Everything You Need to Know About Establishing a Foreign-Invested Company in Korea
- 정재권
- 2 days ago
- 24 min read
From Foreign Investment Notification to Incorporation Registration, Business Registration, and Foreign-Invested Enterprise Registration
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 subsidiary funded by a foreign investor is a separate legal entity established under Korean law. It is therefore subject to the Korean Commercial Act, tax laws, labor laws, and other Korean regulations in the same manner as other Korean companies.
However, a Korean company does not automatically become a “foreign-invested enterprise” merely because one of its shareholders is a foreign person or foreign company. To qualify as a foreign-invested enterprise under the Korean Foreign Investment Promotion Act, the investment must satisfy certain requirements concerning the investment amount, shareholding ratio, or management participation. The investor must also complete the prescribed procedures, including foreign investment notification, remittance of investment funds, incorporation registration, business registration, and foreign-invested enterprise registration.
The general process is as follows:
Foreign investment notification → Remittance of investment funds → Incorporation registration → Business licenses and permits → Business registration → Opening a corporate bank account → Foreign-invested enterprise registration
Although this sequence may appear straightforward, delays often occur because the required overseas documents differ depending on whether the investor is a foreign individual or a foreign corporation. Problems may also arise when notarization or apostille procedures are incomplete, when the name of the remitter differs from the name of the reported investor, or when the actual remittance amount does not match the amount stated in the foreign investment notification.
1. What Is a Foreign-Invested Company?
1.1. It is a Korean company with a qualifying foreign investment
A “foreign-invested company” is not a separate type of company under the Korean Commercial Act.
It is generally a Korean company—such as a stock company, limited company, or limited liability company—in which a foreign investor has made an investment satisfying the requirements of the Foreign Investment Promotion Act and which has been registered as a foreign-invested enterprise.
In practice, a stock company, known in Korean as a jusik hoesa, is the most commonly used form. A stock company limits each shareholder’s liability to the amount invested and provides a relatively clear framework for share ownership, corporate governance, capital increases, and share transfers.
A foreign-invested company must also be distinguished from a Korean branch of a foreign company.
A Korean branch is legally part of the foreign head office. By contrast, a foreign-invested Korean subsidiary is a separate Korean legal entity with its own rights, liabilities, assets, employees, bank accounts, tax obligations, and accounting records.
1.2. The general requirements are an investment of at least KRW 100 million and a shareholding of at least 10%
As a general rule, an investment in a newly established Korean company qualifies as foreign investment when both of the following requirements are satisfied:
The amount invested by each foreign investor is at least KRW 100 million; and
The foreign investor owns at least 10% of the total voting shares or total equity interests of the Korean company.
An investment may still qualify even when the foreign investor owns less than 10% if the investor owns shares or equity interests and is entitled to appoint or dispatch an executive who participates in important management decisions.
The minimum investment amount of KRW 100 million still applies in such a case.
For example, if a foreign company contributes the entire KRW 100 million capital of a newly established Korean company and owns 100% of its shares, the investment will generally qualify under the Foreign Investment Promotion Act.
By contrast, if a foreign investor contributes KRW 50 million and owns 100% of a Korean company, the Korean company may still be validly established under the Commercial Act. However, the investment will generally not qualify for registration as a foreign-invested enterprise under the Foreign Investment Promotion Act.
An investment that does not satisfy the Foreign Investment Promotion Act may instead require a separate securities acquisition report under the Foreign Exchange Transactions Act and the Foreign Exchange Transactions Regulations.
1.3. Two additional procedures apply compared with an ordinary Korean incorporation
The incorporation registration and business registration procedures are generally the same as those applicable to a Korean-owned company.
A foreign-invested company, however, has two additional stages:
Foreign investment notification before the investment is made; and
Foreign-invested enterprise registration after the investment has been completed.
The standard sequence is therefore:
Foreign investment notification
Remittance of investment funds
Incorporation registration
Required business licenses and permits
Business registration
Opening a corporate bank account
Foreign-invested enterprise registration
If all overseas documents and the business premises are ready and no separate business license is required, a relatively simple incorporation may be completed in approximately two weeks. In practice, however, the process may take longer because of apostille issuance, bank compliance reviews, business licensing requirements, or an on-site inspection by the competent tax office.
