Registration of a Foreign Investment Company

Donhtan Administrative Attorney Office

Administrative Attorney Kyoungrock, Lee         

010-4592-8605      

https://open.kakao.com/o/somZTx9f

                                                                    

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Foreign Direct Investment (FDI) in Korea

Foreign Direct Investment (FDI) has been on the rise recently. FDI is defined as a foreigner establishing a new enterprise in Korea to invest, or making an equity investment in an existing domestic company.

A foreigner is generally permitted to establish a corporation and invest in Korea at any time, with the exception of specific sectors related to national security, such as the defense industry, broadcasting, and banking.

Incentives and Requirements

Registering as a Foreign-Investited Enterprise (FIE) provides several incentives and is actively encouraged by the government. These benefits include reductions in acquisition tax and the issuance of long-term D-8 visas for the foreign investor.

To register as an FIE, the investment must meet the following minimum conditions:

1. The investment amount must be 100 million KRW (approximately $75,000 USD) or more.
2. If investing in an existing company, the amount must be 100 million KRW or more, and the equity stake must be 10% or greater.
3. When establishing a new corporation, an investment of 100 million KRW automatically grants 100% equity, satisfying both the minimum amount and percentage criteria.

Crucial Rule: Source of Funds

The capital for an FIE must be funds that have been remitted from overseas to Korea. It is not enough for the investor to be a foreigner; the investment funds must originate from abroad and be transferred domestically.

For example, if a foreigner saves money while working in Korea for several years and then establishes a corporation with a 100 million KRW investment, this does not qualify as FDI. Similarly, sending funds earned in Korea overseas only to remit them back for investment also does not qualify.

Consequently, for individual investors with a long history of residence or employment in Korea, they must prove that the investment is purely sourced from abroad and was not earned domestically. Authorities may require documentation such as proof of the source of funds and financial transaction records for the last six months to verify this.

Initial Procedure: Filing a Notification

To begin the FDI process, an investor must first file a Foreign Investment Notification with a foreign exchange bank or KOTRA (Korea Trade-Investment Promotion Agency).

Required documents to verify the investor's identity (individual or corporate) and receive the Foreign Investment Notification Certificate typically include:

• The investor’s passport.
• Corporate verification documents (e.g., a business license/Ying Ye Zhi Zhao in China) if the investor is a foreign corporation.
• A shareholder list.
• Documents confirming the representative's identity.

business_in_korea2021.pdf

6.68MB

Guide to Foreign Investment Notification.pdf

2.24MB

 

Administrative Attorney Kyoungrock, Lee      010-4592-8605