Plan the real cash cost of leaving a Korean shop
Closing or relocating a leased commercial unit in Korea involves more than the contractor quote. Interior removal, reinstatement, value-added tax, change orders, waste disposal, unpaid rent, utility settlement, deposit deductions, and the timing of reimbursements all affect the amount of cash the tenant needs.
This calculator separates seven categories of removal and reinstatement work, estimates the 2026 Hope Return Package shop-demolition grant ceiling, and reconciles the lease deposit. It keeps four different measures visible: total project cash before support, restoration cash cost after support, economic exit cost including lost deposit, and peak cash needed before the grant or deposit refund arrives.
What this calculator covers
- A tenant restoring the inside of a leased shop, not demolition of an entire building.
- Actual supply values from a detailed contractor quote, rather than a generic cost per square metre.
- The official area ceiling, closure-date ceiling, documented eligible supply value, and preliminary eligibility checks.
- Landlord contributions, rent and utility arrears, restoration deductions, deposit refund, and cash timing.
The 2026 shop-demolition support rule
The 2026 One-Stop Closure Support notice issued by Korea’s Ministry of SMEs and Startups and administered by the Small Enterprise and Market Service states that eligible shop-demolition costs may be supported up to KRW 200,000 per 3.3 m² of exclusive-use area. The overall ceiling is KRW 6,000,000 for a closure on or after July 11, 2025. A closure from January 1, 2023 through July 10, 2025 falls under the earlier KRW 4,000,000 ceiling.
Applications run through the Small Business 24 portal while the budget remains available. The program is reimbursement-based and subject to document review, possible site verification, and the administering agency’s final determination. A calculated ceiling is therefore not an award promise.
Core 2026 Hope Return Package shop-demolition support rules| Rule | Official basis | Calculator treatment |
|---|
| Area ceiling | Up to KRW 200,000 per 3.3 m² | Area units × KRW 200,000 |
| Closure on or after July 11, 2025 | Overall maximum | KRW 6,000,000 |
| Closure through July 10, 2025 | Earlier overall maximum | KRW 4,000,000 |
| Documented amount | Supply value on an electronic tax invoice | VAT excluded |
| Contractor | Tax-registered business that can issue evidence | Self-demolition flagged |
The KRW 6 million figure is a ceiling, not an automatic payment
The formula amount is the smallest of documented eligible supply value, the area ceiling, and the closure-date ceiling. If any exclusion flag is selected, the calculator preserves the mathematical ceiling for reference but sets the eligibility-adjusted estimate to zero. This is a conservative planning signal, not a formal rejection decision.
Who should use the preliminary eligibility check?
The public notice generally targets a small business owner who has closed or expects to close, operated the business for at least 60 days, and used a shop under a paid lease. The business, lease, construction, payment, and closure facts must all be supported by the documents required at the applicable application stage.
Positive checks
- Small-business status can be documented.
- The operation period is at least 60 days.
- The premises are occupied under a paid lease.
- A tax-registered contractor performs the work.
- The closure date is January 1, 2023 or later.
Common exclusion risks
- Owner-occupied property or rent-free occupancy.
- Self-demolition or residential, temporary, or unpermitted premises.
- A prior shop-demolition grant or duplicate public funding for the same cost.
- Relocation rather than closure, or reopening at the same location.
- An excluded industry or a non-profit operator.
Small-business status is not a single headcount test
Article 2 of the Framework Act on Small Enterprises and Article 3 of its Enforcement Decree connect small-business status to small-enterprise requirements and regular-worker limits. The regular-worker limit is fewer than 10 for mining, manufacturing, construction, and transport, and fewer than 5 for other industries. Revenue thresholds, related-enterprise rules, and documentary requirements also matter, so the check box does not replace an official confirmation certificate.
Relocation and same-location reopening require care
The notice excludes a simple move of the business and reopening at the same premises. It also describes recovery restrictions tied to reopening at the supported location within the applicable period. If the business name, registration, operator, or activity changes but commercial activity effectively continues, explain the complete facts to the administering agency before signing the demolition contract.
Enter the quote as supply value, not cash total
Copy the pre-VAT supply value from the contractor’s detailed work statement into the relevant categories. If a contractor gives only one total, request a breakdown by scope, quantity, unit price, supply value, and VAT. A comparable breakdown makes omissions visible and helps connect the quote to the tax invoice, payment evidence, and completion photographs.
Removal and reinstatement work
- Fixed fixtures, partitions, and ceiling removal.
- Electrical, plumbing, gas, duct, and HVAC disconnection.
- Signboard, awning, film, and exterior attachment removal.
- Floor, wall, ceiling, paint, tile, and finish reinstatement.
- Waste hauling, disposal, protection, safety, and final cleaning.
