Double tax treaties in Vietnam

What does a double tax treaty do?

A double-taxation-avoidance agreement (DTA), or double tax treaty, is a bilateral agreement that decides which of two countries may tax a given type of income and provides relief so the same income is not taxed twice. Vietnam has signed DTAs with more than 80 countries and territories, mostly modelled on the OECD Model Convention.19

Treaties work in three main ways. They allocate taxing rights by income type — business profits, dividends, interest, royalties and employment income each have their own article. They eliminate double taxation on income the other country has already taxed, by exempting it in Vietnam or by giving a foreign-tax credit for tax paid abroad. And for a person resident in two countries at once, they apply tie-breaker tests — typically permanent home, then centre of vital interests, then habitual abode, then nationality — to decide which country treats them as resident.18

That tie-breaker only matters where both countries claim the same person; it sits on top of Vietnam's own 183-day residence test. See tax residency in Vietnam and the 183-day rule, and the rates a resident or non-resident then pays in Vietnam personal income tax for 2026.8

One income type deserves a closer look for cross-border hiring: employment. The treaty's employment-income article — in older treaties still headed dependent personal services — follows a common pattern. Salary is taxed only in the person's country of residence unless the work is actually performed in Vietnam; even then, Vietnam's right to tax switches off only when three conditions all hold — the employee is in Vietnam for no more than 183 days in a 12-month period, the pay comes from an employer that is not resident in Vietnam, and the cost is not borne by a permanent establishment the employer has here. Fail any one of the three and Vietnam can tax the Vietnamese work-days. Because each treaty's own wording governs, treat this as the usual shape rather than a fixed rule.10

Vietnam's treaty network, and how to use one

Vietnam's network of 80-plus signed DTAs covers most of its major trading and investment partners. Not every signed treaty is necessarily in force, so the first step for any cross-border payment or assignment is to confirm a treaty actually applies between Vietnam and the other country, and for which year.9

The crucial point: treaty relief in Vietnam is never automatic. A benefit must be claimed, with a tax-residency certificate from the other country and supporting documents, within a three-year window; miss it and Vietnam applies the higher domestic rate, with relief only by later refund. Since Circular 95/2026 the authority can also look past the paperwork to the real substance — who performs the functions, bears the risks and owns the income — before allowing a benefit.1

What did Circular 95/2026/TT-BTC change?

From 1 July 2026 Vietnam applies all of its tax treaties under Circular 95/2026/TT-BTC, issued by the Ministry of Finance on 1 June 2026. It replaced the long-standing Circular 205/2013/TT-BTC and is the single rulebook for how residency, permanent establishment and each type of income are handled and how relief is claimed; it also carries guidance on advance pricing agreements and the mutual-agreement procedure.13

Two shifts matter most. The first is the substance-over-form test above: reflecting Vietnam's entry into the BEPS Multilateral Instrument (in force here since 1 September 2023), the circular adds preventing treaty abuse and “non-taxation” to a treaty's purpose, so a paper structure with no real economic substance can be challenged.2 The second is a broader permanent-establishment concept: it expressly reaches digital and e-commerce platforms serving Vietnamese customers, and a representative office can now create a permanent establishment if it negotiates or concludes contracts rather than only doing liaison work.1

These changes sit alongside the wider 2026 tax-administration overhaul — see what changed for employers in Vietnam in 2026.

Is there a tax treaty between the US and Vietnam?

No treaty is in force — the exception every US company should know. The United States and Vietnam signed an income-tax treaty, with a protocol, on 7 July 2015, the first between the two countries. Vietnam ratified it (reported in 2017), but the US Senate never did, so it has never entered into force. As of October 2026 there is still no operative US–Vietnam income-tax treaty.45

That makes Vietnam unusual among major US trading partners. Reporting attributes the stall to provisions in the 2015 text falling out of step with later US tax-law changes (dated by one source to changes after 2020), with technical discussions continuing. Until the treaty is in force, US taxpayers in Vietnam cannot use it: they rely on Vietnamese domestic rules and the US foreign tax credit to avoid double taxation, not on treaty relief or tie-breakers.4

There is a second gap on the social-security side: no totalisation agreement exists between the US and Vietnam either. So a US national on a Vietnamese labour contract of 12 months or more can face compulsory Vietnamese social and health insurance while still owing US Social Security or self-employment tax, with no treaty to assign coverage or credit the periods across.4 We set out the full picture on EOR Vietnam for US companies, and the contribution mechanics on social insurance for foreign employees in Vietnam.

