Korea Branch Office Problems After Setup: FX Reports, Registration, Funds and Closure

Most problems after a foreign company opens a branch or office in Korea come from five points: (1) where the establishment report is filed, (2) whether the place of business was registered within three weeks, (3) whether operating funds came in through the designated foreign exchange bank, (4) whether a change report was filed when details changed, and (5) whether the right documents are ready for profit remittance and closure. Companies also often forget that an office (liaison office) may not carry out revenue-generating business. This guide follows the original text of Chapter 9, Section 3 of the Foreign Exchange Transaction Regulation (domestic branches of foreign companies) and the Commercial Act provisions on foreign companies.

Key points

A domestic branch is either a branch (may earn revenue) or an office (non-business functions only, such as liaison, market research and R&D).
The establishment report normally goes to the designated foreign exchange bank; finance, securities and insurance-related business goes to the Minister of Economy and Finance.
A foreign company must register its place of business within three weeks and cannot trade continuously before registration.
Operating funds must come through the designated foreign exchange bank, and those records are reused for D-7 transferee visas.
Change reports, remittance of net profits and closure each have their own forms and attachments.

What is the difference between a branch and an office?

The Foreign Exchange Transaction Regulation divides a non-resident's domestic branch into two types (Art. 9-32(2)): a branch that carries out revenue-generating business in Korea, and an office that does not earn revenue and performs only non-business functions such as liaison, market research and research and development. What is commonly called a liaison office falls into the second type.

The most common problem in practice is an office that was reported as such but signs contracts or sells to Korean customers. If revenue-generating business becomes necessary, first consider a change report on the scope of business or a switch to a branch or corporation.

Where should the establishment report be filed?

The rule is to report to the head of the designated foreign exchange bank (Art. 9-33(1)). However, a branch set up for the following business must report to the Minister of Economy and Finance (Art. 9-33(2)):

Financial business other than banking, such as lending, arranging or brokering overseas finance, card business and installment finance
Business related to securities and insurance
Business not permitted under the Foreign Investment Promotion Act or other laws

The report uses Form 9-8 (Report on Establishment of a Domestic Branch of a Foreign Company) with documents proving the head office's name, location and main business, proof of any permit required by other laws, and a statement of the business and scope to be carried out in Korea (Art. 9-33(3)). Because the filing office depends on the business, fix the scope of business first.

By when must the branch be registered?

Article 614 of the Commercial Act requires a foreign company doing business in Korea to appoint a representative in Korea and either set up a place of business or have at least one representative domiciled in Korea. If a place of business is set up, it must be registered at its location within three weeks from the date of establishment. If registrable matters arise abroad, the period runs from the date the notice arrives (Art. 615).

Before registration the company may not trade on a continuing basis, and anyone who trades in breach of this is jointly liable with the company for that transaction (Art. 616). That is why a branch should not start business just because the bank report is done.

How should operating funds be brought in?

When a domestic branch brings in operating funds from the overseas head office, it must do so through the designated foreign exchange bank (Art. 9-34(1)). Money that arrives by another route is hard to document as operating funds.

These records are also used for visas. The Ministry of Justice manuals require proof of operating funds brought in (such as a foreign currency purchase certificate) as evidence that the branch operates normally when a D-7 transferee applies for a visa confirmation or an extension. Keep the bank documents from the very first transfer.

What must be done when reported details change?

To change details after the establishment report, submit Form 9-9 (Report on Change of a Domestic Branch of a Foreign Company) with proof of the change, plus a business plan if the branch's business changes, to the office that received the establishment report (Art. 9-33(4)). Companies often delay this after changing the representative, address or scope of business. Changes to registered matters also need a separate change registration.

What is needed to send profits home or close the branch?

Remitting net profits

A branch that wants to send its settled net profits abroad must do so through the designated foreign exchange bank, using Form 9-10 with these documents (Art. 9-35):

The branch's balance sheet and income statement
A tax payment certificate
An audit certificate from a certified public accountant if net profit for the period is 100 percent or more of the operating funds brought in, or exceeds KRW 100 million

Closing the domestic branch

To close the branch, file Form 9-11 (Closure Report) with the office that received the establishment report. To remit proceeds from disposing of assets in Korea, submit a tax payment certificate issued by the competent tax office to the designated foreign exchange bank (Art. 9-37). When a foreign company closes its place of business voluntarily, the Commercial Act rules on liquidation of assets in Korea apply (Art. 620).

