How to Establish a Branch Office in Korea
Doing Business in Korea
To protect those who transact with foreign companies, the Commercial Act sets out requirements for foreign companies doing business in Korea.
- Appoint a representative in Korea.
- Establish a business office in Korea, or ensure that at least one representative has an address in the Republic of Korea.
- Complete the same registration as a branch of a Korean company of the same or most similar type. A foreign company must register the law governing its incorporation and the name and address of its representative in Korea.
The Difference Between a Branch Office and a Liaison Office
A branch office conducts business activities in Korea to generate profit. This is the principal difference from a liaison office, which does not conduct profit-making business activities and instead performs non-commercial functions such as business liaison and market research.
A liaison office has a limited scope of activities because it may not sell products directly on behalf of its head office.
Establishment Procedure
Establishing a branch office in Korea generally involves the following four steps. Each step is explained in detail below.
- Hold a board meeting to approve the establishment of the Korean branch office and appoint its representative
- Notify a designated foreign exchange bank in Korea of the branch office's establishment
- Register the establishment of the branch office with the competent district court in Korea
- Complete business registration with the competent tax office in Korea
1. Hold a Board Meeting to Establish the Branch Office and Appoint Its Representative
The representative does not have to be a Korean national or a resident of Korea.
2. Notify a Designated Foreign Exchange Bank of the Branch Office's Establishment
A foreign company must file a notification with the head of a designated foreign exchange bank. In certain cases, however, notification must be made to the Minister of Economy and Finance.
The following cases require notification to the Minister of Economy and Finance.
- Engaging in financial businesses other than banking, such as lending, brokerage or arrangement of overseas financing, credit card services, and installment financing
- Engaging in securities or insurance businesses
- Engaging in businesses not permitted under the Foreign Investment Promotion Act or other laws
3. Register the Branch Office with the Competent District Court
The Foreign Exchange Transactions Act aims to promote the sound development of the national economy, maintain equilibrium in the balance of payments, and stabilize the value of the currency. The following matters must therefore be disclosed.
- The matters that must be registered by a branch of a Korean company of the same or most similar type
- The law governing the company's incorporation
- The name and address of the representative in Korea (a foreign address is also permitted)
4. Complete Business Registration with the Competent Tax Office
A business operator must apply for business registration for each place of business with the head of the tax office having jurisdiction over that place of business within 20 days of commencing business (Article 8(1) of the Value-Added Tax Act).
Failure to register results in tax disadvantages.
Timeline
The following timeline is stated on the existing page.
Address for sending documents (original): Jaekwon JUNG, HWAUM LAW Office, 4F, Summit Building, 10 Nonhyeon-ro 71-gil, Gangnam-gu, Seoul, South Korea 06248
- 1. Hold a board meeting to establish the branch office and appoint its representative
- 2. Prepare the required notarized and apostilled documents and send them to Hwaum Law Office
- 3. Documents arrive at Hwaum Law Office in Korea (D-0)
- 4. Notify a bank in Korea of the branch office's establishment (D+1)
- 5. Apply to a Korean court to register the branch office's establishment (D+2)
- 6. Complete registration of the branch office's establishment (D+4~6)
- 7. Enter into a lease for the branch office premises (~D+7)
- 8. Apply for business registration with a tax office in Korea (D+7)
- 9. Complete business registration (D+9)
Service Fee
Branch Office Establishment: US$2,300.00