South Korea is a global economic powerhouse, ranking among the world’s top 15 economies and serving as a major hub for technology, manufacturing, and innovation. The country is renowned for its advanced IT infrastructure, robust export sector, and highly educated workforce. The key growth sectors include consumer goods, pharmaceuticals, fintech, and real estate tech.
Unlock growth opportunities in South Korea with Cerity Global as your trusted partner. We offer end-to-end support for establishing your legal entity, navigating South Korea’s often complex regulatory landscape with clarity and efficiency.
From company registration to ongoing back-office support, including HR, payroll, benefits, accounting, tax and compliance, Cerity Global simplifies the process so you can focus on growing your business.
Need to hire quickly before your entity is set up? We offer interim EOR services in South Korea, enabling you to onboard talent fast. Once your entity is established, we ensure a smooth transition of your employees from the EOR Structure to your own legal entity, without disrupting payroll or compliance.
Our experts stay ahead of regulatory changes to keep your operations aligned with South Korea’s employment and tax laws, helping you scale confidently and compliantly.
A joint-stock company or Jusik Hoesa, is a standard entity setup for foreign businesses that establish subsidiaries in Korea. The liability is restricted to the capital investment by the shareholders.
A limited liability company (LLC), or Yuhan Hoesa, is the most common form of legal entity setup in South Korea. An LLC must appoint at least one investor and one director, and there is limited liability for shareholders.
Allows foreign companies to conduct business activities in South Korea under the parent company’s name. The branch office is not a separate legal entity but an extension of the foreign parent company. Must be registered with the Korea Development Bank or relevant authorities depending on the business sector.
A limited presence allows foreign companies to conduct market research, liaison activities, and represent the parent company’s interests. Cannot engage in commercial activities or generate revenue in South Korea. Must register with relevant Korean authorities if conducting business-related activities.
Must have at least one director who is a Korean resident or has obtained appropriate work authorization. Foreign directors are permitted but require proper visa status. Public companies require at least three directors and one statutory auditor.
Must have at least one representative director who is ordinarily resident in South Korea or holds appropriate work authorization. Foreign representatives are allowed to provide proper documentation.
Must appoint a branch manager who is ordinarily resident in South Korea or holds appropriate work authorization to act on behalf of the foreign company.
Must appoint a local representative who is ordinarily resident in South Korea or holds appropriate work authorization.
South Korean bank account setup requires specific documentation and follows strict regulatory compliance procedures:
Bank Account Setup in South Korea: What’s Possible and When
Before Incorporation:
After Incorporation:
Note:
All banking activities must comply with Korean banking regulations and anti-money laundering requirements under the Financial Transaction Reports Act.
Required documents include the business registration certificate, articles of incorporation, directors’ identification and verification documents, proof of registered office address, and tax registration certificate.
Cerity Global supports companies in their global expansion plans and helps in legal entity setup, registration and ongoing support services. With us, you can quickly set up a legal entity, operate compliantly, and expand globally. The process typically takes a few days to a week, depending on the bank.
Employment in South Korea is primarily governed by the following laws:
Employment contracts should be in written form for all employment relationships.
Some of the standard details mentioned in the written contract include:
The different types of employment relationships are:
Permanent Employment
Full-time or permanent employment, also known as regular employment, comes with comprehensive job security and benefits. Regular employees are entitled to all statutory benefits, severance pay, and strong termination protection.
Fixed-Term Contracts
Employment for a specific period with automatic conversion to regular employment after two years of continuous service. Maximum initial term of two years with one renewal permitted.
Temporary Employment
Employment through staffing agencies for specific projects or temporary needs. Permitted only for certain designated business types and limited duration.
In South Korea, a probationary period typically ranges from three to six months for regular employees, with some specialized roles extending up to one year with mutual agreement.
The regular working hours in South Korea are 8 hours per day and 40 hours a week.
Overtime
The maximum working hours including overtime cannot exceed 52 hours per week under the revised Labor Standards Act.
Notice periods are usually 30 days
Severance pay is calculated as 30 days of average wage for each year of service and applies to employees who have worked for more than one consecutive year.
