Branch vs Representative Office in Vietnam (2026) Compared

Foreign companies testing or entering the Vietnamese market usually choose between three vehicles: a representative office, a branch of the foreign trader, or a subsidiary, that is, a foreign-invested company established in Vietnam. The right choice depends mainly on one question: do you need to earn revenue in Vietnam? It also depends on how much compliance, cost and liability exposure the parent is prepared to carry.

This guide compares the three structures in 2026, explains the licensing authorities after the 2025 reforms, and sets out when each one makes sense.

The legal framework

Representative offices and branches of foreign traders are both governed by the Commercial Law 2005 and Decree No. 07/2016/ND-CP on representative offices and branches of foreign traders in Vietnam, which remains in force. A foreign-invested company is set up under the Law on Investment 2025 and the Enterprise Law 2020.

An important update concerns licensing authority:

• Representative office: licensed by the provincial Department of Industry and Trade where the office is located, or by the management board of an industrial park, export processing zone, economic zone or high-tech park if it is located in one.
• Branch of a foreign trader: under Decree No. 146/2025/ND-CP, effective from 1 July 2025, licensing was transferred from the Ministry of Industry and Trade to the provincial People's Committee. Older articles often confuse these two procedures.
• Foreign-invested company: an Investment Registration Certificate issued by the investment registration authority (the provincial Department of Finance or the industrial zone management board), followed by an Enterprise Registration Certificate.

Representative office

A representative office is a dependent unit of the foreign trader with no separate legal personality. Its functions are limited to:

• acting as a liaison office with partners and customers in Vietnam;
• market research;
• promoting investment and business opportunities for the parent and supervising the performance of the parent's contracts.

It may not carry out directly profit-generating activities: it cannot buy and sell goods, supply revenue-generating services or issue sales invoices. It cannot enter into or amend the parent's contracts unless the chief representative holds a lawful power of attorney for each occasion, and even then the contract remains the parent's.

Key features:

• the foreign trader must have operated for at least one year and hold a business registration document valid for at least one more year;
• the licensing authority decides within 7 working days of a complete file, or about 13 working days if a line ministry is consulted;
• the state fee is 3,000,000 VND for a new licence and 1,500,000 VND for renewal or amendment, under Circular No. 143/2016/TT-BTC;
• the licence lasts 5 years, not exceeding the remaining term of the parent's registration, and is renewable;
• there is no corporate income tax because there is no revenue, but the office must withhold personal income tax for staff and send an annual activity report before 30 January.

For the full procedure, see our guide to setting up a representative office in Vietnam.

Branch of a foreign trader

A branch is also a dependent unit of the foreign trader without separate legal personality, but unlike a representative office it can carry out business activities and generate revenue in Vietnam, within the scope of the parent's business. In practice:

• branches of foreign traders are permitted only in limited sectors, so many investors find the route unavailable for their business line;
• the parent company bears liability for the branch's obligations, because the branch is not a separate entity;
• compliance is heavier than for a representative office, since the branch trades, issues invoices and has corresponding tax obligations;
• since 1 July 2025 the licence is issued by the provincial People's Committee under Decree No. 146/2025/ND-CP.

Because of these restrictions, branches of foreign traders are far less common than representative offices or subsidiaries.

Subsidiary (foreign-invested company)

A foreign-invested company is a separate legal entity incorporated in Vietnam. It can trade, sign contracts in its own name, issue invoices and earn revenue, and the parent's liability is limited to its capital contribution. Key points from the Law on Investment 2025 and the Enterprise Law 2020:

• business lines are divided into lines open to foreign investors, lines with conditional market access (for example ownership caps, investment form or partner requirements) and lines not yet open. The restricted list is in Decree No. 96/2026/ND-CP guiding the Law on Investment No. 143/2025/QH15;
• the Investment Registration Certificate takes about 15 working days from a valid file, and the Enterprise Registration Certificate usually 3 to 5 working days after that;
• there is no general minimum capital, but capital must be appropriate to the project, and some conditional sectors have legal capital requirements;
• charter capital must be contributed in full within 90 days of the Enterprise Registration Certificate;
• the company must open a direct investment capital account, through which capital contributions and profit remittances flow, and file periodic investment reports.

