D8 Visa (D-8-1) 100 Million Won Investment Individual/Corporation New/Dispatched Advanced Practical Q&A

Today, I will leave out the basics of the D8 visa process (proof of source of investment funds, precautions when remittance, etc.) and post in Q&A format based on the most frequently asked questions while going through the actual process.

The D8 visa also has different contents depending on the new corporation/dispatch and the size of the investment fund.

The content I'm posting today is about the most common process for foreign individuals to invest 100 million won to establish a new corporation in Korea and go through the process.

1. I haven't applied for a D-8 visa yet. Can I use the investment funds? How much can I use?

There is no specific standard in the guidelines for how much you can use.

However, if you invest 100 million won and apply for a D8 visa, and use up all of the investment funds before the D8 visa is approved, there could be significant problems with issuance.

The important thing is that when using investment funds, they must be used for business purposes only, not for personal purposes, and if the investment funds were used for business purposes, the details of that use must be sufficiently proven through supporting documents (receipts, export declaration certificates, etc.) when applying for a D8 visa.

The common advice to "avoid using investment funds until your D-8 visa is approved" stems from the fact that applicants often find themselves using investment funds without receipts or even remembering where they were spent. For these reasons, we recommend against using investment funds until approval is granted.

2. So, when can I use the investment funds? I need to use them for business purposes, but since the company hasn't been registered yet, I can't use them through a corporate account. Can I use the investment funds in my personal account?

Question 2 is an extension of question 1, and it's one I frequently receive from other administrative scriveners who work in immigration matters. To cut to the chase, it's possible to use investment funds in a personal account.

However, use of a personal account is limited to use as a personal account in the name of the applicant who will become the representative of the corporation before corporate registration, i.e. before the issuance of the corporate account. After the issuance of the corporate account, it is recommended to transfer all investment funds to the corporate account and use the investment funds.

The most common uses would be office or restaurant lease deposits, monthly rent payments, interior design costs, etc.

Even if the above expenses are used for the personal account of the applicant who will become the corporate representative, there will not be a major problem as long as the supporting documents are properly submitted at the time of application.

3. Should the capital amount on the corporate registration copy match the investment amount reported at the time of the initial foreign investment report?

Question 3 can also be an extension of question 2.

I reported a 100 million won investment and remitted another 100 million won, but the company hasn't been registered yet. However, after paying the deposit, purchasing office furniture, and using various other items, I'm now down to 50 million won in capital. I need to register the company, but what should I do? If I register the company with 50 million won in capital, won't there be issues with immigration later?

Let's first look at the guidelines.

▶ Investment in a corporation (D-8-1)

- The investment target must be a Korean corporation.

- The investment amount is KRW 100 million or more, and the investor owns more than 10/100 of the total number of voting shares of the invested corporation (Article 2, Paragraph 2, Subparagraph 1 of the Enforcement Decree of the Foreign Investment Promotion Act) or enters into a contract for dispatching or appointing executives while owning the corporation's shares, etc. (Article 2, Paragraph 2, Subparagraph 2 of the Enforcement Decree of the Foreign Investment Promotion Act)

※ Investment funds are in principle to be in the investor's name, but transfers under the name of spouse and minor children and proxy remittances are exceptionally permitted (however, for investors with an investment amount of KRW 300 million or more, transfers under the name of parents and spouse's parents and proxy remittances may be additionally permitted).

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As you can see in this, it states that the amount invested in a Korean corporation must be at least 100 million won, but nowhere does it say that the capital of the invested corporation must be at least 100 million won.

However, if you've followed the basic D8 visa process, that is, followed the FM process, the investment amount and corporate capital will generally be the same. This is because, immediately following the domestic remittance of the investment funds, the next step is to exchange the funds in the investor's virtual account and transfer them to a domestic personal account in the investor's (the corporate representative's) name.

And if you ask the bank to issue a balance certificate after transferring money, they will process it right away.

In other words, if you proceed according to the procedure and receive a balance certificate of 100 million won or more on time, there is no problem registering the capital of 100 million won when registering the corporation even if you used the investment funds in your personal account.

※ Documents proving capital when registering a corporation: Account balance certificate under the representative's name

However, in cases where the investment amount exceeds several billion won or there is a Korean partner and the investment is made in an existing Korean corporation, the investment amount is often not increased as is when registering the corporation but is treated as capital surplus.

In such cases, the reported investment amount (foreign investment amount listed on the foreign investment company registration certificate) and the corporate capital (as listed on the corporate registration copy) do not match.

In other words, since the corporate capital can be set differently by treating a portion of the investment funds as capital surplus, the corporate capital may differ from the actual investment amount.

The most important thing in obtaining a permit is to prove the source of investment funds and, if capital was used, the details of the use.

However, in the case of new corporations with a 100 million investment, the investment amount and the corporate capital have mostly matched in numerous precedents so far (I looked at the corporate registration copies of clients who came to me after registering the corporation without starting the procedure from the beginning, and most of them matched). In fact, if you just follow the procedure, there is no difficulty at all in registering the corporation with a 100 million won capital as the 100 million won investment, so I think it is better not to deviate from it if possible .

4. I have leased an office (corporate address), but the lease period has not yet expired. Can I still register the corporation?

There is no problem at all when registering a corporation.

However, problems often arise during the business registration process.

The tax office's position is that they cannot issue a corporate business registration certificate when ownership of the corporate address has not yet been transferred (and the deposit has not been fully paid). This is completely understandable.

Not all tax offices are like this, but because of the experiences mentioned above, we are currently advising that you sign a lease agreement to ensure that ownership can be transferred at least until the business registration.

※ Even if online businesses (such as shared offices) are eligible for corporate and business registration, they will not be recognized as business locations when applying for a D-8 visa unless there are compelling reasons. The following are the guidelines.

▶ Additional documents to confirm the existence of an independent business establishment

- Lease agreement and bank transfer, utility bill, and management fee payment confirmation documents

- Short-term leases (less than 6 months), residential leases, and online businesses are not recognized in principle, but are permitted only in exceptional cases where it is unavoidable due to the nature of the business.