Foreign nationals require appropriate work authorization to work in South Korea. Korean citizens can work freely without restrictions.
Work Visa & Permit Options in South Korea
1. Professional Employment (E-7) Visa
For skilled professionals in specialized fields.
2. Intra-Company Transfer (E-7-4) Visa
For employees of multinational companies transferred to Korean operations.
3. Investment (D-8) Visa
For foreign investors establishing businesses in Korea.
4. Startup (D-8-4) Visa
For entrepreneurs establishing innovative businesses.
Key Notes:
Visa requirements and processes are regularly updated by the Korea Immigration Service; ensure you consult the latest requirements before proceeding.
Regular employees are entitled to 15 days of paid annual leave after one year of continuous service, increasing progressively with years of service. Employees with 3+ years of service receive one additional day per two years, up to a maximum of 25 days.
Female employees receive 90 days of maternity leave, of which 60 days paid by government, 30 days by employer
Male employees receive 10 days of paid paternity leave.
Employees are entitled to paid sick leave, typically provided at the employer’s discretion, with government-mandated medical leave for serious illnesses and industrial accidents.
The following statutory national holidays are observed in South Korea:
The payroll frequency is usually monthly, with payment due by the end of each month for that month's work.
There is no legal requirement for a 13th month salary, though many companies provide annual bonuses and special holiday allowances (Lunar New Year and Chuseok bonuses are common practice).
The Korean employment system includes comprehensive mandatory social insurance and benefits.
The mandatory benefits in South Korea include:
South Korean accounting follows Korean Generally Accepted Accounting Principles (K-GAAP) and Korean International Financial Reporting Standards (K-IFRS), administered by the Korea Accounting Institute (KAI).
All Korean companies must file annual financial statements and tax returns.
Audit requirements depend on company size and type:
Audits must be performed by Korean Certified Public Accountants and filed with relevant authorities.
The corporate tax rates in South Korea are:
The VAT rate in South Korea is 10% on most goods and services.
Businesses with an annual turnover of KRW 48 million or more must register for VAT. Some items are zero-rated or exempt from VAT.
Corporate tax returns are due within 3 months after the end of the fiscal year. Interim prepayments are required for the first half of the fiscal year, due within 2 months after the interim period.
Penalties include tax underreporting penalties (10%-40% of unpaid tax), failure to file penalties, and other administrative penalties as specified in the tax laws.
South Korea has comprehensive transfer pricing rules aligned with OECD guidelines:
South Korea implements CbC reporting requirements:
Transfer pricing documentation is required for Korean entities that are part of multinational groups above certain thresholds.
Master File
Local File
Deadline: Documentation must be prepared by the due date for filing the corporate tax return and provided to the National Tax Service within 60 days of request.
South Korea’s data protection framework is governed by the Personal Information Protection Act (PIPA), administered by the Personal Information Protection Commission.
South Korea’s AML framework is governed by the Act on Reporting and Using Specified Financial Transaction Information and the Act on the Regulation of Similar Receiving Businesses, administered by the Korea Financial Intelligence Unit (KoFIU).
Obligated entities: Banks, securities companies, insurance companies, foreign exchange dealers, money transfer operators, and other designated financial service providers.
Key requirements:
Penalties: Administrative fines up to KRW 50 million for individuals and KRW 500 million for corporations; criminal penalties including imprisonment for serious violations.
Reasons you should setup legal entity in South Korea:
Cerity Global ensures your business expansion in South Korea is fast, compliant, and future-ready, so you can focus on growth while we manage the back-office tasks.
Economic figures are subject to change based on quarterly reports and market conditions.
Cerity Global combines deep local knowledge with proven expertise to make your South Korea business establishment effortless and compliant. Whether you’re looking for legal entity setup and registration or ongoing support, we’re your trusted partner for sustainable global expansion in South Korea.
Disclaimer – The information provided is for informational purposes only and does not constitute legal, business, or tax advice. Entity setup requirements, tax rates, and economic data are subject to change and may vary by location.
To discuss your needs and how we can help you achieve a compliant and efficient expansion.