<관련 글 링크>
<English version>
1. Overview
A liaison office differs from a branch in that a branch actually performs business activities as well as a foreign invested corporation in that foreign invested corporation performs the same business activities as a domestic corporation.
A liaison office is limited to perform preparatory and auxiliary activities such as simple liaison work, advertisement, publicity, information gathering, etc. solely on behalf of its head office.
A liaison office is not responsible for any tax liabilities other than withholding income tax on its employees’salary income followed by submitting payment statements.
A branch is a business place in Korea where income generating business activities are performed on behalf of its head office in overseas.
With regard to the taxation on the income of the branch for each fiscal year, only income generated in Korea (Korean source income) is taxed in Korea.
A foreign invested corporation, a corporation established under the Foreign Investment Promotion Law is a domestic corporation of which the head office is located in Korea.
There are two types of the foreign invested corporations; wholly owned subsidiary or joint venture.
Unlike a branch, the foreign invested corporation has tax liability on global source income. In other words, the foreign invested corporation should pay corporate taxes not only for the income derived in Korea, but also for the income derived from overseas.
2. Procedures & Required Documents
To establish a liaison office in Korea, one should complete the “registration/application for a liaison office establishment”, and submit to chief of designated foreign exchange bank or to the chief of the Minister of Strategy and Finance.
Documents to be submitted
① Establishment report of a liaison office of the foreign company
② Articles of incorporation, court registration or business license of head
office - notarization is required when copies are submitted
③ A copy of business license or a copy of the certificate of register, etc.
④ Specification of the business item and its scope in Korea (ex. Business Plan)
⑤ Other necessary documents
※ When the establishment is reported to the Minister of Strategy and Finance
- Non-banking, financial business including financing, arrangement or intermediation of overseas financing, credit card operation, installment financing, etc.
- Securities and insurance business
- Businesses not permitted under other related laws or regulations such
as Foreign Investment Promotion Laws, etc.
Secondly, an establishment of a liaison office should be reported to the tax office concerned to acquire identification number within 20 days from the completion of establishment
Documents to be submitted
① Application of business registration
② Copy of lease agreement
③ Copy of establishment report of a liaison office of the foreign company
※ The tax identification number of a liaison office is used in the tax withholding report, VAT invoice, payment statement, etc. as a replacement for business entity registration number of other types of entities.
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