What Is a Korean Branch Office?
A branch office (지점, 支店) of a foreign company is a business presence in Korea that is legally an extension of the foreign parent company — not a separate legal entity. Unlike a Korean subsidiary (자회사, 법인), the parent company bears all liabilities incurred by the branch, and the branch has no independent legal personality under Korean law.
The Korean branch can generate revenue, enter into commercial contracts in Korea, issue tax invoices, and hire both local Korean staff and dispatched foreign employees. These activities distinguish it from a liaison office (연락사무소), which is strictly limited to non-commercial, market research functions and cannot generate revenue.
Key factors when choosing a branch office over other structures:
- You want to conduct revenue-generating activities in Korea without establishing a separate Korean legal entity
- The parent company is comfortable bearing liability for Korean operations
- You do not need the full capital requirements or governance formalities of a Korean 주식회사 (corporation)
- You intend to dispatch staff from the parent company (D-7-1 visa applies)
- You want a faster path to operations compared to full subsidiary incorporation
Branch vs Liaison vs Subsidiary
The table below compares all three main foreign company presence structures in Korea across the criteria most relevant to setup and operations decisions.
| Criterion | Liaison Office (연락사무소) | Branch Office (지점) | Subsidiary (법인) |
|---|---|---|---|
| Legal entity? | No | No (extension of parent) | Yes — separate Korean company |
| Revenue allowed? | No | Yes | Yes |
| Liability | Parent company | Parent company | Company (parent protected) |
| Corporate tax | None | On Korean-sourced income | On Korean income |
| Min. capital | None | None | KRW 100M (주식회사 FDI) |
| Registration body | KOTRA | District Court (지방법원 등기소) | Commercial Court + NTS |
| D-7 visa type | D-7-2 | D-7-1 | D-8 (investor) |
| Typical use case | Market research only | Full operations without Korea subsidiary | Permanent full operations |
| Time to setup | 4–6 weeks | 6–10 weeks | 8–12 weeks |
Branch Office Registration Process — Step by Step
The Korean branch office registration process involves two main government bodies: the district court (지방법원 등기소) for the corporate registration, and the National Tax Service (국세청) for the business registration. Below is the complete sequence.
- Prepare parent company documents — Obtain the parent company's corporate register (certificate of incorporation), articles of incorporation, and a board resolution authorizing the establishment of the Korean branch and appointing a representative. All foreign documents must be apostilled (Hague Convention countries) or notarized and consular-legalized (non-Hague countries).
- Translate documents into Korean — All foreign-language documents require certified Korean translations. Use a licensed Korean court-sworn translator or an official translation agency. Translations are attached alongside the originals during court filing.
- Appoint a Korean branch representative (지점장) — Designate the branch representative (지점장). This person can be a Korean national or a foreign national with a valid Korean work/residence status. The board resolution appointing the representative must be included in the registration package.
- Register at the district court (지방법원 등기소) — File the branch registration application with the district court having jurisdiction over the intended branch address. Court processing takes approximately 1–2 weeks once the complete package is submitted. Using a registered legal agent (법무사) streamlines this step significantly.
- Obtain business registration from the National Tax Service (사업자등록) — Within 20 days of beginning business activities, file for business registration with the NTS. This yields the Korean business registration number (사업자등록번호) required for tax invoicing, banking, and all commercial activities.
- Open a Korean corporate bank account — Present the court registration certificate and NTS business registration certificate to a Korean bank (Shinhan, Hana, Kookmin, Woori, or others). Foreign representative involvement at the bank appointment may be required.
- Apply for D-7-1 visa for dispatched foreign staff — Once the court registration is complete and the branch registration certificate is issued, foreign nationals being dispatched from the parent company to work at the branch can apply for the D-7-1 visa. Court registration completion is a prerequisite — do not apply before this step.
