Starting a business in South Korea: your bridge to the Asia-Pacific

For most foreign investors, the most common structures are a limited liability company (Yuhan Hoesa) or a stock company (Jusik Hoesa), both of which require registration of incorporation with the relevant court registry.

Branch offices and liaison offices are also available. Branch offices can conduct commercial activities on behalf of their foreign parent companies, while liaison offices are limited to non-revenue-generating activities.

Foreign investors can own 100% of a South Korean company in most industries under the Foreign Investment Promotion Act (FIPA). However, certain activities in sectors such as broadcasting, telecommunications and financial services are subject to foreign investment restrictions or additional regulatory requirements.

To establish a qualifying foreign-invested company, investors must generally notify a designated foreign exchange bank or the Korea Trade-Investment Promotion Agency (KOTRA) before remitting investment funds. Investors must then complete foreign-invested company registration after making the qualifying investment.

South Korea's incorporation process generally involves Foreign Investment Notification, capital remittance, court registration, business registration and the registration of the foreign-invested company.

Businesses operating in regulated sectors, such as financial services, healthcare or the food and beverage sector, may also require additional licences or regulatory approvals before commencing operations.

Companies generally need a registered office address in South Korea, although directors who are foreign nationals are not ordinarily required to reside in the country.

Businesses should also confirm that their proposed premises comply with applicable building use restrictions and industry-specific licensing requirements. Support from accounting and corporate administration providers can help businesses manage regulatory filings and ongoing compliance obligations.

Companies must complete business registration with the National Tax Service (NTS) and comply with applicable corporate income tax and value-added tax (VAT) obligations. The standard VAT rate is 10%.

For financial years beginning in 2026, national corporate income tax rates range from 10% to 25%, depending on taxable income, with local corporate income tax applying separately.

Foreign nationals intending to work in South Korea generally need appropriate immigration status and work authorisation. The D-8 corporate investment visa may be available to qualifying foreign investors and essential professionals.

Businesses must also comply with applicable employment laws, including working-hour limits, statutory severance entitlements and social insurance requirements. Workforce planning should account for these obligations alongside local recruitment conditions.

A limited liability company (LLC), or Yuhan Hoesa, provides its members with limited liability and a comparatively flexible management structure. The liability of each member (shareholder) is limited to the amount of capital they contribute to the company. LLCs permit 100% foreign ownership and generally have fewer corporate formalities than stock companies. This structure is commonly selected by small and medium-sized enterprises. Its profits are subject to corporate income tax at the entity level.

A stock company (SC), or Jusik Hoesa, is another common corporate entity for foreign investors establishing subsidiaries in South Korea. It permits 100% foreign ownership and is typically chosen by large enterprises and multinational corporations seeking to raise capital and expand their operations. A stock company's share capital is divided into shares held by its shareholders, who may be individuals or companies. Each shareholder's liability is limited to their investment in the company's shares. As with an LLC, the company's profits are subject to corporate income tax at the entity level.

A branch office is an extension of a foreign parent company and is authorised to carry out revenue-generating activities in South Korea. It is not a separate legal entity and operates as part of the parent company, which remains fully responsible for the branch office's obligations and liabilities. Under the Foreign Exchange Transactions Act, the branch office will be recognised as a permanent establishment and taxed on Korean-sourced income as if it were a domestic company.

A liaison office (or representative office) enables a foreign company to establish a non-commercial presence in South Korea. A liaison office is restricted to non-revenue-generating activities, such as building relationships, conducting promotional activities and carrying out market research on behalf of the parent company. This model is typically used by firms evaluating market entry or supporting regional operations without assuming the obligations associated with operating a separate local legal entity. Liaison offices are generally not subject to corporate tax because their permitted activities do not generate revenue.

We can work with you to identify a structure that supports your immediate set-up requirements and longer-term plans in South Korea. View our 'at-a-glance' comparison table outlining key information about different company formation options.

 

South Korea offers three main types of designated investment locations:

• Free Economic Zones (FEZs)

• Free Trade Zones (FTZs)

• Foreign Investment Zones (FIZs). This category is further divided into complex-type, individual-type and service-type zones

South Korea has also introduced Opportunity Development Special Zones (ODSZs), an investment incentive framework designed to support regional development. However, the framework is aimed primarily at domestic businesses, so foreign investors should confirm their eligibility before selecting a location.

Investment zones often focus on particular industries. For example, the Busan-Jinhae FEZ supports logistics and manufacturing activities, including shipbuilding equipment, automotive parts and machinery. The zone also hosts research facilities serving emerging industries such as biotechnology and healthcare.

