Vietnam presence model
Vietnam Company Formation vs a Representative Office
Draw the revenue line first: a representative office supports a foreign parent, while a Vietnamese company provides a platform for local commercial operations.
A representative office is appropriate for a qualifying foreign trader that needs lawful liaison, market research and permitted trade-promotion activity without local revenue. Form a Vietnamese company when the Vietnam operation must sell, invoice, deliver revenue-generating services, hold commercial rights or contract in its own name. If the operating plan crosses that line within months, starting with an office can create two setup projects instead of one.
Key takeaways
- A representative office is a dependent presence of the foreign trader, not a Vietnamese company or independent profit centre.
- Local selling, invoicing and revenue delivery point toward company formation, even if market research remains part of the work.
- The office licence depends on the foreign parent’s eligibility, documents, permitted scope and continuing existence.
- Lower corporate compliance does not mean no compliance: employment, personal tax, reporting, licence and office-expense controls remain.
- Select the model against the next 18–24 months, then set a measurable trigger for moving from research to trading.
The revenue line decides the model
Start with the first six transactions the Vietnam team is expected to perform. Identify who signs the customer contract, who supplies the product or service, who issues the invoice, where payment is received, who bears warranty or delivery responsibility, and which entity employs the delivery team. A parent company can remain the seller in a cross-border model, but a representative office cannot quietly become the local seller.
Call an activity “support” only when the evidence, contracts and money flow also show support. Sales targets, local price negotiation, customer acceptance and delivery responsibility can expose a practical commercial role even if the office never prints an invoice.
Test substance with ordinary emails and workflows. If Vietnam personnel quote binding prices, approve discounts, accept purchase orders, control inventory release or resolve performance claims, the parent should determine whether those acts exceed permitted liaison and create wider tax or regulatory exposure. A narrow written mandate will not cure day-to-day conduct that tells customers the office is the local business.
A company has a separate enterprise structure, charter capital, governance and tax accounting. It can pursue the registered commercial model subject to foreign-investor market access and any investment or sector approvals. The choice is therefore a legal-capability decision, not simply “light setup” versus “heavy setup.”
Representative office scope
Vietnam’s Commercial Law framework treats the representative office of a foreign trader as a dependent unit established for market study and legally permitted trade-promotion activity. It is not a separate legal person and may not directly conduct profit-making activity. A useful office mandate covers stakeholder liaison, market intelligence, partner screening and coordination for the foreign parent.
The office can maintain premises, employ personnel and pay its operating expenses within the permitted framework. It may have a bank account for its operational funding, but that account is not a substitute for a trading account. Where the head signs on behalf of the parent, specific authority and the parent’s contracting position must be documented.
Responsibility stays connected to the foreign trader. Define which parent function supervises the head, approves expenses, retains records, reviews public communications and verifies the annual activity report. The office should be able to demonstrate why each material cost supports its licensed mandate. This governance link is especially important where regional sales teams visit Vietnam or use office personnel during negotiations.
The Government’s explanation of Decree 07/2016/ND-CP eligibility confirms that the applicant must be a qualifying foreign trader and that evidence of foreign business registration or an equivalent document forms part of the licence record. Sector-specific regimes can displace the general route.
When a company is required
Choose company formation where a local entity must be the seller, service provider, importer, lessee of operational premises, holder of commercial licences, owner of local inventory or employer of a delivery organisation. The exact permissions still depend on market access, investment facts and sector rules; incorporation alone does not authorise every regulated activity.
The company route also separates local governance and financial records from the foreign parent. Members or shareholders fund charter capital, appoint representatives and approve reserved matters. The company maintains accounting and tax records for its business and can accumulate local operating history.
Use the Vietnam company formation requirements as the enterprise baseline, then add the investment and operating approvals required by the actual revenue model. A company supplies a commercial platform , not a waiver of sector conditions.
Office eligibility and documents
Under the general Decree 07 framework, the foreign trader normally must be lawfully established or recognised in a qualifying jurisdiction, have operated for at least one year, and retain sufficient registration life where its home registration is time-limited. The proposed office scope must be compatible with Vietnam’s commitments, and specialist sectors may follow their own rules.