2. What Should Be Decided Before Starting the Incorporation Process?
2.1. Confirm the business purposes and foreign investment restrictions
The founders should first determine the actual businesses that the Korean company will conduct and whether any foreign investment restriction, ownership cap, license, permit, registration, or reporting requirement applies.
The company’s business purposes must be stated in its articles of incorporation and corporate registry.
If the business purposes are drafted too narrowly, the company may need to amend its articles and register the amendment whenever it expands into a new business. On the other hand, listing a large number of unrelated business purposes may prompt the bank or tax office to request additional explanations regarding the company’s actual business.
Foreign investment restrictions should not be reviewed only by looking at a general industry name. The following should be considered together:
The detailed Korean Standard Industrial Classification code
The company’s actual business model
The percentage of foreign ownership
Sector-specific statutes and regulations
Licensing, personnel, facilities, and capital requirements
2.2. Determine the capital amount and shareholding structure
To qualify as a foreign-invested enterprise, the investment structure should normally be designed so that each foreign investor contributes at least KRW 100 million and satisfies the applicable shareholding or management participation requirement.
When a foreign company and a Korean shareholder establish a joint venture, they should determine the following in advance:
Total registered capital
Par value per share
Investment amount of each shareholder
Shareholding percentage of each shareholder
Composition of the board of directors
Appointment of the representative director
Approval requirements for important corporate decisions
Rules governing the issuance of new shares
Restrictions on share transfers
Dividend policy
Future funding obligations
For a joint venture, it is generally advisable to prepare a shareholders’ agreement in addition to the articles of incorporation.
A shareholders’ agreement may address:
Board composition
Reserved matters requiring shareholder consent
Share transfer restrictions
Rights of first refusal
Tag-along and drag-along rights
Deadlock resolution
Additional funding
Confidentiality and non-compete obligations
Exit rights
2.3. Secure a registered office and actual business premises
A registered head-office address is required for incorporation registration, while a lease agreement or other evidence of lawful use of the premises is generally required for business registration.
At the incorporation-registration stage, the lease agreement itself may not always need to be filed with the court registry. Nevertheless, the registered head-office address must already have been determined.
At the business-registration stage, the company must generally submit:
A lease agreement in the company’s name; or
Other documents proving the company’s right to use the premises.
Because the company does not legally exist before incorporation, the lease may initially be signed by a promoter or proposed representative director. The agreement should state that the tenant’s position will be transferred to the newly established company after incorporation. After incorporation, the agreement should be amended, re-executed, or accompanied by a written confirmation of succession.
A serviced office, shared office, or virtual office may be acceptable for certain businesses, but not for every business.
A separate and genuine office may be required where:
The business requires a license or permit
The company conducts manufacturing
The company operates in the medical or educational sector
The company intends to sponsor a D-8 visa
The competent authority requires an independent business location
The suitability of the premises should therefore be confirmed before the lease is signed.
3. How Should Overseas Documents Be Prepared?
3.1. The required documents differ depending on whether the investor is an individual or a corporation
When the foreign investor is an individual, the following documents are commonly required:
Copy of passport
Proof of overseas residential address
Acceptance of office, if the individual will serve as a director or representative director
Power of attorney, if a Korean representative will handle the procedures
Signature certificate or notarized signature document, where required
When the foreign investor is a foreign corporation, the following documents are commonly required:
Certificate of incorporation, commercial registry certificate, or similar corporate-status certificate
Document confirming the corporation’s current legal name, registered address, and continuing existence
Document identifying the corporation’s authorized representative
Board or shareholder resolution approving the establishment of and investment in the Korean company
Power of attorney appointing a representative in Korea
Evidence of the signatory’s authority
Articles of association or shareholder information, where requested
Corporate systems and document names differ from country to country.
It is not always necessary to find a document bearing the exact title “corporate registry certificate.” Instead, the foreign investor should prepare a combination of documents proving:
The foreign corporation’s legal existence
Its registered address
Its authorized representative
The authority of the person signing the Korean incorporation documents
The corporation’s valid internal approval of the Korean investment
3.2. Notarization and apostille are separate procedures
Notarization and apostille serve different purposes.
Notarization generally confirms that a person signed a document, acknowledged a signature, or executed a document before a notary public.
An apostille certifies the authenticity of the public official’s signature or seal on a document so that the document may be recognized in another country that is a party to the Hague Apostille Convention.
