Using company assets for lease: legal perspectives and risks

In practice, using company assets for lease is a way for enterprises to efficiently exploit idle assets and increase revenue. However, this activity is governed by various legal regulations on enterprises, contracts, and taxation, requiring enterprises to exercise proper authority and follow prescribed procedures to avoid legal risks.

I. Current practice regarding the use of company assets for lease

In the course of operations, many enterprises have a need to exploit idle assets in order to optimize the efficiency of capital utilization. Accordingly, using company assets for lease has increasingly become a common option in business practice.

Many enterprises own headquarters, factories, machinery, vehicles, or other assets that are not fully utilized at full capacity.

Using company assets for lease enables enterprises to generate additional income, reduce asset maintenance costs, and enhance management efficiency.

However, in numerous cases, leasing activities are carried out without a clear legal basis, without resolutions of the Members’ Council/Board of Directors, with cursory contracts, or without full compliance with tax obligations.

These shortcomings easily lead to disputes, legal exposure, and the risk of administrative penalties.

The above practice shows that, although using company assets for lease brings economic benefits, failure to comply with legal regulations and internal governance procedures exposes enterprises to multiple risks. Therefore, accurately identifying the current practice is an important basis for enterprises to develop appropriate and legally safe asset leasing plans.

II. Concept of using company assets for lease

Using company assets for lease means that an enterprise exploits assets under its ownership to generate revenue, and such activity must comply with enterprise law and other relevant legal regulations.

1. What is the use of company assets for lease?

In the course of production and business activities, enterprises often own various types of assets serving operational and development purposes. When such assets are not fully utilized, the need to use them to generate additional revenue is inevitable.

Using company assets for lease refers to the enterprise’s use of assets under its lawful ownership or lawful right of use to allow other organizations or individuals to exploit and use such assets for a certain period, on the basis of a lease contract and in exchange for rental payments. This activity is carried out for profit-making purposes, to optimize asset value, and does not change the company’s ownership of the leased assets.

Accordingly, using company assets for lease is a lawful and common form of asset exploitation in practice, but it must be carried out within the proper scope of authority, for proper purposes, and in full compliance with relevant legal regulations.

2. Which types of company assets may be used for lease?

In principle, a company may use its assets for lease if such assets are under its lawful ownership or lawful right of use and are not prohibited from being transacted under the law. Assets commonly leased include:

• Immovable property: headquarters, offices, factories, warehouses, business premises;
• Movable property: machinery, equipment, production lines, means of transport;
• Other assets with economic value that can be independently exploited under contract.

Where assets are mortgaged, pledged, or subject to restrictions on disposition, leasing may only be carried out upon satisfaction of legal conditions or with the consent of relevant entitled parties.

Accordingly, most company assets may be leased, provided that the enterprise has lawful rights over such assets and the leasing does not violate legal restrictions.

3. Is the use of company assets for lease considered a business activity?

Pursuant to Clause 21 Article 4 of the Law on Enterprises 2020 (as amended and supplemented in 2025), business means the continuous performance of one, several, or all stages from investment and production to service provision for profit-making purposes.

Pursuant to Clause 2 Article 7 of the Law on Enterprises 2020 (as amended and supplemented in 2025), enterprises have the freedom to conduct business in sectors and trades not prohibited by law, and there is no prohibition on asset leasing.

Where an enterprise leases assets on a regular and continuous basis, it may be required to register additional business lines in accordance with Article 30 of the Law on Enterprises 2020 (as amended and supplemented in 2025). Regardless of whether business lines are registered, income from asset leasing constitutes corporate income taxable income pursuant to Article 3 of the Law on Corporate Income Tax.

Based on the above provisions, the use of company assets for lease is in principle regarded as a business activity, giving rise to revenue and corresponding legal and tax obligations. Enterprises must rely on the nature and frequency of leasing activities to comply with the Law on Enterprises 2020 (as amended and supplemented in 2025) and other relevant laws.

III. Legal regulations relating to the use of company assets for lease

The company’s use of assets under its ownership for lease must satisfy legal requirements on decision-making authority, purpose of use, and form of transaction, and must comply with the Law on Enterprise 2020 (as amended and supplemented in 2025) and the Civil Code 2015 to ensure legality and mitigate potential risks.

1. What are the legal conditions for a company to lease out assets?

Pursuant to Clauses 1 and 2 Article 7 of the Law on Enterprise 2020 (as amended and supplemented in 2025), enterprises have the right to possess, use, and dispose of their assets. However, in order to lease out assets, the company must satisfy the following legal conditions:

• Have lawful ownership or lawful right of use over the leased assets, in accordance with Articles 105 and 472 of the Civil Code 2015;
• The assets are not subject to statutory prohibitions on transactions, are not distrained for enforcement of judgments, and are not restricted from disposition by decisions of competent authorities;
• The leasing is decided in accordance with the company’s internal authority, consistent with the company charter and corporate governance regulations (Members’ Council/Board of Directors or the company owner decides on high-value assets);
• The asset lease contract is established in accordance with the Civil Code, clearly specifying the leased subject matter, lease term, rental price, and the rights and obligations of the parties pursuant to Section 5 Chapter XVI of the Civil Code 2015;
• Compliance with specialized laws (if any), such as land law, housing law, construction law, or real estate business law in cases involving real estate leasing.

