Expanding a Swedish business into South Korea

The Sweden–Korea framework

Trade runs on the EU–Korea Free Trade Agreement (한-EU 자유무역협정, han-EU jayu muyeok hyeopjeong), provisionally applied from 1 July 2011 and fully in force since 13 December 2015. It was the EU’s first trade agreement with an Asian country, and almost every tariff on industrial goods between the two has now gone. Business Sweden puts Swedish exports to Korea at about USD 1.7–1.8 billion and Korean exports to Sweden at about USD 1.4 billion, concentrated in vehicles, machinery, advanced materials and life science. Its 2026 survey of Swedish companies in Korea found 64% profitable and nearly three-quarters expecting turnover to grow — and named labour regulation, licences and recruitment as the hardest parts.

Tax relations are governed by the Korea–Sweden double taxation convention (skatteavtal mellan Sverige och Sydkorea), a long-standing treaty with mid-range rates: 10% on dividends to a company owning at least 25% of the capital, 15% otherwise. A social security convention (konvention om social trygghet) signed in Seoul in September 2013 has been in force since 1 June 2015. On documents, the Hague Apostille Convention applies to both countries, so Swedish papers need one apostille and no Korean consular stamp.

Four ways in

1. A Korean distributor or agent

Many Swedish industrial companies sell in Korea for years through a Korean distributor that holds stock, handles certification and services customers. No Korean entity is needed. Keep the relationship buy-and-resell: an agent who habitually concludes contracts in the Swedish company’s name can create a permanent establishment (국내사업장, gungnae saeopjang) under Article 94 of the Corporate Tax Act and Article 5 of the treaty. Register the trademark in Korea before signing; see trademark registration.

2. A liaison office

A liaison office (연락사무소, yeollak samuso) places staff in Korea for market research, promotion, quality control and technical support, reported to a foreign exchange bank under the Foreign Exchange Transactions Act. It cannot earn income in Korea. Swedish suppliers to Korean shipyards and carmakers often start with engineers in a liaison office near the customer; see liaison offices.

3. A branch

A branch is the aktiebolag itself registered in Korea under Article 614 of the Commercial Act. It can trade and employ, but the Swedish company is liable for everything the branch does, and changes in Bolagsverket’s register — a new board member, a new signatory — must be mirrored in the Korean registry. Korea taxes the branch’s profits at the normal corporate rates; Sweden taxes them as part of the AB’s income, with a credit for Korean tax. See branch or subsidiary.

4. A Korean subsidiary

Most Swedish companies that intend to stay form a Jusik Hoesa (주식회사, jusik hoesa), the Korean share company, owned by the AB. Korean industrial customers prefer a Korean counterparty for supply contracts, warranties and after-sales service, and public buyers often require one. With at least KRW 100 million of capital the company is registered as a foreign investment under the Foreign Investment Promotion Act, which opens the D-8 visa for the director sent from Sweden; see the KRW 100 million rule.

Company documents from Sweden

A Swedish aktiebolag’s corporate facts all sit in Bolagsverket (the Swedish Companies Registration Office)’s register, which makes the Korean paperwork simpler than for most countries. A Korean registry and bank want the following:

Typical documents for a Swedish corporate shareholder.

The point that trips Swedish companies is signing authority (firmateckning). The registreringsbevis states who may sign for the company — the board jointly, two directors together, the managing director for day-to-day matters, or named signatories. The board minutes and the power of attorney must be signed in a way that matches it exactly, or the Korean registry will reject them. Ask Bolagsverket for the English version of the registreringsbevis, and order it shortly before filing: Korean bodies generally expect it to be no more than three months old.

The power of attorney should list each Korean act — the foreign investment notification, subscription for shares, court and tax registration, bank accounts and registration of the company seal — and name the Korean agent. Documents can be in English; Korean translations are made in Seoul.

Personal documents and the apostille

Typical personal documents for a director moving to Korea.

In Sweden the apostille is issued by a notarius publicus (notary public), appointed by the county administrative board, who usually also certifies the signatures on the board minutes and power of attorney — so one appointment can cover both steps. Korean directors file a seal certificate (인감증명서, ingam jeungmyeongseo); a Swedish director instead signs before the notary, and the apostilled signature serves the same purpose. See apostilles for Korea.

Read the registreringsbevis before you sign anything. If it says two directors jointly, two directors sign — in front of the notary.