Exit and deposit settlement
- Other closing costs such as transport or temporary storage.
- A landlord contribution confirmed in writing.
- Lease deposit, unpaid rent, management fees, and utilities.
- A landlord restoration deduction from the deposit.
- Other agreed deductions for keys, equipment, or settlement items.
Confirmed eligible supply value is a separate input
Total quoted supply value can be greater than the amount recognized by the program. A line item may be outside the program scope or lack adequate evidence even when it appears on a contractor quote. Enter only the amount that can be tied to qualifying work and the required evidence. Leave it at zero while unconfirmed to avoid building a cash plan around an optimistic reimbursement.
Use exclusive-use area from consistent documents
The calculator accepts pyeong or square metres. A square-metre entry is divided by 3.3 for the support formula. Check the lease against the building register and do not add common area or space outside the actual removal scope. The agency’s treatment of fractions, documentary conflicts, and final won-level rounding controls the award.
How the calculator works
1. Project cash before support
Project cash equals work supply subtotal, plus 10% VAT on that subtotal, plus contingency supply value and its VAT, plus other closing costs. Contingency is a cash-planning allowance for change orders. It is not automatically added to confirmed eligible supply value.
2. Grant formula
Area ceiling equals exclusive-use area divided by 3.3 m² and multiplied by KRW 200,000. Formula support is the minimum of confirmed eligible supply value, area ceiling, and the overall ceiling for the closure date. Eligibility-adjusted support is zero when a selected exclusion risk blocks the preliminary result.
3. Net restoration cash cost
Net restoration cash cost equals project cash before support, minus estimated support, minus the applied landlord contribution. A landlord contribution is capped at the remaining project cash so an accidental oversized input cannot create a negative restoration cost.
4. Deposit and economic exit cost
Expected deposit refund equals the deposit minus rent, management and utility arrears, landlord restoration deduction, and other agreed deductions. Economic exit cost equals net restoration cash cost plus all deposit deductions. Closing cash balance also includes the return of the tenant’s original deposit, so it should not be mistaken for profit.
Worked example
This hypothetical example explains the calculation and is not an approved grant case. Assume a paid 25-pyeong lease, 730 operating days, an August 1, 2026 closure, KRW 8,000,000 of quoted work supply value, and KRW 7,200,000 of confirmed eligible supply value.
Hypothetical Korean shop restoration and demolition grant calculation| Item | Basis | Amount |
|---|
| Work supply subtotal | Seven work categories | KRW 8,000,000 |
| VAT | 10% of work supply | KRW 800,000 |
| Contingency and contingency VAT | 10% allowance plus VAT | KRW 880,000 |
| Other closing cost | Assumed transport and storage | KRW 500,000 |
| Project cash before support | Sum of the four lines above | KRW 10,180,000 |
| Estimated support | 25 × KRW 200,000, tested against other caps | KRW 5,000,000 |
| Landlord contribution | Written amount assumed | KRW 500,000 |
| Net restoration cash cost | KRW 10.18m − KRW 5m − KRW 0.5m | KRW 4,680,000 |
| Deposit deductions | Rent, fees, restoration, and other deductions | KRW 3,500,000 |
| Economic exit cost | Restoration cash cost plus deposit deductions | KRW 8,180,000 |
A KRW 20,000,000 deposit less KRW 3,500,000 of deductions produces an expected refund of KRW 16,500,000. If every payment and receipt occurs as planned, the closing cash balance is positive KRW 11,820,000. The tenant still needs up to KRW 10,180,000 before reimbursements because construction may be paid before the grant and deposit refund arrive.
Documents and a practical sequence
- Confirm the lease and restoration scope. Match the premises, exclusive-use area, and restoration clause. Agree in writing with the landlord on fixtures that remain and work that must be removed.
- Compare detailed contractor quotes. Verify business registration and electronic tax-invoice capability, then compare the same scope, quantities, unit prices, supply value, VAT, waste handling, and completion conditions.
- Preserve before-work evidence. Photograph the entrance, signboard, full interior, utility connections, and every removal target. Keep original files with date and location context.
- Check the current Small Business 24 process. Confirm budget availability and whether the present application stage requires closure, lease, building, quote, or other evidence before starting work.
- Make traceable payments. Ensure the parties and amounts on the electronic tax invoice, bank-transfer record, or accepted card record match the contract and work statement.
- Document completion and deposit settlement. Take after-work photographs from comparable angles and prepare an itemized written statement of arrears, restoration deductions, and the deposit refund.
Evidence file checklist
- Paid lease agreement and relevant building-register record.
- Itemized work statement and contractor agreement.
- Electronic tax invoice or another specifically accepted sales record.
