Korean companies expanding to Germany, Spain and Portugal

Why Korean companies choose these three

Germany is Europe’s largest economy and its industrial core: the natural base for Korean suppliers to carmakers and machine builders, for B2B sales across the German-speaking market and for engineering teams. Korean investment there is visible — Samsung Electronics completed the EUR 1.5 billion purchase of the German-headquartered climate-technology group FläktGroup in 2025 — even though Korea’s large battery plants went to Poland and Hungary rather than Germany. Spain is a large consumer market, a cost-competitive manufacturing location with EU-funded industrial incentives, and a bridge to Latin America: Hyundai Mobis received EUR 16.7 million of support for an EV battery-system plant in Navarre serving Volkswagen, and Lotte Energy Materials EUR 49.2 million for a battery-materials plant in Tarragona, whose completion has been pushed back to 2027. Portugal offers the lowest headline corporate tax of the three, fast company formation and a strong technology workforce, and its investment agency has courted Korean game companies.

The Korean side is the same whichever country is chosen: the overseas investment report, Korean tax on European profits and dividends, transfer pricing between parent and subsidiary, and sending Korean staff. The European side differs in capital, formalities, tax, labour law and residence permits. Our team works on both: we incorporate companies in Germany, Spain and Portugal through our offices in Stuttgart and Barcelona, and handle Korean filings from Seoul.

Before money leaves Korea

Korean residents investing abroad must report under the Foreign Exchange Transactions Act and the Foreign Exchange Transaction Regulations. A Korean company acquiring 10% or more of a foreign company — or less than 10% with management, technology or supply ties — files an overseas direct investment report (해외직접투자 신고, haeoe jikjeop tuja singo) with its designated foreign exchange bank before remitting the money, with the business plan, the target’s details and the amount. Later events need follow-up reports: additional capital, changes in shareholding, loans to the subsidiary, annual reports on the subsidiary’s results, and liquidation. Practitioners note a small-amount route allowing a limited first remittance to be reported afterwards; for anything substantial, file first.

The Financial Supervisory Service treats this seriously: it found 478 overseas investment reporting violations in its latest annual review and stresses that a prior report is needed for any amount. Administrative fines can reach KRW 100 million for a missing prior report, and repeated or serious breaches can lead to suspension of foreign exchange transactions. Loans from the Korean parent to the European subsidiary, guarantees for its bank lines and payments for goods and services follow their own reporting rules. See Korean foreign exchange rules.

Germany: the GmbH

Most Korean companies use a limited liability company (Gesellschaft mit beschränkter Haftung, GmbH). It needs share capital of EUR 25,000, of which at least EUR 12,500 must be paid in before registration, articles notarised by a German notary — online notarisation is possible for many formations — registration in the commercial register (Handelsregister), which creates the company, trade registration with the municipality and tax registration. Beneficial owners are recorded in the transparency register (Transparenzregister). The entrepreneurial company (Unternehmergesellschaft (haftungsbeschränkt)) is a GmbH variant with capital from EUR 1 that must retain a quarter of profits until it reaches EUR 25,000; it is cheap to form but signals little to German customers and banks. A well-prepared GmbH is registered in a few weeks; opening the bank account and registering the Korean managing director can take longer.

Germany’s combined tax burden is about 30%: corporate tax of 15% plus a 5.5% solidarity surcharge on it, 15.825% in total, and municipal trade tax of roughly 8.75% to 20% depending on the city — about 30% in Berlin, 32% in Frankfurt, 33% in Munich. A 2025 law cuts corporate tax by one point a year from 2028 to 10% from 2032, bringing the combined burden towards 25%. Dividends to a Korean parent bear German withholding of 5% for a holding of at least 25% and 15% otherwise under the Korea–Germany treaty, against 26.375% domestically; German refund and exemption procedures require a certificate of Korean residence. Germany is a high-wage, highly regulated labour market with works councils in larger companies, strong dismissal protection after six months and generous holidays — which Korean managers find a culture shock and Korean budgets should not underestimate.

Spain: the S.L.

