[Korea FDI Setup] Step 1: Foreign Investment Declaration and Capital Remittance Guide

Service 1: Business Setup & FDI

Hello! This is Administrative Attorney ON (Onhaeng), your dedicated partner in navigating foreign investment, corporate setup, and D-8 visa procedures in South Korea.

Foreign entrepreneurs frequently ask us: "Should I incorporate the company first, or remit the investment capital first?" The definitive legal answer is neither: Filing the Foreign Investment Declaration comes first!

Under the Foreign Investment Promotion Act, the prerequisite first step in establishing a Foreign-Invested Enterprise (FIE) in Korea is formally submitting an FDI report to a designated foreign exchange bank or KOTRA, obtaining the official filing certificate, and then remitting the capital from overseas. Today, we break down Step 1 with practical field insights and essential compliance checklists.

What is a Foreign-Invested Enterprise in Korea?

Under the Foreign Investment Promotion Act, a foreign-invested company refers to a Korean corporation established with a foreign direct investment of KRW 100 million or more. Unlike general domestic companies, it requires distinct regulatory reporting (FDI Declaration ➔ Capital Remittance ➔ FIE Registration), in return granting eligibility for the D-8 Corporate Investment Visa and various government investment incentives.

Stage Procedure Key Deliverable
Step 1 FDI Declaration + Capital Remittance FDI Filing Certificate, FX Certificate
Step 2 Corporate Registration + Business License Corporate Registry, Business License
Step 3 Foreign-Invested Enterprise Registration FIE Registration Certificate

You may file your declaration at either a designated foreign exchange bank or KOTRA (Invest KOREA). In practice, foreign exchange banks are widely favored because the temporary capital custody account can be established simultaneously.

Statutory Requirements for FDI Recognition

  • Minimum Investment Amount: At least KRW 100 million per foreign investor. Accounting for currency rate fluctuations and intermediary banking fees, it is standard practice to remit an extra 5% to 10% buffer.
  • Voting Equity Ratio: Holding at least 10% of the corporation's voting shares. (Holding under 10% may qualify only if accompanied by an executive dispatch or management participation contract).
  • Remittance Source: Funds must strictly originate from an overseas bank account held in the investor's own legal name. Third-party transfers or domestic accounts are strictly disqualified.
  • Prior Declaration Principle: You must complete the FDI notification before transmitting funds. Unreported remittances cannot be recognized as legal foreign investment capital.

Required Documents Checklist

1. For FDI Declaration:
- Foreign Investment Declaration Form (Bank Standard Form)
- Individual: Valid Passport Copy (Proof of Nationality)
- Corporate: Overseas Certificate of Incorporation (with Apostille/Consular Legalization) + Certified Korean Translation
- Power of Attorney (POA) and agent identification if represented by an administrative attorney

2. Certificates Issued by the Bank Post-Remittance:
- Foreign Investment Declaration Certificate (외국인투자신고필증)
- Certificate of Foreign Currency Purchase/Deposit (외화매입·예치증명서) — essential for incorporation!

💡 Onhaeng's Practical Tips: 2 Key Checkpoints Verified in the Field

Tip 1: Send a Buffer Amount & State Clear Investment Purpose!
If you wire exactly KRW 100 million, exchange rate fluctuations and intermediary bank deduction fees may cause the received balance to drop below KRW 100 million, invalidating the entire filing. Always remit with a buffer, and ensure the wire message clearly states: "Foreign Direct Investment / Capital".

Tip 2: Secure the FX Certificate & Mind the 30-Day Deadline!
The Certificate of Foreign Currency Purchase/Deposit is a universal master key used for incorporation registration, FIE registration, and the D-8 visa application. Furthermore, the Foreign-Invested Enterprise Registration must be completed within 30 days of capital contribution settlement. Plan the next step immediately once Step 1 concludes.

Conclusion

In establishing a foreign-invested corporation, the very first step is the most crucial. Missing the filing sequence or encountering discrepancies in remittance accounts can force you to restart the entire incorporation process from scratch.

For overseas investors, managing document translation, Apostille legalization, bank declarations, and foreign exchange compliance from abroad can be daunting. Certified Public Translation & Administrative Attorneys Office ON:ON provides end-to-end one-stop support: from certified translation and FDI notification to incorporation, FIE registration, and D-8 visa approval.

ON:ON Korea Visa & Corporate Administration | Certified Translation & Administrative Attorney Office ON:ON

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