How to Establish a Company in South Korea

Establish a company in South Korea to gain access to one of Asia’s most innovative and strategically located markets. With a robust infrastructure, a highly skilled workforce, and strong government support for foreign investment, South Korea offers an ideal environment for international business expansion. Understanding the country’s legal, administrative, and cultural landscape is key to a smooth and successful setup. This guide outlines the essential steps and considerations for entering the South Korean market with confidence.

Why Establish a Company in South Korea?

Before diving into the process, it’s important to understand the benefits of setting up a company in South Korea:

  • Strategic Location: Positioned between China and Japan, South Korea is a gateway to Northeast Asia.
  • Innovation Hub: With advanced technology and a strong R&D ecosystem, it’s ideal for tech-driven industries.
  • Business-Friendly Environment: The government provides incentives to foreign investors in certain sectors.
  • Strong Trade Agreements: Access to major markets through multiple FTAs, including the EU and the US.

Types of Business Entities in South Korea

When looking to establish a company in South Korea, foreign investors can choose from several business structures:

1. Wholly Foreign-Owned Company (WFOE)

A WFOE allows full ownership by a foreign investor. It’s treated like any domestic company but requires a minimum investment of KRW 100 million (~USD 75,000).

2. Joint Venture

A partnership with a local entity. Ideal for leveraging local expertise and networks.

3. Branch Office

A branch is considered an extension of a foreign company and not a separate legal entity. It’s suitable for carrying out profit-generating activities.

4. Liaison Office

This type of entity is limited to non-commercial activities like market research and does not require registration as a legal entity.

Step-by-Step Process to Establish a Company in South Korea

1. Choose a Business Structure

Select the most suitable entity type based on your business goals, ownership preferences, and regulatory requirements.

2. Reserve a Company Name

Check availability and register the name with the Supreme Court’s registry.

3. Secure a Business Address

A physical office is required to register your company. Virtual offices may be acceptable for certain types of businesses.

4. Open a Bank Account

Deposit the required capital and obtain a capital verification certificate.

5. Register the Company

Submit your application to the relevant local district court. You’ll need to provide:

  • Articles of Incorporation
  • Business plan
  • Shareholder and director details
  • Proof of capital deposit

6. Obtain a Business Registration Certificate

Once approved, apply for a Business Registration Certificate (BRC) at the National Tax Service within 20 days of incorporation.

7. Apply for Relevant Licenses and Permits

Depending on your industry, you may need sector-specific licenses (e.g., fintech, food, import/export).

Tax and Compliance Considerations

When you establish a company in South Korea, understanding the local tax regime is crucial:

  • Corporate Tax Rate: Ranges from 10% to 25% depending on taxable income.
  • VAT: Standard rate is 10%.
  • Annual Reporting: Companies must file financial statements and tax returns annually.

Hiring a local accounting and legal firm can help ensure compliance with South Korean laws and tax requirements.

Working with a Local Partner

Navigating South Korea’s legal and regulatory environment can be challenging without local expertise. Partnering with a consultancy that specializes in market entry services can:

  • Simplify the incorporation process
  • Ensure compliance with labor laws and tax codes
  • Assist with finding office space and hiring talent

To establish a company in South Korea, thorough preparation and understanding of local regulations are vital. With a strong economy, transparent legal system, and government support for foreign investment, South Korea is a promising destination for business expansion. Whether you choose to set up a WFOE, joint venture, or branch, the right guidance will ensure a smooth market entry and long-term success.