The usual vehicle is the private limited company (sociedad de responsabilidad limitada, S.L.). Since the 2022 Crea y Crece law its minimum capital is EUR 1, but until capital and reserves reach EUR 3,000 a fifth of profit must go to a reserve, and partners are jointly liable up to EUR 3,000 on liquidation; most foreign-owned S.L.s use EUR 3,000 or more. Formation requires tax identification numbers for the company and for foreign shareholders and directors — the NIE (número de identidad de extranjero) for individuals and a NIF for the Korean parent — a deed before a Spanish notary and registration in the mercantile register (Registro Mercantil). Foreign investments are declared to the Spanish investment register on form D-1A, filed electronically since February 2024, and annual reports follow.

Non-EU investors acquiring 10% or more of, or control over, a Spanish company in sensitive sectors — critical infrastructure and technologies, defence, energy, health, data, media and others — need prior authorisation under Spain’s foreign investment screening rules; the transaction is suspended until approval, and silence after the maximum period counts as refusal. Most Korean trading and service subsidiaries are outside the screening, but battery, semiconductor, energy and data businesses should check.

Spanish corporate tax is 25%, with reduced rates for smaller companies: micro-companies with turnover under EUR 1 million pay 19% on the first EUR 50,000 and 21% on the rest in 2026, falling to 17% and 20% from 2027; companies with turnover of EUR 1 million to 10 million pay 23% in 2026, falling to 20% by 2029; and new companies pay 15% in their first two profitable years. Dividends to a Korean parent bear 10% withholding for a holding of at least 25% and 15% otherwise under the Korea–Spain treaty, against 19% domestically. Spain’s regions add their own incentives, and EU-funded programmes for strategic industries have supported Korean battery investments.

Portugal: the Lda

Portugal’s private limited company (sociedade por quotas, Lda) can be formed with EUR 1 per quota. Through the Company on the Spot (Empresa na Hora) service the company can be registered in a day for a fee of about EUR 360 using pre-approved articles, with all partners present or represented; capital is deposited within days and the start of activity is declared to the tax authority within 15 days. Beneficial owners are declared to the central register of beneficial owners (RCBE) within 30 days and confirmed annually; a company without an RCBE declaration cannot distribute profits or take public contracts.

Corporate income tax is 19% in 2026, falling to 18% in 2027 and 17% in 2028, with a 15% rate on the first EUR 50,000 for SMEs. Municipalities add a surtax of up to 1.5%, and a state surtax applies to profits above EUR 1.5 million at 3%, above EUR 7.5 million at 5% and above EUR 35 million at 9%. Dividends to a Korean parent bear 10% withholding for a holding of at least 25% and 15% otherwise under the 1996 Korea–Portugal treaty, against 25% domestically; interest bears 15%. Portugal and Korea agreed in November 2024 to amend the treaty and to conclude a social security agreement, neither of which was in force at the time of writing.

Banks, documents and the first months

The slowest step in all three countries is usually the bank account. European banks apply know-your-customer checks to the Korean parent and its ultimate owners, and ask for the Korean corporate register extract, articles, shareholder register and identification of directors — apostilled, with certified translations — and an explanation of the business and expected flows. Korean documents are apostilled by the Ministry of Foreign Affairs; Korea has been a party to the Apostille Convention since 2007. German banks often want to meet the managing director; Spanish and Portuguese banks need the company’s tax number and, for foreign directors, their own identification numbers. Plan for four to eight weeks from registration to a working account, and keep the capital remittance aligned with the Korean report and the bank’s blocked-account requirements. In the first months the company also registers for VAT and, if it hires, with social security, and appoints an accountant who files in the local language — none of the three countries accepts English filings.

The three side by side

All three apply EU rules on beneficial ownership, controlled foreign companies, the minimum tax and product regulation.

Korean tax on European profits and dividends

A European subsidiary’s profits are not taxed in Korea until they are distributed. Since 1 January 2023 dividends a Korean company receives from a foreign company in which it holds at least 10% are 95% excluded from its taxable income; where the exclusion applies, no foreign tax credit is given for the withholding, so the European withholding tax is a final cost. With all three countries taxing at 19% to 30%, Korea’s controlled foreign company rules — which in 2026 apply where the foreign company’s effective tax rate is 17.5% or less — are not normally engaged, although a Portuguese company with tax incentives or losses carried forward should check. The calculator above shows the total effect.

