The foreign currency can then be deposited with a bank and used as evidence of the investment fund payment.

5.2. Investment Remittance Documents Should Be Retained Throughout the Process

When the investment funds arrive, the bank will issue documents such as:

Foreign currency remittance receipt or incoming remittance record
Foreign Exchange Purchase Certificate
Certificate of Deposit of Share Subscription Payment or balance certificate
Account transaction records

These documents may be used not only for incorporation registration but also for business registration, registration as a foreign-invested company, and an application for D-8 status. Therefore, both the originals and copies should be retained.

When establishing a stock company, submission of a Certificate of Deposit of Share Subscription Payment is generally required. However, for a company with capital of less than KRW 1 billion, this may be replaced by a balance certificate for an account in the foreign investor's name. InvestKorea

5.3. It Is Advisable to Keep Establishment Expenses Separate from the Investment Funds

Once the investment funds have been deposited into the share subscription payment account, they may not be freely usable before incorporation registration is completed. However, expenses such as registration and license taxes, translation fees, notarization fees, and office security deposits may arise before incorporation.

Therefore, the foreign investor may consider remitting establishment preparation expenses separately from the investment funds, or having a promoter pay them in advance and then settling them after incorporation as startup or establishment expenses with proper supporting documentation.

In such cases, records should be maintained showing who paid which expenses on behalf of the company and on what basis the newly established company will reimburse those expenses. InvestKorea

6. Step 3: Incorporation Registration of a Stock Company

6.1. Incorporation Registration Creates the Company's Legal Personality

Completing the foreign investment notification and remitting the capital does not mean that the company has been established immediately. The company is established only after incorporation registration is completed with the competent court registry office.

The incorporation registration includes the company's name, business purposes, registered office, capital, issued shares, officers, method of public notice, and other information.

If there are no corrections required after filing, the registration can generally be processed within several days. However, if there are problems with the authentication or translation of foreign documents, an order to correct the filing may be issued.

6.2. General Documents Required for Incorporation Registration

For an unlisted stock company established by promoters, the following documents are generally prepared:

Application for Incorporation Registration of a Stock Company
Articles of incorporation
Documents relating to the promoters' subscription for shares
Consent to the terms of share issuance
Minutes of the promoters' meeting
Board minutes, where required
Investigation report of directors or auditors
Certificate of Deposit of Share Subscription Payment or balance certificate
Foreign investment notification
Acceptance of office by officers
Proof of address of officers
Corporate seal declaration and corporate seal
Confirmation of payment of registration and license tax
Korean translations of foreign-language documents
Power of attorney for filing through an agent

Where there is an in-kind contribution, additional documents may be required, such as a certificate of delivery of the contributed property, an appraisal report, an inspection report by an inspector, or a certificate confirming completion of the in-kind contribution recognized under applicable law. InvestKorea

6.3. Where a Foreign Individual Is a Promoter or Officer

If a foreign individual subscribes for shares as a promoter and takes office as the representative director or a director, the process cannot be completed with a passport alone.

The following documents may be required so that the registry office can verify the foreign individual's signature and address:

Notarized acceptance of office
Notarized documents relating to the seal/signature declaration
Proof of overseas address
Copy of passport
Power of attorney for an agent

Among these documents, acceptance of office, signature documents, proof of address, and powers of attorney prepared overseas generally require local notarization and an apostille or consular legalization by a Korean diplomatic mission. InvestKorea

6.4. Where a Foreign Company Is a Promoter

For a foreign company to become a shareholder of a Korean company, it must be possible to verify that the foreign company actually exists and that the person who decided to establish the Korean company had proper authority to do so.

Accordingly, the following documents are generally prepared:

Certificate of incorporation or registration of the foreign company
Documents confirming the registered office address and representative of the foreign company
Resolution of the foreign company approving the establishment and investment in the Korean company
Power of attorney for an agent who will subscribe for shares and carry out the incorporation procedures in Korea
Documents confirming the representative authority and signature of the foreign company's representative
Articles of incorporation and shareholder register of the foreign company, where necessary

The internal approval process of the foreign company varies depending on the law governing its incorporation and its articles of incorporation.

It should first be confirmed under the law of the company's home country whether a board resolution or shareholders' approval is required and whether the document should be signed by a sole representative or joint representatives.