Accordingly, a private document such as a foreign company’s board resolution or power of attorney will generally need to be notarized first and then apostilled.
A public document, such as a government-issued corporate certificate or address certificate, may in some jurisdictions be apostilled directly.
If the document is issued in a country that is not a party to the Hague Apostille Convention, the document will generally need to undergo the relevant domestic certification process and then be legalized or confirmed by the Korean embassy or consulate having jurisdiction over that country.
3.3. Not every document requires an apostille
An apostille is not necessarily required for every document submitted at the foreign investment notification stage.
For a straightforward foreign investment notification, a passport or basic corporate-status document may be accepted without an apostille, depending on the receiving bank or KOTRA office.
At the incorporation-registration stage, however, the Korean registry must verify the authenticity of signatures, authority, identity, and address. Accordingly, documents prepared overseas—such as the following—will commonly require notarization and an apostille or Korean consular legalization:
Acceptance of office
Signature declaration
Address certificate
Power of attorney
Foreign corporate resolution
Evidence of the foreign corporate representative’s authority
Banks may request more extensive documents than the court registry because they must comply with customer due diligence, anti-money-laundering, and beneficial-ownership requirements.
It is therefore advisable to confirm document requirements in advance with:
The foreign exchange bank receiving the investment notification
The bank expected to open the corporate account
The competent Korean court registry
The professional handling the incorporation
3.4. Korean translations should also be prepared
Foreign-language documents submitted to the Korean court registry, tax office, or other authorities must generally be accompanied by Korean translations.
The translation itself does not always need to be apostilled. However, the translator’s name, signature, and any translation-certification requirements imposed by the receiving authority should be satisfied.
The following details must be consistent throughout all documents:
Legal name of the foreign investor
Name of the individual investor
Registered address
Corporate registration number
Passport number
Name and title of the authorized representative
Investment amount
Shareholding percentage
Problems often arise when:
A passport includes a middle name that is omitted from another document
An abbreviated company name is mixed with the full legal name
Different address formats are used
The investment amount differs among the notification, resolution, and bank documents
All documents should therefore be prepared using the name and information stated in the investor’s official passport or corporate certificate.
4. Step One: Foreign Investment Notification
4.1. Foreign investment notification should generally be filed before the investment
For a newly established Korean company, the foreign investment notification should generally be filed before the investment funds are remitted.
The notification may be submitted to:
KOTRA’s Foreign Investor Support Center; or
An authorized foreign exchange bank in Korea.
In practice, many investors file the notification with the bank that will receive the investment funds and later open the company’s corporate account.
KOTRA may be useful where the investment structure is complicated or the investor requires broader administrative guidance.
4.2. Documents generally required for the notification
For a standard cash investment in a newly established Korean company, the following documents are commonly required:
Two copies of the foreign investment notification form
Passport, if the investor is an individual
Certificate of incorporation, business registry certificate, or similar evidence of legal existence, if the investor is a corporation
Power of attorney and identification of the agent, if filed by an agent
Documents relating to the contributed asset and its valuation, if the investment is not made in cash
If the investor intends to contribute intellectual property rights, machinery, equipment, or other non-cash assets, the parties should separately review:
Whether the asset is legally eligible as an object of foreign investment
How the asset will be valued
Whether an appraisal, customs procedure, or special confirmation is required
4.3. The notification must accurately reflect the planned incorporation structure
The notification form generally states:
Identity of the foreign investor
Expected investment amount
Expected shareholding percentage
Method of investment
Name of the proposed Korean company
Intended business activities
Because the Korean company has not yet been established, some information is reported on a proposed basis.
The subsequent incorporation documents, shareholder register, and corporate registry should nevertheless be consistent with the notification. If the company name, investment amount, shareholding percentage, or business sector changes, the investor should determine whether an amendment notification is required.
Particular attention is required when the notified investor is a foreign corporation but the funds are remitted by:
The foreign corporation’s representative personally
An affiliated company
A parent or subsidiary company
Another third party
Such a structure may require additional explanation regarding the source of funds and the legal relationship between the investor and remitter.
The safest approach is for the foreign investor named in the notification to remit the investment funds directly from an account held in that investor’s own name.
5. Step Two: Remittance of Investment Funds and Payment of Share Capital
5.1. The investment funds should be remitted in foreign currency and identified as investment capital
The foreign investor may remit the investment funds to:
A temporary account opened with a Korean foreign exchange bank
A share-subscription payment account
Another account designated by the receiving bank for incorporation purposes
The remitter should be the foreign investor named in the foreign investment notification.
