A Guide to Financial Obligations for Overseas Vietnamese Selling Property

The financial obligations for overseas Vietnamese selling property constitute an inseparable component of the ownership and land use rights transfer process. Correctly identifying and executing these duties requires a deep understanding of current laws on taxes and fees. This analysis by Long Phan Consulting Company details the specific fees, charges, and taxes that overseas Vietnamese clients must fulfill when conducting real-t estate transactions in Vietnam.

Real Estate Brokerage Fees

A real estate brokerage fee is a cost incurred when a client uses an intermediary service to find a buyer and facilitate a transaction. This fee is based on a civil agreement between the seller and the broker, recorded in a brokerage service contract. The legal framework for this activity is clarified by current legislation, particularly the Law on Real Estate Business 2023.

Article 63 of the Law on Real Estate Business 2023 governs brokerage remuneration and commissions:

• Individual real estate brokers receive remuneration and commissions from a real estate exchange or brokerage service enterprise.
• The amount of remuneration and commission is determined by agreement between the individual broker and the business entity. The brokerage remuneration is not dependent on the transaction price.

Payment of the brokerage fee typically occurs after the seller receives a deposit from the buyer or upon completion of the transfer procedures at a notary office, as stipulated in the contract.

Personal Income Tax (PIT)

Personal income tax is one of the mandatory financial obligations for overseas Vietnamese when selling property. This tax must be paid to the state budget upon generating income from a real estate transfer. The declaration and payment of PIT are handled at the competent tax authority where the property is located.

PIT Rates and Calculation:

• Tax Rate: Pursuant to Article 22 of Decree 65/2013/ND-CP (amended by Clause 12, Article 2 of Decree 12/2015/ND-CP) and Article 29 of the Law on Personal Income Tax 2007, the applicable tax rate for both resident and non-resident individuals (including overseas Vietnamese) is 2% of the transfer price.
• Taxable Price: According to Article 18 of Decree 65/2013/ND-CP, the taxable price is the price stated in the transfer contract at the time of transfer.
  • If the contract price is lower than the price set by the provincial-level People’s Committee, the tax will be calculated based on the People’s Committee’s price list.
  • For a house attached to land, the house’s value is determined by the registration fee calculation price issued by the provincial People’s Committee.
• Tax Point: The tax is calculated from the moment the transfer contract becomes legally effective. If the contract stipulates that the buyer pays the tax, the tax point is the time of registration of ownership.

The law also provides for PIT exemptions in certain cases, under Article 4 of the Law on Personal Income Tax 2007 (supplemented by Clause 3, Article 2 of the Law Amending Tax Laws 2014):

• Real estate transfers between: spouses; parents and children; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grandchildren; and siblings.
• Transfer of a house, residential land rights, and attached assets by an individual who owns only that single house and residential land in Vietnam.
• Income from the sale of land allocated by the State.

>>> See more at: A Guide to Real Estate Taxes in Vietnam

Registration Fee

The registration fee is an amount the property recipient must pay when registering ownership and use rights with a competent state agency. By convention, the buyer is obligated to pay this fee. However, the transfer contract can stipulate that the seller (the overseas Vietnamese) is responsible for this payment, making it a critical component of the financial obligations for overseas Vietnamese to calculate.

Fee Rate and Formula:

• Rate: Based on Clause 1, Article 8 of Decree 10/2022/NĐ-CP, the registration fee rate for houses and land is 0.5%.
• Formula: As per Article 6 of Decree 10/2022/NĐ-CP, the formula is: Registration Fee Payable = Price for Registration Fee Calculation x 0.5%

Clause 1, Article 7 of Decree 10/2022/NĐ-CP details the price for registration fee calculation:

• The price for land is the price in the Land Price List issued by the provincial or municipal People’s Committee at the time of declaration.
• The price for a house is the price issued by the provincial or municipal People’s Committee according to construction law.

Important Note: If the transfer price in the contract is higher than the price regulated by the People’s Committee, the registration fee will be calculated based on the contract price.

Special Cases:

• For property purchased via auction, the price for the registration fee calculation is the actual winning bid price.
• For apartments in condominiums or multi-story buildings, the price includes the allocated land value, determined by coefficients in Decree 53/2011/NĐ-CP.

Accurate determination of the registration fee price helps all parties budget correctly and fulfill financial duties efficiently.

Notarization and Authentication Fees

Notarization and authentication fees are paid to a notarial practice organization (public Notary Office or private Notary Office) to notarize the contract for the transfer of land use rights and attached assets. This is a mandatory procedure for the contract to be legally valid and serves as the basis for subsequent land registration procedures. This cost is an essential part of the total financial obligations for overseas Vietnamese selling property.

Notarization Fee Schedule: The fee is regulated by Article 4 of Circular 257/2016/TT-BTC, based on the asset value or contract value.