6.5. Domestic Notarization of the Articles of Incorporation and Minutes

Under the Korean Commercial Act, the articles of incorporation of a stock company generally require authentication by a notary. However, where a company with capital of less than KRW 1 billion is established through incorporation by promoters, notarization of the articles of incorporation may be exempted.

Whether the minutes of the promoters' meeting and board meetings require notarization also depends on the capital amount and method of incorporation.

This domestic notarization of the Korean articles of incorporation and minutes is a separate procedure from the apostille of foreign documents. In other words, even if notarization of the Korean articles of incorporation is exempted because the capital is less than KRW 1 billion, this does not exempt foreign directors' acceptance of office or a foreign company's power of attorney from the local notarization and apostille requirements applicable to those documents. InvestKorea

7. Step 4: Licenses, Permits, and Business Registration

7.1. Business Licenses and Permits Must Be Obtained Separately Depending on the Industry

The fact that a business purpose is stated in the corporate registry does not by itself mean that the company can actually conduct that business.

For example, financial services, travel businesses, construction, employment placement services, food-related businesses, medical and pharmaceutical businesses, private academies, mail-order sales, and location information-related businesses may require licenses, registrations, or notifications under the relevant laws.

Businesses requiring licenses or permits must generally go through the relevant administrative procedures. When applying for business registration, the relevant license or permit may need to be submitted. If the license or permit has not yet been completed, a copy of the license or permit application or a business plan may be requested instead. InvestKorea

7.2. Business Registration Is a Tax Registration with the Tax Office

If incorporation registration is the procedure that creates the company's legal personality, business registration is the procedure through which the company receives a business registration number so that it can issue tax invoices and file tax returns for VAT, corporate income tax, and other taxes.

Business registration is separate from incorporation registration, and the application generally focuses on the following documents:

Corporate establishment report and business registration application
Articles of incorporation
Full certificate of corporate registration
Lease agreement for the premises in the company's name
List of shareholders or equity contributors
Foreign investment notification
Foreign Exchange Purchase Certificate and other documents proving the introduction of investment funds
Passport or identification of the foreign representative
Required business licenses and permits
In-kind contribution statement, where applicable
Power of attorney and identification of the agent, if applying through an agent

The National Tax Service provides that the business registration documents for a for-profit domestic corporation include the application, a lease agreement in the company's name, a list of shareholders or equity contributors, and licensing documents for the relevant industry. For a foreign-invested company, the foreign investment notification and documents proving the introduction of investment funds are generally additionally required. National Tax Service

7.3. Business Registration and Registration as a Foreign-Invested Company Are Different

Receiving a business registration certificate does not mean that registration as a foreign-invested company has also been completed.

Business registration is a tax procedure handled by the tax office, whereas registration as a foreign-invested company is an investment administration procedure under the Foreign Investment Promotion Act handled by KOTRA or a foreign exchange bank.

Therefore, even if a foreign shareholder is shown in the business registration documents or the tax office has reviewed documents relating to the foreign investment, a separate application for registration as a foreign-invested company must be made.

8. Step 5: Opening a Corporate Bank Account and Registration as a Foreign-Invested Company

8.1. Documents Verifying the Ultimate Beneficial Owner Are Required to Open a Corporate Account

After completing incorporation registration and business registration, a general business account in the company's name is opened.

Banks generally require the following documents:

Full certificate of corporate registration
Business registration certificate
Corporate seal certificate and corporate seal
Identification of the representative
Shareholder register of the Korean company
Shareholder register of the foreign parent company or documents verifying the ultimate beneficial owner
Lease agreement for the business premises
Contracts, website, or business plan confirming the nature of the business
Power of attorney and identification if an agent visits the bank

In particular, where a foreign company is a shareholder, the bank may require a corporate ownership structure chart and ultimate beneficial owner verification documents in order to identify the ultimate individual shareholders of the foreign company.

This is a customer due diligence procedure conducted separately by the financial institution from the incorporation registration process. Therefore, the completion of incorporation registration does not automatically mean that a corporate bank account will be opened.

8.2. Registration as a Foreign-Invested Company Must Be Completed Within 60 Days

After the contribution has been fully paid and the incorporation and business registration have been completed, an application for registration as a foreign-invested company should be submitted to KOTRA or the foreign exchange bank where the initial foreign investment notification was filed.