The dossier commonly proves the parent’s existence, appointment of the office head, the parent’s recent financial or tax-standing information, the head’s identity and lawful premises. Foreign-issued documents may require authentication and Vietnamese translation. Review the evidence function of each document; a historic incorporation certificate may not prove current operation or the appointing person’s authority.
Create a dated licence evidence register. It should match every eligibility condition to a source document, note authentication and translation status, identify any expiry date, and show who can answer a licensing-authority question. Confirm that the proposed premises are permissible and that the office name, parent details, head information and activity description agree across the application, appointment record and lease.
The general licence term is capped and cannot outlast the relevant foreign registration. Renewal, amendment and termination events need calendar control. The office also reports on its prior-year activities by the statutory annual deadline and must keep its actual work within the licensed scope.
Confirm the competent provincial filing authority immediately before submission. Vietnam’s 2025 decentralisation measures changed how state powers are allocated, while a 2026 draft proposed further changes to the Decree 07 regime; draft text should not be treated as operative law.
Responsibility and compliance map
A representative office is not a zero-administration alternative. The foreign parent remains responsible for the dependent unit, while the office needs controls for authorised spending, employees, personal income tax, immigration where relevant, records, annual reporting and licence changes. A company adds enterprise, accounting, tax, investment and corporate-governance duties because it conducts its own business.
| Operational fact | Representative office | Vietnam company | Control evidence |
|---|---|---|---|
| Customer seller | Foreign parent | Local company if contracted | Contract and invoice flow |
| Local funding | Parent-funded expenses | Capital and business cash | Bank and accounting record |
| Core filing | Office licence | Enterprise and applicable investment record | Current certificates |
| Recurring control | Scope and annual report | Tax, accounting and corporate compliance | Dated compliance calendar |
Plan the move from presence to trading
Set transition triggers when opening the office: first local customer contract, inventory ownership, local invoice requirement, regulated delivery, operational lease or a headcount whose work goes beyond liaison. Review the plan before a trigger occurs, not after the office has accepted commercial responsibility.
There is no assumption of automatic conversion. The group may need to establish a new company, obtain applicable approvals, open accounts and configure tax and invoicing, then separately transfer or replace employment, premises, equipment and service arrangements and complete office closure or amendment steps.
Run the transition as two controlled lanes. The company lane reaches legal and operational readiness for the first transaction. The office lane inventories contracts, staff, assets, files and pending obligations, then transfers or terminates each item on documented authority. Do not close the office before records and liabilities have owners, and do not let the company trade before its own approvals and systems are active.
Before the first Vietnam customer commitment, use a local-contract readiness check to match the promised seller, delivery team and invoicing entity to the structure that will exist at signing and performance.
Choose a Vietnam company or representative office
Choose the representative office when a qualifying foreign parent genuinely needs a non-revenue market presence and can keep customer contracting, invoicing and commercial delivery outside the office. Document its mandate, authority boundaries, expense funding and transition trigger before hiring.
Choose company formation when the Vietnam team must participate in the revenue transaction or hold local commercial rights. Design the company around market access and the first permitted transaction, not merely around obtaining an enterprise certificate.
Stop and obtain activity-specific advice if the proposed office role includes price commitment, customer acceptance, local delivery, inventory, regulated work or receipt of sales proceeds. Those facts can change the model before any document checklist does.
Frequently asked questions
Can a representative office invoice Vietnamese customers?
It is not a local revenue vehicle and cannot directly conduct profit-making activity. Customer contracting and invoicing must follow a lawful structure outside the office’s non-commercial scope.
Can a representative office hire staff?
It can employ personnel for permitted office activities, subject to employment, tax, immigration and other applicable requirements. Job duties must remain consistent with the licensed scope.
Is the representative office tax-free?
It is designed not to earn business income, but it can still have payroll, personal-income-tax, withholding, reporting and recordkeeping responsibilities. Confirm the actual payments and workforce.
How long is a representative office licence valid?
Under the general framework, it is normally valid for up to five years and cannot exceed the remaining term of a time-limited foreign business registration. Sector rules and current amendments must be checked.
Can an office be converted into a company?
Do not assume an automatic conversion. Company establishment and office amendment or closure are separate workstreams, with employment, premises, assets, accounts and approvals mapped between them.
