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Acquisition of Assets/Real Estate from Target Company - M&A Vietnam
In the context of increasingly dynamic Mergers and Acquisitions (M&A) activities in Vietnam, the acquisition of assets, particularly real estate, from the target company has emerged as a popular transaction method. This approach offers numerous opportunities but also harbors considerable legal challenges. Join DB Legal as we delve into analyzing current legal regulations, as well as the key advantages and disadvantages of acquiring assets/real estate in M&A transactions.
Table of contents:
I. Legal Basis:
- Civil Code No. 91/2015/QH13 dated November 24, 2015;
- Law on Land No. 31/2024/QH15 dated January 18, 2024 (Note: This Law takes effect from January 01, 2025, replacing the Law on Land 2013);
- Other relevant legal documents at the time of the transaction.
II. Requirements for Approval or License:
Basically, the transfer of assets by the target company will be based on the regulations on civil purchase and sale transactions as stipulated in the Civil Code and its implementing documents. According to the general principle, the purchase and sale of assets by the target company does not require a license or prior approval from the competent state authority. However, after completing the purchase and sale transaction, the registration of asset ownership rights at the competent state authority as required by law is mandatory to establish the rights and obligations of the buyer.
Regarding the transfer of real estate, this is a complex transaction and is subject to regulation by numerous legal provisions, especially the Law on Land 2024 and its implementing documents. Due to its specific nature and the overlaps and inconsistencies that sometimes occur between regulations, seeking opinions and confirmation from the competent state authority (e.g., Department of Natural Resources and Environment) before conducting the transaction is highly advisable to ensure legality and minimize risks.
Another important factor that can greatly affect the purchase/transfer transaction of assets/real estate is the status of the asset being used as collateral at a bank. The sale/transfer of mortgaged assets is a complex process, requiring the written consent of the bank to release the collateral or an agreement on the transfer of debt obligations.
III. Taxation in Asset Purchase/Real Estate Transfer Transactions:
Depending on the type of asset purchased/transferred at the Target Company, the following types of taxes need to be carefully considered and calculated when carrying out the transaction:
- Corporate Income Tax (CIT) for the seller: The seller is obligated to declare and pay CIT on the income arising from the sale/transfer of assets/real estate according to the provisions of the current Law on Corporate Income Tax.
- Value Added Tax (VAT): The application of VAT will depend on the type of asset and the transaction subject/parties according to the provisions of the Law on Value Added Tax.
- Other taxes and fees: May include registration fee upon transfer of asset ownership/usage rights, fees related to registration procedures, and other taxes and fees depending on the specifics of the transaction (e.g., change of land use purpose may result in additional financial obligations).
IV. Conclusion:
The acquisition of assets, particularly real estate, in M&A transactions in Vietnam is a popular method but involves many complex legal issues. Although in principle, ordinary asset purchase and sale transactions do not require prior approval, compliance with the provisions of the Civil Code and carrying out ownership registration after the transaction are mandatory. Regarding real estate, due to the complexity of the land law system, seeking consultation from the competent state authority before the transaction is a prudent and essential step. Furthermore, the status of mortgaged assets and related tax obligations are also important factors that need to be carefully considered to ensure the M&A transaction is successful and complies with the law. DB Legal recommends that investors and businesses should seek professional legal advice to comprehensively assess the legal risks and opportunities in asset/real estate purchase and sale transactions within the framework of M&A in Vietnam, especially in the context of significant changes in land law in 2025.
The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.
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