Can You Sell Products or Run a Paid Service on D-10-2?
BySangjin Ji, Administrative Attorney3 years of embassy visa practiceLinkedIn
Suppose James is developing AI inventory-management software for retail stores and demonstrates a prototype to a store owner. The software can already display stock levels and analyze sales, but a feature that automatically recommends when to reorder is still under development. After watching the demonstration, the owner makes an offer.
“My staff and I would like to try it in practice. Once we start using it as a regular service, we could pay a monthly fee.”
It is an encouraging offer. But if James holds D-10-2 startup-preparation status, he needs to check his position before launching a paid service. The Korea Productivity Center's Global Startup Immigration Center, in its OASIS guidance, explains that D-10-2 permits technology-startup preparation activities, but not profit-making activities. D-10-2 alone does not authorize James to sell the software or operate a regular service in return for monthly fees.
Until now, James has been showing the prototype to store staff and collecting feedback. He is finding out which features need improvement and using that information in development. The situation changes if the store begins managing its actual inventory through the software and James agrees to keep fixing errors in return for a fee.
Receiving a customer's offer also needs to be distinguished from entering into a contract or actually providing a service. A proposal to try a prototype raises different questions from one that already specifies fees, a service start date and ongoing technical support. Even a free beta test needs to be assessed by looking at the work actually provided.
For a founder, developing a prototype and securing a first customer may feel like one continuous process. But when the activities the founder will carry out in Korea change, the immigration status and permissions needed for those activities must also be checked.
Where Does Startup Preparation Become Business Operation?
First, consider the purpose of D-10-2. The Ministry of Education's Study in Korea guidance describes technology-startup preparation activities such as participating in the Overall Assistance for Startup Immigration System (OASIS), preparing and filing applications for intellectual property rights such as patents, and preparing to establish a startup company.
For example, James might attend OASIS training to refine his business idea, prepare a patent application for technology he has developed, or decide the business purposes of the company he intends to establish. At this stage, he is identifying the technology his business will use and laying the groundwork for starting that business.
How does showing his software to a store differ from selling it? Look at his technology startup plan. It says that he has developed stock-checking and sales-analysis features, while automated reorder recommendations remain under development. He wants to demonstrate the prototype to store staff, learn which features are difficult to use and improve the software.
Prototype screenshots, development records and store feedback can explain what he has built so far. In particular, a record of the changes he made in response to staff feedback can show how development has progressed.
Now suppose the store owner proposes a regular service agreement. The draft says that the store will use the software from the following month, pay a monthly fee, and receive bug fixes and technical support from James.
The draft now describes the service to be supplied to a customer, rather than simply the purpose of testing a product. If a contract is concluded on those terms, the store gains a right to use the software and James undertakes to provide the service for the agreed period.
The documents tell different parts of the story. The startup plan and development records explain what James has built and what he intends to develop next. The customer agreement identifies the supplier, what the customer will use and how often payment is due.
The Korea Productivity Center's Global Startup Immigration Center states that D-10-2 allows technology-startup preparation but not profit-making activities. James therefore needs to distinguish developing a product and gathering customer feedback from supplying a paid service. A customer's offer to pay a monthly fee does not, by itself, mean that business operations have begun; before actually providing the paid service, James must check the immigration status and permissions required.
The statutory framework also distinguishes between activities permitted under different statuses. Article 17(1) of the Immigration Act (「출입국관리법」), published by the National Law Information Center, provides for a foreign national's stay in Korea within the scope of their immigration status and permitted period of stay. Article 12 and Attached Table 1-2 of the Enforcement Decree of the Immigration Act (「출입국관리법 시행령」) distinguish job-seeking status (D-10) from corporate-investment status (D-8).
In practical terms, planning to establish a company or develop a product in Korea is not the same as holding a status that permits the founder to operate that business. James can document his startup preparation even before establishing a company. Conversely, establishing a company or completing business registration does not, by itself, authorize him to start regular business operations on D-10-2. He needs to check the status and permissions appropriate to the work he will actually perform.
What about demonstrating the prototype and testing its features at a store? The relevant details include whether James is showing the software and collecting feedback, or continuously providing it for the store's actual operations. The scope of any permitted free test needs to be assessed against its purpose, the activities actually carried out and the criteria applied by the immigration authorities.
The distinction becomes easier to see by comparing a demonstration with installation and actual use at the store.
What Changes If James Installs the Prototype at the Store?
Suppose James opens the prototype on his laptop and demonstrates its stock-checking and sales-analysis features. The store owner says that searching for a product by name is inconvenient. James decides to improve the search function in response.
He can keep screenshots of the demonstration, the feedback he received and a record of the changes he makes. These materials can help him explain to the immigration authorities how he has been developing and improving the software.
But what if the owner makes a further request?
“Please install it at our store. Our staff would like to try using it every day.”