How do treaties interact with permanent-establishment risk?

A treaty's most valuable protection is the business-profits rule: where a DTA applies, Vietnam may tax a foreign enterprise's business profits only if it has a permanent establishment (PE) in Vietnam as defined by the treaty, and only the profits attributable to it. No PE, no business-profits tax — but only where a treaty is in force and relief is properly claimed.8

Under Vietnamese law a PE is broadly a fixed place of business (a branch, office, factory or long-running project), a dependent agent who habitually concludes or negotiates binding contracts for the foreign company, or the provision of services in Vietnam for 183 days or more in any 12-month period.8 The dependent-agent limb is the one that catches cross-border hiring: if a person in Vietnam habitually signs or negotiates deals that bind an overseas company, the authority can treat that company as having a taxable presence here, even without an office.8

Where a PE exists, the treaty shield falls away on the corporate-income-tax side. A foreign company's Vietnam-source income is usually taxed through Foreign Contractor Tax, which has a corporate-income-tax part and a VAT part; a treaty can relieve only the corporate-income-tax part, and only when there is no PE. The VAT part is always due under domestic rules regardless of any treaty.8 This is a fact-specific area; our guide to permanent-establishment risk in Vietnam works through the triggers and the Circular 95 substance test in full.

Treaties vs social-security agreements: two different instruments

It is easy to conflate two separate kinds of bilateral agreement, and the difference matters when you hire across a border. A double tax treaty deals with income tax — which country taxes salary, dividends or profits, and how double taxation is relieved. A social-security (totalisation) agreement deals with social insurance — which country's compulsory system a posted worker pays into. A country can have one, both or neither with Vietnam.

Vietnam's first-ever social-security agreement, with South Korea, came into force on 1 January 2024. A worker posted between the two countries can keep paying social insurance only in their home country for up to 60 months — extendable by a further 36 with the same employer — instead of paying into both.6 Japan and Vietnam began talks on a similar agreement in July 2025, but nothing is yet signed or in force, so staff moving between Japan and Vietnam can still face charges in both systems for now.7 On the income-tax side a Japanese parent is better placed, since the Japan–Vietnam tax treaty has been in force since 1995; how a Japanese group uses it is set out in the Japanese-company EOR guide. For how compulsory contributions apply to foreign staff meanwhile, see social insurance in Vietnam.

How EOR Vietnam factors treaties into foreign-hire payroll

When EOR Vietnam employs your worker, a licensed Vietnam-registered entity is the legal employer and runs the compliant payroll — the contract, personal-income-tax withholding and the statutory social, health and unemployment insurance. For how that is structured and why it is lawful, see what an employer of record is in Vietnam.

Treaties enter in two practical ways. For an inbound foreign hire resident in a treaty country, we withhold Vietnamese tax under domestic rules and can help the employee assemble the residency certificate and dossier needed to claim treaty relief under Circular 95/2026 — but the relief is claimed by the taxpayer, is never automatic, and the treaty position is one to confirm with a Vietnamese tax adviser.1 Separately, using an EOR puts a Vietnamese company in the employer's seat, which helps, but it does not on its own remove the foreign client's permanent-establishment risk: that depends on what the worker actually does. Keeping deal-making authority offshore, with the in-country role confined to support and delivery, is what keeps the arrangement clean.8

None of this moves our fee. The EOR Vietnam service fee is a flat US$149 per employee per month for Vietnamese nationals — the same fee regardless of salary, seniority, role, location in Vietnam or headcount, as of October 2026 — and it is not a percentage of payroll. Foreign nationals who need a Vietnamese work permit are quoted separately, because the work-permit, visa and residence handling differs case to case. There are no setup, onboarding, offboarding, contract or payslip fees and no hidden fees; gross salary, the statutory employer contributions and any statutory or agreed employment payments are passed through at cost. A refundable security deposit equal to two months of the employee's employment cost is held for the engagement and returned at the end, less any unpaid amounts. See the itemised breakdown on Vietnam payroll and employer costs.

Related guides

These sit alongside the rest of our Vietnam employer guides, which work through the payroll, tax and compliance detail behind a cross-border hire.