Vietnam taxes employment income for work performed in Vietnam, regardless of who pays it or where. When an expatriate is paid partly on the Vietnamese payroll and partly by the parent company abroad, the offshore part is still taxable here. If the Vietnamese company does not include it in its own withholding, the individual generally has to declare and pay it directly under the tax administration rules, and bring it into the annual finalisation if he or she is a resident.
Split payroll is common for good reasons — home-country pension, social security, mortgage payments, currency — and it is not a problem in itself. It becomes one when nobody in Vietnam knows what is paid abroad. The same arrangement also raises questions for the company: whether a recharge from the parent attracts foreign contractor tax, whether the costs are deductible, and whether the parent has created a taxable presence in Vietnam.
The principle: where the work is done
For Vietnamese PIT, employment income arises where the work is performed. A resident is taxed on worldwide income, so all of the expatriate's employment income is in scope. A non-resident is taxed on income for work performed in Vietnam, even if it is paid by a foreign entity into a foreign bank account. The payment location changes the procedure, not the liability.
The rules are in the Law on Personal Income Tax, guided from mid-2026 by Decree 253/2026/ND-CP and Circular 87/2026/TT-BTC, with the procedure in the Law on Tax Administration (Law 38/2019/QH14) and its implementing documents, including Circular 80/2021/TT-BTC and Circular 89/2026/TT-BTC. Check the current declaration cycle for income paid from abroad before setting up a process.
Three ways to handle the offshore part
| Approach | How it works | Watch out for |
|---|---|---|
| Shadow payroll in Vietnam | The Vietnamese company includes the offshore amounts in its payroll calculation and withholds the total tax from the local payment | Local pay must be large enough to cover the tax; data from the parent must arrive each month |
| Individual declares directly | The expatriate declares the offshore income and pays the tax under the tax administration rules | Many individuals do not know they must; late declaration creates interest |
| Full local payroll with recharge | The Vietnamese company pays everything and receives, or pays, a recharge within the group | Treatment of the recharge for CIT, VAT and foreign contractor tax |
A shadow payroll is usually the cleanest for the individual: one withholding, one finalisation, no separate declarations. It requires a monthly data feed from the paying entity abroad — base salary, bonuses, allowances, benefits, share-plan events — converted into Vietnamese dong.
Converting foreign currency
Income paid in foreign currency is converted into Vietnamese dong for tax purposes using the exchange rate the rules specify — generally a rate published by a bank on the relevant date. Pick the method the rules require, apply it consistently, and record the rate used for each payment. Inconsistent conversion is a small error each month but becomes a visible difference at finalisation, especially when bonuses are paid in a different month from salary.
The secondment agreement
Who is the employer, in substance? A secondment agreement should answer that clearly, because the answer drives the tax treatment on both sides:
- Who directs the work and bears the risk of its results — the Vietnamese company or the parent.
- Who bears the cost — through a recharge, a service fee or not at all.
- Which entity pays each element of the package, and in which currency.
- How long the assignment runs, with any extension process.
Where the Vietnamese company directs the work and bears the cost, the expatriate is in substance its employee and the costs are its costs. A recharge from the parent then reimburses salary the parent paid on its behalf. Where the parent directs the work and the individual provides services to the Vietnamese company on the parent's account, the arrangement looks more like a service contract — which brings foreign contractor tax and, potentially, a taxable presence of the parent in Vietnam.
Recharges: the company's side
A recharge of expatriate costs from an overseas parent to the Vietnamese company is often treated by the group as a pass-through at cost. Vietnamese tax does not always see it that way. Questions to settle before the first invoice:
- Is the recharge a reimbursement of employment costs of the Vietnamese company's own employee, or a payment for services from the parent? The answer decides whether foreign contractor tax applies.
- Has PIT been handled for the amounts recharged? A recharge of salary on which no Vietnamese PIT was paid is an obvious audit query.
- Is the cost deductible for CIT? Deductibility generally requires the underlying employment to be documented and the related PIT handled.
- Does the arrangement fit the group's transfer pricing documentation? Decree 255/2026/ND-CP now governs tax administration for enterprises with related-party transactions.
Short visits and business travellers
Not every foreign employee in Vietnam is on assignment. Engineers commissioning equipment, auditors, regional managers visiting for a week at a time are usually non-residents taxed on income for days worked in Vietnam. Many of Vietnam's tax treaties contain a dependent personal services article that can exempt such visitors if its conditions are met — typically limits on days present, remuneration paid by a non-resident employer and not borne by a permanent establishment in Vietnam. The conditions differ by treaty, and claiming the exemption requires following the Vietnamese notification procedure with a certificate of residence.
Keep a register of visitors, days worked in Vietnam and who bears their cost. When a visitor's cost is recharged to the Vietnamese company, the treaty condition about who bears the remuneration may no longer be met.
A monthly data checklist for a shadow payroll
A shadow payroll only works if the Vietnamese payroll team receives complete data from abroad every month, in time to close. Agree a template with the paying entity that covers:
- Base pay paid abroad, with the payment date and currency.
- Bonuses and incentives, including those relating to earlier periods or earlier roles.
- Allowances and benefits paid or provided abroad — pension contributions by the employer, insurance premiums, housing or school costs at home.
- Equity events: vesting, exercise and sale of shares under group plans.
- Days worked in and outside Vietnam, if part of the income relates to work elsewhere and the individual is non-resident.
At year end, reconcile the shadow payroll to the home-country payroll records for each expatriate. Differences usually come from a bonus paid in the home country after the Vietnamese payroll closed, or an equity event processed by a separate plan administrator. Catching them before the finalisation avoids supplementary declarations later.
If a shadow payroll is not practical — for a small number of assignees, for example — give each expatriate a written note explaining that the offshore part must be declared directly, how often, and where to get the figures. Silence is how offshore income goes undeclared.
Where to check your own position
An expatriate can see income reported for them and tax paid in the individual e-tax account or the mobile tax app. If the offshore part appears nowhere there, it has not been declared. The company's e-tax account shows its withholding returns and any foreign contractor tax declared on recharges. Compare both with the group's mobility records at least once a year.
Frequently asked questions
Part of my salary is paid into my home bank account. Is it taxable in Vietnam?
Yes, to the extent it relates to work performed in Vietnam, and if you are resident, all of it. If the Vietnamese company does not include it in its payroll, you generally need to declare and pay it yourself.
What is a shadow payroll?
A payroll calculation in Vietnam that includes amounts paid abroad, so the Vietnamese company can withhold the full tax from the local payment. It needs a monthly data feed from the paying entity.
Does a recharge from our parent trigger foreign contractor tax?
It can. If the recharge is in substance a payment for services from the parent, foreign contractor tax generally applies. A reimbursement of the Vietnamese company's own employment costs may be treated differently; document the arrangement.
Our engineer visits Vietnam for two weeks each quarter. Does he pay Vietnamese tax?
He is likely a non-resident taxed on income for days worked in Vietnam, unless a tax treaty exempts him and the notification procedure is followed. Check the specific treaty and who bears his cost.
Which exchange rate do we use for pay in euros?
The rate the rules specify, generally a bank rate on the relevant date. Apply one method consistently and record the rate for each payment.
Can a split payroll create a taxable presence for our parent in Vietnam?
Potentially, if the parent directs the work and the individual in effect supplies the parent's services in Vietnam. The secondment agreement and how it operates in practice decide the risk.