The remittance message should clearly state that the funds are for:
Establishment of a Korean corporation
Equity investment
Payment of subscribed share capital
Foreign currency may also be physically brought into Korea. In such a case, the investor must declare the funds to Korean Customs upon entry and obtain the relevant foreign exchange declaration certificate. The declared funds may then be deposited with a Korean bank and used as evidence of the capital contribution.
5.2. All remittance and currency-conversion records should be preserved
After the funds arrive, the bank may issue documents such as:
Incoming foreign remittance record
Certificate of foreign currency purchase
Certificate of custody of share-subscription payment
Bank balance certificate
Account transaction statement
These records may be required for:
Incorporation registration
Business registration
Foreign-invested enterprise registration
D-8 visa application
Future dividend remittance
Repatriation of share-sale or liquidation proceeds
The originals and electronic copies should therefore be retained.
As a general rule, a stock company files a bank certificate confirming custody of the subscription monies. However, where the registered capital is less than KRW 1 billion, a bank balance certificate may be used in lieu of the formal custody certificate under the simplified incorporation rules.
5.3. Incorporation expenses should be planned separately from the investment funds
Once the investment funds are deposited in a share-subscription account, they may not be freely available until incorporation has been completed.
However, incorporation-related expenses may arise before the company legally exists, including:
Registration and license tax
Translation and notarization fees
Professional fees
Office deposit
Initial rent
Document issuance fees
The investor may therefore remit separate incorporation-preparation funds, or a promoter may initially pay the expenses and later seek reimbursement from the company.
In that case, the company should preserve evidence showing:
Who paid the expense
What the expense was for
Why it was incurred for the company
The basis on which the newly established company reimbursed it
6. Step Three: Incorporation Registration
6.1. The company acquires legal personality only upon incorporation registration
Foreign investment notification and remittance of the capital do not by themselves create the Korean company.
The company legally comes into existence only when the incorporation registration is completed with the competent Korean court registry.
The corporate registry will generally state:
Corporate name
Business purposes
Registered head office
Registered capital
Number and type of issued shares
Directors and representative director
Auditor, where applicable
Method of public notice
If there is no request for correction, the registration may be processed within several business days. Defects in overseas authentication, translation, or corporate authorization documents may result in a correction order and delay.
6.2. Documents generally required for incorporation registration
For a privately held stock company established by promoters, the following documents are commonly required:
Application for incorporation registration
Articles of incorporation
Documents relating to the promoters’ subscription of shares
Consent concerning matters relating to the issuance of shares
Minutes or written resolutions of the promoters
Board minutes, where required
Investigation report of the directors or auditor
Certificate of custody of share-subscription payment or bank balance certificate
Foreign investment notification certificate
Acceptance of office by directors, representative director, and auditor
Evidence of residential address of foreign officers
Corporate seal registration form and corporate seal
Evidence of payment of registration and license tax
Korean translations of foreign-language documents
Power of attorney, if the registration is filed by an agent
Where there is a contribution in kind, additional documents may be required, including:
Certificate of delivery of the contributed property
Appraisal report
Court-appointed inspector’s report
Confirmation permitted under special rules applicable to foreign investment
6.3. When a foreign individual is a promoter or officer
Where a foreign individual subscribes for shares and also becomes a director or representative director, a passport alone may not be sufficient.
The court registry may require documents such as:
Notarized acceptance of office
Notarized signature declaration
Overseas address certificate
Copy of passport
Power of attorney
Documents executed outside Korea will generally require notarization and an apostille or Korean consular legalization.
This is because the registry must verify:
Identity of the officer
Authenticity of the signature
Residential address
Intention to accept the office
Authority of any appointed agent
6.4. When a foreign corporation is a promoter
When a foreign corporation becomes a shareholder of the Korean company, the Korean authorities must be able to confirm both the foreign corporation’s existence and the authority of the person who approved and signed the investment documents.
