Question: After relocating to a new premises, the management of our company’s Representative Office (RO) in Dong Nai intends to utilize the former office space as a temporary storage area — an “intermediate warehouse” — for goods to be picked up by customers. Accordingly, goods will be transferred from the company’s main warehouse in Ho Chi Minh City to the RO in Dong Nai, where customers may collect the goods within a few days. However, all delivery documents will remain issued under the company’s head office, and the RO will not engage in any direct business activities.
Given this arrangement, is the use of a representative office as an intermediate storage facility compliant with current Vietnamese legal regulations?
Answer:
Regarding your inquiry on whether the Representative Office in Dong Nai may concurrently function as an intermediate warehouse, SB Law would like to provide the following legal opinion:
1. Legal Basis on the Functions of a Representative Office
According to Clause 2, Article 44 of the Law on Enterprises 2020, a representative office is a dependent unit of the enterprise, which is authorized to represent and protect the legitimate interests of the enterprise. It does not perform business functions. A representative office may engage in activities such as trade promotion, product marketing, market research, and similar functions. However, it is not permitted to conduct profit-generating activities, such as buying and selling goods, warehousing, or delivering goods. Such commercial activities may only be carried out by the enterprise’s head office, branches, or business locations that are duly registered for such functions in accordance with Vietnamese law.
2. Legal Assessment on the Use of the Representative Office as an Intermediate Warehouse
Although, in formality, the goods are transferred from the main warehouse and all documentation is issued under the company’s head office, the actual storage of goods at the Representative Office (RO) for customer pickup may still give rise to the following legal risks:
- Exceeding the lawful scope of the RO’s permitted activities: The physical storage of goods and the arrangement for customers to collect them from the RO may be viewed as a form of de facto business activity, which contradicts the non-profit nature and legal function of a representative office under Vietnamese law.
- Risk of administrative sanctions: In the event that the Market Surveillance Authority, the Tax Department, or other competent authorities conduct an inspection, the enterprise may be penalized for misuse of the RO’s registered functions, especially if it fails to demonstrate the non-commercial nature of the warehousing activity.
- Goods management concerns: Storing goods at the RO may trigger additional requirements relating to fire safety regulations, storage conditions, and liability for loss or damage. These matters typically fall outside the scope of preparation and compliance expected of a representative office.
3. Recommended Solutions
To ensure compliance with applicable laws and minimize risks, the enterprise should consider establishing a “business location” at the former address of the Representative Office (RO) in Dong Nai, with the primary function of warehousing and goods transshipment. This approach offers the following benefits:
- Legalization of warehousing functions: A business location is permitted to carry out supporting commercial activities, including the storage of goods, and is not subject to the restrictions imposed on a representative office.
- Facilitating goods receipt and delivery: Customers can collect goods at a location closer to them without triggering any legal violations.
Mitigating tax risks and administrative sanctions: Once the function is legally recognized, the enterprise will no longer worry about inspections or periodic audits from regulatory authorities.