Depending on the zone, industry and applicable investment criteria, benefits may vary across FEZs, FTZs and FIZs and may include:

• Tax reductions and exemptions: Qualifying businesses may receive exemptions from customs duties on imported capital goods, along with acquisition tax and property tax relief. In FEZs, exemptions from customs duties generally apply for five years and may be extended for up to a further two years in qualifying circumstances. Local tax reductions may be available for up to 15 years under the applicable local ordinances. Corporate income tax exemptions previously available specifically to foreign investors were generally abolished for new investments made on or after 1 January 2019. FIZs may also provide customs duties and local tax relief, while FTZs offer tariff benefits and zero-rated VAT on specified goods and services, subject to applicable requirements.

• Business support and regulatory incentives: The form of business and location support varies by zone type. Foreign-invested companies that meet the relevant criteria may receive cash grants, reduced rental fees and infrastructure support. FIZs may provide preferential land or rental arrangements, while qualifying businesses in FTZs may benefit from reduced rental fees or long-term leases. Certain FEZs also provide special regulatory arrangements relating to employment and foreign exchange transactions.

• Simplified administrative procedures: FEZs offer investment support services to assist businesses with set-up and regulatory requirements. FTZs provide customs arrangements designed to facilitate manufacturing and international trade.

• Living and business environment: Some FEZs, particularly the Incheon FEZ, have developed residential communities alongside international schools, healthcare facilities and commercial infrastructure to support foreign investors and employees.

In addition to the investment zones outlined above, foreign businesses also have the option to set up elsewhere in South Korea.

Potential advantages include:

• Access to customers and business networks: Establishing operations in a major commercial district may place a business close to customers, corporate headquarters and professional service providers.

• Industry-specific locations: Businesses with sales operations, as well as those in the consumer goods and financial services sectors, may benefit from being based near established commercial centres. Manufacturers may prefer areas close to suppliers or industrial clusters.

Seoul is a major centre for corporate headquarters and commercial activity. Gangnam is associated with technology and consumer businesses, Yeouido with financial services and Gwanghwamun with corporate and professional services.

Beyond Seoul, Busan offers access to a major international port and established logistics infrastructure, making it a potential location for companies involved in international trade and distribution.

Establishing a company in a designated investment zone does not create a separate legal form. These companies remain South Korean entities subject to applicable company law and any additional zone-specific requirements, while qualifying businesses may benefit from zone-specific incentives.

Businesses entering South Korea should consider how existing trade relationships and industry opportunities may influence their market-entry and set-up plans.

The bilateral UK–South Korea FTA entered into force in 2021 and provides the framework for trade between the two countries. In December 2025, the two governments concluded negotiations on an upgraded UK–South Korea FTA covering digital trade, supply chain resilience and market access. Once in force, the upgraded agreement is expected to preserve tariff-free access for 98% of South Korean tariff lines.

Total UK–South Korea trade in goods and services reached £15.8 billion in 2024, an increase of 32% compared with 2014. The relationship was further strengthened by the Downing Street Accord, signed in November 2023, which elevated bilateral ties to a Global Strategic Partnership.

For UK businesses, South Korea offers opportunities in financial services, professional services, life sciences, fintech and advanced manufacturing. The country's extensive FTA network may also support international trade, although preferential tariff treatment depends on meeting the rules of origin under the relevant agreement.

Entry approach: UK businesses considering South Korea may explore Seoul, particularly Yeouido and Gangnam, as a base for financial services, professional services and commercial operations. Companies involved in advanced manufacturing or semiconductor-related activities may consider Gyeonggi Province, which offers proximity to established industrial clusters.

The EU–South Korea FTA was provisionally applied from 2011 and entered fully into force in 2015. It was the EU's first FTA with an Asian country. Bilateral trade in goods reached approximately €124 billion in 2025.

The EU remains South Korea's largest foreign investor by investment stock, accounting for approximately 24.4% of the country's total inward foreign direct investment (FDI) stock. The EU and South Korea maintain an extensive trade and investment relationship, supported by cooperation in advanced manufacturing and technology.

In June 2026, the EU and South Korea signed a Digital Trade Agreement aimed at facilitating cross-border data flows and electronic transactions following its entry into force. EU businesses can also access market-entry support through organisations such as the European Union Chamber of Commerce in Korea and the EU Business Hub.

Entry approach: EU businesses may consider Seoul for corporate headquarters and commercial activities, while the Incheon Free Economic Zone may suit companies in biotechnology and other designated advanced industries. Songdo International City may be an attractive location for pharmaceutical and life sciences companies because of its established biopharmaceutical cluster. Automotive companies and other manufacturers may also explore industrial locations in Gyeonggi Province and South Chungcheong Province.

South Korea maintains strong economic ties with ASEAN and participates in the ASEAN Plus Three framework alongside China and Japan. The ASEAN–Korea Free Trade Agreement (AKFTA) and the Regional Comprehensive Economic Partnership (RCEP) also support regional trade by providing preferential tariff treatment for qualifying goods.

