Buying overseas property in developing countries like Vietnam requires due diligence and that you understand the buy and sell procedures in advance.
A commonly asked question is how foreigners can transfer money into and out of Vietnam when buying real estate. This is essential to understand to make sure that your money don’t get ‘stuck’.
After all, you probably want to exit the market sometime in the future.
In this article, I explain some key information you need to know when transferring money cross border in Vietnam.
This article is written for investors who wish to buy real estate in Vietnam.
General information about Vietnam currency controls
Vietnam’s foreign exchange controls are regulated by the State Bank of Vietnam.
Some of their responsibilities are:
a. To control capital transfers made over the Vietnamese borders
b. Oversee and manage procedures when opening bank accounts in Vietnam
Vietnam’s currency controls is a key concern among global real estate investors, in fact, many people search for this topic, prior to buying property. It’s not strange as the procedures in developing countries can deviate quite much from those in developed ones.
One of the main reasons why I wrote this article is to highlight the importance to have an exit strategy. You should know how to transfer your money out of the country before you even decide to buy real estate.
Even if many locals choose to stay in the market long-term, many foreigners plan to exit the market someday in the future.
If you don’t have an exit strategy from the start, you may end up paying hefty costs to get your money out of Vietnam, or in the worst case, you won’t be able to get your money out at all.
How can I transfer money into Vietnam?
Transferring money into Vietnam is fairly easy. You only need the recipient’s bank account information, along with a SWIFT code. The Vietnamese State Bank doesn’t control the source of the inflow of money as strict, as if you transfer money out of the country.
This is a common practice in other developing countries in the region.
An important thing is the description you write in the transferring note. A recommendation is to have a clear explanation of your transaction purposes, and to not only use words relating to “investment”, “investing”, “real estate”, “property”, for example.
This can result in more lengthy and thorough background checks, which can delay the payments.
What should I include in the transferring note?
Below are some good examples of transferring notes versus some bad ones:
a. “[Company name] transaction for the booking of the [project name], [your name]”
b. “[Company name] transaction for the consulting of the [project name], [your name]”
c. “[Company name] payment of the apartment [apartment code], [your name]”
a. “For personal investment”
b. “Buying real estate”
Although there’s nothing wrong legally to include a note like “personal investment” or “buying real estate”, it may take longer time for the bank to approve the transfer, the bank might even refund you.
In the end, you’ll not lose any money or have legal issues whatsoever with the authorities.
The main issue is that you’ll end up paying your installments lately.
How can I transfer money out of Vietnam?
As mentioned above, the Vietnamese State Bank controls outflows of money more strictly. Having that said, if you do it right from the start, it’s not a very complicated process.
It’s important that you keep all original agreements and contracts (including signatures) between you and the entities involved. Some of the entities can be:
- The real estate broker
- The developer
- The tenant (if you rent out your property)
- The buyer that you resell your property to
In case you resell your property, your agreement must be notarized. You also need to keep all the receipts of any payments made to the tax authorities.
All these documents have a purpose: you can prove that the money you want to transfer out of Vietnam is legal, and you have accomplished all your tax/fee obligations.
If you work with a professional broker, you better tell him or her to send the original versions of these documents as soon as possible. The main reason is that your broker might change job, long before you finish your investment.
You can choose to keep these documents in the bank where you open your bank account – if you are a VIP client. This is probably one of the safest places to keep them.
What happens if I lose any of the documents?
In case you’ve lost any of the documents, at the time of exiting the market, you can seek help from a currency service provider.
They may charge you a fee of around 1-2%, which is more expensive than using an official channel. Your agent might be capable of helping you in such situation.
Opening a bank account in Vietnam
You don’t need to open a bank account at the very start, when buying a property in Vietnam.
However, sooner or later you’ll need to open one to manage local transactions. You have both domestic and foreign banks to choose among, for foreigners, a recommended choice is to use international banks due to the following reasons:
a. The procedures are more standardized
b. The staff can communicate in English
c. It will be easier to transfer money out of Vietnam when you decide to exit the market
d. You will have an internet banking system with an English interface
What documents do I need to open a bank account?
To open a bank account, you just need a visa that allows you to enter Vietnam. It’s that simple. All you need to do is enter Vietnam and go to a bank with a copy of your passport and visa.
The rest of the procedure will be carried out by the bank staff.
In case you want to accelerate the process and get some help on the way, you can contact your local broker, as they have direct access to customer service managers at international banks.
All you need to do is send a copy of your passport and the date you’ll arrive in Vietnam, the broker will then arrange all your documents in advance.
When you arrive in Vietnam, you just go to the bank, show your original visa, and sign the documents. Everything will be finished in 15-30 minutes.
Can I apply for a debit or credit card as a non-resident foreigner?
If you’re not a resident in Vietnam, banks will not issue debit or credit cards for you. Therefore, all transactions will be managed at the bank, or through internet banking.
In case you want to deposit or withdraw cash from your bank account, you’ll need to do it at the bank. If you are a VIP client (the conditions vary from banks to banks), you’ll have an individual manager supporting you 24/7 with all the transactions.
You can also delegate other people to deposit money or to withdraw money from your bank account.
Managing payments and refunds
For most properties, you pay by installments. In order to do this you have 2 choices:
a. You transfer money directly from the bank account in your home country to the developer’s bank account. This is done for each installment. The bank will handle the transferring from USD/EUR (or any kind of currency) into Vietnamese Dong automatically
b. You first transfer money from your bank in your home country to your Vietnamese bank account. After, you use the internet banking service (or delegate someone in Vietnam, for example, your broker) to transfer money from your Vietnamese bank account to the developer’s bank account
We recommend the second option due to the following reasons:
a. You will not lose money from the exchange rate
b. There will be less fees incurred
c. It will be easier to transfer money out of Vietnam in the future
d. It will be convenient for you to have your money in Vietnamese Dong, in a Vietnamese bank account. Every time you come to Vietnam, you don’t need to bring cash. Even if you bring money, you can choose to keep it in your Vietnamese bank account
e. The refund needs to go to a Vietnamese bank account fist. Developers generally don’t refund money to a local bank account in your home country.
Managing transactions in Vietnam is a fairly easy task if you seek help and do everything correctly from the start.
Be sure to study the process in advance, before transferring large sums of money. This is especially the case when making transactions for property procurements for example.
You should be careful making any big transactions, as the main issue is not to get the money into the country, but out of it. Be sure to keep all documents and agreements involved, as this will reduce the risks of encountering problems later.
I also recommend you to read my separate article about how foreigners can buy real estate in Vietnam, to understand the importance of the ‘pink book’ and Sales & Purchase Agreement, for example.