Korea's KRW 100 Million FDI Threshold: What Foreign-Invested Company Status Actually Buys

What makes a Korean company “foreign-invested”

Two numbers, both of which have to be true at the same time. The foreign investor must put in at least KRW 100 million, and that money must buy at least 10% of the voting shares of the Korean company. Miss either and you have a perfectly legal Korean company with a foreign shareholder — you simply do not have a foreign-invested company under the Foreign Investment Promotion Act, and none of the status that follows attaches.

There is one alternative route. A foreigner who invests KRW 100 million or more but ends up with less than 10% of the shares is still treated as making foreign direct investment if they dispatch or appoint an executive with authority to participate in the company’s major decision-making and management. That is the escape hatch for a minority position in an existing Korean business, and it is a board-seat test rather than a money test.

The thing that trips people is that this is not a company-law threshold. Korean company law imposes no minimum capital on a stock company; you can incorporate one with a nominal amount and it will be validly registered. The KRW 100 million is a foreign-investment threshold, and it exists to separate a genuine direct investment from a portfolio holding. Nothing stops you incorporating below it. What stops is the status.

Why the KRW 100 million is per investor

Invest KOREA states the amount as the sum to be invested per person where two or more persons plan to invest. Two foreign co-founders putting in KRW 50 million each therefore produce nothing: two investments, both below the line, and a company that is not foreign-invested.

This is the mistake we see most often in early-stage structures, because the arithmetic looks right from the outside. The parent is sending KRW 100 million. It just happens to be arriving from two passports. If the plan is for both founders to hold the corporate-investor visa, each of them needs the full KRW 100 million and each needs 10% of the voting shares in their own name.

Equity is not the only qualifying form. A loan from the overseas parent counts as foreign investment if its average term is at least five years — but only where equity investment has already been made, so it cannot be used to manufacture the initial status. Contributions to non-profit research bodies in science and technology qualify from KRW 50 million, subject to conditions on research staff and facilities. And a foreign-invested company that spends its own unappropriated earned surplus on building or extending a factory or research facility is treated as making a fresh foreign investment, calculated by multiplying the amount spent by the foreign shareholding ratio.

The order of the steps is the whole game

Incorporating a foreign-invested company involves the same steps a Korean founder takes, plus two: the foreign direct investment notification at the front and the foreign-invested company registration at the back. Invest KOREA puts the whole sequence at roughly two weeks.

Step 1 comes before step 2. The notification is a pre-notification, and money that lands in Korea ahead of it has a recognition problem rather than a paperwork problem. Two details in the middle of this list cost real money when they are missed.

The first is the description on the remittance. If the funds are hand-carried, the customs declaration must record the purpose as “investment” or “investment fund” — Invest KOREA says in terms that otherwise the funds will not be recognised as foreign direct investment. A wire should likewise be sent in foreign currency with investment stated as the purpose. This is one field on one form, and it determines whether the money you sent is the money the register recognises.

The second is the bank. A foreign investor may open a corporate account at a foreign exchange bank immediately after business registration, but opening additional accounts at a different bank is restricted for twenty business days. That makes the first choice of bank a decision rather than a default, particularly for a group that expects to run its treasury through a specific relationship bank. There is also a useful concession for smaller entities: a company valued at under KRW 1 billion can submit a certificate of balance instead of the formal certificate of deposit of payment for shares, and the funds can be freely withdrawn for business purposes from the following day rather than sitting frozen.

The residence visa follows the company, not the other way round. Invest KOREA’s own guidance notes that the visa is issued after the company is registered, and the corporate-investor route is built directly on the Foreign Investment Promotion Act test — the same KRW 100 million, the same 10%. Structuring the investment below the threshold and expecting to fix the visa afterwards does not work in that order.

What the status stopped buying

Here is the part most English-language guidance still gets wrong, because it was written from a page that has not been updated since 2018.

Foreign-invested companies used to receive a substantial national tax holiday. Under the former Restriction of Special Taxation Act rules, a qualifying company in a high-technology business, or a foreign investor in a foreign investment zone, free economic zone or free trade zone, got a 100% exemption from corporate or income tax for the first five years and a 50% reduction for the following two, in proportion to the foreign shareholding ratio. The 2019 tax reform abolished most of that package as Korea aligned with the OECD’s BEPS work. Investments made before the end of 2018 kept their benefits; new ones did not get them.

The local tax leg lasted longer, and then quietly stopped. Acquisition tax and property tax exemptions for qualified foreign-invested companies — available for up to fifteen years — remained open only to companies that filed applications by 31 December 2025. That provision expired on that date without further extension.

What remains is genuinely useful, but it is narrower and it is shaped for capital projects. The surviving exemptions from customs duties, import VAT and individual consumption tax on capital goods imported as part of the investment matter to a manufacturer bringing in a production line. Cash grants — covering land purchase or rent, construction, capital goods, infrastructure and employment and training subsidies — are negotiated against qualifying facility and R&D projects, not handed to a ten-person sales subsidiary. Location support depends on where you build. If your Korean entity is an office with a sales team, none of it is likely to change your numbers, and you should stop treating it as part of the case.

Which is not to say the status is worthless. It is what makes the corporate-investor visa route available, it is what puts the investment on the register that Korean banks and counterparties check, and it is the framework the whole entry is documented in. Those are process benefits rather than cash benefits, and they are worth having for their own reasons.

When a branch or a liaison office is the better answer

A subsidiary is not automatically right. The three vehicles differ in ways that outlive the setup decision.

The liability line is the one that decides most cases. A branch is the head office; a Korean employment claim, tax assessment or contract dispute against a branch is a claim against the parent. A subsidiary contains it. Against that, a branch avoids the FDI notification and the registration entirely, and a liaison office avoids Korean bookkeeping altogether — which is the correct answer for a genuine representative presence that will not sell anything.

The audit line matters more than it looks. A foreign-invested company must keep books under Korean accounting principles and becomes subject to external audit once it crosses the statutory size thresholds, which growing subsidiaries do without noticing. If you are choosing a subsidiary, the cost of accounting and bookkeeping to Korean standards belongs in the entry model from day one, alongside the four major insurances your first Korean hire triggers and the corporate tax interim payment that lands every August.

Getting the sequence right is not difficult, but it is unforgiving, and almost every problem we are asked to unwind afterwards started as a remittance that arrived before the notification or with the wrong word on the form. If you are at the stage of deciding between a subsidiary and a branch, our company registration service covers the notification, the incorporation and the registration as one piece of work — and we will tell you plainly when a branch is the cheaper answer.

Figures current as at 21 August 2026. Korean thresholds and incentives are revised regularly — each figure above is linked to the authority it was read from.