Expanding a business by opening a branch or representative office is often seen as a purely operational or commercial decision. Many companies focus on location, staffing, and market potential—while assuming that legal matters are already covered under the existing company license.
In practice, however, opening a branch or representative office in Vietnam always triggers legal and compliance obligations. Businesses that fail to update legal status properly may face penalties, inspections, or restrictions on future expansion—even if their core company is fully licensed.
This article explains whether businesses must update legal compliance when opening a branch or representative office, the risks of overlooking legal procedures, and how ongoing legal consultancy helps companies expand safely and efficiently.
Under Vietnamese law, a branch and a representative office serve different legal functions.
A branch is permitted to conduct business activities within the licensed scope of the parent company. A representative office, by contrast, is limited to liaison, market research, and coordination activities and is not allowed to generate revenue.
Because these two forms have different legal roles, the legal requirements for establishment, operation, and compliance also differ. Choosing the wrong structure—or operating beyond permitted functions—can lead to serious compliance issues.
One of the most common misconceptions is that a branch or representative office can be opened internally without notifying authorities.
In reality:
Opening a branch or representative office always requires registration with competent authorities
The establishment must be recorded in the enterprise registration system
Certain documents must be submitted within statutory deadlines
Failing to complete proper registration may result in administrative penalties and orders to suspend operations at the new location.
When opening a branch, businesses often assume that the parent company’s business scope automatically applies without limitation.
However, authorities will assess:
Whether the parent company’s registered business lines cover the branch’s activities
Whether the branch operates strictly within that scope
Whether additional conditions or sub-licenses apply
If a branch performs activities not clearly covered by the registered scope, penalties may be imposed—even if the parent company holds valid licenses.
For businesses operating in regulated sectors—such as logistics, education, advertising, trading, or technology—opening a branch does not remove licensing obligations.
In many cases:
Existing licenses must be amended to include the branch
Additional approvals are required for new locations
Operational conditions must be met at each site
A common compliance mistake is assuming that a license granted for headquarters automatically covers all branches without further action.
Opening a branch often creates new tax and accounting obligations, depending on whether the branch is dependent or independent.
Businesses may need to:
Register tax codes for the branch
Update accounting structures
Adjust invoicing and reporting practices
Notify tax authorities within prescribed timelines
Failure to align tax registration with legal structure can lead to audits, penalties, or invalid invoices.
Branches and representative offices employ staff, which triggers labor law obligations.
Businesses must ensure:
Employment contracts reflect the correct employer entity
Internal labor rules apply consistently across locations
Social insurance registrations are updated properly
Working conditions comply with local requirements
Using outdated contracts or failing to register labor changes is a common inspection finding.
Representative offices are often misunderstood as “lighter” legal structures. While they have fewer obligations, their operational limits are strict.
Representative offices:
Cannot sign commercial contracts in their own name
Cannot issue invoices
Cannot generate revenue
If authorities find that a representative office is engaging in business activities, penalties may apply—even if the parent company is fully licensed.
Vietnam’s legal framework evolves frequently. Requirements for establishing or operating branches and representative offices may change due to:
Amendments to enterprise regulations
Changes in licensing or reporting rules
Shifts in enforcement practice at the local level
Businesses that rely on outdated information risk non-compliance during expansion.
Expansion is usually driven by commercial urgency. Legal compliance is often treated as an administrative afterthought.
Common reasons businesses overlook legal updates include:
Assumption that “we already have licenses”
Fragmented compliance responsibilities
Lack of legal oversight during expansion
Reliance on non-legal teams for registration tasks
As a result, compliance gaps appear only when inspections or audits occur.
Failing to update legal compliance when opening a branch or representative office can lead to:
Administrative fines
Orders to suspend operations at the new location
Increased scrutiny from authorities
Delays in future licensing or expansion
Reputational risk with partners and regulators
These consequences often outweigh the cost and effort of proper legal preparation.
Some businesses consult lawyers only to file registration documents. While this addresses formal requirements, it does not ensure ongoing compliance after establishment.
Ad-hoc legal support does not:
Monitor changes in legal requirements
Review operational compliance regularly
Coordinate labor, tax, and licensing obligations
Expansion-related compliance requires continuous legal oversight, not one-time filings.
Ongoing legal consultancy allows businesses to integrate legal compliance into expansion planning from the start.
With ongoing legal support, businesses benefit from:
Proper structuring of branches and representative offices
Alignment between licensed scope and actual operations
Timely updates to licenses and registrations
Coordinated compliance across departments
Early detection of legal risks during expansion
This proactive approach reduces disruption and ensures smooth growth.
FDI companies face additional challenges when expanding in Vietnam:
Language barriers
Differences between group policies and local law
Internal approval delays
Inconsistent enforcement across provinces
Ongoing local legal consultancy helps foreign investors navigate these challenges and expand with confidence.
DEDICA provides ongoing legal consultancy services to support businesses opening branches and representative offices in Vietnam.
As an outsourced legal department, DEDICA supports clients by:
Advising on appropriate expansion structure
Handling branch and representative office registration
Reviewing licensing and business scope implications
Supporting labor, tax, and compliance updates
Assisting with inspections and authority communications
DEDICA’s approach is practical, business-oriented, and prevention-focused, helping businesses expand without creating hidden legal risks.
Opening a branch or representative office is not just a commercial step—it is a legal event that requires careful compliance updates.
Even fully licensed businesses can face penalties if expansion-related obligations are overlooked. Proper legal preparation ensures that growth does not introduce unnecessary risk.
By engaging ongoing legal consultancy, businesses can expand confidently, stay compliant, and focus on growth rather than corrective action.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
🕒 Working Hours: Monday – Friday (8:30 – 18:00)
Contact us today for a free initial consultation with our experienced lawyers!
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