Managing Partner Ohoon Kwon of Cha & Kwon Law Office delivered comprehensive legal counsel on the corporate “flip” transaction by which rapidly growing Korean startup Company A reorganised through a Luxembourg holding structure. The project centred on resolving the complex tax issues Korean founders typically face when they pivot a domestic entity for strategic entry into the European market.

Having proven its business model in Korea, Company A identified explosive growth potential in Europe and resolved to establish a firm foothold there. As European investor interest intensified, globalising the corporate structure became essential to attract capital efficiently and scale operations. Luxembourg was selected as the beach-head for Europe, and a holding-company-led flip was initiated.
 

1. Examination of Korean Founders’ Tax Burdens

Managing Partner Kwon conducted an in-depth analysis aimed at minimising tax exposure for the founders during the flip. He reviewed potential capital-gains tax on share exchanges, deemed acquisition tax, and measures to avert double taxation upon a future exit. By scrutinising each founder’s shareholding profile and personal tax status, he proposed the most tax-efficient timing and methodology for the flip and, where needed, prepared strategies for advance rulings with the tax authorities.
 

2. Structuring a Luxembourg Holding Company

To maximise Luxembourg’s tax incentives and the EU’s free movement of capital, a SOPARFI (Société de Participations Financières) holding company was recommended. The structure encompassed an efficient governance framework for future European subsidiaries, an intellectual-property management regime, and optimised intra-group cash flows.
 

3. Building a Collaboration Framework with Local Counsel

To ensure full compliance with Luxembourg law and regulations, Managing Partner Kwon established a close working relationship with a Luxembourg law firm. Together they reviewed company law, financial regulation and labour law, providing an integrated solution that satisfied both Korean and Luxembourg requirements. Complex international-tax issues—application of the bilateral tax treaty, transfer-pricing concerns and Place of Effective Management tests—were resolved in tandem with local tax specialists.
 

4. Phased Execution Roadmap

A six-month, four-stage roadmap was devised to secure flawless execution:

-Preparation Phase – Preliminary legal/tax review and documentation.
-Luxembourg Incorporation Phase – Formation of the SOPARFI holding company.
-Share-Exchange Phase – Execution of the flip and registry filings.
-Post-Completion Phase – Ongoing compliance, reporting and optimisation.

Each stage was mapped to specific legal procedures and document packages, enabling systematic management throughout the project lifecycle.