Streamline your company incorporation in South Korea
Strategically situated between China and Japan, South Korea is an ideal international trading hub and source of business opportunities. Because South Korea does not restrict foreign currency accounts or the repatriation of capital earnings, offers additional tax incentives in its free trade zones and open access to foreign investment, many investors are taking advantage of the opportunities to do business in South Korea. Additionally, the South Korean economy continues to grow into one of the largest in the world.
Our comprehensive end-to-end solution will help your company establish a legal entity in South Korea. We deliver a strategic approach by enabling our clients the ability to retain the same quality of legal compliance as their own in-country subsidiaries.
Horizons is South Korea’s most trusted incorporation partner to foreign clients. This expertise allows businesses to establish local entities efficiently, reliably, and compliantly.
Streamline your entity setup
Our team of in-country experts work alongside local governments to handle the bulk of the incorporation process. This saves you valuable time and money.
Our highly-skilled advisors will manage all of your monthly corporate services. This includes your bookkeeping, financial planning, and accounting.
Local HR Department
You can rely on the support of our local Human Resources department for reliable and compliant guidance for your entire entity setup.
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Our approach to company incorporation in South Korea.
South Korea offers a lucrative opportunity to create and manage a local company of your own. We can work with you to identify a company structure that best aligns with your in-country strategy and long-term development plans.
By partnering with Horizons, we’ll help you manage your company’s end-to-end incorporation. This includes:
- Handling payroll setup and registration. Once incorporation is complete, we transition employees from their current employment status – under our PEO – into that of your company.
- Overseeing the same benefits your company has been providing to your foreign employees under the ownership of your new subsidiary.
- Gathering local employment contracts and legally mandated materials for the establishment of your new entity.
- Strategic guidance in matters concerning contract negotiations with employees.
Foreign capital-invested company
A foreign capital-invested company, foreign direct investment company or FDI company is a local corporation that d under a foreign investment under the nation’s law. This type of business is a separate legal entity from the foreign company. This method can be used to create a subsidiary.
At least one shareholder and director are necessary to establish an FDI company. They can be of any nationality. Shares in companies in South Korea do not have to be held by local residents.
Many investors choose this option because it allows for more favorable tax treatments, protects the foreign entity from liability and allows for easier remittance of profits. Additional tax support and incentives may be available.
Many foreign investors to establish this type of entity because it insulates the parent company from liabilities assumed by the FDI company. However, this option is usually associated with higher administrative and compliance requirements.
To form this type of company, each investor must invest a minimum of 100 million won.
If the corporation establishing the FDI company is a private business, it is not allowed to issue a business investment visa. If the business invests at least KRW 300 million, the business can receive a trade visa.
A foreign capital-invest company can be formed with the following types of business under Korean law:
Joint stock company
A joint stock company, or Chushik Hoesa, is the only type of corporate entity that can currently publicly issue shares in South Korea. This is one of the most common corporate forms for foreign companies that establish subsidiaries in Korea.
With this type of entity, stockholders’ liability is limited to their capital investment to the company. Stocks may be freely transferrable, but the board of directors may have to approve any such transfer. Annual shareholder meetings are required for this type of company.
Limited liability company
A limited liability company, or Yunhan Hoesa, is a closely held company with 50 or fewer shareholders. Shareholders enjoy limited liability. At least one shareholder and one director are required to establish this type of entity in South Korea. However, there are few requirements related to directors and accounting. These companies have a minimum used share capital of USD $1. Some companies choose this option because of tax benefits like pass-through benefits and simplified reporting guidelines. The Korean Commercial Code prohibits limited liability companies from securitizing shares and issuing corporate bonds.
A partnership or Hapmyeong Hoesa is formed by two or more partners, all of whom maintain unlimited liability. Transfer of ownership is limited for this type of structure and requires the unanimous consent of all remaining partners. This type of business is responsible for paying Korean corporate taxes and cannot be treated as a pass-through entity
The limited partnership or Hapja Hoesa requires at least one of the partners to maintain unlimited liability and at least one partner to maintain limited liability. This type of business is responsible for paying Korean corporate taxes and cannot be treated as a pass-through entity.
Limited liability partnership
A limited liability partnership, or Hapja Johap, allows one or more partners to have unlimited liability and others to have limited liability like with a Hapja Hoesa. However, the main difference between this type of entity and that one is that a limited liability partnership is treated as a separate legal entity. Therefore, this type of company can be treated as a pass-through entity.
A branch office is not considered as a separate legal entity. Instead, it is considered the same legal entity as the overseas company. An overseas manager is appointed as the branch manager. The actions of the branch are imputed to the parent company.
Profit-making activity can be conducted at a branch office. There is no limit in the amount of investment or ownership of a branch office. However, the branch office is confined to the operations detailed by the parent company. Unless otherwise prohibited, the branch office can invoice local customers, sign local contracts and receive income from local customers.
Because branch offices do not need to be formally incorporated, they are easier to set up than an FDI company. Unlike liaison offices, they can engage in sales activity, so they are often an ideal option for smaller businesses wishing to expand to South Korea.
A liaison office in South Korea is limited to certain activities, such as:
- Research and development
- Exploring the entry into the South Korea market
The office cannot engage in profit-making activity in South Korea and instead can only complete non-sales functions. Because this option does not require incorporating or registering like a foreign company or branch office, the process to set one up is much faster. However, the office must still register at the tax department.
There is no restriction on foreign ownership, but because the activities are limited, it serves a limited purpose in South Korea.
Guided assistance through the incorporation process
The local experts at Horizons can discuss whether it makes sense to incorporate your business in South Kora. If so, we can discuss the options available for you and which type of entity is best suited to your needs. We can also discuss options regarding establishing your entity in a free economic zone in South Korea in which you may receive additional incentives and tax benefits for investing or starting a business in South Korea.
Our local experts can assist you with registering your business, completing all incorporation requirements, meeting requirements by local authorities and preparing necessary documents to effectuate this process.
Pre & post-incorporation services
Horizons provides companies with both pre and post-incorporation services as part of our entity setup solution.
With pre-incorporation, you can use our PEO service to immediately establish a global workforce in South Korea while you await the completion of your company incorporation. Once the setup is complete, we will seamlessly transition your foreign employees from our international PEO directly to your company’s new subsidiary.
Our post-incorporation experts support ongoing monthly and annual compliance services in order for our clients to continue operating compliantly on-site, giving you the ability to primarily focus on local operations.
By partnering with Horizons for your company incorporation in South Korea, you can save time and money while ensuring that the entire process will be handled efficiently, reliably, and with full compliance to local laws.