Scenario: a German parent transfers a component-manufacturing process to its Vietnamese subsidiary, charging 5% of revenue as royalty. The two sign a 2-page English “internal agreement”, registered nowhere. When the subsidiary remits fees abroad, the bank demands supporting documents — and the tax authority reassesses the transfer value for want of a registered contract. Cross-border technology transfer in Vietnam is no intra-group private matter — it’s a state-managed transaction with registration procedures and clear tax consequences.
Legal framework
- Law on Technology Transfer 2017 (07/2017/QH14) and Decree 101/2026/ND-CP (replacing Decree 76/2018/ND-CP, which ceased to have effect on 1 April 2026): governing transfers from abroad into Vietnam, from Vietnam abroad, and domestic;
- Restricted technologies: listed technologies require a licence for transfer;
- Contract registration: technology transfer contracts subject to registration with science-and-technology authorities.
Transfer contracts: essential contents
- Subject matter: describing the technology (know-how, processes, technical dossiers) — detail prevents disputes;
- Scope of rights: exclusive/non-exclusive, territory, term;
- Fees: computation (revenue royalties, lump sums, hybrids), payment timing;
- Support duties: training, documentation, technical assistance;
- Non-compete and confidentiality: protecting know-how post-expiry;
- Arm’s length: related-party fees must meet market pricing (TP linkage).
Tax on transfer fees
- Foreign contractor tax: outbound technology fees attract FCT (VAT and contractor CIT) — withheld by the Vietnamese subsidiary before payment;
- Tax treaties: check the Vietnam–transferor-country treaty for rates and relief procedures;
- Deductibility: business-serving fees with lawful contracts are CIT-deductible — but above-market related-party portions may be disallowed.
Common traps
- Unregistered contracts: no legal basis when disputes arise or banks/tax ask;
- Zero fees between affiliates: free transfers to subsidiaries — authorities may impute market value;
- Mixing technical-service fees: technology transfer vs technical services face different tax treatments — separate them in the contract;
- Prohibited/restricted tech: not checking the lists before signing.
FAQs
Parent-to-subsidiary transfers — registration needed?
Yes — technology transfer contracts from abroad into Vietnam require registration, including between related parties.
Tax on outbound transfer fees?
Foreign contractor tax (VAT + contractor CIT), withheld before remittance. Check treaties for relief.
Free transfers to subsidiaries?
Contractually fine, but tax authorities may impute market value between related parties — “free” doesn’t mean “no taxable value”.
Notarisation required?
Not mandatory, but registration with the competent authority is required.
Note: This article is for reference only. Contact FLAT Law Firm.