- Bank-transfer confirmation or accepted card-payment evidence.
- Before, during, and after photographs, including signboard removal.
- Written landlord settlement for deductions and deposit return.
Site checks and fraud risk
In its June 2026 field-check announcement, the Ministry of SMEs and Startups described site verification and fraud-detection measures for the shop-demolition program. A quote and tax invoice that appear internally consistent may still require explanation if the real work, payment trail, photographs, or lease relationship do not match.
Never create transactions to fill the ceiling
- Do not add work that was never performed merely to approach KRW 6,000,000.
- Do not receive a rebate after transferring an inflated contract amount.
- Do not count the same restoration once as contractor work and again as a landlord deduction.
- A related-party contractor still needs real work, reasonable pricing, tax evidence, and traceable payment.
Useful planning scenarios
Before requesting quotes
Enter rough amounts by work category and test a 10% to 15% contingency. Peak cash shows whether the expected contract deposit and final payment are affordable even when reimbursements arrive later.
Comparing contractors
Normalize every quote to supply value plus VAT and the same work categories. A cheap quote that omits waste, signboard removal, utility termination, or finish repair can produce a larger change order later.
Negotiating with the landlord
Separate work the landlord will fund from work deducted from the deposit. If both entries describe the same physical work, correct the overlap before using the economic exit result.
Uncertain eligibility
Select every risk that actually applies and inspect the zero-support case first. A plan that remains viable without the grant is less likely to fail if the award is delayed, reduced, or denied.
Frequently asked questions
Is Korean VAT covered by the grant?
The 2026 notice uses the supply value shown on an electronic tax invoice and excludes VAT from support. The calculator adds 10% VAT to cash spending but does not add it to the support formula.
Does a 30-pyeong shop automatically receive KRW 6 million?
No. Thirty pyeong produces an area ceiling of KRW 6,000,000, but a lower documented eligible supply value becomes the limit. Eligibility, documents, actual work, budget availability, and agency review still control payment.
Can the tenant perform the demolition and claim materials?
The notice lists self-demolition as an exclusion. Use a contractor capable of issuing the required evidence and confirm the latest procedural requirements before work begins.
Is a landlord restoration deduction duplicate support?
It can create an overlap if it charges the tenant again for the same work already paid to the contractor. Distinguish work performed by each party, document the legal and factual basis for each charge, and ask the administering agency how duplicate-funding rules apply.
Can a business apply before the closure date?
A business expecting to close may fall within the public-notice scope, but documents required for application and reimbursement can differ by stage. Check the current Small Business 24 workflow before demolition or payment.
Does a large deposit refund eliminate the exit cost?
No. A refund returns the tenant’s own deposited capital; it is not income. The calculator includes it in closing cash balance but measures economic exit cost separately as restoration cash cost plus deposit deductions.
Limits and cautions
- The result is a planning estimate based on user inputs and rules checked for the 2026 notice. It is not an award decision, tax opinion, or legal advice.
- Budget exhaustion, amended guidance, missing evidence, site findings, and agency review can reduce or eliminate support.
- Articles 615 and 654 of the Korean Civil Act provide a general framework for return and restoration, but the actual duty depends on the lease, special clauses, original condition, consent, evidence, and applicable case law.
- The calculator uses the 10% general VAT rate in Article 30 of the Korean Value-Added Tax Act for cash planning. Input-tax credit or refund treatment depends on the taxpayer and filing facts.
- Asbestos, refrigerants, hazardous waste, structural work, and work requiring a permit need separate professional review, lawful disposal, and potentially different costs.
- If restoration scope or deposit deductions are disputed, obtain Korean legal and tax advice before signing a final settlement.
Official sources and verification date
The calculator rules and source notes were rechecked on August 8, 2026. Always review the current notice, attachments, and portal instructions immediately before applying.
- Official 2026 Hope Return Package One-Stop Closure Support notice — published January 21, 2026, with the shop-demolition attachment.
- Small Business 24 portal — current application workflow and program notices.
- Ministry field-verification announcement — site checks and fraud-detection measures.
- Framework Act on Small Enterprises, Article 2 — law ID 013671, text MST 280155, effective June 3, 2026.
- Enforcement Decree, Article 3 — law ID 014004, text MST 282975, effective February 1, 2026.
- Korean Civil Act, Articles 615 and 654 — law ID 001706, text MST 284415, effective March 17, 2026.
- Korean Value-Added Tax Act, Article 30 — law ID 001571, text MST 276117, effective January 2, 2026.
Calculate with the quote and lease beside you
Start with itemized supply values and exclusive-use area, then complete every eligibility and deposit field from actual documents. Use the result to discuss scope and settlement with the contractor and landlord, and confirm the latest Small Business 24 guidance before applying.