Set up representative office in Vietnam (2026): Cost, Procedure & FDI Comparison

Many foreign enterprises deal with a difficult situation when entering the Vietnamese market for the first time: should they establish a foreign direct investment (FDI) company or set up a representative office? In practice, a common mistake is to open an FDI company too early, before understanding the full picture of the market. This guide on how to set up a representative office in Vietnam (2026): Cost, Procedure & FDI Comparison explores the most effective market entry strategies to avoid time-consuming and costly reversals in business operations.

According to statistics, approximately 70% of foreign enterprises set up a representative office in Vietnam before transitioning to an FDI model. Among these, over 60% convert to an FDI company after 6-18 months of operation once market potential and business models are defined. In this article, we will provide a detailed comparison between a representative office and an FDI enterprise to help investors choose their business objectives.

Summary of setting up a representative office for foreign traders in Vietnam in 2026

A representative office in Vietnam (Representative Office Vietnam) is a legal form that allows foreign enterprises to establish a presence in the Vietnamese market without performing direct business activities. While the requirements to set up a representative office in Vietnam are not complex, enterprises must ensure the legal status and the operation of the parent company before submitting the application.

The licensing authorities will consider the following factors:

• Operation time of the foreign enterprise (usually 01 year or more).
• Legal status and validity of the business license.
• Proposed scope of activities of the representative office in Vietnam (excluding direct business functions).
• Timeline for representative office Vietnam: 15–25 working days.
• Cost to set up a representative office in Vietnam: from 900 USD.

The Vietnam representative office model is the ideal choice for businesses looking to survey the market before establishing a full FDI company.

Comparing a foreign representative office with an FDI company in Vietnam (2026)

Should you choose to set up a representative office or an FDI company in Vietnam in 2026?

With 19 years of consulting experience, Viet An Law has observed that up to 70% of foreign clients choose the representative office in Vietnam model first. The choice between these two models depends on business goals, budget, and development strategies. Below is a quick guide to help you identify the appropriate model:

Cases where you should establish a representative office in Vietnam

An enterprise should choose to open a representative office in Vietnam when:

• They wish to research the Vietnamese market before investing.
• They are not ready to deploy large-scale business operations.
• They do not yet need to generate revenue within Vietnam.
• The primary function is trade promotion and partner connections.
• Contract signing is maintained through the parent company abroad.

Opening a representative office in Vietnam is the right solution for the “market exploration” and early-stage trade promotion phase.

Cases where you should establish a foreign-invested enterprise in Vietnam

An enterprise should set up an FDI company when:

• There is a plan for direct business and profit generation in Vietnam.
• There is a need to sign commercial contracts, issue invoices, and transact with customers.
• The goal is to build a brand, develop market share, and expand the customer base.
• There is a medium to long-term investment strategy in Vietnam.

Opening a foreign-invested company is a model suitable for business expansion and revenue growth.

Quick conclusion

• Representative office: suitable for market starting and testing.
• FDI company: suitable for business and long-term development.

Pros and cons of a foreign representative office in Vietnam

The representative office in Vietnam offers several advantages and certain limitations that investors must weigh against their specific operational needs.

Procedure to set up a representative office in Vietnam (2026)

The basic procedure to set up a representative office in Vietnam consists of the following steps:

Cost to open a representative office in Vietnam

The representative office of Vietnam’s cost structure generally includes:

• Service fee (~900 USD).
• Translation and notarization fees.
• Incidental costs.
• Translation & Notarization: from 200-300 USD.
• Consular legalisation (if applicable).

The total cost to establish a representative office in Vietnam, including legal fees, administrative operations, and taxes for the first year, varies by case but usually ranges from 900 USD to 3,000 USD.

How to avoid rejection of a representative office establishment license in Vietnam in 2026

In reality, most dossiers are rejected not because the regulations are too complex, but due to a lack of preparation or misunderstanding of legal requirements. To increase the success rate on the first attempt, investors should note:

Prepare complete and valid legal dossiers

Ensure all documents, such as the Business Registration Certificate, financial reports, and parent company legal papers, are:

• Consularly legalized.
• Translated and notarised into Vietnamese.
• Valid according to regulations.

Check business lines before submission

Not all business lines are permitted to set up a representative office in Vietnam. It is necessary to review this in advance to avoid restricted or prohibited lists.

Ensure the operation time of the parent company

Foreign traders must typically:

• Have operated for at least 01 year.
• Have transparent financial records.

Prepare a valid location for the representative office

The proposed address must:

• Have a clear lease agreement.
• Not be located in a prohibited business area.
• Be suitable for office purposes.

Work with an experienced legal consultant

Using a professional consulting firm helps avoid dossier errors, shortens processing time, and ensures compliance with the procedure to set up a representative office in Vietnam.

Expert advice

Over 80% of rejected representative office applications in Vietnam stem from incomplete documentation or incorrect requirements from the start. A clear legal roadmap will save the business significant time and expense.

Receive a free consultation and a roadmap to establish a representative office in 24 hours. Contact Viet An Law now for quick support in 10-30 minutes.

