Question: My company is working on real estate brokerage service in Ho Chi Minh City. In the near future, I would like to implement registration for foreign investment. May I ask for the procedure to conduct this activity?
Answer: Thank you for your inquiry. SB Law would like to advise your company as follows:
INVESTMENT REGISTRATION CERTIFICATE
According to Vietnam Law on Investment 2014, an investment in the form of the establishment of an economic organization will require a Foreign Investor to go through a two-step licensing process as follows:
(i) application for obtaining an Investment Registration Certificate (IRC) which is issued to the Foreign Investor itself rather than to the Foreign Invested Enterprise (FIE); and
(ii) registration for establishment of an enterprise by obtaining an Enterprise Registration Certificate (ERC) for the FIE.
OTHER REQUIREMENTS SHOULD BE TAKEN INTO ACCOUNT
(i) Foreign Ownership Limitation
According to current Vietnam’s WTO Commitments and local laws and regulations, currently the Foreign Investor is allowed to set-up 100% foreign-owned company to carry out Real-estate brokerage services in Vietnam. The foreign investor should be experienced organization.
(ii) Investment capital
The Vietnam law does not imply a minimum of required charter capital/investment capital for carrying out Real-estate brokerage services in Vietnam. However, the investment capital should be consistent with scale and purpose of investment project. The range varies from US$ hundred-thousand for the medium to US$ millions for big ones. The Foreign Investor could contribute investment capital by cash or fixed-assets like machinery, equipment, etc. or combination of those means.
(iii) Residency requirement to Legal Representative of Vietnam-based company
According to Vietnam Law on Enterprises, the Legal representative of Vietnam- based company is required to residing in Vietnam, as a resident. Under point of view of Tax Authority, a person can be deemed as "resident" if such person lives at least 183 days per year in the country; or if such person has obtained a so-called "Temporary Residence Card" in Vietnam. Thus, technically, if the foreign Legal Representative has "Temporary Residence Card" and made a "Power of Attorney" for assigning his/her rights and obligations to another person (usually another manager of the company), such foreign Legal Representative does not need to be physical presence (living) in Vietnam; however, he/she still must responsible for any decisions that their proxy made for and on behalf of them. More importantly, once the Legal representative is deemed as a "resident in Vietnam", annually he/she must to declare and finalize all of his/her global incomes and to pay taxes in Vietnam.
For avoidance of this burden, some enterprises choose the “legal work-around” that they register two (02) Legal Representatives, the local one resides in Vietnam while the foreigner does not. The local Legal Representative which lives in Vietnam shall be limited his/her rights/obligations/duties against the company, e.g. he/she is not allowed to sign commercial contracts but corporate reports, etc. Therefore, the company’s operations and managerial matters shall be decided by the non-residing foreign Legal Representative.
In summary, we kindly suggest two (02) below options for your consideration:
(a) In case of having 01 foreign Legal Representative, Work Permit and Temporary Residence Card must be apply and obtain for this person; OR
(b) Having from 02 Legal Representatives upward, at least one of them is local and reside in Vietnam.
REQUIREMENTS FOR REAL ESTATE BROKERAGE SERVICE
(i) Requirements for real estate brokerage service providers
a) Any real estate brokerage service providers must set up the enterprise and there are at least 2 employees obtaining real estate broker license (hereinafter referred to as broker license), excluding cases prescribed in Clause 2 of this Article.
b) Any individual is entitled to provide real estate brokerage services independently provided that he obtains a broker license and pay taxes as prescribed in law on taxation.
c) Any real estate service provider is not entitled to be both a broker and a contracting party in a real estate transaction.
(ii) Scope of Real estate brokerage services
a) Look for partners who meet requirements given by clients for agreement negotiation and conclusion.
b) Act as authorized representative to follow procedures for real estate sale, transfer, lease, and sublease or lease purchase.
c) Provide information and support contracting parties in negotiation and conclusion of agreement on real estate sale, transfer, lease, sublease or lease purchase.
(iii) Real estate brokerage remunerations
a) The real estate brokerage service providers shall receive remunerations from clients regardless of results of real estate sale, transfer, lease, sublease or lease purchase between their clients and a third person.
b) The real estate brokerage remunerations shall be agreed by contracting parties regardless of brokerage transfer price.
(iv) Real estate brokerage commission
a) The real estate brokerage service providers shall receive brokerage commission when their clients sign agreements on real estate sale, transfer, lease, sublease or lease purchase.
b) The real estate brokerage commission shall be agreed by contracting parties.
(v) Rights of real estate brokerage service providers
a) Provide real estate brokerage services as prescribed in this Law.
b) Request their clients to provide documents and information about the real estate.
c) Receive remunerations or commission as specified in the signed agreement.
d) Hire other real estate brokerage service providers to provide real estate brokerage services within the scope of the signed agreement provided that take responsibility for brokerage result to the clients.
e) Exercise other rights specified in the agreement.
(vi) Obligations of real estate brokerage service providers
a) Abide by the signed agreement.
b) Provide documents and information about the real estate brokered by them and take responsibility for documents and information provided by them.
c) Support contracting parties in negotiation and conclusion of agreement on real estate sale, transfer, lease, sublease or lease purchase.
d) Conform to the reporting as prescribed in regulations of law and subject to inspection carried out by competent agencies.
e) Pay compensation for damage caused by the provider.
f) Fulfill tax obligations to the State as prescribed in regulations of law.
g) Fulfill other obligations specified in the agreement.
(vii) Real estate broker license
– An individual shall be granted broker license if they:
a) Have full capacity for civil acts;
b) Obtain at least upper-secondary graduation degree;
c) Have passed examination in real estate brokerage knowledge.
– Broker license’s duration is 05 years.
– The Minister of Construction shall be providing guidance on grant of broker license.