In summary, a company may lease out assets where it has lawful rights over the assets, the leasing is decided by the competent internal authority, is expressed in a lawful contract, and does not fall under statutory prohibitions. Full compliance with these conditions helps enterprises mitigate legal risks and disputes arising from asset leasing.

2. How does the law regulate the rights and obligations of the company during the lease term?

Pursuant to Section 5 Chapter XVI of the Civil Code 2015 (Articles 472 to 482), during the lease term, the company as the lessor has the following rights and obligations:

Rights of the lessor:

• To request the lessee to pay rent in full and on time in accordance with the contract (Article 481);
• To require the lessee to use the assets for the agreed purposes and functions (Article 480);
• To unilaterally terminate the contract and claim damages where the lessee breaches its obligations (Articles 480 and 482).

Obligations of the lessor:

• To deliver the assets in accordance with the agreement regarding quantity, quality, condition, time, and place (Article 476);
• To ensure the usability and stable right of use of the leased assets throughout the lease term (Articles 477 and 478);
• To repair the leased assets where damage occurs not due to the lessee’s fault, except for minor repairs in accordance with customary practice (Article 477).

Accordingly, during the lease term, the company is entitled to collect rental payments and protect its assets, while also being obliged to deliver the assets as agreed and ensure the lawful and stable use of the assets by the lessee in accordance with the Civil Code 2015. Proper compliance with these provisions is an important basis for minimizing disputes and legal risks for enterprises.

3. Is a company’s asset lease contract required to be in writing?

Pursuant to Article 472 of the Civil Code 2015, the law does not require all asset lease contracts to be in writing. An asset lease contract may be concluded verbally, in writing, or by specific conduct, unless otherwise prescribed by law.

However, in certain cases, a written form is mandatory, including:

• Leases of immovable property (houses, construction works, etc.) as prescribed by housing law, real estate business law, and relevant regulations;
• Where the parties agree on a written form;
• Where specialized laws require written contracts, notarization, or certification.

For enterprises, although not mandatory in all cases, executing lease contracts in writing is necessary to clearly define the leased subject matter, rental price, lease term, and the rights and obligations of the parties, thereby minimizing dispute risks and serving as a basis for accounting and tax compliance.

A company’s asset lease contract is not always required to be in writing, but it should be executed in writing; in cases where the law mandates a written form, enterprises must strictly comply to ensure the legal validity of the contract.

4. Is the lease term of company assets limited by law?

Pursuant to Article 474 of the Civil Code 2015, the lease term is determined by agreement of the parties; where there is no agreement, the lease term is determined by the purpose of the lease. Civil law does not impose a general limit on the lease term of company assets.

However, in certain cases, specialized laws prescribe limits on lease terms, which enterprises must comply with, for example:

• Leases of land use rights, houses, or construction works must be consistent with the land use term, ownership term, or permitted business term under land, housing, and real estate business laws;
• Where the parties cannot agree on a lease term and it cannot be determined based on the lease purpose, either party may terminate the contract at any time, provided that reasonable prior notice is given (Clause 2 Article 474 of the Civil Code 2015).

Accordingly, in principle, the lease term of company assets is not limited by law but depends on the parties’ agreement; for assets subject to specialized laws, the lease term must comply with the corresponding statutory limits.

IV. Answers to frequently asked questions regarding the use of company assets for lease

In practice, using company assets for lease often raises questions relating to decision-making authority, rental pricing, scope of registered business lines, and tax obligations. The following section consolidates and answers common questions to help enterprises correctly understand legal regulations and mitigate legal risks when implementing leasing activities.

1. May a company lease out its entire head office to individuals or other organizations?

In principle, a company may lease out its entire head office to individuals or other organizations if legal conditions are satisfied. Specifically:

• Pursuant to Clause 8 Article 7 of the Law on Enterprise 2020 (as amended and supplemented in 2025), enterprises have the right to possess, use, and dispose of their assets. Accordingly, if the head office is under the company’s lawful ownership or lawful right of use, the company may lease it out.
• The company must ensure that it still has a lawful registered head office address for registration and transactions pursuant to Article 42 of the Law on Enterprise 2020 (as amended and supplemented in 2025). Where leasing out the entire head office results in the company no longer having a head office address, the enterprise must register a change of head office in accordance with the law.

The company may lease out its entire head office provided that it has lawful rights over the premises and that the leasing does not deprive the enterprise of a registered head office address, or that the enterprise has completed the procedures for changing its head office in compliance with legal requirements.

