Invest KOREA

According to Article 6(1) of the Farmland Act, farmland shall be owned only by a person who uses or will use it for his/her own agricultural management. Therefore, only agricultural corporations may own farmland. An agricultural corporation can register as a foreign-invested company by receiving equity investment from foreigners, such a foreign-invested agricultural company can own farmland. ◎ The Rules on Foreign Investment (the Ministry of Trade, Industry and Energy, 2020) specify that foreign investment is permitted in agricultural business with the exception of rice and barley cultivation. Consequently, a foreign-invested agricultural company may be restricted in its ownership of rice and barley farmland. ◎ According to the Farmland Act, only agricultural corporations can own farmland. However, Article 6(2) of the same Act lists exceptions that allow a person to own farmland even if it is not used for his/her own agricultural management. A non-agricultural corporation may acquire farmland if the land has obtained permission or completed consultation to divert, which means the purpose of the land use is changed from farmland such as field or rice field to land on which construction is permitted.

The foreigner does not need to obtain permission from the head of the relevant local government. ◎ Under Article 56(1)4 of the National Land Planning and Utilization Act, a person who intends to engage in certain development activities shall obtain permission for development activities from the head of the local government. Certain development activities mentioned above include construction of buildings, erection of structures, changes in the form and quality of any land, extraction of earth and stone, and partition of land. However, the partition of land within an FIZ is possible without permission from the head of the local government (Article 20(1) of the Foreign Investment Promotion Act).

The company should report real estate acquisition by foreigners under the Act on Report on Real Estate Transactions, etc. However, real estate acquisition report under the Foreign Exchange Transactions Act is not necessary. ◎ In this case, the company is classified as a foreigner under the Act on Report on Real Estate Transactions, etc., but as a resident under the Foreign Exchange Transactions Act. Therefore, the company does not need to report the real estate acquisition stipulated in the Foreign Exchange Transactions Act. ◎ It is important to note that foreign investors who plan to register a foreign-invested company will be subject to the Foreign Investment Promotion Act. That means if the company intends to bring in capital or long-term loans for the real estate purchase, the foreign funds can be transferred to Korea only after the notification of foreign investment.

Yes, a report of real estate acquisition by a foreigner is required. ◎ Even if a company is a domestic corporation, if half or more of its executives are foreign nationals or half or more of its shares are held by foreign nationals or foreign corporations, the domestic corporation is classified as foreigner, etc. under the Act on Report on Real Estate Transactions, etc. Therefore, the company is subject to report real estate acquisition by foreigners.

A domestic branch of a foreign corporation should report real estate acquisition by foreigners. ◎ Under the Act on Report on Real Estate Transactions, etc., a foreign corporation’s domestic branch is deemed a foreigner, hence reporting of a real estate acquisition is required. ◎ In this case, when introducing funds into Korea from overseas to acquire domestic real estate, the domestic branch is classified as a resident under the Foreign Exchange Transaction Act. In this regard, the branch can introduce the operational funds from its overseas headquarters through a designated foreign exchange bank without reporting the real estate acquisiton under the Foreign Exchange Act (Article 9-34 of the Foreign Exchange Transactions Regulations).