Leaving the branch inactive

If, without good reason, the company does not start business within one year of registering the place of business, or suspends business for one year or more, a court may order the place of business closed at the request of an interested party or a prosecutor (Commercial Act Art. 619).

What sanctions apply if a report is missed?

Receiving and paying funds related to setting up and running a domestic branch is a capital transaction under the Foreign Exchange Transactions Act (Art. 3(1)(19)(e); Regulation Art. 9-32(1)). Carrying out a capital transaction without the required report, or with a false report, can lead to an administrative fine of up to KRW 100 million (Act Art. 32(1)(4)), and if the amount exceeds the threshold set by Presidential Decree, the criminal provision applies (Art. 29(1)(3)). Even for small amounts, following the reporting order is the safe approach.

Official sources (checked against the original text)

Foreign Exchange Transaction Regulation (Ministry of Economy and Finance Notice No. 2026-103, effective 16 September 2026), Art. 9-32 (scope and types), 9-33 (establishment report and changes), 9-34 (bringing in operating funds), 9-35 (remittance of net profits), 9-37 (closure of a domestic branch)
Foreign Exchange Transactions Act, Art. 3(1)(19)(e) (definition of capital transaction), Art. 18 (reporting of capital transactions), Art. 29 (penalties), Art. 32 (administrative fines)
Commercial Act, Art. 614 (representative, place of business and registration), 615 (start of the registration period), 616 (no continuing transactions before registration), 619 (order to close a place of business), 620 (liquidation of assets in Korea)
Ministry of Justice visa and stay manuals (September 2026), Intra-Company Transfer (D-7) — proof of branch establishment and operating funds brought in
Checked on 3 October 2026 against the current statutes on law.go.kr and the Ministry of Justice manuals (September 2026 edition). Rules change often, so confirm again right before you apply.

How A-One Administrative Agency can help

A-One Administrative Agency prepares establishment, change and closure reports for domestic branches and their attachments, prepares filings with the foreign exchange bank, and prepares D-7 documents for dispatched staff. Registration filings are handled by a judicial scrivener, corporate tax filing and audit certificates by a tax accountant or CPA, and disputes and litigation by an attorney, so we work with those professionals where needed.

Frequently asked questions

Q. Can a liaison office sell products to Korean customers?

Under the Foreign Exchange Transaction Regulation, an office does not carry out revenue-generating business and performs only non-business functions such as liaison, market research and R&D (Art. 9-32(2)). If you need revenue-generating business, consider a branch or a corporation.

Q. Where do we file the branch establishment report?

Normally with the head of the designated foreign exchange bank. A branch for financial business other than banking, securities or insurance business, or business not permitted by other laws reports to the Minister of Economy and Finance (Art. 9-33).

Q. Can we start business right after the bank report?

No. Under the Commercial Act, a foreign company must register its place of business within three weeks and may not trade continuously before registration. Anyone who trades in breach is jointly liable with the company (Arts. 614 and 616).

Q. Can operating funds be sent to the representative's personal account?

Operating funds must come in through the designated foreign exchange bank (Art. 9-34). These records are also used as proof of operating funds for D-7 visa and extension documents, so use the bank route from the start.

Q. What is needed to send branch profits to the head office?

Submit a remittance application, the balance sheet, income statement and a tax payment certificate to the designated foreign exchange bank. If net profit is at least the operating funds brought in or exceeds KRW 100 million, a CPA audit certificate is also required (Art. 9-35).

Q. Can remaining funds be sent home when the branch closes?

File a closure report with the office that received the establishment report. To remit proceeds from disposing of assets in Korea, submit a tax payment certificate from the competent tax office to the designated foreign exchange bank (Art. 9-37).

Q. Is it a problem to register a branch and not operate it?

If business does not start within one year of registration, or is suspended for one year or more without good reason, a court may order the place of business closed at the request of an interested party or a prosecutor (Commercial Act Art. 619).