The following documents are therefore commonly prepared:
Certificate of incorporation or corporate registration
Evidence of the foreign corporation’s registered address
Evidence identifying the authorized representative
Resolution approving the Korean subsidiary and capital contribution
Power of attorney appointing a representative in Korea
Evidence of the signatory’s authority
Articles of association, if requested
Shareholder register or ownership chart, if requested
The correct internal approval procedure depends on:
The law governing the foreign corporation
Its articles of association
Its board and shareholder approval rules
Whether it has a sole representative or joint representatives
The foreign corporation should therefore verify under its home-country law whether the Korean investment requires a board resolution, shareholder approval, or another form of corporate authorization.
6.5. Korean notarization of the articles of incorporation and minutes
Under the Korean Commercial Act, the articles of incorporation of a stock company are generally subject to notarization.
However, where the company is established through promoters’ incorporation and its registered capital is less than KRW 1 billion, notarization of the articles may be exempted.
Notarization requirements for promoters’ minutes and board minutes may also vary depending on:
Registered capital
Form of incorporation
Number and status of promoters
Structure of the board
This domestic notarization issue is separate from the apostille of overseas documents.
Accordingly, even if the Korean articles of incorporation are exempt from notarization because the capital is below KRW 1 billion, overseas documents such as the foreign officer’s acceptance of office or the foreign corporation’s power of attorney may still need notarization and an apostille.
7. Step Four: Business Licenses, Permits, and Business Registration
7.1. Sector-specific licenses and permits must be obtained separately
Listing a business purpose in the corporate registry does not, by itself, authorize the company to conduct a regulated business.
Separate approval, licensing, registration, or reporting may be required for businesses such as:
Financial services
Travel services
Construction
Employment placement
Food manufacturing or restaurant operations
Medical and pharmaceutical businesses
Private education
Mail-order sales
Telecommunications
Location-based services
Where a permit is required, the relevant administrative procedure must be completed with the competent authority.
The tax office may request:
A copy of the license or permit
Evidence that an application has been filed
A business plan
Facility information
Other sector-specific documents
7.2. Business registration is a tax registration procedure
Incorporation registration creates the company as a legal entity.
Business registration, by contrast, is the tax procedure through which the company receives a business registration number and becomes able to:
Issue tax invoices
File value-added tax returns
File corporate income tax returns
Register employees for payroll tax purposes
Conduct ordinary commercial transactions
The following documents are commonly required:
Application for business registration and corporate establishment report
Articles of incorporation
Corporate registry certificate
Lease agreement in the company’s name
Shareholder or equity-holder statement
Foreign investment notification certificate
Certificate of foreign currency purchase or other evidence of capital inflow
Passport or identification of the foreign representative
Required business licenses or permits
Statement of contribution in kind, if applicable
Power of attorney and identification of the agent
For a foreign-invested company, the tax office will commonly request evidence showing both the foreign investment notification and the actual inflow of the investment funds.
7.3. Business registration and foreign-invested enterprise registration are different
Issuance of a Korean business registration certificate does not complete the foreign-investment registration process.
Business registration is handled by the competent tax office under Korean tax law.
Foreign-invested enterprise registration is handled under the Foreign Investment Promotion Act by:
KOTRA; or
The foreign exchange bank that received the original foreign investment notification.
Even if the business registration certificate or tax-office records identify a foreign shareholder, a separate application for foreign-invested enterprise registration is still required.
8. Step Five: Opening the Corporate Bank Account and Registering the Foreign-Invested Enterprise
8.1. Banks require beneficial-ownership and business-substance documents
After incorporation and business registration, the company may open its ordinary operating bank account.
The bank will generally request documents such as:
Corporate registry certificate
Business registration certificate
Corporate seal certificate and corporate seal
Identification of the representative director
Shareholder register of the Korean company
Shareholder register or ownership information of the foreign parent company
Ultimate beneficial ownership declaration
Lease agreement
Business plan
Website or marketing materials
Customer or supplier contracts
Power of attorney, if an agent visits the bank
Where the shareholder is a foreign corporation, the bank may require an ownership chart tracing the structure to the ultimate individual beneficial owners.
These requirements arise from customer due diligence and anti-money-laundering rules and are separate from the requirements of the court registry.
Completion of the incorporation registration therefore does not guarantee that a bank account will be opened automatically.
8.2. Foreign-invested enterprise registration should generally be completed within 60 days
After the capital contribution has been completed and the company has completed its incorporation and business registration, the company should apply for foreign-invested enterprise registration with the institution that accepted the original foreign investment notification.
