When an individual investor — whether a founder, a capital-contributing member, or a shareholder — decides to divest and sell their capital contribution or shares, the first question accountants and the investor need to answer is: is the proceeds subject to personal income tax (PIT), how much, and who is responsible for declaring and paying it? From 1 July 2026, this is governed by Personal Income Tax Law No. 109/2025/QH15, detailed in Decree No. 253/2026/ND-CP and Circular No. 89/2026/TT-BTC. This article, compiled by Trustlineax, answers those questions for the case where the investor is an individual.
1. What counts as income from a capital transfer?
Under Article 10 of Decree No. 253/2026/ND-CP (detailing clause 4, Article 3 of the Personal Income Tax Law), income from a capital transfer includes:
- Income from transferring part or all of a capital contribution in a limited liability company, partnership, business cooperation contract, cooperative, cooperative union, people’s credit fund, or other organization.
- Income from transferring securities (shares, rights to purchase shares, bonds, treasury bills, fund certificates, etc.).
- Income arising when contributing capital in the form of a capital contribution or securities to establish or increase the charter capital of an enterprise.
- Income from a capital transfer in other forms, including the sale of an enterprise or the transfer of capital-contribution rights.
- Separately, where the sale of an entire private enterprise or a single-member limited liability company owned by one individual, structured as a capital transfer, is tied to real estate, it is treated as income from a real estate transfer (taxed under separate rules, not the capital-transfer rules).
Note that the law separates two groups with two different tax-calculation methods: transfer of a capital contribution (in an LLC, partnership, etc.) and transfer of securities (shares, bonds, etc.).
2. Tax rates and how tax is calculated
2.1. Transfer of a capital contribution (not securities)
Under Article 13 of Personal Income Tax Law No. 109/2025/QH15 and Article 53 of Decree No. 253/2026/ND-CP:
- Resident individuals: PIT = taxable income × 20%, calculated per transaction. Taxable income = transfer price − purchase price of the transferred capital − related reasonable expenses.
- Where the purchase price and related expenses cannot be determined: PIT = transfer price × 2%.
- Non-resident individuals: the same 20% rate on taxable income (or 2% on the transfer price if the purchase price and expenses cannot be determined) applies per transaction, regardless of whether the transfer takes place in Vietnam or overseas.
2.2. Transfer of securities
PIT = transfer price × 0.1% per transaction — applied uniformly to both resident and non-resident individuals, regardless of whether the transfer results in a gain or a loss.
2.3. Determining the transfer price, purchase price, and reasonable expenses
Under Article 53 of Decree No. 253/2026/ND-CP:
- The transfer price is the amount the individual receives under the capital transfer contract. For installment or deferred-payment contracts, the transfer price excludes the installment/deferred interest portion (which is instead taxed as income from capital investment). Where the contract does not state a payment price, or the tax authority has grounds to determine the stated price does not reflect market price, the tax authority may impose the transfer price.
- The purchase price of the transferred capital is the total value of the original capital contribution plus any subsequent contributions or purchases, determined from accounting books, invoices and documents (for self-contributed capital) or from the contract and payment documents (for capital acquired from another party).
- Deductible reasonable expenses include: legal procedure costs for the transfer, fees/charges paid to the state budget, and other expenses with lawful supporting documents. Expenses incurred overseas must be certified by a notary or an independent auditor in the country concerned and translated into Vietnamese.
2.4. Capital contributed, then later withdrawn or the company dissolved
An individual who contributes capital in the form of a capital contribution is not required to pay tax at the time of contribution. Tax only becomes payable when the capital is later transferred, withdrawn, or the enterprise is dissolved — PIT is then due on the corresponding income not previously taxed (together with tax on income from the capital transfer or from capital investment, depending on the withdrawal/dissolution scenario).
3. When is taxable income determined?
The point in time for determining taxable income is when the transaction is completed under the law, or when the procedure to change the list of capital-contributing members or shareholders is carried out at the enterprise.