Voixa Korea

Setting up the Korean company

On the Korean side the process is the same for every foreign investor. The investment is notified to a Korean foreign exchange bank under Article 5 of the Foreign Investment Promotion Act; the capital is wired from the AB’s own account in euros, US dollars or Swedish kronor and the bank certifies receipt. Sweden requires no approval for outbound investment. The company is registered with the court and obtains its business registration number (사업자등록번호, saeopja deungnok beonho) from the tax office; a trading company also needs a customs clearance code to import. With documents ready, the Korean part takes two to four weeks; see registering a company in Korea.

Korean directors serve terms of up to three years under Article 383 of the Commercial Act and must be re-registered on renewal. The company registers a corporate seal (법인인감, beobin ingam), keeps Korean-language books, and files corporate tax, VAT and payroll returns on the Korean calendar; see annual compliance.

Trading under the EU–Korea FTA

Swedish goods enter Korea at preferential rates if they meet the agreement’s product-specific rules of origin. The EU–Korea agreement predates the EU’s REX system and still works on approved exporter (godkänd exportör) status: for consignments worth more than EUR 6,000, only an exporter authorised by Tullverket (Swedish Customs) may make the origin declaration on the invoice; below that, any exporter can. The Korean importer claims the preferential rate under the FTA Customs Act, and Korea Customs Service can verify origin years later. Keep the bill of materials and supplier declarations for at least five years.

Tariffs are rarely the obstacle now; standards are. Electrical and radio equipment needs KC certification, machinery used in Korean workplaces may need safety certification under the occupational safety rules, medical devices and pharmaceuticals need Ministry of Food and Drug Safety approval, and food needs plant registration and Korean labels. See importing into Korea, pharmaceutical imports and customs duties. Defence, space and dual-use technology adds export licensing on the Swedish side under the Inspectorate of Strategic Products and Korean end-user checks; see export controls.

Korean tax and the treaty

The Korean subsidiary pays corporate tax at 10% to 25% plus local income tax of one-tenth under Article 55 of the Corporate Tax Act — 11% on the first KRW 200 million — and charges 10% VAT. Payments to Sweden bear Korean withholding, reduced by the treaty:

Domestic rates include Korean local income tax. Source: PwC Worldwide Tax Summaries, Korea, 2026.

Sweden sits in the middle of Korea’s treaty table: Finland, the Netherlands and Spain have the same 10%, the UK and Germany get 5%, and Denmark and Norway only 15%. That is rarely a reason for a Swedish group to hold Korea from elsewhere — see Korea’s treaties ranked for why a holding layer usually costs more than it saves. To claim the treaty rate, the AB files a limited tax rate application (제한세율 적용신청서, jehan seyul jeogyong sincheongseo) with the Korean company before payment under Article 98-6 of the Corporate Tax Act, with a Skatteverket certificate of tax residence. Without it, 22% is withheld and a refund claim follows.

Swedish tax on Korean profits

For an aktiebolag, shares in an unlisted Korean company are business-related shares (näringsbetingade andelar) under chapter 24 of the Income Tax Act (inkomstskattelagen), provided the Korean company corresponds to a Swedish limited company — which a Jusik Hoesa paying Korean corporate tax does. Dividends received are exempt, and so are gains on a sale of the shares. Because no Swedish tax is due, the Korean withholding cannot be credited in Sweden: the 10% is a final cost, and missing the treaty forms turns it into 22%.

Sweden’s CFC rules (CFC-reglerna) in chapter 39a tax a Swedish shareholder on a foreign company’s income if it is low-taxed — broadly, taxed at less than 55% of the Swedish tax that would have applied — subject to exceptions for income covered by Sweden’s list of treaty jurisdictions and for real business activity. A Korean trading or service company paying normal Korean rates is outside the rules in practice, but a small Korean company in the 11% bracket with passive income should be checked with a Swedish adviser.

A branch is different: the profits are part of the AB’s income, taxed in Sweden at 20.6% with a credit for the Korean corporate tax. Transactions between the AB and the Korean subsidiary — goods, licences, management fees — must be at arm’s length under the Swedish correction rule in chapter 14 and under Article 7 of the Adjustment of International Taxes Act in Korea. A short intercompany agreement and a benchmark on file avoid most arguments in both countries.

Staff, social security and visas

Swedish citizens can visit Korea visa-free for up to 90 days for meetings and market visits, subject to Korea’s electronic travel authorisation rules at the time of travel. Working in Korea needs a visa under the Immigration Act: a Swedish investor-director managing a company with at least KRW 100 million of foreign investment applies for the D-8 corporate investment visa (기업투자 비자, gieop tuja bija); see D-8 requirements. Engineers seconded from Sweden to a subsidiary or branch usually come on a D-7 intra-company transfer or E-7 professional visa.