Core Registration Document Checklist
The following documents are required for the district court registration of a Korean branch office. Apostille requirements apply to documents from Hague Convention member countries.
| Document | Requirements |
|---|---|
| Parent company certificate of incorporation (법인설립증명서) | Apostilled + certified Korean translation |
| Parent company articles of incorporation (정관) | Apostilled + certified Korean translation |
| Board resolution authorizing Korean branch establishment and appointing representative | Apostilled + Korean translation |
| Representative's (지점장) passport copy | Clear copy; valid 6+ months |
| Representative's signed letter of acceptance of appointment | Original signed document |
| Korean address proof (branch office lease contract) | Physical address; virtual offices accepted if lease exists |
| Seal certificate of parent company (인감증명서 equivalent) | Apostilled |
| Court registration fee | Approx. KRW 150,000+ (varies by registered capital) |
| Legal agent (법무사) engagement letter | Required if filing through a 법무사; their fee additional |
Tax Treatment — Permanent Establishment (PE)
Establishing a Korean branch office creates a permanent establishment (PE, 고정사업장) for the foreign parent company under Korean tax law and relevant tax treaties. This has significant tax implications.
Korean Corporate Income Tax
All Korea-sourced income attributable to the Korean PE is subject to Korean corporate tax at the following rates:
- 10% on taxable income up to KRW 200M
- 20% on KRW 200M–KRW 20B
- 22% on KRW 20B–KRW 300B
- 25% on income exceeding KRW 300B
The branch must file an annual corporate tax return (법인세 신고) with the NTS and pay corporate tax on the Korean PE's attributable income.
Transfer Pricing and Internal Fees
The parent company cannot allocate internal management fees, royalties, or service charges to the Korean branch without proper arm's-length transfer pricing documentation. The NTS actively audits PE transfer pricing arrangements. Establish and document internal fee policies before operations begin.
Branch Losses
Branch losses generated in Korea can be carried forward and deducted from future Korean PE income, subject to Korean tax loss carry-forward rules (up to 15 years for losses incurred from 2020 onward).
VAT Registration
If the branch is expected to generate taxable revenue, VAT registration with the NTS is required. VAT registration must be completed within 20 days of the first taxable transaction. The standard Korean VAT rate is 10%.
Withholding Tax on Payments to Parent
Certain payments from the Korean branch to the foreign parent company — such as royalties, service fees, and interest — are subject to Korean withholding tax (typically 20%, reduced by applicable tax treaty). Withholding tax must be remitted to the NTS at the time of payment.
D-7-1 Visa for Branch Office Staff
The D-7-1 visa (지사 파견, intra-company transferee — branch office) is the primary visa category for foreign nationals dispatched by their overseas employer to work at the Korean branch.
Eligibility Requirements
- Applicant must be currently employed by the parent company at the time of application
- Salary is typically paid by the parent company (not from Korean branch payroll)
- The Korean branch must be fully registered (district court + NTS) before the visa application
- No minimum Korean language requirement
D-7-1 Required Documents
| Document | Notes |
|---|---|
| Passport (6+ months validity) | |
| Dispatch letter (파견명령서) from parent company | Specifying role, duration, compensation — on parent company letterhead |
| Employment contract from parent company | Confirming current employment relationship |
| Branch office registration certificate | Korean district court 등기부등본 |
| Parent company certificate of incorporation | Apostilled or certified copy |
| Invitation letter from Korean branch | On Korean branch letterhead with representative signature |
| Visa application form + photos | Standard Korean immigration application form |
Validity and Renewal
D-7-1 is typically issued for 1–3 years, renewable as long as the branch remains registered and the employment relationship with the parent company continues. There is no fixed maximum stay, and many branch managers maintain D-7-1 status through repeated renewals over many years.
Family Members (F-3)
Spouse and minor children of D-7-1 visa holders may accompany or follow-to-join on an F-3 (dependent family) visa. F-3 holders cannot engage in paid employment in Korea without a separate work permit.
