The set-up of a company in South Korea requires the elaboration of specific documents such as the articles of association of the business. A special visa might be required for foreign investors according to the Korean Commercial Code. Our specialists in company formation in South Korea are ready to explain to you the requirements for opening an enterprise in this country.
|Types of companies||
– general partnership,
– limited partnership,
– private limited liability company,
– public company
Minimum share capital requirements for LTD
Minimum number of shareholders
|At least one shareholder is required to open a company in Korea.|
|Local manager required (YES/NO)||
No, there is no need for a local manager to start a business in Korea.
|Incorporation timeframe (approx.)||
Approx. 4 weeks
Corporate tax is levied at rates rangining from 10% to 25% depending on the annual profits.
– 15.4% for payments made to residents,
– 20% for payments to non-residents
|Number of double tax treaties (approx.)||
Approx. 90 double tax treaties
|Registered address availability (YES/NO)||Yes, registered addresses are available for company formation in Korea.|
|Shareholders annual meeting required||
Annual shareholders meeting must be held.
|Availability of electronic signature||
Electronic signatures are accepted in South Korea.
|Annual return filing requirements||
Interim tax returns must be filed for the first 6 months, annual tax returns must be filed no later than 3 months from the end of the financial year.
|Full foreign-ownership availability||
Full foreign ownership is allowed.
– foreign tax credits,
– corporate tax exemptions for SMEs,
– tax exemptions for increasing employment,
– research and development incentives
|Company formation services support in Korea||
We offer company registration services in Korea.
Company formation steps in South Korea
If you want to open a company in South Korea, there are several steps you need to complete. After choosing the most suitable legal form, you must:
- reserve the company’s trading name;
- draft the Articles of Association in the case of private and public companies;
- file these documents alongside other papers with the Companies Register;
- set up a company bank account with a financial institution of your choosing;
- apply for a tax identification number;
- apply for the necessary licenses, depending on the industry to operate in.
No matter the type of entity you decide on, it must have at least one shareholder and one director. There are no citizenship or residency requirements for any of them if they do not live in Korea.
As a general rule, business registration in Korea with the Trade Register takes about 2 weeks. However, the bank account opening and licensing procedures can lead to a longer timeframe for the company to start operating. It takes around 3 weeks to have the bank account set up and approved.
If you want to start a business in South Korea as a foreign investor, we invite you to discuss the requirements with our local consultants. They can conduct all the due diligence processes required for you to incorporate the chosen legal structure as soon as possible.
Types of companies in South Korea
The legal structure in which an entrepreneur can organize his/her business entity is closely connected to the size and profile of the company. Whether you intend to be the only owner of your enterprise or to work in a partnership with certain local and foreign investors, the Korean state offers you several alternatives. Some of the most popular legal forms for opening a company in Korea are the following:
• General Partnership (Hapmyeong Hoesa).
• Limited Liability Partnership (Hapja Hoesa).
• Joint Stock Corporation (Chusik Hoesa).
• Limited Liability Corporation (Yuhan Hoesa).
If you want to set up a private business in South Korea you are not allowed to use in the name of the company the term hoesa which means corporation.
Our consultants in company registration in South Korea remain at your disposal for more details regarding the particularities of the business structures available in this country and for personalized company formation services.
What is the minimum share capital for company registration in South Korea?
One of the main advantages of choosing South Korea for starting a business is that there is no minimum share capital required to create a private company. However, it is necessary to establish the required amount in accordance with the activity sector in which it will operate. For this purpose, you can reach out to our business registration agents in South Korea who will guide you.
Special requirements for foreign investors in South Korea
As a foreign entrepreneur who wants to have full control over one’s business in Korea, the following types of companies are available for registration:
- the local company;
- the branch office which can be set up by a foreign company;
- the liaison office available for a foreign enterprise.
These types of companies fall under the Foreign Direct Investment laws and must comply with certain requirements. In the case of local companies, the minimum investment is KRW 100 million, which is the equivalent of approximately USD 90,000.
