A foreign company can employ people in Korea through its own entity (a Jusik Hoesa or Yuhan Hoesa subsidiary, a branch, or a liaison office that may not earn revenue) or through an Employer of Record with no entity at all. Registering a subsidiary as a foreign-invested company takes at least KRW 100 million of investment, and setup usually takes 4–8 weeks end to end, against days to about two weeks for EOR onboarding.
What are the options for hiring employees in Korea?
You can engage independent contractors, employ through an Employer of Record, or open your own Korean presence: a liaison office, a branch office or a subsidiary. Only a branch or a subsidiary may earn revenue in Korea.
| Route | What it is | Revenue in Korea? | Best for |
|---|---|---|---|
| Independent contractor | Cross-border service agreement | No local presence | Defined projects without fixed hours or supervision |
| Employer of Record | A Korean provider employs your hire | No | First employees, testing the market |
| Liaison office (연락사무소, Yeollak Samuso) | Non-trading extension of the parent | No | Market research, supplier contact, quality control |
| Branch office (지점, Jijeom) | The foreign parent itself, registered in Korea | Yes | Selling under the parent's name |
| Subsidiary | A separate Korean company you own | Yes | Long-term teams, local contracts, investor visas |
Contractors are fastest but carry misclassification risk if the person works like an employee, with fixed hours, supervision and exclusivity; our employment types guide explains the line. Korean law has no separate EOR category, and because you direct the daily work, some set-ups can resemble worker dispatch, which is limited to permitted job types and generally two years. Ask any provider how its model handles this.
Jusik Hoesa or Yuhan Hoesa: which subsidiary should you form?
Most foreign subsidiaries are joint-stock companies (주식회사, Jusik Hoesa), Korea's most common corporate form. A limited company (유한회사, Yuhan Hoesa) suits wholly owned subsidiaries that want lighter governance, and US parents that want check-the-box flexibility.
| Jusik Hoesa | Yuhan Hoesa | |
|---|---|---|
| Ownership | Shares; can issue bonds and list | Membership units; no shares or bonds |
| Directors | 3+ with a board; 1–2 allowed if capital is under KRW 1 billion | 1+; no board required |
| Statutory auditor | Required unless capital is under KRW 1 billion | Optional |
| Director term | Up to 3 years, renewable | No statutory limit |
| External audit trigger | KRW 50 billion+ in prior-year assets or revenue, or 2 of 4 size tests | Same KRW 50 billion test, or 3 of 5 tests |
| US tax classification | "Per se" corporation | Eligible entity; can elect flow-through treatment |
The size tests are KRW 12 billion in assets, KRW 7 billion in liabilities, KRW 10 billion in revenue and 100 employees; a Yuhan Hoesa adds 50 or more members. A small hiring subsidiary sits far below them. Foreigners, including non-residents, can be promoters and directors of either form.
Branch office or liaison office: what is the difference?
A branch can trade and earn revenue but is legally the foreign parent, so the parent carries its liabilities. A liaison office cannot earn revenue in Korea. Neither is a foreign-invested company; staff sent from headquarters usually use the D-7 intra-company transfer visa.
To open a branch, report it to a designated foreign exchange bank (about a week), appoint a representative in Korea, register at the court registry within three weeks of the bank's acceptance, then register with the tax office. There is no minimum capital. A branch is a permanent establishment taxed on Korean-source income at the same rates as a Korean company, and some treaties, such as those with France, Australia and Canada, allow an extra branch profits tax.
A liaison office is also reported to a foreign exchange bank but needs no court registration; the tax office issues a unique number instead of a business registration. It may handle business contacts, market research, R&D, quality control and advertising for the parent, but may not sell directly, hold inventory for sale or broker deals.
How does FDI registration work, and why does KRW 100 million matter?
Under the Foreign Investment Promotion Act, each foreign investor must put in at least KRW 100 million, and hold at least 10% of voting shares when buying into an existing company, for the business to register as a foreign-invested company (외국인투자기업, Oegugin Tuja Gieop). That status underpins the D-8 visa and simplified dividend repatriation.
- Notify first. File the foreign investment notification with Invest Korea (KOTRA) or a designated foreign exchange bank before remitting capital; it is processed on the spot.
- Below the threshold, the Foreign Exchange Transactions Act applies instead: the company can still be formed, but not as a foreign-invested company.
- Register within 60 days of paying in the investment. Banks ask for the certificate when you remit dividends, and immigration asks for it with a D-8 application.
- It is not a fee. The Commercial Act has had no minimum capital since 2009, and the KRW 100 million becomes the company's working capital for payroll and rent.
How long does it take to set up a Korean subsidiary?
Official processing takes about two weeks. Plan 4–8 weeks end to end, because apostilled parent documents, an office lease and bank onboarding take longer than the filings.
- Prepare documents: the parent's certificate of incorporation and board resolution (apostilled or consularized), directors' passports and notarized signatures, and a Korean office lease. This is usually the longest step.
- Foreign investment notification at Invest Korea or a foreign exchange bank: same day.
- Remit the capital to a temporary bank account and obtain a deposit certificate: 2–3 days.
- Register the incorporation at the court registry and pay registration tax: 2–3 days.
- Business registration (사업자등록, Saeopja Deungnok) at the tax office: 4–5 days; the legal deadline is 20 days from the start of business.
