휴업 and 폐업: what a suspended or closed supplier means for you

Korean businesses exist in one of three tax states. Which one your supplier is in determines whether they can invoice you, whether your contract is enforceable in practice, and whether you should be sending money at all.

휴업 — temporarily suspended

A business files for 휴업 when it intends to stop trading for a period but resume later. Seasonal operations do it routinely, as do businesses pausing while the owner deals with illness or restructuring. It is not, by itself, a sign of failure.

Commercially, though, it changes your position. A suspended business is not conducting normal operations, which means delivery dates, order acceptance and support commitments are all unreliable until it resumes. If you are mid-contract, this is the point to ask directly what is happening and when they expect to return.

폐업 — permanently closed

This is deregistration. The business has formally ended its registration with the National Tax Service, and the record carries a closure date.

The practical consequences are immediate and hard. A closed business cannot issue a valid tax invoice, so any invoice dated after the closure date is not valid for your accounts. If you have already paid against one, you may be unable to reclaim the VAT, and your own filing may need correcting.

More seriously, if someone is still actively trading under a deregistered number and issuing paperwork against it, that is a strong signal to stop and reassess the whole relationship rather than to chase the specific invoice.

The timing problem

Status is a snapshot. A supplier verified in January can be closed by March, and nothing will notify you — the change is silent unless you look again.

This matters most for relationships with long gaps between orders. Annual renewals, occasional purchases and dormant supplier lists are exactly where a closure goes unnoticed until an invoice arrives that cannot be reclaimed.

National Tax Service records update roughly every thirty minutes, and a newly registered business appears within a day or two. Re-checking before a significant payment costs nothing and closes the gap.