Post-establishment procedures for foreign representative offices in Vietnam (2026)

After being granted the Establishment License, the representative office in Vietnam must perform several critical procedures to ensure operations comply with Decree 07/2016/ND-CP (Nghị Dịnh 07/2016/ND-CP) regarding representative offices of foreign traders in Vietnam.

Opening bank accounts for the Representative Office

The office needs to open:

• A specialised expenditure account in foreign currency.
• Or a Vietnamese Dong account sourced from foreign currency. These accounts must only be used for the lawful activities of the representative office.

Performing periodic reporting obligations

Annually, before January 30th, the office must:

• Submit an activity report for the previous year.
• Submit it to the Department of Industry and Trade according to the prescribed form.

Internal financial record management

• Establish a cash book.
• Fully record all revenues and expenditures arising during operations.

Labour procedures for foreigners (if any)

• Apply for a Work Permit for foreign personnel.
• Ensure compliance with labour regulations in Vietnam.

Signing labour contracts

• Sign contracts with the Head of the Representative Office.
• Sign contracts with staff working at the office.

Income obligations and salary confirmation

Annually, the parent company needs to confirm the income and salary of the Head of the Office and staff according to the prescribed form.

Tax and insurance obligations

• Declare and pay Personal Income Tax (PIT).
• Participate in insurance (if applicable).
• Note: It is necessary to keep all tax declarations and payment vouchers and perform annual tax finalisation.

Other legal obligations

In addition to the above, the representative office must also comply with relevant regulations according to the current laws of Vietnam.

Full compliance with post-licensing procedures helps the Representative Office operate stably, avoid legal risks and administrative sanctions.

Case study 1: Why a Singaporean enterprise chose a representative office before an FDI company?

In February 2025, a Singaporean materials enterprise contacted Viet An Law for advice on expansion. They initially weighed both models but chose a phased approach.

• Phase 1 (2025): Established a representative office in Vietnam to research the market and build partner relationships.
• Phase 2 (2026): After one year of data collection, they converted to a Singaporean FDI company in February 2026. This strategy minimised initial risks and optimised operational costs before large-scale investment.

Results

Investors appreciate the phased implementation strategy with clear benefits:

• Minimising risks in the early stages of market entry
• Optimise operating costs before expanding investment
• Have enough real data to make accurate decisions
• Identify the market potential before establishing an FDI enterprise.

Lessons for foreign investors

Opening a representative office is the right choice for many foreign businesses when:

• Not understanding the Vietnamese market
• Want to verify your needs before investing
• It is necessary to minimise legal and financial risks.

Based on Viet An Law’s experience of processing documents, after the market is confirmed, switching to the FDI company model will help businesses develop sustainably and generate direct revenue.

Case study 2: Japanese enterprise selecting a representative office before FDI investment

In 2023, a Japanese mechanical engineering firm planned to set up an FDI company immediately. After an assessment, they realised the operational risks were high. As Viet An Law’s advice, they conduct:

• Phase 1 (2023): They established a representative office in Vietnam to assess consumer behaviour and identify logistics partners.
• Phase 2 (2025): By October 2025, with a stable partner network and revenue potential confirmed, they successfully established an FDI company as advised by Viet An Law. This “step-by-step” strategy allowed for more accurate and effective investment decisions.

In fact, many businesses from Korea, Japan, Singapore, and the US often choose representative offices as the first step to enter the Vietnamese market, before switching to the FDI company model.

Representative office establishment services for foreign companies – Viet An Law

With over 19 years of experience in foreign investment consulting, Viet An Law provides inclusive packages to open a representative office in Vietnam, helping foreign businesses set up their commercial presence.

Our scope of services includes:

• Consulting on the appropriate model before establishment.
• Preparing and drafting legal dossiers under Vietnamese law.
• Representing clients to apply for the Establishment License.
• Performing post-licensing procedures.
• Consulting on operation and legal compliance, including PIT and personnel support.

Choosing Viet An Law ensures:

• Practical experience with thousands of FDI customers
• In-depth understanding of investment and corporate law in Vietnam
• A professional process with a completion time of only 15-25 working days, backed by deep expertise in investment law.
• Establishment – Tax – Insurance – Reporting package services.

Frequently asked questions (FAQ) regarding opening a representative office for foreign companies in Vietnam

What documents must a representative office keep at the office?

The office must maintain the Establishment License, seal registration certificate, tax code notification, and all financial/operational vouchers to ensure compliance during inspections.

Can a Vietnam representative office sign economic contracts?

Yes, but only contracts serving the office’s operations (leasing, utilities, etc.) and trade promotion activities. They cannot sign direct sales or commercial contracts.

Can the office collect money from customers on behalf of the parent company?

No. They are only permitted to collect funds to serve the activities of the representative office.

Can a representative office in Vietnam do business?

No business, only investment and trade promotion.

How long is the establishment time?

15-25 business days.

Is the office subject to Corporate Income Tax?

No, as it does not generate direct revenue. However, it must fulfill Personal Income Tax (PIT) obligations for its employees.

When should you transition from a representative office to an FDI company?

When the business needs to sign direct commercial contracts or generate revenue within Vietnam. This is a natural progression for successful market entry.

Are you considering how to set up a representative office in Vietnam for your business?

Contact Viet An Law for free consultation and to find the most suitable model for your enterprise.