A permanent establishment refers to a permanent place in Korea conducting all or part of the business activities of a foreign company. The foreign company does not only decide on how to pay the taxes regarding the withheld income, but also about whether or not the profits from the business are subject to taxation.

Several conditions must be met to be acknowledged as a permanent establishment:
– Existence of a business location (place);
– Business location has to be fixed (duration);
– Business has to be conducted through that location (function).

Even if the above conditions are not met, a permanent establishment is also whe

– There is a person acting as a subordinate agent with the right to execute;
– A domestic liaison office actually executing business activities of the foreign company;
– A domestic liaison office conducting business activities not for the headquarters but for
an affiliate company.