4. Who declares and pays the tax: the investor, or the company on their behalf?
This is a particularly important point for investors looking to sell capital, because the declaration and payment procedure differs depending on residency status and the type of asset transferred (under Circular No. 89/2026/TT-BTC):
4.1. Transfer of a capital contribution (not securities)
- Resident individuals may declare tax directly per transaction with the tax authority managing the organization in which they hold the capital contribution (if the transfer takes place at an organization in Vietnam), or the tax authority managing their place of residence (if the transfer takes place at an organization overseas). Alternatively, the organization itself may declare and pay the tax on the individual’s behalf, either per transaction or monthly/quarterly in the same period as VAT filings.
- Non-resident individuals: the organization or individual receiving the transferred capital is responsible for withholding the PIT and declaring it monthly or quarterly in the same period as VAT filings. If a non-resident individual transfers capital to an organization or individual overseas (i.e. the buyer is not subject to withholding obligations in Vietnam), the non-resident individual must declare the tax directly; if they fail to do so, the enterprise carrying out the procedure to change the list of capital-contributing members must declare and pay the tax on their behalf.
4.2. Transfer of securities
- The organization involved (a securities company, the commercial bank where the depository account is held, a fund management company, or the issuer/organization authorized to manage the shareholder list) typically withholds and pays the tax on the investor’s behalf and declares it monthly/quarterly in the same period as VAT filings.
- Where the securities transaction does not fall under any of the above withholding scenarios, the individual must declare the tax directly, per transaction.
4.3. A mandatory condition before the business registration certificate can be updated
This is a point investors need to pay particular attention to: under the regulations, an individual must fulfil their tax obligation on the transferred capital before the procedure to change the list of capital-contributing members or shareholders can be carried out at the enterprise. If the enterprise proceeds with changing the member/shareholder name while the transferring individual has not yet fulfilled their tax obligation, the enterprise where the individual transferred capital must declare and pay the tax on that individual’s behalf. In other words, a company cannot simply “wash its hands” of a former shareholder’s or member’s tax obligation if it wants to complete the business registration change.
5. What if the investor is an organization (a foreign company)?
If the seller is an organization or enterprise (not an individual) — for example, an investment fund or an overseas parent company — the income from the capital transfer is not subject to PIT but to corporate income tax (CIT) under separate CIT rules (the applicable tax rate and how taxable income is determined are outside the scope of this article). Procedurally, Circular No. 89/2026/TT-BTC provides that for capital transfers by a foreign enterprise, the tax authority directly managing the Vietnamese organization in which the foreign enterprise has invested capital is the office that receives and processes the tax declaration dossier; the declaration is made per transaction, in accordance with corporate income tax law.
6. Practical points for investors and businesses
- Keep the transfer contract, documentation of the original (or acquired) purchase price, and supporting documents for reasonable expenses — without these, tax will be calculated at the flat 2% rate on the transfer price (often disadvantageous where the actual gain is small, but advantageous where the actual gain is large).
- Foreign investors (non-resident individuals) who do not yet have a tax code should register early so that the receiving organization can withhold and declare tax on time.
- Companies should verify that departing shareholders or members have fulfilled their tax obligations before processing a business registration change, to avoid inadvertently inheriting the obligation to declare and pay tax on their behalf if the transferring party has not yet paid.
- For cross-border transactions (where the buyer or seller is overseas), it is essential to determine clearly who bears the withholding obligation, to avoid missing a tax obligation and facing a retrospective tax assessment or penalties later.
- Where the investor is an organization, this is a corporate income tax matter, not a personal income tax matter — apply the correct legal instruments and the correct tax authority accordingly.
This article was compiled by Trustlineax based on Personal Income Tax Law No. 109/2025/QH15 (Articles 13, 23), Decree No. 253/2026/ND-CP (Articles 10, 53), and Circular No. 89/2026/TT-BTC. It focuses on the case where the investor is an individual; where the investor is an organization, corporate income tax law applies and is outside the detailed scope of this article. The content is for reference only and does not replace the original legal text or professional tax advice for a specific transaction.