Some foreign investors enter Vietnam not by setting up a subsidiary but by implementing a project under a business cooperation contract (BCC) or similar structures, establishing a project management office (PMO) in Vietnam. When leasing office space for this model, nearly every assumption of an ordinary lease changes: the signatory is not a Vietnamese enterprise, the PMO has no legal personality, and its lifespan is bound to the project contract. This article compares the two leasing models so investors choose the right structure from the start.
1. What a PMO is, and who signs the lease
Under investment law, a foreign investor implementing a project under a BCC may establish a management office in Vietnam and must register that office with the investment registration authority where it is located. The PMO has its own seal, may open accounts and recruit staff to serve the BCC’s implementation — but it is not an independent legal person and not a branch of a Vietnamese subsidiary. Consequences for the lease: the lessee on the contract is the foreign investor (a foreign organisation), signed by the PMO’s representative within their authority; ultimate payment liability rests with the foreign investor, not confined to “office assets” as with a limited liability company.
2. Diligence and clause differences when the lessee is a foreign organisation
A building owner diligences a foreign organisation very differently from a Vietnamese company: they typically require consular-legalised copies of the investor’s incorporation documents, the PMO registration papers, and sometimes a parent payment guarantee or an above-market deposit. On the investor’s side, clauses deserve more care than in a company lease: first, a termination clause keyed to the BCC’s fate — if the project/BCC ends early, the PMO must be dissolved by procedure, and the lease needs a matching termination right to avoid paying rent after the office legally ceases to exist for use; second, currency — rent remains payable in Vietnamese dong domestically even though the lessee is a foreign organisation, save for very narrow foreign-exchange exceptions that do not cover office leasing.
3. Operating differences: invoices, tax and labour
A PMO serving a BCC has its own tax regime tied to the BCC (profit sharing/tax under the contract terms and contractor-tax rules where relevant) — office rent is a management-activity cost recognised under that regime, not an ordinary corporate income taxpayer’s expense. On labour: the PMO recruits staff directly to serve the project; foreign staff working at the office still need work permits as usual. On invoices: the lessor invoices the PMO under its registration details — agree the name and tax code serving the BCC at signing to avoid documentary mismatches later.
4. When to choose which model
The PMO model fits when: the project runs under a BCC without a joint legal entity; the Vietnam activity has a clearly bounded term under the project contract; and the investor wants a management presence without creating a subsidiary to maintain after the project. Conversely, if activity tends to expand into regular business, commercial contracts with Vietnamese clients beyond the BCC scope, or multiple sector licences — a subsidiary is the right structure, and leasing for a subsidiary is simpler in every respect: clear subject, easier domestic credit diligence, ordinary corporate expense treatment. The deciding point is the investment structure already chosen; the lease is only a consequence — do not let one building’s convenience reverse the structural decision.
Frequently asked questions
Must the PMO be registered before signing the office lease?
The safe sequence is to register the PMO with the investment registration authority before or in parallel, because the office’s registration papers are the basis for the building owner to confirm the signatory’s authority and to invoice the correct name. Some owners accept signing with the investor through a duly authorised representative before PMO registration completes, but that depends on each building’s diligence.
Does the PMO register its office address as a “head office” like a company?
The PMO registers its office location with the investment registration authority (not an enterprise head office under the Law on Enterprises). The address must be a real location with a valid lease; when relocating, the investor notifies/updates the PMO registration under investment procedures.
When the BCC ends, what happens to the office lease?
The investor must complete PMO cessation procedures and settle obligations, including the lease. That is why the lease needs a termination clause synchronised with BCC termination events from signing; otherwise the investor remains liable for rent to the end of the lease term even after the office is dissolved, because liability belongs to the foreign investor and does not lapse with the office.
Must Vietnamese staff of the PMO be hired through a service company?
No. The PMO may recruit labour directly to serve the BCC’s implementation and sign labour contracts under Vietnamese labour law; insurance and personal income tax obligations are handled through the tax code serving the office/BCC activity under applicable tax guidance.