Under the Korea–Sweden social security convention, an employee posted from Sweden stays in the Swedish pension system and is exempt from the Korean National Pension (국민연금, gungmin yeongeum) for up to 24 months, extendable by agreement for up to 36 more; the certificate of coverage comes from Försäkringskassan (the Swedish Social Insurance Agency). Periods in both countries also count towards pension entitlement in the other. Korean health and employment insurance still apply. Local staff are employed under the Labour Standards Act with written terms, four social insurances and severance after a year; see hiring in Korea.

Swedish support for the move

• Business Sweden has an office in Seoul for market analysis, partner searches and establishment support, and publishes an annual business climate survey on Korea.
• The Embassy of Sweden in Seoul leads Team Sweden in Korea, including state visits and trade delegations.
• EKN, the Swedish export credit agency, guarantees payment risk on Korean buyers; SEK finances exports and Swedish companies’ foreign subsidiaries.
• The Swedish Chamber of Commerce in Korea connects Swedish companies in Seoul with each other and with Korean partners.

Where Swedish companies win in Korea

Business Sweden’s focus list for Korea — batteries, defence, energy, life science, semiconductors, space, transportation and food and beverage — maps onto Korea’s industrial base. Korea’s shipyards in Ulsan, Geoje and Mokpo are among the largest buyers of marine propulsion, emissions and automation technology; its battery and chip makers buy process equipment, materials and testing; its hospitals and pharma companies license Swedish life-science products. The Korean customer usually wants a local entity, local engineers who speak Korean, fast service and certification done in Korea. That is why the 2026 survey found that local requirements had become the most-cited trade barrier, and why recruitment ranks among the hardest parts: experienced Korean engineers are sought after by Korean groups too.

Consumer brands face a different market: fast, mobile-first and dominated by Korean platforms. Swedish fashion, furniture and design brands have done well in Korea, and Korean consumers rate Scandinavian design highly, but online sales run through Korean marketplaces with their own rules; see selling on Korean marketplaces.

Protect the brand

Korea is a first-to-file (선출원주의, seonchurwonjuui) trademark system under Article 35 of the Trademark Act. A Swedish brand that exhibits in Seoul or appoints a distributor before filing can find its name registered by someone else. Extend the mark through the Madrid system via the Swedish Intellectual Property Office (PRV) or EUIPO, or file directly with KIPO, and consider a Hangul version of the name. Swedish characters — å, ä, ö — are often dropped or transliterated in Korea; register the forms customers will actually type. See trademark registration in Korea.

A worked example

Västkust Marine AB, a Gothenburg company that makes fuel-saving propulsion systems, sells to three Korean shipyards through a Busan agent. As orders grow, the shipyards ask for a local supplier with service engineers on site. Västkust forms a Jusik Hoesa in Busan with KRW 300 million of capital, notified as a foreign investment and wholly owned by the AB. The registreringsbevis says the company is signed for by two board members jointly, so both sign the board minutes and power of attorney before a notarius publicus in Gothenburg, who also issues the apostilles. The trademark is filed with KIPO in Latin letters and Hangul.

A Swedish engineer moves to Busan on a D-8 visa as representative director, staying in the Swedish pension system with a certificate from Försäkringskassan; four Korean engineers are hired locally. The Korean company buys systems from the AB at benchmarked prices, installs and services them, and in year three makes KRW 500 million of profit. It pays KRW 88 million of Korean corporate and local income tax and a KRW 300 million dividend, with 10% treaty withholding — KRW 30 million — on the strength of a Skatteverket residence certificate. In Gothenburg the dividend is exempt as income from business-related shares. The systems ship from Sweden with an approved exporter’s origin declaration, duty-free under the EU–Korea FTA.

Mistakes we see

1. Board minutes signed by the wrong people for the company’s firmateckning.
2. A registreringsbevis older than three months at filing.
3. An agent concluding contracts for the AB and creating a Korean permanent establishment.
4. No treaty application before the first dividend — 22% instead of 10%.
5. Shipping above EUR 6,000 without approved exporter status and losing the FTA rate.
6. Underestimating Korean certification and the time it takes.
7. Seconding staff without a certificate of coverage, paying pension contributions twice.
8. Filing the trademark after the trade fair.

Korean 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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