- Corporate bank account: move the paid-in capital into it. Banks check beneficial owners and the source of funds, and may want the representative director in person, so build in a buffer.
- Foreign-invested company registration: within 60 days of paying in the capital.
- Employer registration when the first employee starts, using the social insurance deadlines above.
KOTRA's cost example for a KRW 100 million company in downtown Seoul, about KRW 1.7 million, includes registration tax, education tax, notarization and the corporate seal, but not legal or accounting fees.
What does a Korean entity owe once it is running?
Expect monthly payroll withholding and social insurance, regular VAT returns, an annual corporate tax return and labor-law paperwork. A statutory audit applies only above the size thresholds.
| Obligation | What it involves (as of October 2026) |
|---|---|
| Corporate income tax | 10% / 20% / 22% / 25% brackets plus 10% local income tax: 11% to 27.5% in total |
| VAT | 10% standard rate; Korean customers expect tax invoices (세금계산서, Segeum Gyesanseo) |
| Payroll | Monthly income tax withholding and four social insurances, about 10.5–11.5% employer cost on top of salary for office roles; National Pension rises from 9.5% to 10% in 2027 |
| Severance | At least 30 days' average wage per year of service for staff with 1+ year; many employers use DB or DC pension plans |
| Labor compliance | Written contracts, itemized payslips, and work rules filed with the labor ministry at 10+ employees |
Our tax and social insurance guide breaks down payroll costs, and the HR compliance guide covers day-to-day employer duties.
When should you move from contractor to EOR to your own entity?
Use contractors for genuinely independent project work, an EOR for your first employees while you test the market, and an entity once headcount, Korean revenue or control needs justify fixed costs. Treat this table as a rule of thumb, not a legal threshold.
| Signal | Contractor | EOR | Own entity |
|---|---|---|---|
| Korean headcount | 1–2 people on defined projects | About 1–5 employees | About 5–10+, or key hires you want to employ directly |
| Revenue in Korea | None; you invoice from abroad | None booked in Korea | Korean customers, local contracts, tax invoices |
| Timeline | Days | Days to about 2 weeks | 4–8 weeks |
| Control | Deliverables only | You direct the work; the provider employs | Full control of contracts, policies, visas, office |
| Main risk | Misclassification | Per-head fees; dispatch-law questions | Fixed costs and direct compliance duties |
Run the numbers: at USD 400–1,000+ per employee per month, five EOR employees cost USD 24,000–60,000 a year in fees alone, to weigh against bookkeeping, payroll, office and management time for an entity. Two triggers usually override cost: a Korean employee who negotiates or signs contracts for you, which can create a taxable permanent establishment whatever the employment route, and relocating foreign staff, which needs your own Korean presence for a D-8 or D-7 visa.
How Hire From Korea helps
Hire From Korea is a recruiter-led hiring partner founded by Daniel Ahn and Sandy Kang and operated by DevTeam Co., Ltd. in Incheon. It delivers a shortlist of 3–5 vetted Korean candidates with bilingual English–Korean interview coordination, for a one-time setup fee of USD 500–1,000 and a success fee of 15–20% of first-year salary charged only when you hire. If you are not ready for an entity, EOR setup, payroll and tax support, and contract review are optional services on a custom quote; tell us about your hire.
Frequently asked questions
Can a foreigner be the only director of a Korean company?
Yes. Foreigners, including non-residents, can be promoters and directors, and a Jusik Hoesa with capital under KRW 1 billion can run with one director and no statutory auditor. You still need someone in Korea for banking and tax; if nobody in Korea handles tax, the tax office asks you to designate a tax agent.
Is there a minimum share capital for a Korean company?
Not under the Commercial Act, which abolished its minimum in 2009. The KRW 100 million figure comes from the Foreign Investment Promotion Act: a smaller investment can still form a company, but not a registered foreign-invested company able to support a D-8 visa.
Do I need a physical office to register a company in Korea?
You need a Korean business address. The tax office asks for the lease when you apply for business registration, and a floor plan if you rent only part of a building, so secure the office before filing.
Can staff hired through an EOR move to my new entity later?
Yes. Usually the EOR employment ends and your entity rehires the person on a new contract. Agree in advance how prior service counts for annual leave and severance, because the EOR must settle severance for anyone with at least a year of service when that employment ends.
Sources
- Invest KOREA (KOTRA) — 2025 Guide to Establishing a Business in Korea — FDI threshold, incorporation steps and deadlines, registration tax example, branch and liaison office rules
- Invest KOREA — Incorporation Procedure — official processing time per step (about two weeks)
- Law Office Inpyeong — The Limited Company (Yuhan Hoesa) — Yuhan Hoesa governance compared with a Jusik Hoesa
- Cornell Law School LII — 26 CFR § 301.7701-2 — Chusik Hoesa on the US per se corporation list
- EY Tax News — Korea enacts 2026 Tax Reform Bill — 2026 corporate tax rates and local surtax
- PwC Worldwide Tax Summaries — Korea: Other taxes — 10% VAT rate
- Korea Legislation Research Institute — Enforcement Decree of the External Audit Act, Article 5 — external audit thresholds
- Easy Law (Ministry of Government Legislation) — Four social insurance registration — employer registration deadlines
This guide is general information, not legal or tax advice. Rules change — confirm specifics with a licensed Korean labor attorney (노무사) or tax accountant.