Expanding a UK business into South Korea

British companies arrive in Korea by several roads. A fintech wins a Korean bank as a client; a Scottish distiller’s importer wants exclusivity; a games studio finds that a third of its downloads come from Seoul; an engineering firm is invited to bid for offshore wind work off the south coast. In each case the question is the same: how much of a Korean presence is needed, and in what legal form.

This guide sets out the options for a UK business, with the Korean statutes behind each, the trade and tax agreements between the two countries, the UK tax consequences that are easy to miss, and the practical steps from Companies House documents to a Korean bank account. It assumes a UK limited company as the parent; most points apply equally to an LLP or a UK plc.

The UK–Korea relationship in brief

Trade between the two countries runs on the UK–Korea Free Trade Agreement (한-영 자유무역협정, han-yeong jayu muyeok hyeopjeong), which carried over the EU–Korea agreement when the UK left the EU and has applied since 1 January 2021. It removes duty on almost all industrial goods, protects geographical indications such as Scotch whisky and opens parts of Korea’s services market. In December 2025 the two governments announced the conclusion of an upgraded agreement covering tariff-free access on around 98% of tariff lines, updated rules of origin, digital trade, e-contracts and wider access for UK financial and professional services. Until the upgrade enters into force, the 2021 agreement applies.

Tax relations are governed by the UK–Korea double taxation convention of 1996, which reduces Korean withholding on dividends, interest and royalties paid to UK residents and allocates taxing rights on business profits and capital gains. A social security agreement coordinates pension contributions for workers sent from one country to the other. In data protection, the UK recognised Korea as adequate in 2022, so personal data can flow from the UK to Korea without additional safeguards.

Four ways in

1. A Korean distributor or agent

The lightest option: a Korean company buys and resells, or sells on commission. No Korean entity, no Korean tax return. The risks are commercial and legal: the distributor controls the customer relationship, and an agent who habitually concludes contracts for the UK company can create a permanent establishment (국내사업장, gungnae saeopjang) under Article 94 of the Corporate Tax Act, bringing Korean corporate tax on the UK company’s profits from those sales. Distribution agreements are often governed by English law with arbitration in London or Seoul; Korean courts generally respect the choice, but Korean mandatory rules on unfair trade practices still apply under the Monopoly Regulation and Fair Trade Act.

2. A liaison office

A liaison office (연락사무소, yeollak samuso) lets the UK company put staff in Korea for market research, sourcing, quality control and customer support, with no Korean income. It is reported to a designated foreign exchange bank under the Foreign Exchange Transactions Act and receives a unique number from the tax office; there is no court registration and, while it stays within Article 94(4) of the Corporate Tax Act, no corporate tax. Our guide to liaison offices covers the limits.

3. A branch of the UK company

A branch is the UK company itself, registered in Korea under Article 614 of the Commercial Act with a representative in Korea. It can trade, invoice and employ. Its Korean profits are taxed at the same rates as a Korean company, and the UK company is liable for everything the branch does. Every change at the UK parent — a new director, a change of name, a new registered office — must be reflected in Korea with apostilled UK documents.

4. A Korean subsidiary

Most UK businesses that intend to stay choose a subsidiary, usually a Jusik Hoesa (주식회사, jusik hoesa) — the Korean stock company — wholly owned by the UK company. It ring-fences liability in Korea, is the form Korean customers, banks, marketplaces and government buyers know best, and, if funded with at least KRW 100 million, is registered as a foreign investment under the Foreign Investment Promotion Act, which opens the D-8 visa for the director who manages it and guarantees the right to remit dividends. Our guide to branch or subsidiary compares the two in detail.

Setting up a subsidiary from the UK

The UK side is mostly paperwork. The parent’s board resolves to form the Korean company, approves the investment and appoints an attorney to act in Korea. Companies House documents do not list directors on the certificate of incorporation, so Korean registries usually want a certified copy of the certificate together with a current extract of the register or a certificate of good standing showing officers and shareholders. Each document is signed before a UK notary public where needed and apostilled by the FCDO Legalisation Office. Our guide to apostilles for Korea sets out the list.

