Note:

• As the guide for the new Law on Housing is pending, the transaction involving foreigners shall be conducted under the Long Term Lease Contract, which will be subsequently converted into Sales & Purchase Agreement if the purchasers are eligible, upon the issuance of the official guidance.

• Unit measurement: Selling price & management fee will be based on Net Usable Area (Carpet Area or Inner Area), which will also be clearly indicated in the Sales & Purchase Agreement (SPA). In general, Carpet Area is the area within the building and inclusive of areas taken by room-divided walls, balcony/loggia attached to the building. It excludes the area of external walls, columns, service ducts, and technical compartments

• It’s standard apply but not fixed and depend on the sales policy of each Developer

Whether the quoted price is inclusive of Value Added Tax or Maintenance Fee should be clearly indicated in the Sales & Purchase Agreement:

Quoted Price = Apartment Price + Value Added Tax + Maintenance fee

Value Added Tax (VAT): Is usually 10% of the apartment value at the moment. VAT rate is subject to change in accordance with VAT laws. Maintenance Fee (or Sinking Fund): Before the handover of the unit, all apartment owners have to contribute 2% of the apartment price for the maintenance and major repairs of common areas in the apartment building. This Maintenance Fee is not used for the operation and management of the condominium, which will be covered by Management & Operation Fee

Besides VAT and Maintenance Fees which have been included in the quoted price, real estate transactions often result in the following transaction costs:

Registration Tax (Upon registration for Ownership Certificate): 0.5% of the apartment value (capped at VND 500 mil.) and in the case of land residential property, 0.5% * land or house area * land price announced by the local people’s committee at the time of registration.

Notary’s Fees: Calculated based on the value of the property under the transaction (from VND 1 mil. and capped at VND 10 mil.)

Personal Income Tax (PIT): Income gained from real estate transaction is taxable with tax rate fixed at 2% (of the selling price). Currently, tax laws in Vietnam allow PIT exemption in case the transfer is between immediate family members or the seller owns only one real property and meets other criteria.

(All these costs are subject to change in accordance with relevant laws and regulations)

Foreign homebuyers can choose one of the following paying methods; (a) open a local bank account in Vietnam to transfer payments to the Developer’s bank account; (b) transfer payment directly from abroad to the developer’s bank account set up in Vietnam; or (c) make cash payment in VND to the developer’s bank account in Vietnam.

Please note that cross-border cash transfer and movement are strictly monitored in Vietnam, read more on Section 7

The developers will decide the payment scheme, which will be clearly indicated in the SPA. Usually subject to negotiation between buyers and sellers, homebuyers can choose to pay in lump sum or to make milestone payments. For projects being under construction, the current Law on Real Estate Business sets the collection limit to 50% for foreign developers and 70% for local Vietnamese developers prior to the handover. Plus, they can only collect up to 95% of the home value before the clients receive the Ownership Certificate (Pink Book).

It is a common practice in Vietnam for:

+ The seller to bear the PIT

+ The buyer to bear the Registration Tax

+ Both parties to negotiate who will bear the remaining taxes and fees.

Developers are required by laws to provide homebuyers warranty services for the house structures and equipment which malfunction or are damaged. The warranty period starts from the handover date and must last at least 24-60 months depending on the property types. Warranty terms shall be clearly indicated in the sales and purchase agreement.

Developers are not bounded by law to offer homebuyers insurance for their purchased properties. Homeowners are recommended to arrange insurance for their property on their own.

The late handover may result in a compensation amount equal to the interest on the paid amounts to the buyer. The interest rate shall be equal to the lending rate at a commercial bank at the time of the late handover.

In case the developer cannot commit to the ultimate deadline for handover as stated in the SPA, the buyer has the right to unilaterally terminate the SPA. The buyer shall be refunded the full paid amount plus compensation amount as mutually agreed in the SPA.

Management Fee will be paid monthly by the residents and used for the operation and management of the condominium. Services include but are not limited to, elevator’s operation, security services, garbage collection, pest control, janitorial and gardening services, and maintenance of common facilities, etc. The monthly fee is calculated based on the carpet area.

Miscellaneous Fees such as utility fees, parking fees, etc. will also subject to negotiation between residents and the developer

Foreigners are allowed to sublease property, but they shall report to the district-level housing authority if he/she wishes to rent out property. Rental income is taxable. Tax rate will vary in accordance with the rental income.

Foreigners are allowed to sell property. If a homeowner with a valid Pink Book sells to another eligible foreigner the remaining tenure is pending the Government’s guidance. If the transferee is a Vietnamese, the tenure shall be automatically converted to Freehold. Personal income tax from sale of the property is subject to 2% of the selling price.

The Foreign homeowners are encouraged to consult with professional brokerage firms or real estate agents who have experiences in property management, transactions, and leasing. Developer can refer some of these well-known consultants to the foreign homeowners.

Foreigners carrying cash exceeding USD 5,000 or VND 15 million (or equivalent amount in other foreign currencies) will have to declare upon entering or exiting Vietnam via international border checkpoints. This also applies to individuals carrying less than the cash limit but has the intention to use the amount for later payment via bank deposit.

In case the individual wants to carry an amount of cash exceeding the cash limit out of Vietnam, they must declare and produce the following document:(a) Confirmation of carrying cash overseas from a credit institution authorized to issue such document and (b) Document showing approval for individuals to carry cash overseas issued by the State Bank of Vietnam.

Transfer limit for inward remittances will be subject to the rules and regulations of the transferor’s home country. Outward remittances are closely monitored in Vietnam and are subject to the regulations of the State Bank of Vietnam and Vietnam’s laws. For outward remittances from Vietnam, the transferor is expected to produce necessary documents proving his source of income such as Proof of Income in Vietnam (if applicable), Proof of Inward Remittances to Vietnam, Sales & Purchase Agreement, etc. He/she shall also produce proofs of his/her tax fulfillment (income gained from real estate transactions and leasing activities are taxable).

Foreigners can set up a bank account with either Vietnamese banks or branches of foreign banks in the country. Most banks require a valid passport, visa/entry permit, residential address, and a minimum deposit amount.