Vietnam–South KoreaDouble Tax Agreement
Features a low 5% royalties rate — highly beneficial for Korean technology companies licensing IP to Vietnamese subsidiaries. Korea is Vietnam's largest single-country investor.
Important notice. Treaty rates shown are standard rates from published treaty texts. Reduced rates may apply subject to beneficial ownership requirements and other conditions specified in each treaty article. Tax treaty application is technically complex and fact-specific. Consult a qualified tax advisor for your specific situation before relying on these rates.
Withholding Tax Rates at a Glance
Dividends WHT
10%on dividend payments
Interest WHT
10%on interest payments
Royalties WHT
5%on royalty payments
Treaty Signed
1994
In Force Since
1994
Status
Active
Model
OECD-based
What This Means for Expats
Residency Tie-Breaker Rules
Determined by permanent home, vital interests, habitual abode, then nationality.
Practical Context
South Korea is Vietnam's largest foreign investor, led by Samsung, LG, and Hyundai. The DTA is critically important for these businesses. The 5% royalties rate is among the lowest in Vietnam's treaty network, reflecting the significant technology transfer between Korean parent companies and Vietnamese subsidiaries. Korean expats in Vietnam number in the tens of thousands, particularly in Hanoi, Binh Duong, and Ho Chi Minh City.
Key Treaty Provisions Explained
Dividends
10% capWhen a Vietnamese company pays dividends to a South Korea shareholder, Vietnam withholds 10% under this treaty — compared to Vietnam's standard domestic rate which may be higher. This applies to portfolio investors. Substantial shareholders may qualify for even lower rates in some treaties.
Interest
10% capInterest paid by a Vietnamese borrower to a South Korea lender is subject to a maximum 10% withholding tax under this treaty. This is relevant for intercompany loans between South Korea parent companies and Vietnamese subsidiaries, as well as bonds and other debt instruments.
Royalties
5% capRoyalties paid from Vietnam to South Korea for use of IP (patents, trademarks, software, know-how) are capped at 5% withholding tax. This is a favorable rate compared to many other treaties — particularly advantageous for South Korea companies licensing technology to Vietnamese operations.
Frequently Asked Questions
Does Vietnam have a tax treaty with South Korea?
Yes. Vietnam and South Korea have a Double Taxation Agreement (DTA) that has been in force since 1994. The treaty prevents the same income from being taxed in both countries and sets withholding tax caps on dividends, interest, and royalties.
What is the withholding tax rate on dividends under the Vietnam–South Korea DTA?
Under the Vietnam–South Korea DTA, the withholding tax on dividends is capped at 10%. Without a treaty, Vietnam's standard domestic WHT rate on dividends paid to foreign entities is generally higher. Always confirm the applicable rate with a tax adviser, as lower rates may apply if specific shareholding thresholds are met.
How does the South Korea–Vietnam DTA affect my salary as an expat?
Under Article 15 of the Vietnam–South Korea DTA, employment income is generally taxable in Vietnam if you are working in Vietnam. The treaty's tiebreaker rules determine your residency: Determined by permanent home, vital interests, habitual abode, then nationality. If you are a Vietnamese tax resident, your worldwide income may be subject to Vietnam PIT, with a credit or exemption for taxes paid in South Korea.
What is a Permanent Establishment (PE) under the Vietnam–South Korea treaty?
A Permanent Establishment is a fixed place of business through which a South Korea company carries on business in Vietnam. If a PE exists, Vietnam can tax the profits attributable to it. Common PE triggers include offices, branches, factories, construction sites lasting more than 6 months, and dependent agents. South Korea companies operating in Vietnam should assess PE risk carefully.
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