English
Contact Us
Home What is Vantu Talent in Vietnam The Vantu Way Testimonials & FAQ Insights Contact Us
English
Back to Insights

Hiring in Vietnam without a company: four legal routes

Published · 9 min read

Woman reviewing documents and a laptop screen at an office desk
Photo: Vitaly Gariev, Unsplash

A European company can have people working in Vietnam through four routes: a subsidiary, a representative office, a licensed local partner or an independent contractor. Each has a legitimate use. The most tempting, the freelancer, is also the one most easily reclassified as an employee when the person works under daily instructions.

The four routes in one table

Sources consulted on 1 October 2026. Cost figures are fees published by advisory firms, not fixed prices. Where no source exists, the table says PENDIENTE (pending).

Route Time to start Setup and annual running cost Tax obligations in Vietnam Risk of employment reclassification Who it suits
1. Subsidiary 1 to 4 months, depending on the source Government fees of about USD 300 to 500 and advisory fees of USD 1,500 to 3,000. Running cost of about USD 6,000 to 10,000 a year for accounting, audit and registered address, before salaries Corporate income tax (standard rate 20%), VAT, personal income tax withholding for staff and a mandatory annual audit Low: the subsidiary is the employer Teams that will last years and justify a fixed structure
2. Representative office 6 to 8 weeks Licence fee of VND 3,000,000. Running cost: PENDIENTE (quote from a local advisor) No corporate income tax, because it cannot generate profit. It files staff personal income tax, holds a tax code and reports each year before 30 January Medium: it can hire normally, but producing work for the parent goes beyond its purpose Commercial liaison, market research and local presence, not production teams
3. Licensed local partner PENDIENTE (depends on whether the partner already operates) PENDIENTE (fee agreed with the partner, no public source) The partner invoices. VAT treatment: PENDIENTE Low if the partner is the real employer and directs the work. Medium or high if the European company gives daily orders Small teams and trial phases before opening a subsidiary
4. Independent contractor Days No setup and no structure to maintain. The person pays their own taxes None for the European company as long as it does not create a permanent establishment High with set hours, daily orders and fixed pay. Low with deliverables and several clients Projects with a defined deliverable and people who work for others
Grid of four routes to employ in Vietnam and three rows: legal employer, who directs and money. Subsidiary: the Vietnamese subsidiary is the employer, the European parent directs through the subsidiary's managers. Representative office: the parent is the employer through its office and directs, transferring funds while the office does not invoice. Licensed local partner: the partner is the employer and directs under the services contract (under labour outsourcing, the European company, 20 jobs in Appendix II, 12 months); the company pays the partner a fee. Independent contractor: no employer, the person directs (reclassification risk if the company directs daily) and the company pays their invoices.

Route 1, Subsidiary - Legal employer: the Vietnamese subsidiary. - Who directs: the European parent, through the subsidiary's managers. - Money: the parent provides capital or pays for services. The subsidiary pays salaries, contributions and taxes.

Route 2, Representative office - Legal employer: the parent, through its office (PENDIENTE: who signs local staff contracts under Decree 07/2016/ND-CP). - Who directs: the parent. - Money: the parent transfers funds for the office's expenses. The office does not invoice.

Route 3, Licensed local partner - Legal employer: the local partner. - Who directs: the partner under a services contract. The European company under labour outsourcing (20 jobs in Appendix II, 12 months). - Money: the European company pays a fee or invoice to the partner. The partner pays salaries and contributions.

Route 4, Independent contractor - Legal employer: none. The person is their own contractor. - Who directs: the person. If the company directs daily, there is a reclassification risk. - Money: the European company pays the person's invoices. The person declares their own taxes.

What a permanent establishment is and how one appears by accident

A permanent establishment is a presence of the foreign company in Vietnam that lets Vietnam tax the profits attributable to that presence. Article 5 of the Spain-Vietnam double taxation treaty defines it. The treaty was signed in Ha Noi on 7 March 2005 and published in the Spanish Official Gazette (BOE no. 8) on 10 January 2006. Other European countries have their own treaties with Vietnam, so check the one that applies to your home country.

The treaty gives three triggers that matter here:

  • A fixed place of business through which the company carries on all or part of its activity.
  • Services provided through employees, if the activity lasts more than six months within any twelve-month period (art. 5.3.b).
  • A person acting in Vietnam on behalf of the company who habitually exercises authority to conclude contracts in its name (art. 5.5).

A common example shows how it happens. Three developers work seven months for a Madrid startup and receive tasks from its CTO every morning. The startup has opened nothing in Vietnam, but it may have provided services through people for more than six months. If one of them also agrees prices with customers, the third trigger appears.

