Foreign Company Korea Setup Guide — Branch vs Subsidiary vs Liaison 2026
Entering the Korean market requires choosing the right legal structure. This guide compares the three main options for foreign companies.
Overview Comparison
| Feature | Subsidiary | Branch | Liaison Office |
|---|---|---|---|
| Legal entity | Separate | Extension | Extension |
| Revenue generation | Yes | Yes | No |
| Parent liability | Limited | Unlimited | Unlimited |
| Tax | Korean corporate tax | Korean corporate tax | None |
| Capital requirement | Varies | None | None |
| Setup complexity | High | Medium | Low |
| FDI registration | Required (if qualifying) | Required | Not required |
Option 1: Wholly-Owned Subsidiary (자회사)
Best For
- Long-term market commitment
- Protecting parent company from Korean liabilities
- Qualifying for D-8 visa for executives
Process
- Incorporate under Korean Commercial Code
- Register FDI with Korea Exchange Bank
- Obtain business registration
- Register for taxes (VAT, corporate income tax)
Timeline: 6–10 weeks
Option 2: Branch Office (지점)
Best For
- Service companies with established overseas reputation
- Companies not wanting to commit full capital
- Financial services firms (banking, insurance)
Requirements
- Appointment of branch manager in Korea
- Registration with district court
- Branch business registration
Key Difference from Subsidiary
Branch profits are attributed to the foreign parent and may be subject to withholding tax on repatriation.
Timeline: 4–6 weeks
Option 3: Liaison Office (연락사무소)
Best For
- Market research phase
- Pre-entry market testing
- Customer support/after-sales service
Restrictions
- Cannot generate revenue in Korea
- Cannot enter into sales contracts
- Cannot invoice Korean customers
Registration
- Register with Korea Trade-Investment Promotion Agency (KOTRA)
- Renew annually
Timeline: 2–4 weeks
Industry-Specific Considerations
Manufacturing: Subsidiary strongly recommended. Consider establishing in Free Economic Zones for tax incentives.
Financial Services: Requires additional FSC (Financial Services Commission) licensing. Branch structure common.
IT/Technology: Subsidiary preferred. R&D activities in Korea may qualify for additional tax credits.
Trading: D-9-2 visa available for principal traders. Representative office may suffice.
Tax Incentives for Foreign Investors
Korea offers various incentives for qualifying foreign investments:
- Corporate income tax reduction (0–100% for 3–7 years)
- Local tax reduction
- Customs duty exemption on capital equipment imports
- Real estate acquisition tax exemption
Qualifying sectors include advanced technology, services in designated zones, and specific manufacturing industries.
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