Legal regulations on foreign-invested enterprises purchasing construction works.

I. Understanding of foreign-invested enterprises purchasing construction works

1. What is a foreign-invested enterprise purchasing construction work(s)?

The term refers to the transaction whereby a foreign-invested enterprise acquires a completed construction work, such as office buildings, shopping centers, factories, or hotels from lawful owners. However, according to the Land Law 2024, foreign-invested enterprises are not allowed to purchase land use rights, and may only lease land from the State, economic organizations, or individuals who legally hold such rights. 

2. Are foreign-invested enterprises allowed to purchase construction works?

Yes, foreign-invested enterprises are allowed to purchase construction works in Vietnam under specific conditions and limitations governed by the 2023 Law on Real Estate Business, Land Law 2024, and Law on Investment 2020. In particular, foreign-invested enterprises may acquire completed construction works (e.g., office buildings, commercial centers, factories) for operational or business purposes.

However, they cannot purchase land use rights, and must lease the land associated with such properties. Additionally, if an foreign-invested enterprise intends to use the property for real estate business purposes (e.g., resale, lease, lease-purchase), it must:

- Having the appropriate business line registered;

- Being approved in its investment registration;

- Ensuring the transaction is made via a notarized or certified contract;

- Avoiding restricted zones for foreign ownership.

-> In short, foreign-invested enterprises may purchase construction works, but not land, and must strictly comply with relevant laws to minimize legal risk.

II. Legal provisions on foreign-invested enterprises purchasing construction works

1. Definition of a foreign-invested enterprise

Pursuant to Clause 22, Article 3 of the Law on Investment 2020:

A foreign-invested economic organization is one in which a foreign investor is a member or shareholder.

Pursuant to Clause 1, Article 23 of the same law, a foreign-invested economic organization is treated as a foreign investor if:

- A foreign investor holds more than 50% of charter capital or, in a partnership, the majority of general partners are foreign individuals;

- An economic organization as described above continues to invest in another entity, holding more than 50% of its charter capital;

- A foreign investor and a foreign-invested organization jointly hold more than 50% of another entity.

-> Therefore, classification depends on capital ownership ratio. If foreign ownership exceeds 50%, the enterprise is subject to stricter legal conditions applicable to foreign investors.

2. Conditions for foreign-invested enterprises to purchase construction works

To purchase construction works, foreign-invested enterprises must satisfy the following conditions under the Law on Real Estate Business 2023, Land Law 2024, and related regulations:

(1) Conditions regarding use scope and purposes:

- Works may only be purchased for proper use or business aligned with the registered business lines;

- For real estate business purposes (resale, lease, lease-purchase), the enterprise must be licensed accordingly in its Investment Registration Certificate;

- FIEs may not freely purchase and resell residential property unless approved as a housing project developer under the Housing Law.

(2) Conditions regarding land use rights:

- Foreign-invested enterprises cannot purchase land use rights;

- If the property is attached to land, the foreign-invested enterprise must lease the land from the State, or from legal land users, as per Clause 3, Article 206 of the Land Law 2024;

- Post-acquisition, land use must conform with the approved land use purposes.

(3) Legal status of the construction work:

- The property must have a valid certificate of ownership, be free from disputes, mortgage, or legal seizure;

- The purchase contract must be in writing and notarized or certified;

- The property must not be located in areas restricted for foreign investors.

III. Questions regarding foreign-invested enterprises purchasing construction works

1. Can foreign-invested enterprises purchase land to build a head office (headquarter)?

Pursuant to Clause 3, Article 206 of the Land Law 2024, foreign-invested enterprises are not permitted to purchase land to build headquarters. They can only lease land for commercial, service, or non-agricultural production purposes from:

- The State,

- Economic organizations,

- Or individuals with lawful land use rights.

2. What should foreign-invested enterprises consider before purchasing construction works?

Important legal considerations for foreign-invested enterprises when purchasing construction works in Vietnam include:

- Foreign-invested enterprises may acquire the building but not the land;

- Land must be leased, not purchased, and its legal status must be verified (ownership, lease term, usage purpose);

- The purchase must serve the registered business scope;

- Free trading of properties is not allowed as with domestic companies;

- All transactions must comply with the Law on Real Estate Business 2023, requiring notarized contracts and valid real estate business eligibility.

3. Can foreign-invested enterprises receive transfer of land use rights to build a head office?

Based on Clause 8, Article 45 of the Land Law 2024, foreign-invested enterprises (as well as overseas Vietnamese and foreign organizations) are not allowed to receive the transfer or donation of land use rights in unauthorized cases.

-> Foreign-invested enterprises cannot acquire land use rights to build head offices. They may only lease land from authorized parties.

4. Can foreign-invested enterprises lease land to invest in and build cemeteries in Vietnam?

Under Clause 1, Article 10 of the Law on Real Estate Business 2023, foreign-invested enterprises may conduct real estate business only through the following activities:

- Investment in housing and construction works for sale, lease, or lease-purchase;

- Infrastructure development for transfer or lease;

- Purchase or lease-purchase of housing or construction areas for business;

- Leasing of land with infrastructure for sublease;

- Leasing of buildings and spaces for subleasing.

-> The law does not include cemetery development as a permitted real estate activity for foreign-invested enterprises.

Therefore, foreign-invested enterprises cannot lease land or engage in the investment, development, or operation of cemeteries in Vietnam under current legal regulations.

IV. Legal consultancy and services for foreign-invested enterprises purchasing construction works

The above article provided by NPLaw outlines key legal aspects of foreign-invested enterprises purchasing construction works in Vietnam. With an experienced team of legal experts and lawyers, NPLaw is ready to advise and support clients with matters related to real estate acquisitions by foreign-invested enterprises. For personalized consultation or legal assistance, please contact NPLaw using the details below: