When a foreign company is ready to establish a presence in Vietnam, one of the first decisions is how to structure that presence. Three options are available under Vietnamese law: a Representative Office, a Branch Office, or a Subsidiary (foreign-invested company). Each carries different legal capabilities, tax obligations, registration requirements, and risk profiles. Choosing the wrong structure can mean costly restructuring later — or, worse, inadvertent legal violations.
Overview: Three Structures at a Glance
| Representative Office | Branch Office | Subsidiary (LLC/JSC) | |
|---|---|---|---|
| Legal personality | None (dependent unit) | None (dependent unit) | Separate legal entity |
| Can sign contracts | No | Yes (limited) | Yes |
| Can generate revenue | No | Yes (certain sectors) | Yes |
| Liability | Parent fully liable | Parent fully liable | Limited to capital invested |
| Can hire employees | Yes | Yes | Yes |
| Subject to CIT | No (if no revenue) | Yes | Yes |
| Can repatriate profits | N/A | Yes (after tax) | Yes (after tax and audit) |
| Incorporation timeline | 15–20 working days | 20–30 working days | 45–60 working days |
Representative Office
What It Can Do
A Representative Office (Văn phòng đại diện) is the lightest form of presence. It acts on behalf of the foreign parent company but cannot conduct direct business activities, sign commercial contracts, or earn revenue in Vietnam. Permitted activities include:
- Market research and business intelligence
- Liaison between the parent and Vietnamese partners
- Promotion and introduction of the parent’s goods and services
- Monitoring and supervising contracts entered into by the parent
Registration Requirements
A Representative Office is licensed by the Department of Industry and Trade (DOIT) in the province where it will be located. Required documents include the parent company’s incorporation certificate, financial statements, and a power of attorney for the Representative Office chief. The licence is valid for 5 years and is renewable.
Tax and Compliance
Since it generates no revenue, a Representative Office has no Corporate Income Tax or VAT obligations. However, it must still:
- Register for tax and obtain a tax code
- Withhold Personal Income Tax (PIT) on employee salaries
- Pay social, health, and unemployment insurance contributions for enrolled employees
- Pay the business license tax (VND 1,000,000 per year)
When to Choose a Representative Office
Best suited for foreign companies that want to explore the Vietnamese market, maintain a local contact point, or manage existing relationships — without committing to full business operations.
Branch Office
What It Can Do
A Branch Office (Chi nhánh) has more authority than a Representative Office — it can sign contracts and conduct business activities on behalf of the parent. However, it is only available to foreign companies in sectors where Vietnamese law permits branches: primarily banking, securities, insurance, legal services, and certain consulting sectors. Manufacturing and most service FDI must use a subsidiary.
Liability
The parent company is fully liable for all obligations of the branch. There is no capital shield — Vietnamese courts can look through to the parent for branch debts and liabilities.
Tax and Compliance
A branch that generates revenue in Vietnam is treated as a permanent establishment for tax purposes and is subject to CIT at the standard 20% rate on net profits. VAT, PIT withholding, and social insurance obligations also apply. Branches must prepare annual financial statements, though they are required to have their annual financial statements audited by an independent audit firm, in the same way as a subsidiary. This is mandatory under Vietnamese law for foreign-invested enterprises and their branches.
When to Choose a Branch
Branches are most commonly used by foreign banks, law firms, and consulting firms operating in sectors where the branch structure is legally permitted. They offer faster setup than a subsidiary but limited protection for the parent.
Subsidiary (Foreign-Invested Company)
What It Can Do
A subsidiary — registered as a Limited Liability Company (LLC) or Joint Stock Company (JSC) with 100% or partial foreign ownership — is a fully independent legal entity in Vietnam. It can engage in any permitted business activities listed in its Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC). Most FDI in Vietnam enters through this structure.
Two Common Forms
- Single-member LLC (1-member LLC): 100% owned by one foreign investor (individual or company). The simplest and most common structure for wholly foreign-owned FDI.
- Multi-member LLC or JSC: Two or more investors. Used for joint ventures with Vietnamese partners or multiple foreign shareholders.
Liability and Capital
The parent company’s liability is limited to its registered capital contribution. Vietnamese creditors and authorities generally cannot pursue the parent for subsidiary obligations beyond the committed capital — one of the key advantages over the branch structure.
Tax and Compliance Obligations
A subsidiary is subject to the full suite of Vietnam tax and compliance requirements: CIT, VAT, PIT withholding, social insurance, e-invoicing, transfer pricing documentation, and annual financial statement audits (for most FDI companies).
Profit Repatriation
Foreign investors can repatriate profits (dividends) once per year, after the subsidiary’s annual financial statements have been audited and all tax obligations have been settled. Profit remittance is made through the Direct Investment Capital Account (DICA) and must be reported to the State Bank of Vietnam.
When to Choose a Subsidiary
The subsidiary structure is right for the majority of FDI entering Vietnam — particularly for manufacturing, distribution, technology, professional services, and retail. It provides the most flexibility, the strongest liability protection, and the broadest range of permitted activities.
Decision Framework: Which Structure Is Right for You?
| Situation | Recommended Structure |
|---|---|
| Testing the market, no revenue generation needed | Representative Office |
| Foreign bank, law firm, or insurer entering Vietnam | Branch Office (sector-permitting) |
| Manufacturing, distribution, technology, or services FDI | Subsidiary (LLC) |
| Joint venture with a Vietnamese partner | Subsidiary (Multi-member LLC or JSC) |
| Expanding an existing Representative Office into full operations | Convert to Subsidiary |
Related reading: After choosing your structure, see our guides on Vietnam Work Permits for Foreign Employees and How to Open a Corporate Bank Account in Vietnam.
How TrustlineAX Can Help
TrustlineAX assists foreign investors with entity selection, incorporation, licensing, and ongoing compliance for all three structure types. Our incorporation team manages the full process — from IRC and ERC applications to bank account opening and operational setup — so your Vietnam entity is ready to do business from day one.