2. May a company lease out assets at a price lower than the market price?

The law does not prohibit a company from leasing out assets at a price lower than the market price, provided that the leasing is carried out on a voluntary and mutually agreed basis and is not intended to evade legal obligations.

Specifically, pursuant to Clause 1 Article 473 of the Civil  2015, the rental price is determined by agreement of the parties, unless otherwise prescribed by law. Only where there is no agreement or the agreement is unclear shall the rental price be determined based on the market price at the time and place of contract conclusion (Clause 2 Article 473).

However, the company should note certain potential legal risks:

• Where assets are leased at an abnormally low price to transfer benefits to related persons, such conduct may be subject to scrutiny regarding the liability of enterprise managers pursuant to Article 13 of the Law on Enterprise 2020 (as amended and supplemented in 2025).
• For tax purposes, where the rental price does not reflect ordinary transaction values and reduces tax payable, tax authorities have the right to assess tax pursuant to Article 50 of the Law on Tax Administration 2019 and adjust taxable revenue to market price.

In summary, a company may lease out assets at a price lower than the market price, but must ensure that there are reasonable grounds, that the transaction is not intended to evade tax or unlawfully transfer benefits, and that full compliance with internal governance and tax obligations is maintained.

3. Must asset leasing activities align with the company’s registered business lines?

The law does not require all asset leasing activities of a company to align with its registered business lines; however, registration obligations arise where leasing activities are conducted on a regular business basis.

Specifically, pursuant to Clause 21 Article 4 of the Law on Enterprise 2020 (as amended and supplemented in 2025), business activities are those conducted continuously for profit-making purposes. Accordingly:

• Where asset leasing is occasional, serving only as temporary exploitation of idle assets, the company is not required to register additional business lines.
• Where asset leasing is conducted regularly and stably, constituting a main or significant source of income, such activity is regarded as a business activity and the company must register additional business lines in accordance with Article 31 of the Law on Enterprise 2020 (as amended and supplemented in 2025).
• In addition, pursuant to Article 44 of the Law on Enterprise 2020 (as amended and supplemented in 2025), where asset leasing is associated with a business location, the company may be required to notify the business location if specific business activities arise at such location.

Asset leasing does not always have to align with registered business lines; however, where leasing constitutes a regular business activity, the company is required to register or notify additional business lines to ensure legal compliance.

4. Must the Members’ Council/Board of Directors approve the leasing of company assets?

The leasing of company assets must be approved by the competent internal management body, depending on the type of enterprise and the value of the leased assets.

For limited liability companies, the Members’ Council has authority where the leased assets are of significant value or fall under cases prescribed in the company charter (Articles 55 and 56 of the Law on Enterprise 2020, as amended and supplemented in 2025).

For joint-stock companies, the Board of Directors decides on asset leasing, unless the value of the assets exceeds its authority, in which case approval of the General Meeting of Shareholders is required (Articles 138 and 153 of the Law on Enterprise 2020, as amended and supplemented in 2025).

Failure to obtain approval from the competent authority may give rise to risks of transaction invalidity or liability of enterprise managers.

5. Does leasing company assets give rise to tax obligations?

Asset leasing is considered a business activity and gives rise to tax obligations under current tax laws, including:

• Value-added tax (VAT) on rental revenue (unless subject to VAT exemption);
• Corporate income tax (CIT) on income derived from leasing activities;
• In cases of real estate leasing, additional fees and taxes may arise depending on the type of assets and leasing arrangements.

Enterprises must declare, issue invoices, and fully perform tax obligations to avoid risks of tax arrears and administrative penalties.

The leasing of company assets certainly gives rise to tax obligations. Enterprises must fully issue invoices, declare, and pay relevant taxes such as VAT, CIT, and other applicable taxes and fees depending on the type of leased assets. Proper tax compliance not only ensures the legality of leasing activities but also helps enterprises avoid risks of tax reassessment, penalties, and subsequent disputes.

V. Why seek legal advice from NPLaw regarding the use of company assets for lease

The use of company assets for lease involves enterprise law, civil law, and tax law simultaneously, entailing various risks relating to decision-making authority, lease contracts, and tax obligations. Early professional legal support helps enterprises mitigate risks and protect their lawful rights and interests.

Expertise in enterprise and tax law: NPLaw lawyers have in-depth knowledge of the Law on Enterprise 2020 (as amended and supplemented in 2025), the Civil Code 2015, and tax regulations relating to enterprise asset leasing.

Targeted advice with clear legal grounds: Providing specific analysis of asset leasing conditions, authority of the Members’ Council/Board of Directors, and requirements for contracts, invoices, and tax declarations.

Risk prevention and dispute resolution support: Assisting enterprises in risk assessment, proper tax compliance, and accompanying enterprises in dealings with partners, tax authorities, or dispute resolution processes.

The above information is for reference purposes only. Where clients require detailed advice for specific situations, please contact Ngoc Phu Law Firm for timely and effective legal support.