How to Set Up a Foreign Liaison Office and What Activities Are Permitted: The Sticking Points Practitioners Hit Most
A liaison office is a non-business outpost that a foreign head office establishes in Korea for market research, communication, and information gathering — strictly outside the scope of revenue-generating activity.
Any transactions or contract signings that produce revenue are completely prohibited, and the office operates after filing under the Foreign Exchange Transactions Act and obtaining a Unique Identification Number.
This guide walks through the setup procedure, the line between permitted and prohibited activities, and the documents and post-setup reporting obligations that most often trip people up — all in the order you'll actually encounter them.
What Is a Liaison Office and Why Choose One
A liaison office is a domestic place of business operated by a foreign corporation that does not engage in sales activities in Korea.
It is not a corporate entity setup; it functions more like a non-business branch of the foreign head office, with no separate Korean legal personality.
How It Differs from a Branch or Subsidiary
The boundary between a branch and a liaison office is what people most commonly confuse.
A branch can engage in business activities and is subject to corporate income tax filing.
A liaison office cannot conduct business at all — instead, it runs solely on funds remitted from the head office and generates no revenue in Korea.
| Category | Liaison Office | Foreign Company Branch | Foreign-Invested Corporation |
|---|---|---|---|
| Business Activity | Not allowed | Allowed | Allowed |
| Legal Entity | None | None (part of HQ) | Independent Korean entity |
| Filing Basis | Foreign Exchange Transactions Act | Foreign Exchange Transactions Act | Foreign Investment Promotion Act |
| Tax Filing | Withholding tax only | Corporate income tax filing | Corporate income tax filing |
Which Companies Choose a Liaison Office
The most common case is a head office that wants to study the market before making a full entry into Korea.
Setting up an entity from day one creates significant winding-down costs, so many companies use a liaison office during a 1–2 year market research phase.
Typical purposes are handling Korean buyers on behalf of a manufacturer's headquarters, supporting head-office advertising and PR, and gathering information.
The Line Between Permitted and Prohibited Liaison Office Activities
The core principle is this: any activity that generates revenue inside Korea is prohibited.
Permitted Non-Business Activities
- Market research on the head office's products and services
- Information gathering and reporting on behalf of the head office
- Communication and interpretation support between the head office and Korean counterparts
- Distribution of advertising and PR materials from the head office
- Supporting head-office visitors and arranging meetings
- Forwarding claims from Korean clients to the head office
Prohibited Activities That Frequently Cause Problems
This boundary is exactly where things get tangled in practice.
- Signing contracts directly in Korea
- Selling, brokering, or arranging goods inside Korea
- Generating sales of head-office products in Korea
- Issuing quotes or tax invoices to Korean clients
- Receiving fees or commissions
Even if something looks like market research on the surface, once you actually push a deal to closing, it counts as business activity.
If this line is weak, follow-up audits can lead to forced conversion into a branch or to administrative fines.
Caution: The moment a liaison office issues an invoice to a Korean client or receives an inbound payment under its name, the activity is treated as business activity and may violate the Foreign Exchange Transactions Act.
The Liaison Office Setup Procedure at a Glance
Setup involves preparing the foreign head office's documents, filing with a Korean foreign exchange bank, and obtaining a Unique Identification Number certificate from the tax office.
Unlike incorporating a company, there is no court registration step.
Step-by-Step Procedure
| Step | Action | Authority |
|---|---|---|
| 1 | Prepare HQ resolutions, company registry, and other documents | HQ home country |
| 2 | Apostille or consular authentication | HQ home country |
| 3 | File establishment notification under the Foreign Exchange Transactions Act | Foreign exchange bank |
| 4 | Apply for Unique Identification Number certificate | District tax office |
| 5 | Sign office lease and open bank account | Korea |
| 6 | Apply for expatriate visa (D-7, etc.) | Immigration Office |
The filing basis is set out in Article 18 of the Foreign Exchange Transactions Act and the Foreign Exchange Transactions Regulations.
The detailed foreign exchange filing forms must be obtained from the foreign exchange bank, and each bank's documentation requirements differ slightly.
Documents the Head Office Must Prepare
- Head office company registry or business certificate
- Head office articles of incorporation
- Resolution to establish the Korean liaison office (board or shareholder resolution)
- Documents appointing the representative
- Head office financial statements
After local notarization, head-office documents must go through apostille certification or Korean consular authentication.
If the head-office country is not a party to the Apostille Convention, consular authentication is required, so the procedure varies depending on where the head office is located.
Practical Tip: If the head-office resolution is missing the language "establishing a liaison office in Korea, which will not engage in business activities," the bank frequently sends the filing back for correction.
Documents That Often Get Stuck and What to Watch For
Setup looks straightforward, but in practice a single line of formatting in a document is often enough to get a filing rejected.
Translation and Notarization of Head-Office Documents
If the head-office documents are not in English, a Korean translation is required, along with either head-office certification of translation accuracy or notarization of the translation.
For Chinese and Japanese head offices in particular, awkward translation of the company-form designation often results in the bank requesting corrections.
Explaining the Flow of Head-Office Funds
Because the liaison office generates no revenue in Korea, operating expenses must be remitted from the head office.
If head-office remittances arrive under labels other than salary or rent, they may fall under separate filing requirements under the Foreign Exchange Transactions Act, so a weak explanation of the funds flow can immediately cause complications.
