Under the Foreign Exchange Transactions Act, funds related to real estate transactions are broadly categorized into funds brought in or remitted from overseas and funds generated domestically. When real estate is purchased with funds brought in or remitted from overseas, the funds for both the purchase and the sale of the real estate for residents and non-residents are guaranteed. However, if you want to send abroad the proceeds from the sale of real estate purchased with funds generated domestically, you must report it to the Governor of the Bank of Korea.
Foreign-Invested Enterprises and Domestic Branches of Foreign Companies
Foreign investors intending to register as a foreign-invested enterprise should bring in funds for real estate acquisition after reporting foreign investment, and then register as a foreign-invested enterprise after completing the necessary procedures for real estate acquisition. For domestic branches of foreign companies, funds can be brought into Korea as operating funds through a designated foreign exchange bank, and then real estate can be acquired.
Typically, the funds for acquiring real estate are not remitted per transaction but are covered by the capital or operating funds already in the foreign-invested enterprise or domestic branch. Thus, when remitting the proceeds from the sale of real estate, it should be done under the item of capital reduction or dividends for foreign-invested enterprises and under operating income for domestic branches. For domestic branches, reducing operating funds is not permitted except when closing the branch and remitting liquidation funds abroad.
Resident Foreigners
When resident foreigners purchase real estate for residence or non-profit purposes, they may bring in purchasing funds and acquire domestic real estate without going through notification procedures as prescribed by the Foreign Exchange Transactions Act.
Overseas remittance of the proceeds from the sale of real estate acquired with funds carried in or remitted from abroad (including funds deposited in external accounts) requires a notification to the head of a foreign exchange bank with documents certifying payment attached. However, the purchase of real estate from funds generated domestically requires a notification to the governor of the Bank of Korea.
Non-Resident Foreigners
Non-resident foreigners must report the acquisition of real estate to the head of a foreign exchange bank when bringing in funds for non-commercial real estate purchases. The proceeds from the sale of such reported real estate can be remitted abroad by reporting to the head of a foreign exchange bank. However, if the acquisition was not reported, the proceeds must be reported to the Governor of the Bank of Korea before remitting abroad.
Copyrightⓒ소소컴퍼니 All Rights Reserved.
Discover NestSure:
Jongno Branch
Seocho Headquarter
