EOR vs setting up your own entity in Vietnam

What are the two ways to employ in Vietnam?

There are two lawful ways for a foreign company to employ someone in Vietnam: use an employer of record, which hires the worker through its own Vietnam-registered company, or set up your own foreign-invested entity — usually a wholly foreign-owned limited liability company, often called a subsidiary — and employ staff directly. Only a company registered in Vietnam can be a legal employer there, so without an entity of your own, an EOR is the route to a compliant hire.

With an EOR, the provider's Vietnamese entity is the legal employer: it signs the Labour Code contract, runs payroll, pays statutory insurance and withholds income tax, while you direct the work and pay a service fee. This is ordinary direct employment invoiced under a service agreement, not a special legal category — the structure is set out under what an employer of record in Vietnam is and whether an EOR is legal in Vietnam. With your own entity you are the employer directly: full control, but every employer duty and a company to run.

How long does it take to set up a company in Vietnam?

Setting up a foreign-invested company in Vietnam takes two approvals in sequence: an Investment Registration Certificate (IRC), then an Enterprise Registration Certificate (ERC). Statutory processing is about 15 working days for the IRC and a further 3 to 5 working days for the ERC3, but allow roughly one to three months end to end once dossiers, bank accounts and company seals are done (as of October 2026).

The IRC is the foreign-investment approval issued under the Law on Investment; the ERC then registers the company itself under the Law on Enterprises.12 Those day-counts are statutory targets from a complete dossier; conditional or inter-ministerial projects can run to about 35 working days, and post-licensing steps — tax registration, a bank account, the seal, and labour and insurance registrations — add two to four more weeks before a first employee can start.3 That lead time, which an EOR removes entirely, is the clearest difference between the options.

Is there a minimum capital, and what are the ongoing obligations?

Most business sectors in Vietnam have no fixed statutory minimum charter capital, but the amount you register must be credible for the licensed business and must be paid in within 90 days of the Enterprise Registration Certificate. Certain regulated sectors — finance, real estate and education — do carry minimum-capital rules.

The authority assesses whether your registered capital is adequate for the scope you apply for, so the figure is a real commitment, contributed within 90 days of the ERC.2 Beyond capital, a standing company carries ongoing accounting, tax and VAT filings, payroll and insurance administration and audited statements — fixed overhead whether you employ one person or twenty. Through an EOR that administration sits with the provider's entity and is folded into the fee. The employer's roughly 23.5% statutory on-cost6 is the same either way, and is itemised under Vietnam payroll and employer costs.

Can a representative office employ staff in Vietnam?

A representative office is not a shortcut to employing operational staff in Vietnam. It cannot earn revenue, sign commercial contracts in its own name or issue VAT invoices; it exists for liaison, market research and promoting the parent's business. It may hire a small liaison team, but it cannot lawfully employ staff who carry out the parent company's revenue-earning work.

Companies sometimes consider one because it is cheaper and quicker to license than a full entity, with a licence valid for up to five years.45 But it cannot be used to build an operational team: using one to employ a team doing the parent's commercial operations is outside what the Commercial Law permits. A branch office is not a general answer either — under the Commercial Law a foreign trader's branch is permitted only in certain sectors and still needs its own licence45 — so for ordinary hiring the real choice is between an EOR and a full operating entity (a foreign-invested subsidiary).

EOR vs entity cost in Vietnam: where is the break-even?

EOR versus entity cost in Vietnam is a trade-off between per-head fees and fixed overhead. An EOR charges a per-employee fee on top of gross salary and the roughly 23.5% statutory employer on-cost, so the bill scales with every hire. Your own entity carries a larger upfront and a largely fixed running cost but no per-head fee, so it overtakes the EOR once you employ enough people for long enough.

On the EOR side, the recurring numbers are the employer's statutory on-cost of about 23.5% of gross salary (social, health and unemployment insurance plus the trade-union fee, subject to a statutory contribution cap) and the provider's service fee.6 Our own service fee is a flat US$149 per employee per month — the same for every Vietnamese-national employee regardless of salary, seniority, role, location in Vietnam or headcount, with no setup, onboarding, offboarding or other fees (as of October 2026); a refundable security deposit equal to two months of the employee's employment cost (gross salary plus statutory employer contributions) is held for the duration of the engagement and returned at the end, less any unpaid amounts. Foreign nationals who need a Vietnamese work permit are quoted separately. Independent 2026 comparisons put other providers' Vietnam EOR fees at roughly US$350–599 per employee per month, on top of salary and the on-cost; these are third-party market observations, not our price, and those providers quote case by case.78 The full breakdown and a calculator are on what an EOR in Vietnam costs.

On the entity side, the cost is the incorporation project plus a fixed run-rate of accounting, tax, audit and insurance administration. We do not publish a single setup figure — it depends on sector, city and adviser, so treat any fixed number seen elsewhere with caution. The shape is what matters: the EOR line rises by our flat US$149 fee with each head, while the entity line starts higher but flattens, so the break-even is where the entity's fixed cost, spread across the team, drops below the stacked US$149 per-employee fees. To compare providers for the EOR side, use how to choose an EOR provider in Vietnam.

Risk and exit: how fast can you start and stop?

On risk and exit, an EOR lets you start in days and stop with lawful notice, with the employer's liabilities carried by a company already operating in Vietnam. Your own entity takes months to open and, importantly, months to wind down — in practice, dissolution and tax clearance are slow — so it is a far heavier commitment to reverse.

Reversibility is the EOR's main non-cost advantage. The trade-off is that an EOR does not by itself settle every tax question — using one does not automatically prevent a foreign company being treated as having a taxable presence, or permanent establishment, in Vietnam, which depends on the facts and the relevant tax treaty, so take specific tax advice before assuming otherwise (as of October 2026). Those points are set out under whether an EOR is legal in Vietnam.

Which should you choose?

Choose an EOR when you are testing the Vietnam market, hiring a handful of people, or need to start quickly without a local company. Choose your own entity when you plan a large permanent team, run revenue-generating operations on the ground, or need licences and local invoicing an EOR cannot provide. Hiring teachers is a clear example: an EOR can employ a teacher, but running a public language centre or school needs your own licensed education entity — see English-teacher hiring in Vietnam. Many companies start with an EOR and incorporate later, once headcount and horizon justify it. If you want this modelled for your plan, request a costed EOR Vietnam quote.

A practical sequence is to begin with an EOR for your first hires, confirm the market and the numbers, and incorporate a subsidiary when the break-even tips — employees can then be transferred onto the new company. If misclassifying people as contractors looks like a cheaper stopgap, read first why that is reclassifiable from day one under EOR versus independent contractor in Vietnam, and how an EOR differs from a PEO under EOR versus PEO in Vietnam.

EOR vs own entity in Vietnam, side by side

The table summarises the factors that usually drive the decision.