Vietnam Real Estate Tax Guide for Foreign Investors: Real Estate Investment and Income Taxation

Vietnam’s real estate market continues to attract strong interest from foreign investors due to rapid urbanization and growing demand for housing and infrastructure. However, accessing this market requires a thorough understanding of the legal framework governing foreign ownership of real estate and the tax obligations arising from investment activities.

See also: Vietnam Port Tax: Current Policies and Regulatory Requirements.

Ownership and Use Rights of Real Estate by Foreign Investors

According to the current provisions of the 2024 Land Law and the 2023 Housing Law:

Foreign organizations and individuals are not entitled to own land in Vietnam, as land is under the ownership of the entire people and uniformly managed by the State on behalf of the people (Article 4, Land Law 2024). However, foreign investors may access land through the following mechanisms:

• Leasing land directly from the State; or
• Cooperating with domestic economic organizations to implement investment projects.

Foreign individuals are permitted to own residential housing (including condominiums and detached houses) within commercial housing development projects, provided that:

• They legally reside in Vietnam; and
• The maximum duration of ownership is 50 years, which may be extended in accordance with the law (Articles 18, 19, and 20 of the Housing Law 2023).

Investment Structure Options and Tax Implications

Foreign investors may choose from various legal structures to participate in the real estate market in Vietnam, including:

• Establishing a foreign-invested enterprise to directly implement a real estate project;
• Contributing capital or acquiring shares in a Vietnamese enterprise that has been granted land use rights;
• Contributing capital in cash or assets to ongoing real estate development projects;
• Investing indirectly through the purchase of securities, bonds, or real estate investment funds.

Income Tax on Rental Income from Real Estate

Foreign individuals and organizations earning income from leasing real estate in Vietnam (e.g., residential properties, commercial spaces, office buildings) are subject to tax obligations in accordance with Vietnamese law. These include personal income tax (PIT), value-added tax (VAT), and associated compliance procedures.

Applicable Tax Rates

According to Circular No. 40/2021/TT-BTC, the following taxes apply to rental income:

• Value-Added Tax (VAT): 5% of taxable revenue;
• Personal Income Tax (PIT): 5% of taxable revenue;
• Business License Fee: Applicable if the total annual rental income exceeds VND 100 million.

Determination of Taxable Revenue

• If the lease contract specifies that the rental price includes taxes, then the taxable revenue is the full amount stated in the contract.
• If the contract states the rental price exclusive of taxes, then taxable revenue is calculated by dividing the rent amount by 0.9.

Important Notes

• If total annual rental income does not exceed VND 100 million, VAT and PIT are not payable.
• If the lessee pays rent in advance for multiple years, the taxable revenue must be allocated proportionally to each calendar year.

See also: Tax Filing Guide for FDI Enterprises in Vietnam.

Deductible Expenses (for Organizations)

In cases where a foreign entity conducts real estate leasing activities through a legal entity established in Vietnam (e.g., a foreign-invested enterprise), operational expenses may be deductible when calculating corporate income tax (CIT), in accordance with:

• Article 4 of Circular No. 96/2015/TT-BTC (guidelines on deductible expenses for determining CIT-liable income). Expenses may be considered deductible if they meet the following conditions:

1. Actually incurred and related to business operations;

2. Supported by lawful invoices and documents as prescribed by law.

• For any expense equal to or exceeding VND 20 million (including VAT):

1. Non-cash payment is required (e.g., via bank transfer, cheque, card, etc.);

2. If the payment has not yet been made at the time of expense recognition, it may still be deductible. However, if the payment is later made in cash, the expense must be adjusted and excluded from deductible expenses.

Special Provisions:

• No retrospective application to invoices already paid in cash prior to the effective date of Circular No. 78.
• For invoices issued via cash register:

1. If the value is VND 20 million or more: non-cash payment is required;

2. If under VND 20 million: cash payment is acceptable and still deductible.

Tax Filing Obligations and Payment Schedule

According to Clause 3, Article 14 of Circular No. 40/2021/TT-BTC, individuals leasing real estate may choose one of two methods for tax declaration:

1. Per-Contract Tax Declaration: Deadline for tax filing is no later than the 10th day from the start date of the rental period as per the payment schedule. (As guided by the National Public Service Portal)

2. Annual Tax Declaration (per calendar year): Deadline for filing is no later than the last day of January of the following calendar year.

Required Tax Filing Documents:

• Tax declaration form for property leasing activities (Form No. 01/TTS);
• Detailed appendix of property lease contracts (Form No. 01-1/BK-TTS);
• Copy of the lease contract and any annexes (required if it’s the first declaration for that lease);
• Power of attorney (if applicable).

