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Subsidiary, branch or liaison office — the choice determines your tax position, your ability to hire, and how hard it is to send money home. We help you choose deliberately, then build it.
Almost every expensive problem we are called in to unwind in Korea traces back to an entity type chosen for the wrong reason at the start — usually because it was the cheapest to establish, or because a group template said so.
The three options are genuinely different things, not tiers of the same thing.
| Subsidiary (유한회사 / 주식회사) | Branch (지점) | Liaison office (연락사무소) | |
|---|---|---|---|
| Legal status | Separate Korean company | Extension of the foreign parent | Extension of the parent, non-trading |
| Can it sell and invoice? | Yes | Yes | No |
| Who carries liability | The Korean company | The foreign parent | The foreign parent |
| Taxed on | Its own worldwide profits, in Korea | Korean-source income | Not a taxpayer on profit; it has none |
| Foreign-invested company status | Available | Not applicable | Not applicable |
| Typical fit | Any operating business | Some financial and project structures | Genuine market research and liaison only |
The order is not arbitrary. Each step depends on the previous one producing a document.
Registering as a foreign-invested company under the Foreign Investment Promotion Act is not automatic — it requires investment at or above the statutory threshold and a formal notification process. What it gives you is meaningful: the FDI registration certificate that banks and counterparties expect to see, access to the investor visa route, and eligibility for incentives that vary by industry and location.
This is the step that surprises people, and it is worth saying clearly: incorporating a company is easier than opening its bank account.
Korean banks apply anti-money-laundering and know-your-customer procedures that assume a human being will appear in a branch with original documents. Ownership structures with several layers, beneficial owners in multiple jurisdictions, and directors who are all overseas all extend the process. Nothing about this is unreasonable; it is simply not something you can complete by email from another country.
Practical measures that help: a local representative who can attend in person, a clean and clearly documented ownership chain, a business plan that explains expected transaction flows, and choosing a bank with an experienced foreign corporate desk rather than the nearest branch.
Incorporation is the beginning of a compliance calendar, not the end of a project.
We normally take clients from registration straight into accounting, payroll and tax filing so there is no gap between the company existing and the company being compliant — because the calendar starts whether or not anyone is watching it.
The government portals behind this topic. Opens in a new tab.
A subsidiary is a separate Korean company, taxed on its own profits, able to trade and hire freely, and the only one of the three that qualifies for foreign-invested company status with the incentives attached to it. A branch is an extension of the foreign parent, taxed in Korea on its Korean-source income, with the parent carrying the liability. A liaison office cannot conduct profit-generating business at all — it exists for market research, liaison and quality control, and it may not issue invoices. Most operating businesses need a subsidiary. Liaison offices are chosen far more often than they are appropriate, usually because they look cheap, and then have to be converted once the office starts selling.
Korean company law does not impose a general minimum share capital, so a locally-owned company can be formed with a nominal amount. Foreign-invested company status under the Foreign Investment Promotion Act is different: it requires investment at or above a statutory threshold, which has long stood at 100 million won, and which unlocks the FDI registration, the associated visa route and certain incentives. Below that threshold you can still own a Korean company — you simply are not a registered foreign-invested company. Since the threshold is set by statute and can be amended, confirm the current figure before you remit.
The filing steps are not the constraint. Where a straightforward subsidiary is concerned, the sequence — FDI notification, capital remittance, registry incorporation, business registration — moves in weeks rather than months. What actually stretches timelines is document preparation from the parent side: notarised and apostilled corporate documents, certified translations, and signatures from directors in another time zone. Start collecting those first and the rest follows quickly.
A Korean company can have foreign directors resident overseas, and there is no general requirement for a resident director. But several practical things — opening and operating a bank account, dealing with banks under anti-money-laundering procedures, signing at the registry, receiving official correspondence — assume somebody is physically here. Companies that set up with no local presence at all usually find the bank account is the wall they hit. A registered office and corporate secretarial arrangement solves most of it.
Yes — a company must have a registered head office address in Korea, and the business registration is issued against a specific address that the tax office can associate with the business. A serviced office or a registered office service is acceptable for many businesses, though certain licensed activities require genuine premises. We provide a registered office where that is appropriate and will tell you plainly when your intended activity requires more than that.
Through dividends, service fees, royalties or interest, each with its own tax and foreign exchange treatment. This is worth planning at setup rather than at the first profitable year end. Dividend distribution requires the statutory accounts and shareholder approvals to be in order; withholding applies and may be reduced by treaty; and foreign exchange transaction reporting rules apply to the remittance itself. Companies that set up without thinking about repatriation frequently find the mechanism they assumed would work is the most expensive of the four.
Foreign-invested company status turns on two numbers — KRW 100 million per investor and 10 percent of the voting shares. Meeting them is easy. Knowing what the status is still worth after the 2019 and 2025 incentive changes is the part that decides how you structure the entry.
