South Korea Company Formation

Opening a company in South Korea

Why start a company in South Korea? What are the advantages in the country of South Korea?
South Korea, a western country, in an Asian market, is a convenient solution for many entrepreneurs.

South Korea is off the coast of Japan. The capital city of the country is the beautiful Seoul. In Korea, North Korea borders Turkey to the southwest, which makes South Korea a convenient solution for imports from Turkey and exports to Turkey.

The local currency is the Korean Won (KWR).

Virtual currency market (crypto)
The crypto market in South Korea is very developed. South Korea is home to some of the oldest and largest crypto exchanges in the world. In South Korea there are many opportunities for entrepreneurs in this field.

The process of opening a company in South Korea
Opening a company in South Korea begins with the signing of a notarial power of attorney to open a company by a local agent. The document is then sent with a courier urgently and the company is established.

In South Korea there is no need for a local director or a local shareholder. This means that it is possible to open the company with 100% shareholding in the name of a foreign citizen - in your name, or even in the name of a foreign company. The director can be foreign and there is no need for a local director.

Restrictions on taking foreign currency out of the country, and equity requirement
South Korea has a law which limits the purchase of foreign currency or the transfer of funds outside of Korea. This is important for those who start a company in South Korea, if they want to withdraw dividends outside the country, or make international payments.

This legislation turns South Korea into a kind of economic bubble, into which foreign money can enter, but is difficult (although possible) to get out of. In South Korea there is a law called the foreign exchange transaction law, which requires various procedures to send dollars or euros out of the country.

By the way, this is also one of the reasons for the prosperity of Bitcoin there - there are not and cannot be any restrictions on Bitcoin transfers outside the country.

After signing the necessary documents to open a company, the company is opened and a certificate of incorporation is issued to the new company in South Korea.

Company address
For the process of registering a company in South Korea, a physical address such as an office is not required, and a virtual office can suffice. However, when the company in South Korea wishes to register with the tax authority for the purpose of starting operations, the tax authority will not accept a virtual office. In such a situation it is possible to rent space in a business center (something like we work) and then you have a rental agreement for the company, which will be provided by the South Korean tax authority.

Opening a bank account in South Korea - current account for the company
After opening the company, it is time to open a current bank account in South Korea for the company.

Anyone who wants to open a bank account in South Korea is required to physically come to the country.

However, there is an alternative, and that is opening an internet bank account. Indeed, similar to our "Zero One" bank, there are Internet banks in Europe that would be happy to accept your company in South Korea as a customer.

VAT registration
After the opening of the company, at the same time as the opening of the current bank account for the company, the registration of the new company with VAT will also be carried out. The company will receive a VAT number and you can start trading.

Tax in South Korea
The corporate tax in South Korea is progressive (marginal), and it starts at 9%, rises to 19%, continues to 21% and ends at 24%.

For sales to the local South Korean market, the VAT is 10%.

Equity Rquirements
When opening a company in South Korea, it is required to deposit a minimum equity capital. The minimum amount of capital required to be deposited varies according to the type of company opened. We will discuss below the different types of companies and the minimum required equity capital.

What kind of company in South Korea should I open?
In South Korea there are two types of companies. The first type of company in South Korea is called Chusik Hoesa. This is a regular limited company of the Joint Stock Corporation type, or LTD - the regular "Ltd" we know.

In this company, shareholders in a joint stock company have a limited guarantee towards the company's obligations. In this company, shares are freely transferable, although this may be subject to the approval of the board of directors. These companies are required to hold shareholder meetings at least annually to discuss financial statements and dividends.

This is the most common type of limited liability company for foreign companies establishing subsidiaries in Korea.

The equity capital required for this type of company in South Korea is extremely high, amounting to 100 million South Korean won, which is roughly $75,000 as of 2024.

The second type of company in South Korea is Yuhan Hoesa. This is a private company which is sometimes referred to as an LLC. This is the most common form of business entity used in South Korea for locals. An LLC must appoint at least one director and at least one shareholder. When starting a company in South Korea, a minimum share capital of 10 million South Korean won, which is about 7,500 euros, must be deposited. This company must not have more than 50 shareholders.

This is the least relevant type for foreign company founders who are not residents of South Korea, and the reason is that in the first type of company, you can get a general permit from the state to withdraw foreign currency from the state. We will discuss this possibility below.

General permit to withdraw foreign currency from the country
When you establish a Chusik Hoesa type company, which is the well-known and popular LTD company in South Korea with foreign investors, you can get a general permit from the state to take foreign currency out of the country.

In order to receive this permit, at the beginning of the company registration process in South Korea, to begin with, it is established with the classification "Foreign investment enterprise". As soon as the company is classified this way and the equity capital of this type of company is paid, then the law on limiting foreign exchange spending mentioned above ceases to apply, and instead the foreign investment promotion law applies, which is an investment promotion law in South Korea.

The bank also treats it differently as soon as the company has such a status.

It is possible to carry out the process of registering a company in South Korea without obtaining this status, the government will require a slightly more complex procedure to register the company in South Korea, and it will also be a little more complex to take the money out of the country, but it will still be possible to take it out, as stated above.

It is also possible to open a company in South Korea without this status of "foreign investment company" and then change its status to "foreign investment company", but then you have to take into account that it will be necessary to change the articles of association, go through some procedure in a commercial court in South Korea, and make a registration With the permission of the exchange, including a status change in the bank where the company's bank account is located, so it is quite similar to registering a completely new company with this status from the beginning.

Company maintenance
The company requires annual maintenance of payment of fees, annual submissions, local address (which we will provide for you), as well as submissions to the tax authority.

Questions and answers
Question: Is it necessary to physically fly to South Korea to open a company in South Korea?
Answer: The entire process is carried out remotely and at no stage is it necessary to physically come to South Korea. There is no need to fly to South Korea to open the company in South Korea. It is also required to physically arrive in South Korea to open the company's bank account, towards the end of the process. However, the entire process of opening a company in South Korea is carried out remotely without setting foot on South Korean soil.

Question: Who provides the local address for the company in the new South Korea?
Answer: We will provide the local address.

Question: How can I find a good accountant who can handle the company in our new South Korea?
Answer: We will connect you with a local accountant.

Question: If I want to come to South Korea to open a bank account, what should I do?
Answer: We will try ahead of time to arrange a meeting for you at the branch in order to sign the account opening forms, so that everything will be in order before you arrive, so that you don't just walk around the city in order to find a branch that will accept you and open a bank account for your new company in South Korea.

Question: How long does it take to open a company in South Korea?
Answer: The process of opening the company, including signing the power of attorney and sending it, should take about 3-4 weeks. After that, the process of opening a bank account takes between 1-3 weeks, depending on the readiness of the banks to accept the new company as a customer. Of course, these are times that depend on third parties, so this is only an estimate.

Question: Is it possible to open a company in South Korea for a person with American citizenship or a person living in the USA?
Answer: Yes. We know how to open a company in South Korea for a person with American citizenship or a person who lives in the USA. South Korea is a Western country, so there is no problem opening a company for a person with American citizenship.

Question: How much does it cost to open a company in South Korea?
Answer: Click here to contact us and get an up-to-date quote for free!