In practice, the whole process usually takes 1 to 3 months including post-incorporation steps, depending on the sector and locality. See our guide to the procedure to establish a foreign-invested company.

Side-by-side comparison

Criteria	Representative office	Branch of a foreign trader	Subsidiary (foreign-invested company)
Can earn revenue in Vietnam	No	Yes, in limited sectors	Yes
Legal status	Dependent unit of the parent	Dependent unit of the parent	Separate legal entity
Liability	Parent responsible	Parent responsible	Limited to capital contributed
Signs commercial contracts	No, except under a power of attorney for each occasion, and the contract remains the parent's	Yes, within the parent's scope	Yes, in its own name
Licensing authority	Provincial Department of Industry and Trade or zone management board	Provincial People's Committee (from 1 July 2025)	Department of Finance or zone management board, then business registration
Corporate income tax	No (no revenue), but personal income tax for staff	Tax obligations arise on its business activities	Yes
Setup and compliance burden	Lightest	Heavy	Moderate to heavy
Best suited to	Market research, liaison, promotion	Certain regulated sectors where a branch is permitted	Actually doing business in Vietnam

Which structure should you choose?

A simple way to decide:

• Choose a representative office if you want an early, low-cost presence to research the market, meet partners and support the parent's sales from abroad, without invoicing in Vietnam.
• Consider a branch only if your sector is one in which branches of foreign traders are allowed and you accept that the parent will carry the branch's liabilities directly.
• Choose a subsidiary if you intend to sell goods or services, issue invoices and earn revenue in Vietnam. For most foreign companies that genuinely want to trade here, this is the practical route.

Many investors start with a representative office and later set up a subsidiary once the market is proven. The subsidiary is a new entity, and the office can then be closed, if no longer needed, by filing a termination notice and settling its tax, employee and creditor obligations. Also note that the head of a representative office may not at the same time be the head of a branch of the same foreign trader, under Article 33(6) of Decree No. 07/2016/ND-CP.

Practical points for foreign companies

• Whichever vehicle you choose, documents issued abroad, such as the parent's business registration and financial statements, must be consularly legalised and translated into Vietnamese. Start this early, as it usually takes the longest.
• Foreign managers and staff need a suitable visa or temporary residence card and a work permit or a confirmation of work permit exemption.
• Protect your brand in Vietnam before launching, whichever structure you use, by filing a trademark application.

Frequently asked questions

Can a representative office sign sales contracts?

No. A representative office cannot carry out revenue-generating activities or issue invoices. It may sign or amend the parent's contracts only if the chief representative holds a lawful power of attorney for each occasion, and the contract then remains the foreign trader's contract.

Is a branch or a subsidiary better for doing business?

For most sectors a subsidiary is more flexible: it is a separate legal entity, it can trade in its own name and the parent's liability is limited to its capital. Branches of foreign traders are permitted only in limited sectors and the parent bears their liabilities directly.

Which structure is cheapest to set up?

The representative office. The state fee for a new licence is 3,000,000 VND and the authority decides within 7 working days of a complete file, but the office cannot earn revenue in Vietnam.

Who licenses a branch of a foreign trader after the 2025 reforms?

Since 1 July 2025, under Decree No. 146/2025/ND-CP, branches of foreign traders are licensed by the provincial People's Committee instead of the Ministry of Industry and Trade. Representative offices are still licensed by the provincial Department of Industry and Trade or the relevant zone management board.

Does a representative office pay corporate income tax?

No, because it has no revenue. It must still register for a tax code, withhold and pay personal income tax for its staff, and send an annual activity report before 30 January each year.

Can a newly incorporated foreign company open a representative office?

No. The foreign trader must have operated for at least one year since its establishment or registration. A new company that wants to enter Vietnam immediately can consider setting up a foreign-invested company instead.

How LTV Law helps

LTV Law advises on the right market-entry vehicle for your sector and goals, checks market-access conditions, and handles licensing for representative offices and foreign-invested companies, including legalisation of the parent's documents. See our representative office service and foreign investment service.

We also handle the follow-on steps, from work permits for foreign managers to annual reporting. Contact our team to discuss which structure fits your plans.

This article is for general information only and does not constitute legal advice.