In Korea, the investment is notified to a foreign exchange bank, the capital is wired from the UK company’s own account — sterling or dollars are both fine and are converted on arrival — and the bank issues a certificate of receipt. The company is then registered with the court, which gives it its corporate registration number, and with the tax office, which gives it its business registration number (사업자등록번호, saeopja deungnok beonho). The foreign investment registration certificate follows. With documents ready, the Korean side takes two to four weeks.

Directors, governance and UK habits

A Jusik Hoesa with capital below KRW 1 billion can have a single director and no statutory auditor. Directors need not be Korean or resident; a UK-based director is common for subsidiaries run from London. Terms of office are limited to three years under Article 383 of the Commercial Act and renewals must be registered, unlike the indefinite appointments UK companies are used to.

Some UK reflexes need adjusting. Korean companies use a registered company seal (법인인감, beobin ingam) for formal documents, and banks and government offices ask for it. Written resolutions in lieu of meetings, routine in the UK, are available for shareholders of small Korean companies but not as broadly for boards. And while English-language board minutes are fine internally, anything filed with the registry must be in Korean.

Duty-free trade under the FTA

UK-made goods qualify for preferential duty in Korea only if they meet the agreement’s rules of origin and the shipment carries a valid origin declaration. Under the UK–Korea agreement the exporter makes a statement on origin on the invoice; above a value threshold this is reserved to approved exporters. The Korean importer claims the preferential rate under the FTA Customs Act and must be able to produce the proof if Korea Customs asks, sometimes years later.

Two traps catch UK exporters. Goods made from substantial EU or third-country components may fail the product-specific rules; and goods shipped through an EU hub must satisfy the agreement’s non-alteration and transport rules to keep their UK origin. The 2025 upgrade simplifies some rules, notably for cars and pharmaceuticals, once in force. Our guide to import-export companies in Korea covers customs procedure, import VAT and refunds.

The FTA makes British goods duty-free in Korea. The paperwork is what makes them British.

Voixa Korea

Korean tax on a UK-owned business

A Korean subsidiary pays Korean 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 of profit. It charges 10% VAT on Korean sales and reclaims VAT on its costs. Payments to the UK parent then bear Korean withholding, reduced by the treaty:

Domestic rates include Korean local income tax. Source: HMRC Double Taxation Relief Manual, DT11352.

The reduced rates apply only if the UK company files a limited tax rate application (제한세율 적용신청서, jehan seyul jeogyong sincheongseo) with the Korean payer before payment under Article 98-6 of the Corporate Tax Act, with an HMRC certificate of residence. HMRC issues certificates on application; request one in good time. Our guide to dividend withholding covers the procedure and refunds.

UK tax on Korean profits

This is where UK businesses most often under-plan. Dividends received by a UK company from a Korean subsidiary are usually exempt from UK corporation tax under the distribution exemption in Part 9A of the Corporation Taxes Act 2009. That is good news, with one consequence: because the dividend is not taxed in the UK, there is no UK tax against which to credit Korean withholding. The 5% treaty rate is therefore a real, final cost, and the 22% domestic rate, if the forms are missed, is worse.

Royalties and interest from Korea are taxable in the UK, with credit for Korean withholding up to the UK tax on the same income. Service fees charged by the UK parent are UK income and should be supported by intra-group agreements and transfer pricing that the Korean tax office will accept under the Adjustment of International Taxes Act — the Korean side looks for evidence that services were actually received, the UK side for arm’s-length income.

A branch is different. Its profits are part of the UK company’s profits and taxed in the UK with credit for Korean tax, unless the company makes the foreign branch exemption election, which is irrevocable and covers all its foreign branches. And because Korea taxes small companies at 11%, a Korean subsidiary may fall below the threshold of the UK controlled foreign company rules’ tax exemption; most small subsidiaries are covered by another exemption, such as the low-profits exemption, but it is worth confirming with a UK adviser before the subsidiary becomes profitable.