Payer of the Fee: According to Article 2 of Circular 257/2016/TT-BTC, the person requesting notarization is obligated to pay the fee. However, the law allows parties to agree on who pays. In practice, parties often agree that the buyer or seller pays, or they split the cost.

Note on Notary Remuneration and Other Costs: Overseas Vietnamese must distinguish between the regulated notarization fee and notary remuneration. Remuneration covers services beyond the basic notarization process, such as contract drafting, legal consultation, or travel for off-site notarization. This remuneration is negotiated between the parties and the notary organization and is not capped by the state fee schedule.

Key Considerations for Transaction Security

The process of transferring real estate in Vietnam has unique aspects for overseas Vietnamese. To ensure legal and financial security, beyond fulfilling all financial obligations for overseas Vietnamese, clients should pay special attention to the following issues.

• Secure a deposit before proceeding: A deposit is a measure to secure contract performance under Article 328 of the Civil Code 2015. While the law does not mandate a specific deposit amount, parties should agree on a reasonable sum (typically under 30% of the contract value) to bind responsibilities. If the buyer defaults, they forfeit the deposit. If the seller (the client) defaults, they must return the deposit plus a penalty equal to the deposit amount, unless otherwise agreed. The deposit agreement should be in writing, with witnesses or notarization, to enhance its legal standing, even if not required by law.
• Define payment terms clearly under a power of attorney: If an overseas Vietnamese cannot return to Vietnam to sign the contract, they can execute a power of attorney appointing another person to act on their behalf. To ensure absolute financial security, the transfer contract and the power of attorney must specify the payment method in detail. Long Phan Consulting Company recommends clients require the buyer to transfer funds directly to the client’s official bank account in Vietnam. This mitigates the risk of misappropriation by the authorized representative or subsequent monetary disputes.
• Calculate all taxes and fees accurately: Before signing the contract and receiving the final payment, all parties must agree upon and precisely calculate all applicable taxes and fees (PIT, registration fee, notarization fee) and determine which party is responsible for payment. Deducting these costs from the final transfer amount should be explicitly stated in the contract to prevent disagreements after the transaction is complete.

These precautions help prevent disputes and protect the seller’s interests. Diligence at every step of the transaction is fundamental to a successful outcome.

Frequently Addressed Technical Issues About Financial Obligations for Overseas Vietnamese Selling Property

To clarify legal regulations and resolve practical issues, here are answers to common questions regarding the financial obligations for overseas Vietnamese when selling property in Vietnam.

• Executing a Valid Power of Attorney from Abroad

For a power of attorney to be legally valid in Vietnam, the overseas Vietnamese must have it authenticated at a Vietnamese diplomatic mission (Embassy or Consulate General) in their country of residence. This document is then sent to Vietnam for the authorized person to carry out the necessary procedures.

• Remitting Proceeds from a Property Sale Abroad

This is permissible. Overseas Vietnamese can legally transfer proceeds from a real estate transaction abroad. The transfer must be conducted through a licensed commercial bank in Vietnam. The individual must provide complete documentation proving the legal origin of the funds, including the notarized transfer contract, tax declarations, and receipts confirming fulfillment of all financial obligations.

• Documentation to Prove Single Property Ownership for PIT Exemption

To be exempt from PIT for owning a single home and residential land, the seller must prepare a sworn affidavit (on a regulated form) affirming it is their only such property in Vietnam and accepting full legal responsibility for the statement. The tax authority will review this affidavit to grant the exemption.

• Legal Risks of Under-declaring the Transaction Price

Declaring a price lower than the actual transaction value is tax evasion and can lead to severe consequences. If discovered, the seller may be subject to tax arrears collection, significant administrative penalties, and late payment interest. Furthermore, the contract could be declared void by a court, posing a risk of asset loss for both parties.

• PIT on the Sale of Inherited or Gifted Property

Income from inheriting or receiving gifted real estate between immediate family members (parents-children, spouses, siblings) is exempt from PIT. However, when the recipient (the overseas Vietnamese) subsequently sells this property, they must still pay the 2% PIT on the transfer price, unless they qualify for an exemption under other circumstances.

• Requirement for a Bank Account in Vietnam for Property Sale

The law does not mandate it, but having a bank account in Vietnam is strongly recommended. It facilitates secure, transparent, and convenient payments and is a crucial element for the subsequent procedures to remit funds abroad.

• Deadline for Fulfilling Tax and Fee Obligations

After the contract is notarized, the tax and registration fee declaration file must be submitted to the competent authority within 10 days. Upon receiving a notice from the tax authority, the payer is obligated to pay the full amount by the deadline specified in the notice.

Conclusion

Completing the financial obligations for overseas Vietnamese when selling property in Vietnam is a complex process requiring precision and strict adherence to legal regulations. Each transaction has unique characteristics and can give rise to unforeseen legal issues. To protect your rights and ensure a safe and effective transaction, please contact Long Phan Consulting Company via our hotline at 1900 6363 89 for specialized legal support.