The general required documents are as follows:

Application for Registration as a Foreign-Invested Company
Full certificate of corporate registration
Foreign Exchange Purchase Certificate and other documents proving the introduction of investment funds
Shareholder register
Copy of business registration certificate
Power of attorney and identification of the agent, if applying through an agent

In principle, registration must be completed within 60 days from the date on which the contribution has been fully paid. InvestKorea

8.3. Why Registration as a Foreign-Invested Company Is Important

A Certificate of Registration as a Foreign-Invested Company serves as evidence that the foreign investor has actually completed the investment it reported and that the Korean company has obtained foreign-invested company status.

This certificate may be an important document for the following procedures:

Application for D-8 Corporate Investment status
Overseas remittance of dividends
Overseas remittance of proceeds from the sale of shares and liquidation proceeds
Application for occupancy in foreign investment zones and various support programs
Application for and administration of tax benefits related to foreign investment
Subsequent notifications relating to increases in investment and changes in shareholding

KOTRA also advises that failure to register as a foreign-invested company may make it difficult to prove that the investment has been implemented and may delay matters such as visa applications, remittance of dividends, and remittance of proceeds from share transfers. InvestKorea

After registration, if there are changes to the company's name or address, foreign investor, investment amount, foreign ownership percentage, or other relevant matters, it should be confirmed whether a foreign investment amendment notification or amendment registration is required.

9. What Types of Businesses Can a Foreign-Invested Company Conduct?

9.1. Most General Industries Allow 100% Foreign Ownership

In most industries, including manufacturing, software development, e-commerce, trading, wholesale and retail, general consulting, research and development, and general services, foreign investors can invest with 100% ownership without Korean shareholders.

However, the absence of foreign ownership restrictions is different from being able to operate the business without a license or permit.

Even where an industry is open to foreign investment, if the relevant individual law imposes requirements relating to licenses, facilities, personnel, or minimum capital, those requirements must still be satisfied.

9.2. Some Industries Are Prohibited or Subject to Foreign Ownership Restrictions

Foreign investment is prohibited or subject to ownership restrictions in certain industries that have significant implications for public interests, national security, key infrastructure, or public opinion.

Restrictions may apply, for example, to the following areas:

Nuclear power generation and certain energy businesses
Broadcasting businesses, including terrestrial, radio, wired, and satellite broadcasting
Wired and wireless telecommunications businesses
Newspapers, periodicals, and news service businesses
Domestic maritime and air transportation businesses
Certain electricity-related businesses
Certain agriculture, livestock, forestry, and fisheries-related industries

The restrictions vary depending on the industry and may take the form of a complete prohibition, a foreign ownership limit of 49% or less than 50%, or restrictions on the percentage of certain facilities.

An accurate determination should be made based on the Korean Standard Industrial Classification code and the relevant individual laws set out in the 2026 Integrated Public Notice on Foreign Investment. MOTIE

9.3. The Minimum Foreign Investment Amount and Industry-Specific Minimum Capital Are Different

The KRW 100 million requirement for registration as a foreign-invested company is the minimum investment amount under the Foreign Investment Promotion Act. It does not mean that the minimum capital required to operate the relevant business is always KRW 100 million.

For example, certain construction, logistics, travel, and financial businesses may be subject to separate capital, personnel, facility, or guarantee insurance requirements under individual laws.

If the statutory capital required for a particular business is KRW 300 million, investing only the KRW 100 million required under the foreign investment rules is not sufficient to obtain the license or permit for that business. InvestKorea

Therefore, before establishing the company, the following three matters should be checked separately:

Whether foreign investment is permitted under the Foreign Investment Promotion Act
Whether there is a foreign ownership restriction for the relevant industry
Capital, personnel, facility, and licensing requirements under the relevant industry-specific laws

10. What Benefits Are Available to Foreign-Invested Companies?

10.1. Corporate Income Tax Is Not Automatically Reduced Simply Because a Company Is Foreign-Invested

In the past, a system providing corporate income tax reductions for a certain period was widely used on the basis that a company was foreign-invested. However, the general corporate income tax reduction for new foreign investment was abolished as of January 1, 2019.

Therefore, in 2026, simply establishing a foreign-invested company and registering it as a foreign-invested company does not automatically result in an exemption or reduction of corporate income tax.

In principle, a foreign-invested company is subject to the same corporate income tax rates and tax filing obligations as an ordinary domestic company. InvestKorea

However, if a newly established company satisfies the general tax incentive requirements applicable to startup small and medium-sized enterprises, research and development, the Integrated Investment Tax Credit, and other programs, it may receive the relevant tax reductions or credits in the same manner as a domestic company.

