How FDI Companies Can Hire International Employees in Vietnam Without a Legal Entity

Key Takeaways

• The deciding question is not whether the company has a legal entity yet, but where this person will work. That single answer determines every legal obligation, and confusing the two is the most common compliance risk FDI companies face when entering Vietnam.
• International employees working remotely who spend fewer than 183 days per year in Vietnam do not trigger Vietnamese PIT or social insurance obligations. Payroll can be run through the parent company’s home-country payroll system, with no Vietnam entity required.
• On-site foreign employees require a legal entity to sponsor a work permit under Decree 219/2025. The full timeline from filing to legal employment is 1 to 2 months, not the 6 months most companies assume.
• While the legal entity is being established, HR outsourcing services allow FDI companies to legally hire local Vietnamese employees within 2 to 4 weeks, building the ground team in parallel.

Vietnam attracted USD 38.4 billion in newly registered FDI in 2025, and most of those companies need people on the ground before their legal entity is ready. Whether they can hire foreign employees without an entity depends entirely on where those employees will work. That single factor determines two completely different legal paths, and understanding those obligations before hiring in Vietnam is what separates a clean market entry from an expensive compliance problem.

The one question that determines everything: where will they work?

Before reviewing any procedure, the company needs to answer one question: will this person work remotely from their home country, or will they be physically present and working in Vietnam? That answer determines all legal obligations: work permits, personal income tax, social insurance, and how payroll is structured.

Path 1: International hiring with no Vietnam entity required

Under Decree 219/2025/ND-CP, foreign nationals who are not working directly in Vietnam do not fall under Vietnamese work permit regulations. If an international employee works entirely remotely and spends fewer than 183 days per year in Vietnam, the company does not need a legal entity, does not need a work permit, and has no Vietnam social insurance obligation. Salary is paid through the parent company’s payroll system in its home country.

This path works for a range of roles during the market exploration phase: regional directors covering multiple markets, strategy advisors, senior executives coordinating remotely before formal Vietnam operations begin. For companies evaluating global hiring options or hiring abroad before committing to a permanent presence, this is often the most practical starting point.

The risk that needs active management is permanent establishment. When a remote employee regularly signs major contracts with Vietnamese partners on behalf of the parent company, or when there is a de facto office and business activity in Vietnam despite no registration, the General Department of Taxation can determine that a permanent establishment exists. That triggers corporate income tax recovery at 20% plus all associated tax obligations. The line between remote support and substantive business activity in Vietnam needs to be defined clearly before applying this path.

Path 2: On-site international employees require a legal entity, but the timeline is shorter than expectedorter than expected

If the company needs to hire employees overseas who will work on-site in Vietnam on a regular basis, a legal entity is a non-negotiable prerequisite for sponsoring a work permit under Decree 219/2025/ND-CP, effective August 7, 2025. There is no workaround for employees working in Vietnam full-time. What surprises most companies is how short the full process actually is.

Step 1: Establishing the legal entity takes 20 to 25 working days

The Investment Registration Certificate is issued within 15 working days from receipt of a complete application. The Enterprise Registration Certificate follows within 3 to 5 working days. With properly prepared documentation, the entire entity formation phase takes approximately 20 to 25 working days.

Step 2: Securing the work permit takes a further 15 to 20 working days

Once the entity is registered, the company submits a justification for employing a foreign national in the specific role (5 working days), followed by the work permit application to the Provincial People’s Committee, with a 10-working-day processing timeline under Decree 219/2025. Total time from filing entity paperwork to the employee starting legally: 1 to 2 months.

Decree 219/2025 also defines 15 exemption categories that eliminate the work permit requirement, including intra-company transferees for under 3 months and specialists in priority sectors such as technology, finance, and digital transformation confirmed by the relevant ministry. Exempt employees still need written confirmation from the Department of Labor, and the legal entity must still act as sponsor. Companies unsure which category applies can consult expat services for foreigners working in Vietnam to assess eligibility before starting the process.

The transition period: keeping operations moving while the entity is established

One to two months is manageable, but not without opportunity cost. During that window, the company still needs a local team to handle ground operations: partner outreach, site preparation, and market development.

HR outsourcing, structured under Articles 170 to 178 of the 2019 Labor Code and Decree 145/2020, is the legal mechanism that lets a foreign company hire Vietnamese employees without a local entity. The outsourcing provider acts as the employer of record, handling employment contracts, payroll, social insurance, and tax filings. The foreign company manages work direction and day-to-day operations directly. Time to first employee starting: 2 to 4 weeks.

The most effective approach is to run two tracks in parallel: international staff work remotely while a local team is built through the PEO model from week one. Once the legal entity is in place, both tracks transition to formal employment without disruption, and Vietnamese employees can move to direct contracts seamlessly.

The practical threshold for switching fully to a direct entity structure is around 20 employees. Below that, HR outsourcing costs are significantly lower than maintaining a legal entity that is not yet fully operational, while eliminating the compliance risk that is highest precisely during this early stage.

Conclusion

Hiring international employees in Vietnam does not always require a legal entity, but it does require clarity on which path applies to each role from day one. Mapping every position to the correct path, using HR outsourcing to build the local team in parallel, and planning the transition when the entity is ready is what makes the difference between a smooth market entry and a costly correction. Talentnet’s HR outsourcing services cover the full cycle from initial hiring and payroll through to direct employment transfer once the legal entity is operational.