Estonian Company Run from South Korea: Tax Rules

Many Korean entrepreneurs form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Korea. Korean tax law looks at the company and at its owner. The company side: Korea treats a corporation as a domestic corporation when its headquarters, main office or actual business management place is in Korea. The owner side: an investor holding 10% or more of a low-taxed foreign corporation can be treated as receiving its retained earnings as a dividend every year. The Estonia–Korea tax treaty decides a company's residence by agreement between the two tax authorities. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask a Korean tax adviser before you form or buy the company. We read the official English translations of the Corporate Tax Act (Act No. 20775, in force 14 March 2025) and of the Adjustment of International Taxes Act (Act No. 21215, in force 1 January 2026) on the National Law Information Center of the Korean Ministry of Government Legislation, law.go.kr, and the Estonia–Korea tax treaty in Riigi Teataja, on 22 October 2026. Where the Korean text and the translation differ, the Korean text prevails.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Korea: the company side

Domestic corporation. A domestic corporation is a corporation with its headquarters, main office or actual business management place located in the Republic of Korea (Corporate Tax Act, Article 2, subparagraph 1).
What is taxed. Corporate tax is imposed on a domestic corporation's income for each business year, its liquidation income and certain capital gains (Corporate Tax Act, Article 4(1)).

An Estonian OÜ has its registered office in Estonia. If you live in Korea and manage the company from there, its actual business management place can be in Korea — and then Korea treats it as a domestic corporation. Your Korean tax adviser answers that with the facts of your case.

In Korea: the owner side

Retained earnings deemed a dividend. Where a "Korean national" (the term of the official translation) invests in a foreign corporation whose actual tax burden in the country of its head office, principal office or actual place of management does not exceed 70% of the maximum rate in Article 55 of the Corporate Tax Act applied to its actual income, and which is in a special relationship with the investor, the investor's share of the retained earnings distributable at the end of each fiscal year is deemed a dividend paid to the investor (Adjustment of International Taxes Act, Article 27(1)).
10% threshold. The rule applies to investors who directly or indirectly hold at least 10 percent of the shares or equity of the corporation at the end of the fiscal year, counting shares held by related persons (Article 27(2)).
Exceptions. The rule does not apply, among other cases, where the corporation's actual income does not exceed an amount set by Presidential Decree, or where it has a fixed place of business, such as an office, a store or a factory, needed for its business in its own country and mainly carries on business there by managing, controlling or operating it itself (Article 28); some types of business stay covered even then (Article 29).

An Estonian company pays no corporate income tax while it keeps its profit, so whether the 70% test is met, and who counts as a "Korean national" under the Act, are questions for your Korean tax adviser.

The Estonia–Korea tax treaty

A company resident in both countries. The competent authorities of the two countries shall endeavour to settle the question by mutual agreement, having regard to its place of effective management, place of main or head office, place of incorporation and any other relevant factors (Convention signed in New York on 23 September 2009, Article 4(3)).
Permanent establishment. A fixed place of business, including a place of management or an office, is a permanent establishment (Article 5).
Dividends. The country of the paying company may tax dividends at no more than 5% of the gross amount where the owner is a company holding directly at least 25% of the capital, and 10% in all other cases (Article 10(2)).
Directors' fees. Fees for a member of the board of a company resident in the other country may be taxed in that country (Article 16).

Whether the Multilateral Instrument changes these articles is a question for your Korean tax adviser. We do not give that ruling.

What to decide before you form or buy the company

Where the company is managed, and by whom. This is the fact the Korean definition of a domestic corporation and the treaty look at.
How much you hold, with your relatives. The 10% threshold counts related persons.
Where the business is carried on. A fixed place of business in Estonia and business mainly carried on there is one of the exceptions.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Korean tax returns and Korean tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Korean tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in South Korea if I run it from Korea?

It can be. Korea treats a corporation as a domestic corporation if its headquarters, main office or actual business management place is in Korea (Corporate Tax Act, Article 2). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). An investor holding 10% or more of a foreign corporation whose actual tax burden is no more than 70% of Korea's maximum corporate tax rate can be treated as receiving its retained earnings as a dividend each year (Adjustment of International Taxes Act, Article 27). Under the Estonia–Korea tax treaty, the two tax authorities settle the residence of a company resident in both by mutual agreement (Article 4(3)). Ask a Korean tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from South Korea: what is taxed where