10.2. Acquisition Tax and Property Tax Reductions May Be Available for Certain Businesses and Investments

Where the requirements prescribed by law are satisfied, including businesses involving new growth or source technologies and businesses of a certain scale located in foreign investment zones or free economic zones, reductions in acquisition tax and property tax may be available.

However, the relevant business, investment amount, location, and installation of new facilities must satisfy the applicable requirements, and a separate application for tax benefits and an official determination are required.

Tax reductions do not automatically apply simply because a company has been designated as a foreign investment zone company or registered as a foreign-invested company. Korea Legislation Research Institute

Local tax benefits may also be expanded in terms of their duration and scope under local government ordinances. Therefore, when determining the location of the business premises, it is advisable to compare the support programs offered by the relevant local government as well.

10.3. Customs Duties, Individual Consumption Tax, and VAT Exemptions May Be Available for Certain Capital Goods

Where capital goods are introduced pursuant to a foreign investment notification for a business that has received a tax benefit determination, customs duties, individual consumption tax, and VAT may be exempted.

Eligible goods include capital goods introduced by the foreign investor as the object of its contribution or certain capital goods introduced by the foreign-invested company using funds contributed by the foreign investor.

In principle, the import declaration must be completed within five years from the date of the foreign investment notification. Investments involving only the acquisition of existing shares in an existing Korean company are excluded from this capital goods exemption. InvestKorea

10.4. Location and Cash Incentives May Be Available Depending on the Investment Scale and Business Activities

Certain foreign investments that contribute to advanced technology, research and development, large-scale job creation, supply chain stability, or other qualifying objectives may be eligible for consideration for occupancy in a foreign investment zone, reductions in rent for national or public property, cash grants, employment subsidies, and training subsidies.

However, these forms of support are not general benefits automatically available merely from registering as a foreign-invested company.

They are determined individually based on factors such as the business sector, investment amount, new employment, technological level, and contribution to the local economy.

10.5. D-8 Corporate Investment Status May Be Available

One of the major practical benefits of registration as a foreign-invested company is that certain foreign nationals may apply for D-8 Corporate Investment status.

Where a foreign individual invests KRW 100 million or more in a Korean company, holds at least 10% of its voting shares, and manages the company, the individual may apply for D-8-1 status.

Where a foreign company establishes a Korean subsidiary, an executive, senior manager, or essential specialist in production or technical fields dispatched from the overseas parent or related company may apply for D-8 status.

However, merely registering a foreign national newly hired by a foreign-invested company in Korea as a director does not, by itself, make that person eligible for D-8 status. InvestKorea

D-8 status is not automatically granted at the same time as registration as a foreign-invested company. The immigration authorities comprehensively review the following materials:

Certificate of Registration as a Foreign-Invested Company
Business registration certificate and full certificate of corporate registration
Overseas remittance and foreign exchange purchase documents
Actual use of the investment funds
Lease agreement for the business premises and photographs of the premises
Business plan and documents demonstrating actual business activities
Dispatch order and certificate of employment, where the applicant is a dispatched employee
Documents regarding the applicant's career and responsibilities

Therefore, even if a company has been formally established, problems may arise during the D-8 review if the investment funds are immediately withdrawn and used personally or if there is no actual office or business activity.

KOTRA also identifies the foreign-invested company registration certificate, remittance documents, records of capital expenditure, and evidence of the existence of the business premises as documents relevant to the D-8 review. InvestKorea

11. Common Problems When Establishing a Foreign-Invested Company

11.1. The Apostilled Documents Do Not Match the Establishment Structure

If a foreign company plans to invest 100% in a Korean company but the overseas board resolution states that the investment is a joint venture or specifies a different investment amount, the document cannot simply be used as it is.

An apostille does not guarantee that the contents of a document are accurate. It only authenticates the signature or seal. Therefore, before obtaining an apostille, the investment amount, shareholding percentage, proposed name of the Korean company, representative, and scope of authority granted under the power of attorney should first be confirmed.

11.2. The Foreign Investor and Actual Remitter Are Different

If the foreign investment notification was filed in the name of a foreign company but the investment funds are remitted by its individual representative or another affiliated company, the bank may request an explanation regarding the third-party remittance and the relationship between the parties and funds.