With a permanent establishment, Vietnam can tax those profits under corporate income tax, standard rate 20% under Law 67/2025/QH15, and the company must register and file returns. The treaty text refers to employees: with contractors the analysis changes (PENDIENTE: Vietnamese domestic concept of permanent establishment and any effect of the multilateral instrument on article 5).

Employment reclassification: what it is and what triggers it

Reclassification happens when an authority treats as an employment contract a contract the company called a services contract. Vietnam's Labor Code (Law 45/2019/QH14, in force since 1 January 2021) covers it in article 13.1. Any agreement, whatever its name, that contains paid work, a salary and management, direction and supervision by one party over the other counts as a labour contract.

The indicators that match those three elements are concrete:

  • A fixed monthly payment instead of payment per deliverable.
  • Working hours set by the company.
  • Tasks assigned and reviewed daily by a company manager.
  • Sanctions or internal rules for breaching work rules.

A law firm with offices in Vietnam names imposed working hours and disciplinary measures as reasons for an authority to treat a contract as employment, even if it is called a services contract (Tilleke & Gibbins, 2024).

The consequences are concrete. The person is entitled to employment benefits and mandatory insurance for the whole period. The authority may see deliberate circumvention and impose penalties: Decree 12/2022/ND-CP of 17 January 2022 sets, in article 9, fines for labour contract violations that rise with the number of workers affected. And a European company with no entity in Vietnam cannot comply as an employer. The same facts, daily direction from the parent, also feed the permanent establishment analysis.

The licensed partner route

The local partner is a Vietnamese company that employs the people. There are two distinct models, and the difference is who directs the work.

Which licence is needed

If the partner lends workers to the European company so that it directs them, that is labour outsourcing (cho thuê lại lao động). Articles 52 to 56 of the Labor Code regulate it and Decree 145/2020/ND-CP of 14 December 2020 sets the conditions. It requires a licence, a deposit of VND 2 billion and a legal representative with three years of experience in the field (art. 21 of the decree).

Outsourcing has two limits. Only the 20 jobs in Appendix II of the decree are allowed, and the arrangement lasts 12 months at most (art. 53.1 of the Code). On that list, the only programming job is programming of production machine systems. Software development does not appear (PENDIENTE: confirm against the official Appendix II and with a Vietnamese lawyer).

The second model is a services contract with a dedicated team. The partner employs and directs, and the European company defines deliverables and pays for the service. It does not need the outsourcing licence while the partner genuinely manages the work. If the European company directs daily, the contract starts to look like unauthorised outsourcing (PENDIENTE: the Vietnamese authorities' test for telling the two apart).

Who is who

The legal employer is the partner: it signs the contracts, pays salaries and contributions and withholds personal income tax. Who directs the day-to-day work depends on the model. In outsourcing, the worker acts under the management of the receiving company (art. 52.1). In a services contract, under the partner's.

In outsourcing, a written contract between the two parties sets tasks, place, working conditions and workplace safety (arts. 54 and 55), and the user company has its own obligations (art. 56). The partner answers for payroll and insurance. The European company answers for what it directs, for the 12-month limit and for the tax risks if it creates a permanent establishment.

What no route solves

None of the four routes manages the relationship with the person: selecting, evaluating, retaining and resolving conflicts. Someone has to do that work, and the legal structure does not.

This article does not cover Spanish-side taxation or social security, work permits for foreign nationals, intellectual property assignment or data protection.

Frequently asked questions

Can I hire a developer in Vietnam as a freelancer?

Yes, if they are genuinely independent: they work with their own means, deliver defined results and can have other clients. If they follow your schedule and daily orders and receive a fixed monthly amount, article 13.1 of the Labor Code allows them to be treated as an employee.

How long and how much does it take to open a subsidiary?

Between 1 and 4 months depending on the source. Government fees are around USD 300 to 500, plus USD 1,500 to 3,000 in advisory fees. After that, the accounts must be audited every year. The Law on Investment 61/2020/QH14 (art. 22) requires an investment project and its certificate before the company is set up.

Is a representative office suitable for having programmers?

It is designed for liaison, market research and promotion. Decree 07/2016/ND-CP of 25 January 2016 bars it from generating profit directly. A team that produces work for the parent raises questions about that limit, so take it to a lawyer.

Is there a safe period before a permanent establishment arises?

No. The treaty sets six months for services provided through employees, but a fixed place of business or a person who closes contracts in the company's name can create one without waiting that long.

Legal notice. This information is general and is not legal advice. Vietnamese rules change and each case depends on its facts: review it with a lawyer who has a presence in Vietnam before deciding.

Closing

Write to Vantu with the profile you need, the number of people and the expected duration. Vantu will explain which of the four routes fits your case best and what your own lawyer should review before you sign the contract.

Sources

All sources consulted on 1 October 2026.