The following documents are commonly required:
Application for foreign-invested enterprise registration
Corporate registry certificate
Certificate of foreign currency purchase or other evidence of capital inflow
Shareholder register
Business registration certificate
Power of attorney and agent identification, where applicable
As a general rule, registration should be completed within 60 days from the date the contribution of the investment asset is completed.
8.3. Why foreign-invested enterprise registration matters
The foreign-invested enterprise registration certificate demonstrates that:
The reported investment was actually completed
The foreign investor acquired the relevant shares or interests
The Korean company has obtained the statutory status of a foreign-invested enterprise
The certificate may be required or useful for:
D-8 Corporate Investment visa applications
Remittance of dividends abroad
Remittance of share-sale proceeds
Remittance of liquidation proceeds
Applications for foreign investment zone benefits
Tax incentive applications
Subsequent capital increases
Changes in foreign shareholding
Administrative support for foreign investors
Failure to complete the registration may delay later procedures because the investor may have difficulty proving that the foreign investment was properly implemented.
If there is a subsequent change in the company name, address, foreign investor, investment amount, or foreign ownership percentage, the company should determine whether an amendment notification or amended foreign-invested enterprise registration is required.
9. What Businesses May a Foreign-Invested Company Conduct?
9.1. Most ordinary business sectors permit 100% foreign ownership
Most general business sectors are open to foreign investment, including:
Manufacturing
Software development
Information technology services
E-commerce
Trading and import-export
Wholesale and retail
General consulting
Research and development
Ordinary service businesses
In many of these sectors, a foreign investor may own 100% of the Korean company without a Korean shareholder.
However, the absence of a foreign ownership restriction does not mean that the business may be conducted without a license.
A sector may be fully open to foreign ownership but still require:
Minimum capital
Qualified personnel
Facilities
Insurance
Registration
Approval
Periodic reporting
9.2. Some sectors are prohibited or subject to foreign ownership limits
Foreign investment may be prohibited or restricted in sectors involving:
Public interest
National security
Essential infrastructure
Broadcasting
Telecommunications
Energy
Transportation
Public opinion and media
Restrictions may apply to, among others:
Nuclear power and certain energy businesses
Terrestrial television and radio broadcasting
Cable and satellite broadcasting
Wired and wireless telecommunications
Newspapers and periodicals
News agencies
Coastal transportation
Aviation
Certain electricity businesses
Certain agricultural, livestock, and fishery businesses
The restriction may take the form of:
Complete prohibition
Foreign ownership cap of less than 49%
Foreign ownership cap of less than 50%
Restrictions on voting rights
Restrictions relating to facilities or management
The exact rule should be confirmed using:
The applicable Korean Standard Industrial Classification code
The current Consolidated Public Notice on Foreign Investment
The relevant sector-specific statute
9.3. The foreign investment minimum and the sector-specific minimum capital are different
The KRW 100 million threshold is the general minimum investment amount for qualification under the Foreign Investment Promotion Act.
It does not mean that KRW 100 million is sufficient for every regulated business.
Certain sectors—such as construction, logistics, travel, finance, and other licensed businesses—may impose their own requirements concerning:
Minimum registered capital
Professional personnel
Office or facility size
Equipment
Security deposits
Guarantee insurance
For example, if the applicable industry law requires capital of KRW 300 million, an investment of only KRW 100 million may qualify as foreign investment but still be insufficient to obtain the business license.
Before incorporation, the investor should therefore distinguish among:
Whether foreign investment is permitted
Whether foreign ownership is restricted
Whether the business requires a separate minimum capital, facility, personnel, or licensing condition
10. What Benefits Are Available to a Foreign-Invested Company?
10.1. Corporate income tax is not automatically reduced
In the past, corporate income tax incentives were widely associated with foreign investment.
However, the general corporate income tax exemption for new foreign investments was abolished for new investments from January 1, 2019.
Accordingly, a company established and registered as a foreign-invested enterprise in 2026 does not automatically receive a corporate income tax exemption.
As a general rule, it is subject to the same corporate income tax rules as other Korean companies.
A foreign-invested company may nevertheless qualify for generally available tax incentives if it satisfies the relevant requirements, including incentives for:
Qualified start-up small and medium-sized enterprises
Research and development
Integrated investment tax credits
Employment creation
Certain regional investments
10.2. Acquisition tax and property tax incentives may be available for qualifying investments
Acquisition tax and property tax reductions may be available for certain qualifying
foreign investments, including investments involving:
New-growth or source technologies
Foreign investment zones
Free economic zones
Large-scale investment projects
Projects meeting regional-development requirements
The company must satisfy the statutory requirements concerning:
Business sector
Investment amount
Location
Newly installed facilities
Employment
Technology
Approval procedure
The tax reduction does not apply automatically merely because the company is registered as a foreign-invested enterprise.
