Korea requires overseas businesses that provide electronic or digital services to consumers in Korea to register, charge, and remit Korean Value-Added Tax at 10 percent under a special simplified registration framework. This obligation is grounded in the Value-Added Tax Act (Article 53-2) and the Enforcement Decree of the Value-Added Tax Act (Article 96-2), which together define the scope of electronic services, identify who must register, and set core compliance requirements.
Who must register. An overseas business must register under the simplified regime when all of the following apply: it has no Korean business registration or branch; it supplies qualifying electronic services; its customers are located in Korea under the place-of-supply rules that look to the recipient’s business location, address, or residence; and the transactions are business-to-consumer sales to individuals who are not registered for Korean VAT. Registration must be completed within 20 days from the date you begin B2C electronic service supplies to customers in Korea. There is no turnover threshold.
What counts as electronic (digital) services. Electronic services include, among others, games, audio and video files, electronic documents, software and similar content or functionality that are produced or processed in digital form and delivered for storage or real-time use on computers or devices. Ongoing improvements and updates are treated as part of the electronic service.
What is not covered. The simplified registration is limited to electronic or digital services and does not apply to supplies of physical goods. If goods are stored in Korea and sold to customers in Korea, the seller falls under ordinary domestic VAT rules and must complete regular Korean business registration. In addition, the simplified regime targets B2C transactions. If you sell to Korean businesses that are VAT-registered and have a valid Korean Business Registration Number, you generally do not need to use the simplified registration for those sales and you do not charge Korean VAT on those B2B transactions; the Korean business accounts for VAT domestically.
If your service is delivered online, it is recommended to implement a VAT/BRN validation check at sign-up or checkout to reduce the risk that a buyer provides an invalid Business Registration Number or a number that does not belong to the transacting party. For higher-value transactions, it is strongly advisable to conduct Korean business due diligence based on the provided Business Registration Number or business name—this can be streamlined using platforms such as KOBDi (https://kobdi.co.kr/)
Registration and ongoing compliance. Overseas providers complete the simplified VAT registration through the National Tax Service’s electronic system for foreign suppliers of electronic services. The standard VAT rate of 10 percent applies to the taxable base derived from Korean consumers. Returns are filed quarterly, and payment is due by the twenty-fifth day of the month following the end of each quarter. Registrants must retain transaction statements for five years and, when requested by the National Tax Service, submit the prescribed electronic-service transaction statement within sixty days. The Enforcement Decree of the Value-Added Tax Act specifies the information that must be recorded and provided.
Selling through marketplaces and app stores. Where an intermediary or platform facilitates the supply of electronic services to Korean consumers, the framework allows that the intermediary may be treated as the deemed supplier depending on how the commercial and billing flows are structured. In practice, contracts, invoicing flows, and settlement logic should make clear which party is the supplier for VAT purposes and whether the taxable base is the gross consideration or a commission.
If you establish a Korean entity or branch instead. Forming a Korean corporation or registering a Korean branch moves the business out of the simplified regime and into the ordinary domestic VAT system. Domestic taxpayers register for business in Korea and follow the standard VAT calendar. Corporate taxpayers typically have four due events per year: interim returns in April and October covering the first and third quarters, and final returns in July and January for the half-year periods. Electronic tax invoice rules and ordinary domestic record-keeping obligations apply. This route is commonly chosen when an overseas supplier expands operations, adds local staff or premises, or stocks physical goods in Korea.
Practical considerations for implementation. Build a reliable customer-location determination process to identify Korean recipients under the place-of-supply rules, maintain sales data in a form that maps cleanly to quarterly filings and payment processes, and ensure five-year retention of transaction statements with the ability to produce the prescribed report within the sixty-day window upon request. Where platforms or intermediaries are involved, confirm the allocation of VAT obligations by reference to the actual flow of the transaction and document it accordingly.