In this case, the incorporation procedure is slightly different, as the first step to complete is to notify the Foreign Direct Investments Board about the intention of opening the company.
Additionally, you must also obtain an entrepreneur visa that will later enable you to obtain a Korean residence permit.
It may be necessary for businesses that are not yet registered in Korea but conduct business there or hire locals to register and file reports with the Korean tax authorities. We advise any company planning to enter the Korean market to seek an expert opinion from our accountants in South Korea in order to carry out an effective and correct tax planning.
If you want to open a company in South Korea as a sole shareholder, please get in touch with our experts who will advise on all the requirements you must meet. We also have a team of immigration lawyers in South Korea who will help you relocate here.
The majority of visitors to South Korea who intend to stay longer than 6 months must get alien registration cards. These are a form of personal identity used by expats in Korea. You will receive a Resident Registration Number with this card, which is required when opening a bank account or registering at the neighborhood doctor’s office. This is also the first step to permanent residency in South Korea.
Tax considerations for companies in Korea
If you want to start a business in South Korea, you must also prepare to become liable for taxation here. Domestic businesses are liable for the corporate tax that applies to their worldwide income. Foreign-owned ones, such as the branch office, will pay the tax on the income they generate in Korea. For this purpose, they are required to file audited tax returns every year.
The corporate tax is the main levy to consider when owning a company in Korea. It applies at the following rates, based on the profits generated:
- 10% on profits of maximum KRW 200 million per year;
- 20% + KRW 20 million on profits of ranging between KRW 200 million and KRW 20 billion;
- 22% + KRW 3,980 million on profits between KRW 20 billion and KRW 300 billion;
- 25% + KRW 65,580 million for profits of more than KRW 300 billion.
The government has put a strong emphasis on the need for foreign investment and has put in place regulations that help foreign business owners get around strict financial and legal restrictions. These advantages include financial assistance and tax benefits, including cash grants. This is also one of the easiest ways for immigration to South Korea. Get in touch with our lawyers in Korea for guidance in relocation.
What to consider when opening a company in South Korea
One of the most essential elements when starting a company in South Korea is to have a clear image on the executive board of your future business. The number of the shareholders and the directors should be already clear when you start the registration procedure.
You might wonder as well what are the costs for setting up a company in South Korea? Apart from the expenses required for registration, you should take into consideration as well the investment capital that you will need to deposit in a local bank. There is no minimum social capital requirement imposed by law, therefore investors have the freedom to decide for themselves. The total time spent with the formation procedure is generally not longer than two weeks.
The economy of Korea is ranked the 15th in the entire world by the nominal gross domestic product (GDP) and the 12th by the purchasing power parity (PPP). However, one of the main reasons why invest in Korea is maybe the fact that the local economy is regarded as both a stable high-income developed state and a member of the Next Eleven countries, which means it has a strong growth potential for the following years. Despite the fact that it lacks natural reserves and it is overpopulated, Korea is at the present the seventh largest exporter and the tenth largest importer in the entire world. Our Korea company registration consultants can assist you in starting a business in Korea.
Hiring foreign workers in Korea
There are two main categories of foreign employees in Korea:
• Foreign migrant employees (who obtain the E-9 visa): under the Employment Permit System, who activate in sectors such as construction, manufacturing, farming and so on;
• Foreign professional employees (they are issued the E1 to E7 visas): these have specialized knowledge, like college teachers, researchers, experts and English teachers.
The Employment Permit System in Korea is comprised of the non-professional employment visa (E-9) for foreign employees who take on basic skilled jobs and the visiting employment visa (H-2) for overseas Korean citizens. Our Korea company formation advisors can provide more details on these visas. We can also help you to open a company in Korea.
This system was adopted to confer the workforce a certain stability in sectors which register serious labor shortages and, at the same time, which protects the local labor market.
Feel free to contact our Korean company formation consultants in order to receive professional help when starting a business in this country. You will find out what is the most efficient procedure for opening a company or immigration to South Korea.