In recent years, Vietnam has become an attractive destination for foreign investors and entrepreneurs due to its growing economy and strategic location in Southeast Asia. As a result, many foreigners are exploring opportunities to establish businesses in the country. One common question that arises is whether foreigners can set up a business household in Vietnam. This article aims to clarify the regulations and procedures surrounding the establishment of business households by foreign individuals in Vietnam, providing valuable insights for those interested in entering the Vietnamese market.
1. What is Business Household?
Current laws do not provide a specific definition for a business household. However, Clause 1, Article 79 of Decree 01/2021/ND-CP defines it as follows:
“A business household shall be registered for establishment by an individual or household members who shall take responsibility for the household’s business operations with all of his/her/their property.”
According to Clause 1, Article 79 of Decree 01/2021/ND-CP, the head of a business household can be one of the following:
- An individual who registers the business household;
- A person authorized by the family members to represent the business household if the family members are the ones registering the household.
An individual or family member, who is a Vietnamese citizen with full legal capacity as prescribed by the Civil Code, has the right to establish a business household, except for the following cases:
- Minors, individuals with limited legal capacity, individuals who have lost their legal capacity, or individuals who have difficulty in recognizing or controlling their behavior;
- Individuals under criminal investigation, detention, serving a prison sentence, undergoing administrative measures at compulsory rehabilitation centers, compulsory education centers, or those prohibited by the Court from holding certain positions, practicing certain professions, or working in certain fields;
- Other cases as prescribed by related laws.
2. Can Foreigners Establish a Business Household in Vietnam?
According to the above regulation, the mandatory condition for establishing a business household is that the individual or family members must be Vietnamese citizens.
Under Clause 1, Article 5 of the 2008 Nationality Law, individuals who hold Vietnamese nationality are considered Vietnamese citizens. Therefore, foreigners who do not hold Vietnamese nationality do not have the right to establish a business household.
3. Authorizing a Vietnamese Citizen to Establish a Business Household
However, foreign nationals have the option to operate a business under the form of a business household by granting power of attorney to a Vietnamese citizen to establish it on their behalf.
This process is carried out through a power of attorney agreement in line with the provisions of the 2015 Civil Code. In this arrangement, the foreigner acts as the principal, wishing to establish the business household, while the Vietnamese citizen serves as the authorized party, meeting the necessary requirements to set up the business.
While the registered owner of the business household is listed as the authorized person on the registration certificate, the foreigner who granted the power of attorney can still manage and oversee the business, benefiting from the income and profits generated. These arrangements will be specified in the power of attorney contract.
In conclusion, while the legal framework for establishing a business household in Vietnam primarily restricts this activity to Vietnamese citizens, foreign nationals still have a pathway to operate in this format. By granting a power of attorney to a Vietnamese citizen, foreigners can legally establish and manage a business household, while benefiting from the business’s income and profits. This process allows foreign entrepreneurs to enter the Vietnamese market and take advantage of the country’s business opportunities. Understanding the regulations and procedures involved is crucial for anyone interested in setting up a business in Vietnam, ensuring compliance and a smooth establishment process.
For more information about Business Households, please read via this link.
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