To separate a line, the group must move premises, machinery, inventory and contracts from the current entity to a new one. Because both entities share one owner, the finance team usually wants to book transfers at book value for simplicity. That is the largest tax risk of a carve-out: the tax authority may reassess at market value where the internal price does not reflect what the transferred assets are really worth.
Legal basis at the time of writing
Tax on asset transfers is determined under Corporate Income Tax Law 67/2025/QH15 and current VAT rules; tax administration follows Law on Tax Administration 108/2025/QH15, effective 1 July 2026. Because transferor and transferee are related parties, the transfer price must respect the arm’s length principle under Decree 255/2026/ND-CP on tax administration for related-party transactions, effective 1 July 2026 replacing Decree 132/2020/ND-CP. Tax incentives attached to a project or location do not automatically follow assets into a different entity.
Market price is a duty, not an option
Intra-group transferred assets must be priced at market value at transfer time, through independent valuation for major assets such as real estate, production lines and trademarks. The spread between transfer price and remaining book value is taxable income of the transferor under the current corporate income tax framework. Inventory transfers raise invoices and VAT like an ordinary sale, unless a corporate separation structure with its own succession mechanics has been confirmed with the tax authority in advance.
Incentives and carried losses do not follow assets
A line enjoying project-based tax incentives may lose them when moved into a new entity if the incentive conditions attach to the original investor and project. Likewise, the transferor’s accumulated losses do not move to the asset recipient in an ordinary asset sale. Both points must be modelled into the line’s value before the carve-out structure is fixed, because they change the after-tax cash flow the buyer actually receives.
Recommended actions
1. Obtain independent valuations for major intra-group transferred assets and keep the pricing file as market-price evidence.
2. Confirm the tax mechanics of the intended separation structure with the tax authority in advance, especially where succession treatment is expected.
3. Model lost tax incentives and non-transferable accumulated losses into the line’s valuation before fixing the structure.
In an internal carve-out, the transfer price is not an internal accounting number; it is the number the company must defend before the tax authority years after the deal.
Frequently asked questions
How are intra-group asset transfers treated?
An asset transfer between two group entities is a transaction between legally separate persons, so invoices must be issued, transfer revenue recognised and tax declared as with a third party, while respecting the arm’s length principle under Decree 255/2026/ND-CP because the parties are related. Internal book values serve management purposes only and do not replace market price when tax is assessed.
What price must be used?
The transfer price must be the asset’s market price at transfer time, established through independent valuation or comparable transaction data. Both transferor and transferee keep the transfer pricing file for this transaction, so when the tax authority reconciles under Law on Tax Administration 108/2025/QH15 the company can show the chosen price has an objective basis.
What taxes arise?
Taxes arising include corporate income tax on the spread between transfer price and the asset’s remaining value under Corporate Income Tax Law 67/2025/QH15, and VAT on transferred goods and inventory as a sale. Real estate transfers also pull in registration fees and separate land use right change procedures that belong in the carve-out timetable.
Do tax incentives transfer?
Tax incentives tied to an investment project or a preferential location do not automatically follow assets into a new entity; the recipient must re-qualify or obtain the competent authority’s confirmation of succession in the specific case. Check the original project’s incentive conditions at structure design stage, because losing an incentive can change the whole economics of the separation.
This article has been quality-reviewed by the FLAW AI Legal Council