James may be eager to agree. Testing in a real store could make problems easier to identify. This is also the point where he needs to look more carefully at what the arrangement involves. If staff enter inventory figures as a test, find errors and report them to him, he can explain those activities as testing and improving a product.
Now consider a different arrangement. The store manages its actual inventory through the software, uses the results to decide what to order, and relies on James to keep fixing errors and maintaining the program. That arrangement has more of the character of providing an ongoing service to the store.
Before agreeing to installation, James should clarify two things. Will the store use the software only for development testing, or also for actual inventory management? And will James simply collect user feedback, or also take responsibility for ongoing operation and technical support after installation?
If he will continuously provide an operational service, he should first check with the immigration authorities whether the proposed activities fall within the startup-preparation activities permitted under D-10-2.
How Far Can a Free Beta Test Go?
James wants to test the software at more stores so that he can improve it. He does not yet intend to sell it, so he plans to charge no fee and collect feedback from participants instead. Can he conduct that free beta test while holding D-10-2 status?
The answer still depends on what he actually does. Suppose he makes the following request to a store.
“The software is still under development. Please try the stock-checking and sales-analysis features and tell me what you find difficult to use.”
The purpose of that arrangement is to collect feedback and use it to improve the product. But the owner might suggest something different.
“Just install it here. We'll use it to manage our inventory from now on, and we'd like you to keep fixing any problems.”
The store now intends to use the software for its actual operations. James would also take on the continuing provision and maintenance of the program. Even without a fee, that arrangement is more likely to be regarded as actual service operation.
The Korea Productivity Center's Global Startup Immigration Center explains that D-10-2 permits startup preparation, not profit-making activities. James should therefore define the purpose and scope of a free beta test from the beginning: which features will be tested, whether the store will use them for actual business tasks, and how much responsibility he will take for bug fixes or operation.
In particular, if he intends to provide the software continuously for a store's business operations, he should confirm with the immigration authorities that the arrangement is permitted under his current D-10-2 status before proceeding.
Does Calling a Payment a “Testing Fee” or “Expense Reimbursement” Make a Difference?
The store owner who wants to use James's software now offers to pay.
“We'd like to use it for about a month. Could we pay you a testing fee?”
James may think that accepting a testing fee is different from selling a product because the software has not officially launched. But D-10-2 is a startup-preparation status that does not permit profit-making activities. How should he assess the proposed payment?
He needs to ask why the store is paying. Suppose payment gives the store access to the inventory-management software for one month. James agrees to provide the program throughout that period and fix any errors.
The store is paying for the use of the software. Even though the product has not officially launched, the arrangement involves supplying a paid service. Changing the description in the agreement from “monthly subscription fee” to “testing fee” does not change what the payment is for.
What about reimbursement of actual expenses? Suppose James incurs transportation costs while visiting the store to test the prototype, and the store offers to cover those costs. Reimbursing transportation expenses actually incurred serves a different purpose from paying for the right to use the software.
However, describing a payment as reimbursement does not establish that James may accept it under D-10-2. He still needs to examine whether the expense was actually incurred, why the payment is being made and what activities he performs in connection with it. The store's proposal is a useful starting point.
Is the payment for access to the program, or is it intended to reimburse particular costs incurred during testing? James can compare the agreed amount and payment conditions with receipts and other expense records. In particular, if the store is paying in return for software access and technical support, D-10-2 alone does not authorize him to launch that paid service.
Where an arrangement requires an individual assessment, including a proposed expense reimbursement, he should explain the actual activities and the purpose of the payment and check the applicable immigration criteria before accepting it.
Can James Sign a Contract Before Receiving Payment?
Suppose the store owner sends James a regular service agreement. The store wants to use the software from the following month and start paying at that time. James wonders whether he can sign now, since he has not received any money yet.
Preparing a contract and actually providing the service need to be distinguished. For example, James and the store might agree to test the program and decide later whether to adopt it as a regular service. They have not yet set a fee or a service start date.
That would be a discussion about a possible future contract. But consider a draft with the following wording.
“The supplier will provide the inventory-management software from December 1, and the customer will pay a monthly fee.”
There are two commitments in that sentence. James is to provide the software from December 1, and the store is to pay monthly in return. If he also undertakes to provide bug fixes and technical support, the work promised to the customer becomes more specific.
The service start date deserves particular attention. Suppose James has promised to begin on December 1 but has not yet received the change-of-status permission needed to operate the business. He needs to establish whether he can lawfully begin providing the service on the date stated in the contract.
Article 24(1) of the Immigration Act requires advance permission to change status before undertaking activities corresponding to a different immigration status. Submitting a change-of-status application does not itself grant authority to begin the new activities.