The Name on the Office Lease
The lessee is typically either the foreign head office or the Korean representative individually.
If the lessee name on the lease differs from the head-office name when applying for the Unique Identification Number, the tax office will request additional explanation.
Practical Tip: Decide on the head office's name representation (full English name, Korean transliteration) before signing the lease. If even one character differs in the contract, you'll lose more time on corrections.
The setup looks simple, but everything turns on the wording of the head-office resolution, the description of remittances, and the lessee name on the office lease.
VISION Administrative Office handles the entire flow — from reviewing the head office's documents, to the foreign exchange bank filing, the Unique Identification Number, and the expatriate visa.
📞 Request a free consultation now → 02-363-2251 / Email 5000meter@gmail.com
Costs vary by case and will be quoted precisely during the free consultation.
Operating the Liaison Office and Ongoing Obligations
Setup is not the end of the road. Several items at the operating stage can lead to fines or pressure to convert into a branch if missed.
Annual Reporting and Filing Obligations
- Reporting operational status to the foreign exchange bank
- Organizing records of remittances received from the head office
- Withholding tax filings with the tax office (employee wages)
A liaison office is not subject to corporate income tax filing, but withholding tax on employee salaries still applies in full.
Per National Tax Service guidance, monthly and semi-annual withholding tax filing schedules must be observed.
Moments When Activity Looks Like Business
- Issuing invoices to Korean clients
- Holding or managing inventory in Korea
- Signing contracts on behalf of the head office
- Korean staff negotiating prices with Korean customers
If these patterns accumulate, a follow-up inspection may result in a forced branch conversion notice.
Once it becomes a branch, corporate income tax filing obligations attach, so it is better to define the activity scope clearly from the start.
Closure Procedure
Closing a liaison office also requires filing a closure notification with the foreign exchange bank, along with a business (Unique Identification Number) closure filing with the tax office.
Settling remaining head-office remittances, processing employee severance, and terminating the lease all move together as a bundle.
The Connection to the Expatriate Visa (D-7)
The liaison office's representative or expatriate staff typically enter Korea on a D-7 (intra-company transferee) visa.
The review focuses on the requirement of at least one year of prior employment at the head office, the position held, and the scope of activity in Korea.
Common Sticking Points
- Less than one year of head-office employment
- A head-office title that is purely sales-oriented, weakening the case for transferee status
- Activity plans for the Korean office that read like business activity
If the visa application describes Korean activities as if they were business activities, it conflicts with the liaison office filing.
The HiKorea website provides guidance, but whether your specific career and head-office position qualify is a case-by-case review.
Caution: For the one-year prior employment rule, whether time at affiliates can be aggregated and whether intra-group transfers count varies by case, and immigration officer judgment can differ.
FAQ
Q1. Does a liaison office receive a Business Registration Certificate?
Because there is no legal entity, a Unique Identification Number certificate is issued instead of a Business Registration Certificate.
It is classified as a non-profit, non-business form that cannot issue tax invoices.
Q2. Can the liaison office hire Korean employees?
Hiring itself is allowed.
However, salaries must be paid from head-office funds, and the employees' duties must be limited to market research and liaison work — not sales activity.
Withholding tax filing obligations still apply.
Q3. Can a Korean bank account be opened in the liaison office's name?
After the Unique Identification Number certificate is issued, an operational KRW account can be opened at a foreign exchange bank.
However, incoming sales receipts will trigger suspicion of business activity, so the account should be used only for head-office remittances and operating expenses.
Q4. Does the procedure differ depending on whether the head office is in the U.S., China, or Japan?
The document authentication method (apostille vs. consular authentication), translation requirements, and resolution format all differ.
Preparation time often varies by 1–3 weeks depending on the head-office country.
Q5. Can a liaison office later be converted into a corporation or branch?
Yes.
The liaison office is closed by filing, and either a foreign-invested corporation setup or a foreign-company branch filing is initiated separately.
Because closure and new establishment are bundled together, the office, employees, and bank accounts all need to be reorganized at the conversion point.
Q6. Is D-7 the only visa available to liaison office personnel?
For representatives and expatriate staff, D-7 is standard.
However, depending on the head-office title, role in Korea, and head-office size, other statuses such as D-8 may need to be considered, and it varies case by case.
Need an Expert Consultation?
A liaison office is not finished after a single filing — it is a continuous chain of setup → visa → operation → ongoing reporting.
If the wording of the head-office resolution, the description of remittances, the lessee name, and the visa activity plan are inconsistent with one another, the process gets stuck at one of these points.
VISION Administrative Office handles the entire flow as one continuous process — head-office document review, foreign exchange bank filing, the tax office's Unique Identification Number, and the expatriate visa (D-7).
Costs vary by case and will be quoted precisely during the free consultation.
VISION Administrative Office — Service Information
- Phone: 02-363-2251
- Email: 5000meter@gmail.com
- KakaoTalk: alexkorea
- Address: 3F Seongwoo Building, 324 Toegye-ro, Jung-gu, Seoul 04614
- Office Name: VISION Administrative Office
The order of operations depends on the head-office country, your hiring plans, and the timeline for any future entity conversion. Send us your head-office documents and we'll flag where the process is most likely to get stuck before you start.
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