Korea, Republic of
A corporation having its head office or principal office in Korea is a resident corporation. A corporation with a place of effective management in Korea is also treated as a resident corporation.
Permanent establishment (PE)
A non-resident corporation is generally deemed to have a tax presence (i.e. PE) in Korea in the following cases, among others:
- It has any fixed place of business in Korea, where the business of the entity is wholly or partly carried on.
- It is represented by a dependent agent in Korea, (i) who has the authority to conclude contracts on its behalf and who has repeatedly exercised that authority; (ii) who, even if having no such authority, repeatedly performs a principal role in the course of concluding contracts.
- Its employee(s) provides services in Korea for more than six months within 12 consecutive months.
- Its employee(s) continuously or repeatedly renders similar services in Korea for two or more years, even if each service visit is for less than six months within 12 consecutive months.
Exceptions to a PE in Korea for a non-resident corporation are limited to specific fixed places of business used only for preparatory or auxiliary nature, and such fixed places include purchasing or storage of goods, advertising, publicity, collecting or furnishing of information, etc. Even though the activities of a PE are preparatory or auxiliary, one could be regarded as having a PE in cases where one of the following conditions is met:
- There is any other Korean PE of the foreign entity or a related company and those activities of the PE and specific place are complementary to each other.
- Even if the foreign corporation or a related entity has no PE in Korea, the aggregate activities of specific places are not of a preparatory or auxiliary nature.
Liaison offices of foreign corporations that undertake non-sales functions (acting as a contact point for foreign head office, market research, R&D activities, collection of market information, etc.) in Korea are subject to new reporting requirements. With effect from 1 January 2022, these foreign liaison offices must prepare the required information, such as its status, head office, as of 31 December of each year and submit it by 10 February of the following year. With effect from 1 July 2022, they are required to submit a summary list of input value-added tax (VAT) invoices by supplier.