A separate tax-incentive application and determination may be required. Local ordinances may also provide additional relief, so the investor should compare support programs among potential business locations before selecting the registered office or factory site.
10.3. Customs duty, individual consumption tax, and VAT exemptions may be available for certain capital goods
Where a foreign-invested enterprise has received the required tax-incentive approval, certain capital goods imported for the approved business may qualify for exemption from:
Customs duty
Individual consumption tax
Value-added tax on importation
The exemption may apply to:
Capital goods contributed directly by the foreign investor
Capital goods purchased and imported using foreign investment funds
The importation must generally be completed within the statutory period, commonly within five years from the date of the foreign investment notification.
A transaction involving only the acquisition of existing shares in a Korean company generally does not qualify for capital-goods import exemptions.
10.4. Location support and cash grants may be available
Certain foreign investment projects may be eligible for:
Entry into a foreign investment zone
Reduced rent for state- or municipality-owned property
Cash grants
Employment subsidies
Training subsidies
Infrastructure support
Administrative assistance
These benefits are not granted to every foreign-invested enterprise.
Eligibility is generally assessed based on factors such as:
Technology level
Research and development activity
Investment amount
New employment
Contribution to supply-chain stability
Contribution to regional development
Economic effect of the project
10.5. Eligible investors and dispatched personnel may apply for a D-8 Corporate Investment visa
One of the most significant practical benefits of a properly registered foreign-invested enterprise is that an eligible foreign national may apply for a D-8 Corporate Investment visa.
A foreign individual who:
Invests at least KRW 100 million in a Korean company
Owns at least 10% of its voting shares
Participates in management
may generally apply for D-8-1 status.
Where a foreign corporation establishes a Korean subsidiary, a dispatched person from the foreign parent or affiliated company may apply if the person serves as:
An executive
A senior manager
An essential specialist in production or technology
By contrast, a foreign national newly hired in Korea by the foreign-invested enterprise does not automatically qualify for a D-8 visa merely because the person is appointed as a director.
Foreign-invested enterprise registration does not automatically result in visa issuance.
The immigration authority will separately review documents and circumstances such as:
Foreign-invested enterprise registration certificate
Business registration certificate
Corporate registry certificate
Overseas remittance records
Certificate of foreign currency purchase
Use of the investment funds
Lease agreement
Photographs and condition of the business premises
Business plan
Actual business activity
Dispatch order and employment certificate, where applicable
Applicant’s experience and expected duties
A company that exists only on paper, has no actual office, or immediately withdraws and uses the capital for personal purposes may encounter serious difficulty in obtaining D-8 status.
11. Common Problems in Establishing a Foreign-Invested Company
11.1. Apostilled documents do not match the actual investment structure
Suppose a foreign corporation intends to own 100% of the Korean company, but the apostilled board resolution states a joint-venture structure or a different investment amount.
The document may be unusable even though it has been properly apostilled.
An apostille does not certify that the contents of the document are legally or factually correct. It generally certifies only the authenticity of the signature, seal, or official capacity appearing on the document.
Before obtaining an apostille, the parties should therefore confirm:
Proposed Korean company name
Investment amount
Shareholding percentage
Identity of the investor
Appointment of directors
Scope of the power of attorney
Authority of the signatory
11.2. The notified investor and the actual remitter are different
If the foreign investment notification identifies a foreign corporation as the investor but the funds are remitted by:
The corporation’s representative personally
An affiliate
Another shareholder
A third party
the bank may require an explanation of the legal relationship and source of funds.
Whenever possible, the funds should be remitted directly from an account held in the name of the foreign investor stated in the notification.