South Korean exports to ASEAN reached US$122.5 billion in 2025, an increase of 7.4% compared with 2024. Growth was driven particularly by semiconductor exports.

For ASEAN businesses, South Korea offers opportunities in consumer goods, the food and beverage sector, digital services and logistics. South Korea's established technology sector and extensive FTA network may also support businesses seeking to expand their regional operations. However, access to preferential tariffs depends on meeting the rules of origin and other requirements under the relevant agreement.

Entry approach: ASEAN businesses may consider Seoul for corporate headquarters and commercial operations, while Incheon may be suitable for logistics and distribution activities. Consumer-facing businesses may also explore selling through e-commerce platforms such as Coupang and Naver Shopping before committing to physical retail operations.

The Mainland of China has been South Korea's largest trading partner for more than two decades. Bilateral trade is supported by the China–South Korea Free Trade Agreement, which entered into force in 2015, and the RCEP.

FDI pledges from the Mainland of China increased by 266.1% year on year to approximately US$5.8 billion in 2024 before declining by 38% year on year to approximately US$3.6 billion in 2025.

Hong Kong also maintains trade and investment ties with South Korea. Bilateral merchandise trade reached HK$314 billion in 2025, while an investment protection agreement between Hong Kong and South Korea has been in force since 1997.

For investors from the Mainland of China and Hong Kong, South Korea offers opportunities in advanced manufacturing, semiconductors, biotechnology and financial services. South Korea's established industrial infrastructure and IP protection framework may be particularly relevant to businesses seeking to establish research facilities or expand their commercial operations.

Entry approach: The Incheon Free Economic Zone, including the Songdo, Cheongna and Yeongjong districts, offers potential locations for businesses in biotechnology, finance and logistics. Companies involved in shipping or industrial manufacturing may also consider the Busan-Jinhae Free Economic Zone, while technology businesses may explore Seoul and Pangyo Techno Valley.

South Korea and the United States (US) maintain extensive trade and investment ties, supported by the Korea–US Free Trade Agreement (KORUS FTA) and cooperation in advanced industries.

US FDI pledges into South Korea reached a record high of US$9.77 billion in 2025, an increase of 86.6% compared with 2024. Investment growth was concentrated in metals, distribution and the information and communications technology.

In November 2025, the two countries announced a strategic agreement addressing tariffs and investment commitments. However, subsequent changes to relevant US tariff and trade measures in 2026 highlight the importance of reviewing current tariffs and trade requirements when planning cross-border operations.

For US businesses, South Korea offers opportunities to work with established companies operating in semiconductors, batteries, biotechnology and artificial intelligence (AI). South Korea's industrial capabilities and research infrastructure may support businesses seeking to establish manufacturing operations or develop technology partnerships in East Asia.

Entry approach: Seoul may serve as a base for regional management, financial services and commercial operations. Pangyo Techno Valley, which hosted 1,780 companies as of December 2025, is an established technology cluster for software, gaming and R&D. Busan may be suitable for businesses involved in maritime technology and logistics. The American Chamber of Commerce in Korea and the US Commercial Service also provide resources for companies exploring the South Korean market.

Setting up a business in South Korea involves a range of costs that vary depending on several factors. These include the chosen entity type, your specific business activity and your intended location.

Our team can provide cost estimates tailored to your specific needs, helping you understand the likely expenditure and scope of the set-up process.

• Registration and licensing fees: Costs associated with court incorporation, business registration and foreign-invested company registration in South Korea, including fees payable to relevant authorities. Additional licensing fees may apply to regulated business activities.

• Other relevant taxes and fees: These may include Local Education Tax, additional registration charges applicable in certain metropolitan areas and court filing fees.

• Capitalisation costs: To qualify as a foreign-invested company, investors must generally contribute at least KRW 100 million. Holding this status helps investors and staff secure Korean visas.

• Visa costs: Expenses associated with visa applications for qualifying investors, intra-company transferees and other expatriate personnel, including relevant D-7 or D-8 visa categories.

• Office space rental: Rental expenditure can vary significantly depending on the location, size, condition and specification of the premises, especially in metropolitan areas such as Seoul.

• Professional fees: These may include fees for legal advisers, business set-up consultants and accounting providers.

• Other potential costs: These may include translation fees, bank charges and additional administrative expenses.

At Hawksford, we tailor our approach to entity formation in South Korea to your needs and objectives. Throughout the process, our team can work with you to manage requirements and help reduce delays.

We typically begin with a comprehensive consultation to understand your immediate business objectives, operational requirements and longer-term plans. This allows us to provide guidance on the legal structure and location best suited to your business as well as any incentives for which it may qualify.

Based on the initial consultation, our team can prepare a plan that sets out a practical approach to establishing your business. The plan includes guidance on company formation and registration in South Korea, corporate structuring and legal considerations relevant to your industry and activities.

