When hiring a foreign expert, the familiar negotiation line is “I want X dollars net per month”. Contracting on net pay reassures the expert and keeps the company competitive in the regional market, but shifts all tax-change risk onto the company. Contracting on gross does the opposite: company cost is fixed and transparent, while the expert carries tax volatility. There is no universal answer — only a risk allocation both sides must understand correctly from the start.
Net pay: the company buys the expert’s stability with tax risk
Under a net contract, every change to the tax scale, personal reliefs or insurance policy moves the company’s true cost while the expert’s income stands still. The transition to the Law on Personal Income Tax 109/2025/QH15 (effective 01 July 2026) is the textbook example: the new scale and reliefs changed the tax on the same gross, and the party absorbing the difference is the net-contracting company. In return, the company gains a clear recruiting edge with international candidates used to negotiating in net figures, and avoids per-period finalisation arguments because the expert never engages with the computation.
Gross pay: cost transparency, with expectations to manage
A gross contract locks the company’s salary cost and puts the tax duty in its correct legal place: the employee is the taxpayer, the company merely withholds and remits. This model’s risk is human: an expert used to net pay elsewhere may be disappointed by the actual take-home, especially while also bearing Vietnam housing and school costs. The softening practice is to attach an illustrative take-home table at signing, stating the assumptions on reliefs and on exchange rates where pay is pegged to a foreign currency.
The hybrid model and a safe conversion
Many groups choose a hybrid: gross salary as the legal basis in the contract, plus a guaranteed minimum net for a fixed period or until the first tax-law change, after which the parties renegotiate. When converting between models, use the proper progressive conversion — the gross-up mechanics — and write the final gross as a fixed number in the contract rather than an open formula. And under either model, the contract needs one clear sentence on the payment currency and the applicable exchange rate, because expatriate pay disputes start from currency swings at least as often as from tax.
Frequently asked questions
Is net or gross better in a foreigner’s contract?
Neither is absolutely better: net is strong for recruiting but places tax-change risk on the company; gross locks cost and is legally transparent but leaves the expert carrying take-home volatility. Choose by the company’s capacity to absorb tax risk and by group practice.
What risk does a net contract create for the company?
Every change to the tax scale, reliefs or compulsory insurance moves true cost outside the budget, as in the transition to the Law on Personal Income Tax 109/2025/QH15. The company must also maintain accurate gross-up capability every pay period.
What happens when tax changes mid-contract?
The signed clause governs: a net contract without a sharing clause leaves the whole change with the company; under gross, the expert’s take-home moves. Hybrid models often set a renegotiation trigger at the first tax-law change so sharing stays controlled.
How is net pay safely converted to gross?
Convert progressively (gross equals net plus the tax computed on that gross), calculated at signing with the individual’s full reliefs, then write the final gross as a fixed figure in the contract with clauses on tax-law change and exchange rates.
This article has been quality-reviewed by the FLAW AI Legal Council