It is advisable to have the funds remitted directly from an account in the name of the foreign investor named in the notification and to ensure that the currency, amount, and purpose of the remittance match the notification.

11.3. The Entire Capital Is Withdrawn Immediately

After incorporation, capital may be used for legitimate business purposes such as rental deposits, salaries, purchasing goods, and marketing expenses.

However, if the representative uses the funds personally or transfers them to an unrelated account, this may create accounting and tax issues. It may also raise questions during the D-8 review regarding whether the capital has actually been used for the company's business.

Capital should be spent through the corporate bank account, and contracts, tax invoices, receipts, and transfer records should be retained.

11.4. It Is Assumed That Licensing Is Complete Simply Because the Business Purpose Has Been Registered

Registering travel, construction, financial, or other business purposes in the corporate registry does not mean that the company can immediately conduct those businesses.

Business registration and industry-specific licensing are also separate procedures.

Before incorporation, the required capital, professional personnel, facilities, guarantee insurance, and foreign ownership restrictions for the relevant business should all be reviewed in order to avoid the need for additional capital increases or amendments to the articles of incorporation.

12. Summary

Establishing a stock company in Korea by a foreign investor does not automatically make the company a foreign-invested company.

In principle, each foreign investor must invest at least KRW 100 million and acquire at least 10% of the voting shares or equity interests. Even if the shareholding is less than 10%, the investment may be recognized as a foreign investment if the investor dispatches or appoints an executive who participates in important management decisions. However, even in this case, an investment amount of at least KRW 100 million is still required.

The establishment of a foreign-invested company generally proceeds in the following order:

Foreign investment notification
Remittance of investment funds
Incorporation registration
Required business licenses and permits
Business registration
Opening of a corporate bank account
Registration as a foreign-invested company

Foreign investment notification should, in principle, be filed with KOTRA or a foreign exchange bank before the investment funds are remitted. It is advisable for the investment funds to be remitted in foreign currency from an account in the name of the foreign investor specified in the notification, with the purpose of the remittance clearly stated as investment.

A foreign individual should prepare documents such as a passport, proof of address, acceptance of office, and power of attorney. A foreign company should prepare documents such as a certificate of incorporation or registration, proof of representative authority, a resolution approving the establishment of the Korean company, and a power of attorney.

Acceptance of office, signature documents, and powers of attorney prepared overseas generally require local notarization and an apostille. Documents from countries that are not parties to the Apostille Convention generally require consular legalization by a Korean diplomatic mission.

Korean translations must be attached to all foreign-language documents, and the investor's name, address, and investment amount should be consistent throughout all documents.

After incorporation registration, business registration is completed by preparing the articles of incorporation, full certificate of corporate registration, lease agreement, shareholder register, foreign investment notification, Foreign Exchange Purchase Certificate, and any required licensing documents.

Afterward, registration as a foreign-invested company must be completed with the initial notification agency within 60 days from the date on which the contribution has been fully paid.

Business registration and registration as a foreign-invested company are separate procedures and must each be completed independently.

100% foreign ownership is permitted in most general industries, including manufacturing, IT, trading, wholesale and retail, and services. However, certain industries, including broadcasting, telecommunications, energy, aviation, and news-related businesses, may be prohibited or subject to foreign ownership restrictions.

In addition, regardless of whether foreign investment is permitted, the minimum capital, personnel, facilities, and licensing requirements under the relevant industry-specific laws must be separately reviewed.

A foreign-invested company does not automatically receive a corporate income tax reduction simply because it is foreign-invested. The general corporate income tax reduction for new foreign investment was abolished in 2019.

However, where certain requirements are satisfied, such as operating a new growth or source technology business or locating in a foreign investment zone, and a separate tax benefit determination has been obtained, reductions in acquisition tax and property tax and exemptions from customs duties, individual consumption tax, and VAT on certain capital goods may be available.

Certain foreign investors or essential specialists dispatched by an overseas parent company may also apply for D-8 Corporate Investment status. However, D-8 status is not automatically issued simply because the company has been registered as a foreign-invested company. A separate review is conducted regarding the use of the investment funds, the existence of actual business premises, and actual business activities.

Everything You Need to Know About Establishing a Foreign-Invested Company — From Foreign Investment Notification to Incorporation Registration, Business Registration, and Foreign-Invested Company Registration