We can then assist with the preparation and processing of the required documentation, helping to ensure that it is accurate and complies with South Korean regulatory requirements. This includes drafting legal documents, completing application forms and supporting applications for necessary approvals from the relevant authorities.

We can oversee your company name registration and assist with submitting the Foreign Investment Notification to a designated foreign exchange bank or the Korea Trade-Investment Promotion Agency (KOTRA). Following the notification, we can arrange the opening of a capital account where required and assist with the remittance of paid-up capital.

Following the capital remittance, we can assist with registration of incorporation with the relevant court registry, business registration with the National Tax Service and foreign-invested company registration. Where applicable, we can also support sector-specific licensing applications and liaise with the relevant authorities regarding required approvals.

We can assist with visa applications for qualifying investors and expatriate personnel, including managing documentation and liaising with the relevant authorities on your behalf.

We can provide guidance on the paperwork required to open a corporate bank account in South Korea and help you prepare for the bank's due diligence process. Through our experience supporting a wide range of clients, we are familiar with the documentation and due diligence requirements commonly applied by banks in South Korea.

We can help arrange a registered office address and, where required, support the establishment of operational premises including checking that the proposed premises are suitable for the company’s registered business activities and applicable building-use requirements.

Beyond incorporation, we can provide ongoing operational and compliance support tailored to the needs of businesses in South Korea. This may include accounting, audit coordination, tax compliance, corporate governance, company secretarial support and regulatory reporting.

The timeline for setting up a business in South Korea can vary depending on several factors. These include the chosen legal structure, the complexity of the intended business activity, applicable licensing requirements, location-specific requirements, bank account opening and the processing times of the relevant authorities.

We provide clear guidance and realistic timelines for each stage of the process to support effective planning.

• Chosen legal structure: The entity type can influence the timeline. Incorporation is typically completed within a matter of weeks, although the overall set-up timeline may be longer where Foreign Investment Notification, capital account opening, capital remittance, licensing or other approvals are required.

• Complexity of business activity: Applications for business activities requiring special approval from the relevant government authorities may take longer to process.

• Foreign Investment Notification: The timeframe depends on the completeness of the investor information and supporting documents required by the designated foreign exchange bank or the Korea Trade-Investment Promotion Agency (KOTRA). Queries or requests for additional information may affect the subsequent capital-remittance and incorporation timetable.

• Designated investment-zone requirements: Each designated investment zone has its own requirements, which can affect the overall timeline.

• Document preparation and authority processing times: Complete and accurate documentation can help reduce avoidable delays, although processing times remain subject to the relevant authorities.

• Capital and corporate bank account opening: The time required to open a pre-incorporation capital account or a post-incorporation corporate bank account can vary depending on the bank, the company's ownership structure, the nature of its activities and the completion of due diligence checks. Each account-opening application remains subject to the bank's approval and may affect the overall set-up timeline.

Our experience supporting international clients entering South Korea enables us to help streamline company formation. We help ensure that all documentation is accurate, complete and submitted promptly through the appropriate channels, reducing the risk of avoidable delays and regulatory complications.

We coordinate with the relevant authorities and financial institutions where necessary, helping to address queries promptly and support timely processing.

• Initial planning and document preparation: Typically 1–2 weeks.

• Foreign Investment Notification and capital arrangements: Typically 1–2 weeks, subject to document readiness and the bank's due diligence requirements.

• Court incorporation, business registration and foreign-invested company registration: Generally 2–4 weeks following capital remittance and receipt of all required documentation in Seoul.

• Visa processing, if applicable: Usually 1–3 months.

• Corporate bank account opening: Typically up to 4 weeks after incorporation of the entity, subject to the bank's due diligence and approval.

These timeframes are indicative and may vary depending on documentation, regulatory requirements and third-party processing. We maintain close communication throughout the process and proactively manage the stages within our remit to support an efficient business set-up within South Korea's regulatory framework.

Companies are generally required to maintain accurate corporate records and statutory registers in accordance with applicable South Korean requirements. These may include member or shareholder records, beneficial ownership information, director and officer details, registered office information, constitutional documents and corporate resolutions.

Companies may also be required to report changes to directors, members or shareholders, registered office addresses or share capital within the applicable deadlines.

Businesses are typically required to maintain proper accounting records and supporting documentation. Financial reporting and audit requirements vary according to factors such as the entity type, size and applicable South Korean regulations. Tax obligations may include corporate income tax, value-added tax (VAT), payroll-related taxes and social insurance contributions, depending on the company's activities and workforce.

Businesses may also need to submit periodic corporate filings, licence renewal applications or sector-specific reports. Filing deadlines and submission procedures vary according to the type of filing and the responsible South Korean authority. Late or inaccurate filings can result in penalties, licence restrictions or increased regulatory scrutiny.