What is a representative office, does it have legal status?
A representative office is a form of commercial presence of a foreign company in Vietnam, but does not have independent legal status and is not allowed to directly do profitable business in Vietnam - only allowed to carry out trade promotion, market research, and communication activities.
So can representative offices recruit personnel?
Yes — representative offices are still allowed to recruit personnel to serve the office's own operations (administrative staff, interpreters, liaison representatives), and the head of the representative office can sign a labor contract with the office's personnel. However, the scope and job role are limited to the scope of functions of the representative office (not allowed to directly do business or make profitable sales).
Problems arise in practice
Many businesses want to expand their sales and production teams in Vietnam but only have representative offices - this is a legal limit that cannot be overcome simply by recruiting more people to the representative office.
Solution when it is necessary to expand beyond the representative office function
- If you only need additional support and administrative personnel: you can still recruit through the representative office as usual.
- If you need personnel to perform business, sales, or production activities: you should use the EOR service to legally hire personnel in Vietnam, or proceed to establish a subsidiary with full business functions.
Practical advice
Enterprises should clearly define the functional boundaries of the representative office before expanding the team, avoiding cases where actual operations exceed the permitted scope, leading to the risk of being fined or having the representative office license revoked.
Can representative offices sign commercial contracts and issue invoices? No. This is the core limitation of representative offices — all direct profitable business activities need to be carried out through a legal entity (subsidiary) or through EOR provider/partner in Vietnam.
Is it difficult to convert from a representative office to a subsidiary? In terms of procedures, it is a process of establishing a new business, not a direct "upgrade"; Enterprises need to prepare investment documents and be able to keep existing personnel when converting.