Common Errors in Branch Setup
The following table summarizes the most frequently encountered errors in Korean branch office registration, their consequences, and how to prevent them.
| Error | Consequence | Prevention |
|---|---|---|
| Apostille applied to an old or superseded document version | Rejection at district court; resubmission and delay of 2–4 weeks | Always apostille the most recently issued certificate — typically within the past 3 months |
| No registered Korean physical address at time of court filing | Cannot open bank account; NTS registration blocked | Secure and sign a physical office lease contract before initiating court registration |
| VAT registration missed or delayed | NTS penalties and back-taxes on transactions from first taxable date | Register with NTS for VAT within 20 days of first taxable transaction |
| D-7-1 visa applied before branch court registration is complete | Visa application rejected; must restart after registration complete | Always complete district court registration and obtain 등기부등본 before applying |
| Transfer pricing between branch and parent not documented | NTS audit risk; tax authority may disallow deductions and impose penalties | Establish arm's-length internal fee and cost allocation policies before operations begin |
| Representative (지점장) is non-resident and unreachable in Korea | Official notices missed; court correspondence undeliverable; compliance issues | Appoint a representative who maintains a valid Korean address and can receive official notices |
Dissolution of Branch Office
When the Korean branch is no longer needed, the foreign parent company must follow a formal dissolution process. Informally abandoning the branch without deregistration leaves ongoing tax filing obligations and potential legal liability.
Dissolution Steps
- Settle all tax obligations with the NTS — File final corporate tax return and VAT returns, settle any outstanding tax liabilities, and obtain tax clearance confirmation from the NTS.
- Close Korean corporate bank accounts — Repatriate remaining funds and formally close the Korean bank accounts.
- File dissolution registration at the district court — Submit a dissolution application (지점폐쇄 등기) at the same district court where the branch was registered, along with the parent company board resolution approving dissolution. Court processing takes approximately 1–2 weeks.
- Notify the Ministry of Justice if visa holders were attached — If D-7-1 visa holders were sponsored by the branch, notify the immigration authority and ensure visa status is resolved before dissolution is finalized.
- Cancel NTS business registration — Submit a business registration cancellation (폐업신고) to the NTS, including final financial statements.
The complete dissolution process typically takes 4–8 weeks if no tax disputes are outstanding.
Frequently Asked Questions
Yes. A branch office can hire Korean national employees directly. They are subject to standard Korean labor law including employment contracts, social insurance contributions, and the Labor Standards Act. The branch as the employer (on behalf of the parent) bears full employer obligations including national pension (국민연금), health insurance (건강보험), employment insurance (고용보험), and industrial accident insurance (산재보험) contributions.
No. Unlike establishing a Korean subsidiary (which requires at least KRW 100M for a 주식회사 under typical FDI rules), a branch office has no statutory minimum capital requirement. However, you will need funds for operational expenses and may need to demonstrate the financial backing of the parent company — particularly when opening a Korean bank account, where banks may request recent parent company financial statements.
Yes. The branch representative must be registered and must be reachable in Korea for official and legal correspondence. While they do not have to be in the office every day, they must have a valid Korean address and be able to receive official notices. Foreign nationals serving as 지점장 will need a valid Korean residence or work visa — typically D-7-1 if dispatched from the parent company, or they may already hold another qualifying Korean visa status.
Yes. After completing business registration with the National Tax Service and obtaining a business registration number (사업자등록번호), a branch office can issue Korean electronic tax invoices (전자세금계산서) for taxable transactions. VAT registration is a prerequisite. The branch is treated the same as any Korean business entity for purposes of Korean tax invoice issuance and receipt.
Branch income in Korea is taxable in Korea. It may also be included in the parent company's home country taxable income, subject to tax treaty provisions between Korea and the parent's home country. Korea has concluded comprehensive tax treaties with most major countries — including the US, UK, Japan, China, Germany, Australia, and many others — to prevent double taxation through mechanisms such as foreign tax credits and exemptions. Consult a cross-border tax advisor familiar with both Korean and home-country tax law for the specific impact on your parent company's consolidated tax position.
The full process — from preparing apostilled documents to completed court registration and NTS business registration — typically takes 6–10 weeks. If documents require apostille from abroad, factor in additional time for that process (2–6 weeks in some countries). Using a registered Korean legal agent (법무사) speeds up the court filing process. Opening a bank account can add a further 1–2 weeks after registration is complete.
