Vietnam is becoming an increasingly attractive destination for those seeking to start a business, including foreigners. Among the common business models, the household business is considered the simplest, most cost-effective, and easiest to set up. However, not everyone is eligible to choose this model. Are foreigners among those permitted to establish a household business in Vietnam?
1. Legal Framework under Vietnamese Law
Pursuant to Clause 1, Article 82 of Decree No. 168/2025/NĐ-CP:
A household business may be registered by an individual or by members of a household, who shall bear unlimited liability with their entire property for the business activities of the household business.
Where a household business is registered by multiple household members, one member shall be authorized to act as the representative of the household business. Where an individual registers a household business, that individual shall be the household business owner and representative.
Furthermore, under Clause 2 of the same Article, only individuals and household members who are Vietnamese citizens possessing full civil act capacity under the Civil Code are entitled to establish a household business, except in the following cases:
a) Persons under criminal investigation, in temporary detention, serving prison sentences, undergoing compulsory administrative measures at compulsory detoxification or compulsory education institutions, or subject to court-imposed prohibitions on holding positions, practicing professions, or engaging in certain activities;
b) Persons otherwise prohibited from establishing a household business under applicable laws.
This means that the mandatory condition for being named as the owner of a household business is Vietnamese nationality. Accordingly, foreigners who do not hold Vietnamese nationality are not eligible to establish household businesses in Vietnam.
2. Circumstances Where Foreigners May Lawfully Participate in a Household Business
2.1 Authorization to a Vietnamese Citizen
Pursuant to Articles 562–568 of the 2015 Civil Code, authorization may be made through a power of attorney or authorization contract, whereby a foreigner (the authorizing party) authorizes a Vietnamese citizen (the authorized party) who fully meets the statutory conditions to register and be named as the household business owner.
The authorization contract should clearly stipulate the rights and obligations of both parties, methods of management, allocation of profits, costs incurred, and liability in the event of disputes (including penalties and dispute resolution forums).
In such cases, the foreigner may still participate in the management and operation of the household business and benefit from its profits.
Notes:
- All business activities must comply with Vietnamese laws, particularly in relation to taxation, labor, and conditional business lines.
- It is advisable to notarize or authenticate the power of attorney to ensure its legal validity.
2.2 Acquisition of Vietnamese Nationality
A foreigner may apply for Vietnamese nationality if the conditions under Article 19 of the Consolidated Law on Nationality are satisfied, including:
- Full civil act capacity under Vietnamese law;
- Respect for the Constitution and laws of Vietnam, with no actions harmful to national interests;
- Respect for Vietnamese traditions and customs;
- Adequate proficiency in Vietnamese to integrate into society;
- Permanent residence in Vietnam for at least five (05) years up to the time of application;
- Ability to ensure livelihood in Vietnam (income, financial capacity, etc.).
Exemptions or relaxations of these conditions may apply to special categories, such as:
- Foreigners with spouses, parents, grandparents, or children who are Vietnamese citizens;
- Persons with exceptional contributions to Vietnam’s development and protection in fields such as science, education, economy, culture, or sports;
- Persons whose naturalization would serve the interests of the Vietnamese State;
- Minors applying for nationality together with their parent(s).
The dossier and procedures for naturalization shall be carried out in accordance with Articles 20 and 21 of the Law on Nationality and Articles 11–16 of Decree No. 191/2025/NĐ-CP.
Upon acquiring Vietnamese nationality, a foreigner shall enjoy the same rights as any Vietnamese citizen, including the right to independently establish a household business.
Although the household business model is simple and suitable for small-scale entrepreneurship, Vietnamese law currently permits only Vietnamese citizens to establish such a business. Foreigners who retain foreign nationality are not allowed to register a household business in their own name. This represents a notable legal limitation for foreign investors wishing to operate under this model.
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