Quick answer: Share awards under an ESOP for foreign experts are not subject to PIT at the time of grant — the tax obligation arises only when the employee transfers (sells) the shares. Clause 3, Article 50 of Decree 253/2026/ND-CP classifies income from share awards as employment income while providing that no tax is collected at grant; the securities company or custodian bank withholds, declares and pays on transfer. On sale, the employee faces two layers: PIT on employment income and the 0.1% securities transfer tax on each sale price.
Applicable legal bases
The framework below is in force as of 20 October 2026 and directly governs this article:
- Law on Personal Income Tax 109/2025/QH15 (effective 01/07/2026; provisions on employment income of resident individuals apply from tax year 2026; replaces Law 04/2007/QH12) — Article 3 (employment income includes monetary or non-monetary benefits in any form); Article 23 (securities transfers by non-residents: transfer price multiplied by the 0.1% rate).
- Decree 253/2026/ND-CP (effective 01/07/2026; issued 30/06/2026) — Clause 3, Article 50: income from share awards (ESOP) falls under employment income; no tax collected when the employee receives the shares; the obligation arises upon transfer.
- Law on Tax Administration 108/2025/QH15 (effective 01/07/2026, replacing Law 38/2019/QH14) — withholding, substitute filing and payment by organizations (securities companies, custodian banks).
In-depth analysis
The legal logic behind “no tax at ESOP grant” is highly practical: at allocation, ESOP shares are typically locked up for 1–3 years under the company scheme — the employee cannot sell them to raise cash for the tax. Taxing at grant would force employees to pay out of pocket on an illiquid asset. The law therefore picks the transfer moment as the trigger: once the shares have become concrete economic benefit in cash, assessing and paying the tax becomes feasible.
The key point on measuring income: taxable income from ESOP is determined by the actual sale price at transfer, not the price at grant. If the market price falls below the grant-date value by the time of sale, taxable income is recomputed on the lower sale price. Conversely, appreciation during the lock-up is fully included in taxable income — the employee enjoys the entire upside but is taxed on the full realized spread.
The two tax layers on selling ESOP shares
When an expert sells ESOP shares, two tax obligations arise simultaneously. Layer one: PIT on employment income — because share-award income is classified in this group under Clause 3, Article 50 of Decree 253/2026; the payer withholds at the rate prescribed in Article 50 before payment. Layer two: the 0.1% securities transfer tax on each transfer price — applied uniformly, whether the shares are of a public or non-public company, listed or unlisted, and computed on the sale price (even a loss-making sale still bears 0.1% on the sale price). The securities company holding the account automatically withholds the 0.1% at source before the proceeds reach the seller.
On procedure: for income from bonus shares or ESOP shares bought at preferential prices, where an organization withholds and pays on the individual’s behalf, filing is monthly or quarterly in line with the VAT filing period, using Form 06/TNCN with appendices — not Form 05/KK-TNCN used for ordinary salary. This decree-level clarification is something many FDI companies’ accounting teams have not yet updated.
ESOPs issued by the foreign parent — the specifics
For foreign experts, ESOPs are often issued by the overseas parent (shares of a group listed in the US, Japan or Europe). The tax treatment is no different in principle: no tax at grant, tax at transfer. The distinctive point is enforcement: if the shares are custodied at a foreign custodian bank and sold on a foreign exchange, Vietnam’s at-source withholding mechanism is hard to apply directly — the individual must self-declare and pay tax in Vietnam on the ESOP income attributable to the working period in Vietnam. Companies should spell out in the global ESOP policy who provides documentation, the conversion exchange rate, and filing support for employees in each country.
Common risks and how to prevent them
- Assuming ESOPs are fully tax-exempt: wrong — only the timing is deferred to transfer, not exempted.
- Forgetting the 0.1% layer on sale: many compute only employment-income PIT and miss the 0.1% on the sale price — the securities company withholds it automatically so underpayment risk is low, but understanding it matters for net-return math.
- Filing the wrong form: ESOPs use Form 06/TNCN, not Form 05/KK-TNCN — a wrong form can get the dossier returned.
- Foreign-parent ESOPs with nobody filing: set up individual self-filing as soon as a sale occurs, keeping trade confirmations and the exchange rate at sale.
Frequently asked questions
1. Is tax due when ESOP shares are granted?
No. Under Clause 3, Article 50 of Decree 253/2026/ND-CP, no PIT is collected when the employee receives ESOP shares; the obligation arises only upon transfer (sale) of the shares.
2. What taxes apply when selling ESOP shares?
Two layers: PIT on employment income (share-award income is classified in this group) and the 0.1% securities transfer tax on each sale price — even a loss-making sale bears 0.1% on the sale price.
3. How is tax computed if the share price falls after grant?
Taxable income follows the actual sale price at transfer. If the sale price is below the grant-date value, tax is computed on the lower sale price — the employee is not taxed on value that has evaporated.
4. Where is tax filed for ESOPs issued by the overseas parent?
The portion of income attributable to the working period in Vietnam must be declared and paid in Vietnam. If the sale goes through a foreign exchange with no Vietnamese withholding agent, the individual self-files; companies should define documentation responsibilities in the global ESOP policy.
Key takeaway for investors
ESOPs are taxed at sale, not at grant — that is the single biggest point to remember. On sale, the employee bears both employment-income PIT and the 0.1% securities transfer tax; company accountants file with Form 06/TNCN. For foreign-parent ESOPs, do not let “nobody withholds” become “nobody files.”