Rather than immediately signing a proposed customer agreement, James should first review the service and terms he would be committing to, together with the status and permission procedures required. A contract that fixes an obligation to provide a regular paid service before the necessary permission has been granted warrants careful consideration. He may need to discuss the contract timetable and service start date again with the customer.
The practical questions are straightforward. Who is named as the supplier? When must the software be provided? When do fees begin to accrue? What technical support has James agreed to deliver? A clear account of these terms provides the information needed to assess whether the proposed activities remain within D-10-2 startup preparation or require a different status and advance permission for business operations.
Does Receiving Revenue Through a Company Resolve the Immigration Issue?
Suppose James establishes Smart Retail Co., Ltd. in Korea. He plans to contract with the store in the company's name and have the software fees paid into its bank account. He might reason as follows.
“The company is receiving the money, not me personally. Wouldn't it be all right for me to stay on D-10-2?”
Establishing a company does not give James permission to undertake any activity he chooses in Korea. The company's business and the work its foreign founder personally performs need to be considered separately. In this example, Smart Retail Co., Ltd. enters into an agreement with the store to receive monthly software fees.
The agreement names Smart Retail Co., Ltd. as the supplier, and payments go to its bank account. But suppose James is the person who visits the store to introduce the program, negotiates the fee and installs the software.
He also fixes errors himself and helps store staff when they have difficulty using the system. The company is the contracting party and recipient of the payments, but James personally supplies and operates the service.
Payment into a corporate bank account does not, by itself, resolve James's immigration-status issue. What if he only owns shares? Consider instead a situation in which he is a shareholder but does not personally take part in customer contracting, software installation or technical support.
Share ownership alone would not establish that he personally carried out every sales or service activity. In other words, the company's contracts or revenue do not, by themselves, determine whether James has breached the conditions of his status. Whether he performs duties as the company's representative and how far he participates in its operations still need to be examined.
What should he check first? A certified extract of the corporate register can show that the company has been established and identify its registered representative. The business registration certificate shows its registered business activities. The proposed customer agreement then shows whether the company is the software supplier, when service is to begin and who will receive the customer's payments.
Finally, James should identify the work he will personally undertake: introducing the program, installing it, correcting errors or providing ongoing support. This separates the business conducted by the company from the activities James intends to perform in Korea.
If he intends to run the company himself and provide paid services to customers, he needs to consider an immigration route appropriate to that activity, such as D-8-4 technology-startup status. D-8-4 is a status for founders of technology-based companies. Incorporation alone does not secure permission; the applicable academic-qualification or recognized recommendation route, technology-related evidence and company-establishment requirements also need to be checked.
Even if the company already exists, James should review his own status and the permissions required before fixing a date for regular service operations to begin.
Additional-Activity Permission or a Change of Status: Which Should James Check?
James now wants to sell his AI inventory-management program as a regular service. A store is ready to use it and has offered to pay monthly. His current status, however, remains D-10-2 startup preparation.
Could he retain D-10-2 and obtain permission to add commercial activities? Or must he change to a status appropriate for business operation? Two distinct procedures are relevant: permission to engage in activities outside the current status, and permission to change status.
Start with the first. Article 20 of the Immigration Act requires a foreign national who intends to undertake activities corresponding to another status alongside activities permitted under the current status to obtain the Minister of Justice's permission in advance, as prescribed by Presidential Decree.
In everyday terms, this is the procedure to consider when adding another activity while continuing the activity already authorized. The additional activity must be incidental to the principal activity under the existing status. Whether permission is available depends on the proposed activity and the status the person currently holds.
The existence of this procedure does not mean that James can freely add paid software operations to D-10-2. What if he has finished preparing and intends to run the company as his main activity?
That calls for consideration of a change of status. Article 24(1) of the Immigration Act requires advance permission from the Minister of Justice, as prescribed by Presidential Decree, before undertaking activities corresponding to a status different from the one currently held.
Until now, James has been developing software, testing a prototype and preparing to establish a business. He now intends to manage the company he has established, enter into customer agreements and supply the software for monthly fees.
If operating the business is becoming his principal activity, he should assess whether his current status permits that work and examine an appropriate change-of-status route. There is another distinction he must keep in mind: applying for a change is not the same as being authorized to start the new activity.
A Supreme Court decision helps explain the nature of that permission. In Supreme Court Decision 2015두48846, dated July 14, 2016, the Court described permission to change status as an administrative decision conferring authority to undertake activities different from those allowed by the previous status.
The Court also recognized that, even where statutory requirements are met, the authority has discretion to consider matters such as the applicant's suitability, the purpose of the stay and the effect on the public interest when deciding whether to grant permission. The case did not directly concern sales under D-10-2; it is relevant here because it explains the character of change-of-status permission.
Apply that distinction to James's proposed schedule. Suppose his draft agreement says that the software will be provided from the first day of the following month. He still holds D-10-2 and has not received the change-of-status permission needed for business operation.