Protect the brand first

Korea operates a first-to-file (선출원주의, seonchurwonjuui) trademark system under Article 35 of the Trademark Act: the first applicant for a mark generally gets it, regardless of who used it first elsewhere. UK brands that announce Korean plans, attend a trade fair or appoint a distributor before filing sometimes find their name registered by someone else. Both countries are members of the Madrid Protocol, so a UK company can extend an existing UK or international registration to Korea, or file directly with the Korean Intellectual Property Office (특허청, teukheocheong). Consider registering the Hangul version of the brand as well — Korean consumers will search for it.

Staff and visas

British citizens can visit Korea for business meetings for up to 90 days without a visa, subject to Korea’s electronic travel authorisation rules at the time of travel; check K-ETA requirements before booking. Working in Korea needs a visa under the Immigration Act.

A UK founder or director who invests at least KRW 100 million into the Korean subsidiary and manages it applies for the D-8 corporate investment visa (기업투자 비자, gieop tuja bija); our guide to D-8 requirements covers the file. Employees transferred from the UK company to a Korean branch or subsidiary usually come on a D-7 intra-company transfer or an E-7 professional visa.

Under the UK–Korea social security agreement, employees seconded from the UK for a limited period can remain in UK National Insurance and be exempt from Korean national pension contributions, with a certificate of coverage from HMRC. Korean health insurance still applies. Local hires are employed under the Labour Standards Act, with written terms, a statutory minimum wage and severance after one year — very different from at-will habits in some markets, and stricter than UK practice on dismissal. Our guide to hiring in Korea sets out the 2026 rates.

Banking, payments and data

The bank that receives the investment usually opens the company’s won and foreign currency accounts once it is registered; the director normally attends in person for identity checks. UK companies paying Korean suppliers or receiving Korean customer payments in sterling can do so through the foreign currency account, with ordinary trade payments flowing freely. Unusual settlement methods — netting intra-group balances, paying through a third country — need to be cleared with the bank first.

Customer and employee data in Korea is governed by the Personal Information Protection Act, one of the strictest regimes in Asia. Data flowing from the UK to Korea is covered by the UK’s adequacy decision; data flowing from Korea to the UK — say, into the parent’s CRM or HR system — must satisfy Korea’s own cross-border transfer rules, usually through disclosure in the privacy policy and, in some cases, consent.

Sectors where UK businesses do well

• Financial and professional services — fintech, asset management, insurance, legal and consulting, with access widened by the 2025 upgrade.
• Offshore wind and energy — Korea’s offshore wind programme draws on UK developers, engineers and supply-chain firms.
• Life sciences — pharmaceuticals and medical devices, subject to approval by the Ministry of Food and Drug Safety.
• Food and drink — whisky, gin and premium foods, with geographical indication protection under the FTA.
• Creative industries and games — a market of heavy mobile and PC gamers and a sophisticated content industry.
• Education — English-language, edtech and university partnerships.

A worked example

Thames Analytics Ltd, a London software company, has Korean enterprise customers buying through a reseller. It forms a Jusik Hoesa in Seoul with KRW 150 million of capital, notified as a foreign investment. Its UK sales director moves to Seoul on a D-8 visa as representative director; two Korean engineers are hired locally. The Korean company resells the UK company’s licences to Korean customers, invoices them with 10% VAT, and pays the UK parent a licence fee subject to 10% Korean withholding under the treaty, creditable in the UK.

In year three the subsidiary makes KRW 300 million of profit and pays KRW 44 million of Korean corporate tax including local tax. It declares a KRW 200 million dividend. With the treaty application and an HMRC certificate of residence on file, Korean withholding is 5% plus local income tax, and the dividend arrives in London exempt from UK corporation tax. Without the forms, 22% would have been withheld and a refund claim filed.

Mistakes we see

1. Announcing Korea before filing the trademark.
2. Companies House certificates without officers, sent alone and rejected by the registry.
3. Missing treaty forms before the first dividend, in a structure where Korean withholding is a final cost.
4. An agent who negotiates contracts, creating a Korean permanent establishment for the UK company.
5. Origin declarations on goods that do not qualify, especially goods with substantial EU content.
6. Copying UK employment contracts that do not meet Article 17 of the Labour Standards Act.

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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