Tax Payment Methods:

• Taxes may be paid directly at the State Treasury, authorized commercial banks, or via the electronic tax payment portal.

Withholding Agent and Tax Obligations of the Lessee

Pursuant to Article 8 of Circular No. 40/2021/TT-BTC, organizations or individuals are required to declare and pay tax on behalf of individuals in the following circumstances:

a) When leasing property from an individual and the lease contract specifies that the lessee (organization) is responsible for paying taxes;

b) When an organization engages in business cooperation with an individual;

c) When an organization pays amounts such as bonuses, promotional rewards, or compensation to a household business under a fixed tax regime;

d) When a Vietnamese organization pays income on behalf of a foreign digital platform provider that has no permanent establishment in Vietnam;

đ) When an e-commerce platform declares and pays taxes on behalf of individuals, in accordance with the roadmap stipulated by the tax authorities;

e) When the organization or individual declares and pays tax on behalf of the taxpayer under a legally valid power of attorney.

Tax Declaration and Payment Methods:

Tax may be declared and paid monthly, quarterly, per occurrence, or annually, depending on the specific taxpayer category and applicable tax administration regulations.

Individuals with Multiple Small Income Sources (< VND 100 Million per Year per Source):

If the total annual income exceeds VND 100 million, the individual may authorize the income-paying organization to declare and pay tax on their behalf.

Capital Gains Tax on Real Estate Transfers

When conducting real estate transfers in Vietnam, foreign investors—whether as individuals or through legal entities—must understand the applicable capital gains tax (CGT) regulations to ensure compliance and optimize tax efficiency during the investment process.

Definition and Calculation Method for Capital Gains Tax

In Vietnam, there is no standalone tax specifically called “capital gains tax”; however, profits earned from selling real estate are taxed under the following structure:

• For individuals (whether resident or non-resident):
  Income from real estate transfers is subject to a 2% tax on the total transfer price, pursuant to Article 23 of the Law on Personal Income Tax No. 04/2007/QH12.
• For organizations (including foreign legal entities):
  Profits from real estate transfers are subject to 20% corporate income tax (CIT) on taxable income, as stipulated in Article 11 of Consolidated Document No. 10/VBHN-BTC (2024).

Exemptions and Allowable Deductions

According to Article 4 of the Law on Personal Income Tax No. 04/2007/QH12, individuals may be exempt from personal income tax on real estate transfers in the following specific cases:

• Between husband and wife;
• Between biological parents and biological children;
• Between adoptive parents and adopted children;
• Between parents-in-law and daughter-in-law or son-in-law;
• Between maternal/paternal grandparents and grandchildren;
• Between siblings (i.e., brothers and sisters).

To be eligible for the tax exemption, sufficient documentation must be provided, including:

• Proof of real estate ownership and current legal status;
• Household registration documents;
• Notarized transfer agreements or contracts.

Recent Legal Developments

In recent years, Vietnam’s legal framework on taxation and land use has undergone significant changes, directly affecting foreign investors:

• The 2024 Land Law (effective from 01 January 2025) introduces important clarifications regarding:

1. The scope of home ownership rights for foreign individuals;

2. Investment conditions through land lease mechanisms; and

3. Transfer procedures for real estate projects.

• The amended Personal Income Tax Law, currently under review by the National Assembly, proposes changes in the tax calculation methods applicable to real estate transactions.
• Enhanced oversight and taxation of indirect capital transfers, particularly in M&A transactions involving companies that own real estate assets in Vietnam.

Timely updates on these legal changes and proper fulfillment of tax obligations are critical to maintaining compliance, avoiding tax disputes or penalties, and ensuring the legal validity of investment operations in Vietnam.

Professional Advisory Recommendation

Given the complexity and ever-evolving nature of Vietnam’s tax and legal systems—especially for foreign investors in real estate—compliance requires in-depth knowledge of both domestic laws and their practical implementation.

We strongly recommend that investors seek professional legal and tax advisory services to develop appropriate investment strategies, ensure regulatory compliance, and optimize tax obligations.

Harley Miller Law Firm is ready to provide comprehensive legal and investment advisory services, including:

• Structuring compliant investment models for foreign investors;
• Assessing tax risks and proposing optimization strategies;
• Assisting with real estate transaction documentation, tax filing, and payment;
• Representing clients in dealings with tax authorities and relevant government agencies.

Please contact our team of lawyers and tax consultants for tailored guidance suited to your specific investment goals and legal circumstances.

See also: Compulsory Taxes for Household Businesses – A Practical Guide

Harley Miller Law Firm

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