Submitting the application does not authorize him to start selling the service on that date. He must compare the contractual start date with whether the required permission has actually been granted. If permission is still outstanding, he may need to renegotiate the service schedule with the customer.
Before launching regular sales, James should therefore compare his current status with the activities he intends to undertake. Adding a further activity while continuing the existing one is different from making business operation his principal activity, and the permission to be considered may differ accordingly.
He should confirm the appropriate status and permission with the immigration authorities before providing the regular service.
What If James Has Already Received a Fee?
Suppose James has already installed the AI inventory-management software at a store and received payment. Only afterwards does he read that D-10-2 does not permit profit-making activities. He becomes concerned.
“I've already been paid. What should I do? Would changing my status now put things right?”
The first step is to establish what he did and when. Suppose the agreement says that software service will begin in April, but store staff actually started using it in March and James received the fee in April.
Is April, the month of payment, the only date that matters? No. Although the contract specifies an April start, actual use began in March. James needs to identify when the store started using the software, what work he performed and when he received the money.
The agreement should show the promised service start date. Software usage records can help establish when the store actually began using it. Bank records can show when payment arrived and how much was received.
He must also distinguish a software usage fee from reimbursement of particular expenses incurred during testing. Together, those records make it easier to explain what actually happened. There is an important caution here.
If the contract provided for a regular service, rewriting it afterwards as a “free prototype test” out of concern about the consequences does not solve the issue. Past activities must be examined against the actual records. A difference between the contractual date and the date of actual use must also be acknowledged and examined.
Does the fact that James received a fee conclusively establish an immigration violation? Not by itself. The assessment depends on the status and permissions he held at the time and the services he actually provided.
Nor would a later change-of-status permission automatically make his earlier activities lawful. Before continuing to provide paid services, James should clarify the activities he is currently permitted to undertake and the immigration procedures required. He may also have obligations under an existing contract, so the terms and the work actually performed need to be considered together.
Rather than hastily rewriting documents, he should begin by arranging the contract, software usage records and payment records in chronological order. He can then use those materials to check with the immigration authorities whether his activities fit his status and what permissions or procedures may be necessary going forward.
What Should James Look for in the Customer's Proposal?
Return to the store that first offered to pay a monthly fee. The owner wants to use James's software as a regular service, and James is keen to secure his first customer.
He still holds D-10-2. What should he examine first? Suppose the store's proposal says that it wants to use the program from the following month and pay a monthly fee.
James should identify when he is expected to begin supplying the program, which features the store will be entitled to use and what the fee pays for. His technology startup plan should be read alongside that proposal. Stock checking and sales analysis have been developed, but automated reorder recommendations are still being built.
What if the customer proposal promises immediate access to the reorder-recommendation feature as well? The offer would no longer match the actual stage of development. James must distinguish the features he can provide now from those planned for the future and describe the proposed service accordingly.
If the agreement will be signed in the company's name, he should also clarify who will provide the service. Even if Smart Retail Co., Ltd. contracts with the store, James's own role still matters if he will personally install the software, fix errors and manage the customer relationship.
After comparing the proposal and startup plan, he should review his current immigration documents. His passport and foreign-resident registration records can be used to check his D-10-2 status and permitted period of stay. He then needs to establish what status and permissions are required for the paid service he intends to operate.
D-10-2 alone does not authorize a regular paid service. Receiving an offer to pay and actually supplying a service for payment are different stages. James should identify the permission needed before confirming the service start date and organize his business schedule accordingly.
Ethos Administrative Attorney Office can undertake specific administrative work in this process. For example, if a feature is described as still under development in the startup plan but presented as already available in the customer proposal, we can compare the documents and help organize an account that reflects the actual development stage.
Where the company will contract with the customer, we can examine the corporate documents and proposal to identify the work the founder intends to perform personally. We can then compare the proposed activities with the founder's current status, examine the relevant application route, and prepare status-application documents and a technology startup plan or provide filing assistance within the scope permitted by law and the agreed engagement.
Detailed document preparation and legally permitted filing assistance are separate from the free preliminary review and are provided as paid services with an agreed scope and fee. The immigration authorities make the final decision on permission.
If you are preparing a technology startup on D-10-2 and have received an offer for paid use, you may provide whichever documents you already hold—evidence of your current status and expiry date, your technology startup plan or a brief development update, and a customer proposal or draft agreement—for a free preliminary review by Ethos Administrative Attorney Office of the immigration route and basic conditions to check first, together with any further documents needed.
Three-point summary
D-10-2 is for technology-startup preparation; this status alone does not authorize product sales or a regular paid service.
Look beyond labels such as “free test” or “testing fee” to the service actually provided and the purpose of payment, and distinguish company transactions from the founder's personal work.
Compare contractual start dates, actual use and payments with the founder's status and permissions, and confirm the required authorization before business operations begin.