Not every investor needs a full legal entity on day one. For a company still testing the market, a representative office can be the sensible first step. Choosing the wrong form, however, means starting again when you want to trade.
Background
A foreign company has three common ways to be present in Vietnam. A representative office may conduct liaison, market research and trade promotion, but may not carry out directly profit-generating activity. A branch may trade within the scope of the parent business lines. A subsidiary is a separate legal entity, the most flexible option and also the one with the fullest compliance obligations.
The difference is not only about permitted activity but about tax. A representative office generates no revenue and therefore has no corporate income tax exposure, but it must still withhold and pay personal income tax for its staff and meet social insurance obligations. A branch is taxed on its own trading results.
Licences for representative offices and branches are issued for a fixed term and must be renewed before expiry. This is the deadline most often missed when the responsible staff member changes.
Common challenges
- A form that does not fit the business plan. Setting up a representative office and then discovering you need to sign contracts and issue invoices means converting the model, at additional cost and delay.
- Operating beyond the permitted scope. A representative office that negotiates, contracts or collects payment is acting outside its licence and risks penalties and revocation.
- Underestimating consular legalisation. Every parent company document requires legalisation and certified translation. The timeline depends on the foreign authority, not on you.
- Missing the renewal deadline. An expired licence means the office is operating without authorisation, which also affects the immigration status of foreign staff.
- Skipping annual activity reports. Both representative offices and branches must file periodic activity reports. Late or missing filings attract administrative penalties.
How TrustlineAX helps
- The right structure chosen deliberately. We compare representative office, branch and subsidiary against four criteria: permitted activity, tax exposure, setup and running cost, and how easily you can scale later.
- Your licence obtained. We prepare the document checklist for the parent company, guide legalisation, draft and file the Vietnamese application and manage the licensing authority through to issue.
- A functioning office, not just a certificate. Company seal, tax code registration, bank account, labour and social insurance registration for the chief representative and staff.
- Immigration handled for your people. Work permits and temporary residence cards for the chief representative and any foreign specialists assigned to Vietnam.
- Deadlines tracked for you. We monitor the licence term and annual reporting obligations and start renewal work before it becomes urgent.
How we work
- Structure advice. A short assessment of your plans in Vietnam and a recommendation on the appropriate form of presence.
- Parent company documents. Checklist and guidance on consular legalisation in your home jurisdiction.
- Licence application. Drafting, certified translation, filing and follow-up with the licensing authority.
- Initial registration. Seal, tax registration, bank account and labour registration once the licence is issued.
- Compliance handover. A calendar of reporting deadlines and the licence renewal date.
Frequently asked questions
Can a representative office sign contracts?
A representative office may not carry out directly profit-generating activity. The chief representative may sign only within a specific authorisation from the parent company and in accordance with the law. Regularly signing commercial contracts is a sign of operating beyond scope.
Does a representative office pay tax?
Because it generates no revenue it has no corporate income tax liability. It must nonetheless withhold, declare and pay personal income tax for its employees and meet social insurance obligations.
How long is the licence valid?
Licences for representative offices and branches are issued for a fixed term set by law and must be renewed before expiry. We recommend starting the renewal file well in advance to avoid any gap.
Can a representative office be converted into a company?
There is no direct conversion procedure. In practice investors incorporate a new entity in parallel and then close the representative office, which is why choosing the right form at the outset matters.