A branch is an alternative for a first sales presence — the profits are then taxed in the European country and again in Korea with a foreign tax credit — but most Korean companies prefer a subsidiary for liability, for local credibility and because Korean dividend exclusion makes it the more efficient route once the business is profitable. Transfer pricing between the Korean parent and the European subsidiary must be documented in both countries, and the EU’s Pillar Two minimum tax applies to groups with consolidated revenue of EUR 750 million or more. See Korea’s treaties ranked.

People and visas

Korean citizens can visit the Schengen area without a visa for up to 90 days in any 180, which covers business trips but not work. Germany goes further: Korean nationals may enter without a visa and apply for a residence permit, including for employment, from inside Germany within 90 days, although the intra-corporate transfer card for managers and specialists seconded within a group is excluded from that route. The EU Blue Card requires a salary of EUR 50,700 in 2026, or EUR 45,934.20 in shortage occupations. The Korea–Germany social security agreement, in force since January 2003, keeps posted employees in the Korean system for up to five years, extendable to eight.

Spain’s procedures for highly qualified professionals and intra-corporate transfers are handled centrally by the unit for large companies, with salary thresholds updated by order each year; posted Korean staff can stay in Korean pension for up to five years under the Korea–Spain agreement in force since April 2013. Portugal offers a tech visa for employers certified by its innovation agency and a highly qualified activity visa linked to salary; with no social security agreement yet, posted Korean staff can face contributions in both countries. In all three, the managing director of the European company should be someone who can actually be reached and can sign — a Korean executive who never visits creates banking and liability problems.

EU rules that come with a European base

• Foreign investment screening is being tightened across the EU: a revised regulation agreed in December 2025 makes screening mechanisms mandatory in every member state with a minimum list of sectors, applying 18 months after entry into force.
• The Carbon Border Adjustment Mechanism entered its definitive period on 1 January 2026; importers of covered goods — steel, aluminium, cement, fertilisers, hydrogen, electricity — above 50 tonnes a year must be authorised, with certificate sales starting in February 2027. A European subsidiary importing Korean steel products is the declarant.
• The Battery Regulation phases in due-diligence, carbon-footprint and labelling duties, with a digital battery passport from February 2027 for EV and industrial batteries.
• Product, data and AI rules — CE marking, GDPR, the AI Act, the Digital Services Act — apply to the European company as importer or provider. See Korean pharma in the EU and selling merchandise in the EU.

A worked example

A Korean maker of EV thermal-management components with KRW 200 billion of revenue wins a supply contract with a German carmaker and needs a European company for sales, engineering support and a warehouse. It compares Germany and Spain: Germany for proximity to the customer’s engineering centre, Spain for a lower-cost warehouse and regional incentives. It chooses a German GmbH with EUR 100,000 capital for sales and engineering, and plans a Spanish S.L. for the warehouse in year three.

Before remitting, it files the overseas direct investment report with its Korean bank. The GmbH’s articles are notarised in Stuttgart; the Korean managing director enters Germany visa-free and applies for a residence permit locally, remaining in Korean pension under the social security agreement. The GmbH earns EUR 2 million in year two and pays tax of about EUR 600,000; it distributes the rest, with 5% German withholding under the treaty — about EUR 70,000 — and the dividend is 95% excluded in Korea. The Korean parent files its annual overseas investment report, documents its transfer pricing for the components it sells to the GmbH, and registers the GmbH as CBAM declarant for the aluminium parts it imports.

Mistakes we see

1. Remitting capital before the Korean overseas investment report.
2. Choosing Portugal for the tax rate and then posting several Korean managers without a social security agreement.
3. A Spanish S.L. at EUR 1 that banks and suppliers will not take seriously.
4. A managing director who never visits, blocking bank accounts and filings.
5. Ignoring European labour law in Korean headcount plans.
6. Expecting a credit for European withholding on dividends that are 95% excluded in Korea.
7. Overlooking CBAM and product rules for goods imported by the European company.

Terms you will meet

Questions readers ask

About the author

Alexander Baranov

Founder of the BCA Group · cross-border corporate and tax adviser since 2008

Alexander advises foreign founders and groups on company formation, tax structuring and corporate law in more than 40 jurisdictions across Europe, the Gulf, Asia and Latin America. He is the author of nine books on international business and tax and writes regularly for professional finance and tax journals. He works in English, German, Spanish and Russian.

This guide is based on the Korean statutes cited in the text and on our own filings. It is reviewed when the law or official rates change.

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