Yes. ◎ Parties to a transaction including a foreigner, etc., entering into a contract to acquire real estate in Korea shall report to the relevant report-receiving authority within 30 days from the transaction contract date. (Article 3(1) of the Act on Report on Real Estate Transactions, etc.) ◎ However, when a foreigner, etc. enters into a contract on acquisition of any real estate under Article 8(1) of the Act on Report on Real Estate Transactions, etc., he/she shall file a report thereon with the report-receiving authority within 60 days from the acquisition date of the real estate. If the real estate acquisition is by means of inheritance, auction, or any cause other than contracts under Article 2 of the Act on Report on Real Estate Transactions or Article 5(2) of the Enforcement Decree of the Act on Report on Real Estate Transactions, the report shall be made to the report-receiving authority within six months. ◎ If a national of the Republic of Korea who possesses any real estate within the territory of the Republic of Korea or a corporation or organization incorporated under the statutes of the Republic of Korea becomes a foreigner, etc., and if the relevant foreigner, etc. intends to possess the relevant real estate, etc. continuously, the foreigner, etc. shall file a report thereon with the report-receiving authority within six months from the date of change to a foreigner, etc. as prescribed by Presidential Decree. ◎ Penalty for failure to report acquisition 1. A person who fails to report the real estate transaction under a contract shall be punished by an administrative fine not exceeding KRW 5 million, and a person who files a false report by an administrative penalty not exceeding five percent of the acquisition value of the relevant real estate, etc. (Article 28(2), 28(3) of the Act on Report on Real Estate Transactions) 2. A person (foreigner, etc.) who fails to file a report under Article 8(1) or files a false report shall be punished by an administrative fine not exceeding KRW 3 million (Article 28(4) of the Act on Report on Real Estate Transactions). 3. A person (foreigner, etc.) who fails to report a real estate acquisition by means of inheritance, auction, or any cause other than contracts or files a false report shall be punished by an administrative fine not exceeding KRW 1 million (Article 28(5) of the Act on Report on Real Estate Transactions). 4. A person (foreigner, etc.) who fails to file a report on continuous possession of land or files a false report shall be punished by an administrative fine not exceeding KRW 1 million (Article 28(5) of the Act on Report on Real Estate Transactions).

Where parties to a transaction, including a foreigner, etc.*, enter into ① a real estate sales contract or ② a contract for supply of real estate under the Housing Site Development Promotion Act or the Housing Act, they are required to notify the relevant authority within 30 days of the date of signing the contract. (Article 3(1) of the Act on Report on Real Estate Transactions, etc. If the real estate acquisition is pursuant to Article 8(1), notification should be filed within 60 days. If the acquisition is pursuant to Article 8(2) of the same Act or Article 5(2) of Enforcement Decree of the Act, notification should be made within six months.) ◎ It is necessary to check in advance whether the land is acquirable only by reporting or is subject to prior permission for transaction. If a foreigner enters into a purchase contract without the transaction permission for the property subject to prior approval, the contract shall be nullified, and imprisonment or a fine sentence may be imposed, making it challenging to acquire the real estate. ◎ Land requiring permission for transaction by foreigners (Article 9 of the Act on Report on Real Estate Transactions, etc.) 1. Military bases and installation protection zones defined in subparagraph 6 of Article 2 of the Protection of Military Bases and Installations Act, and such other areas as may be especially necessary to limit land acquisition by a foreigner, etc. for the purposes of national defense 2. Designated cultural heritage defined in Article 2(2) of the Cultural Heritage Protection Act, and protective facilities or protection zones therefor 3. Ecological and scenery conservation areas set in subparagraph 12 of Article 2 of the Natural Environment Conservation Act 4. Special districts for protection of wildlife under Article 27 of the Wildlife Protection and Management Act ◎ Penalty provision: A foreigner, etc. who enters into any land acquisition contract without obtaining permission or after obtaining permission by illegal means shall be subject to imprisonment with labor for not more than two years or by a fine not exceeding KRW 20 million.

When a foreigner acquires real estate, applicable laws and procedures vary depending on the purpose of acquisition, residency status, and whether the buyer is a corporate or an individual. ◎ The Act on Report on Real Estate Transactions, etc. stipulates only the procedures for a foreigner to acquire real estate in Korea. When the real estate acquisition is for-profit such as property rental, in addition to the registration of real estate acquisition by a foreigner, foreign-invested company registration through foreign investment notification under the Foreign Investment Promotion Act is required. If the investor is a nonresident under the Foreign Exchange Transactions Act, an additional registration should follow for the acquisition of the real estate. ◎ When a foreign company sets up a branch in Korea, branch establishment notification under the Foreign Exchange Transactions Act is required instead of foreign investment notification under the Foreign Investment Promotion Act. After registration of a branch, purchase the real estate under the name of the branch.