The following should be consistent:
Name of investor
Name of remitter
Currency
Amount
Purpose of payment
Shareholding structure
11.3. The company immediately withdraws the entire capital
After incorporation, the capital may be used for legitimate business purposes, including:
Office deposit
Rent
Salaries
Purchase of goods or equipment
Marketing
Professional services
Operating expenses
However, if the representative director withdraws the funds for personal use or transfers them to an unrelated account, the company may face:
Accounting issues
Corporate tax issues
Deemed-loan or temporary-payment issues
Breach-of-duty concerns
Difficulty in a D-8 visa review
The capital should be spent from the corporate bank account, and the company should retain:
Contracts
Tax invoices
Receipts
Bank transfer records
Accounting records
11.4. The investor assumes that registering a business purpose is the same as obtaining a license
Stating “travel business,” “construction,” or “financial services” in the corporate registry does not authorize the company to conduct that business.
The following are separate procedures:
Incorporation registration
Business registration
Sector-specific license or permit
Foreign-invested enterprise registration
Before incorporating the company, the investor should review all applicable requirements concerning:
Capital
Personnel
Facilities
Guarantee insurance
Foreign ownership
Licensing
Reporting
This can prevent an unnecessary capital increase, office relocation, or amendment of the articles of incorporation after the company has already been established.
12. Summary
A Korean company does not automatically become a foreign-invested enterprise merely because its shareholder is a foreign person or foreign company.
As a general rule, each foreign investor must invest at least KRW 100 million and acquire at least 10% of the voting shares or equity interests. An investment below 10% may still qualify where the foreign investor is entitled to appoint or dispatch an executive who participates in important management decisions, but the KRW 100 million minimum investment requirement still applies.
The standard process is:
Foreign investment notification
Remittance of investment funds
Incorporation registration
Required business licenses and permits
Business registration
Opening a corporate bank account
Foreign-invested enterprise registration
The foreign investment notification should generally be filed with KOTRA or an authorized foreign exchange bank before the funds are remitted. The investment funds should be sent in foreign currency by the reported investor, with the payment purpose clearly identified as an equity investment in the Korean company.
A foreign individual will commonly need to prepare a passport, proof of address, acceptance of office, and power of attorney.
A foreign corporate investor will commonly need to prepare a certificate of incorporation or corporate registration, evidence of representative authority, a resolution approving the Korean investment, and a power of attorney.
Overseas documents such as acceptances of office, signature documents, powers of attorney, and corporate resolutions will commonly require local notarization and an apostille. If the issuing country is not a party to the Hague Apostille Convention, Korean consular legalization will generally be required. Korean translations should be attached, and the investor’s name, address, investment amount, and shareholding ratio should be consistent throughout all documents.
After incorporation registration, the company applies for business registration using documents such as the articles of incorporation, corporate registry certificate, lease agreement, shareholder statement, foreign investment notification certificate, evidence of the capital inflow, and any required business license.
Business registration and foreign-invested enterprise registration are separate procedures. After the investment has been completed, the company should generally complete foreign-invested enterprise registration with the original notification institution within 60 days.
Most manufacturing, IT, trading, wholesale, retail, consulting, and ordinary service businesses permit 100% foreign ownership. However, certain sectors—including broadcasting, telecommunications, energy, aviation, news media, and some transport and primary-industry businesses—may be prohibited or subject to foreign ownership limits.
The Foreign Investment Promotion Act’s KRW 100 million threshold must also be distinguished from any separate minimum capital requirement imposed by the law governing the relevant business.
Registration as a foreign-invested enterprise does not automatically provide a corporate income tax exemption. The former general corporate income tax incentive for new foreign investments was abolished from 2019. Nevertheless, qualifying investments may still receive acquisition-tax or property-tax relief, capital-goods import tax exemptions, foreign investment zone support, cash grants, or other incentives.
Eligible foreign investors and qualifying personnel dispatched by a foreign parent company may also apply for D-8 Corporate Investment status. However, registration of the foreign-invested enterprise does not guarantee visa issuance. The immigration authority separately examines the actual source and use of the investment funds, the existence of genuine business premises, the company’s real business activities, and the applicant’s role and qualifications.
Principal Legal and Administrative References
Korean Foreign Investment Promotion Act
Enforcement Decree of the Foreign Investment Promotion Act
Enforcement Rule of the Foreign Investment Promotion Act
Korean Commercial Act
Korean Foreign Exchange Transactions Act
Korean Foreign Exchange Transactions Regulations
Consolidated Public Notice on Foreign Investment
Official foreign investment guidance issued by Invest KOREA
Business-registration guidance issued by the Korean National Tax Service
D-8 Corporate Investment visa guidance issued by Korean immigration authorities
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