Compulsory Insurance for Foreign Employees in Vietnam ~ Key Points for Employers: Enrollment, Cost Management, and Refund Claims ~
2026/03/17
- I-GLOCAL.CO.,LTD Hanoi Office
- CFE
- Kiriko Kashima
Executive Summary
① Under the Social Insurance Law 2024 and Decree No. 219, expatriates receiving salary from a Vietnamese entity are no longer permitted to obtain a work permit under the ‘intra-company transfer’ category, resulting in a growing number of cases where mandatory insurance enrollment (social insurance and health insurance) becomes newly required.
② The total contribution rate is 30% of monthly salary (20.5% employer / 9.5% employee), but by utilizing the one-time social insurance withdrawal available upon departure, the employer’s net cost can be substantially reduced.
③ The one-time social insurance withdrawal may only be claimed once per person, upon final departure after termination of the employment contract. The refund amount is calculated based on the contribution period, and both the foreign national and an authorized representative must receive payment via a Vietnamese domestic bank account.
Introduction
For companies employing foreign nationals in Vietnam, the mandatory insurance system is not merely a legal obligation—it is a critical element directly affecting employment structure, cost management, and regulatory compliance. Since enrollment requirements vary depending on the work permit category and the form of the employment contract, a precise understanding of the system is essential.
This report covers the typical enrollment scenarios for foreign nationals, the structure of insurance contributions, and the practical steps involved in filing a one-time social insurance withdrawal upon repatriation.
1. Cases in Which Foreign Nationals Are Subject to Mandatory Insurance
1.1 Types of Mandatory Insurance Applicable to Foreign Nationals in Vietnam
Under the Social Insurance Law 2024 (Law No. 41/2024/QH15) and the amended Health Insurance Law 2024 (Law No. 51/2024/QH15), foreign nationals satisfying all of the following conditions are subject to Vietnam’s mandatory insurance system.
| ☑ Conditions for Mandatory Enrollment (Foreign Nationals) ✓ Holds a work permit (or exemption certificate) issued in Vietnam ✓ Has an employment contract with a Vietnamese legal entity of 12 months or more （i.e., the work permit category is ‘Employment Contract with Vietnamese Entity’） ✓ Has not reached retirement age at the time of signing the employment contract （As of 2026: 61 years and 6 months for men; 57 years for women） |
The mandatory insurance system consists of three components. Foreign nationals are required to contribute to social insurance and health insurance; unemployment insurance is exempt.
1.2 Two Typical Scenarios for Mandatory Insurance Enrollment
| Case 1：Employment Contract with a Vietnamese Entity (Locally Hired) |
| Foreign nationals directly hired by a Vietnamese entity under an employment contract are subject to mandatory enrollment in the same manner as Vietnamese employees. |
| Case 2: Expatriates Who Do Not Meet the Conditions for ‘Intra-Company Transfer’ Work Permit Category |
| Under Decree No. 219/2025/ND-CP (effective August 2025), which governs work permit categories, the ‘intra-company transfer’ classification requires that all salary and allowances be paid exclusively by the foreign parent company. Payment of salary by the Vietnamese entity is not permitted under this category. As a result, the previous practice of entering into a nominal employment contract for tax deductibility purposes is incompatible with the intra-company transfer category. Expatriates who receive salary from the Vietnamese entity must now obtain their work permit under the ’employment contract with Vietnamese entity’ category and enroll in mandatory insurance for salary paid by the Vietnamese entity.Self-Assessment Checklist for Case 2 Applicability If any of the following apply, review your mandatory insurance obligations: □ The Vietnamese entity bears part or all of the expatriate’s salary □ An employment contract exists between the expatriate and the Vietnamese entity □ The work permit category is something other than ‘intra-company transfer’FAQ Q. What if the Vietnamese entity does not pay the expatriate directly, but receives a cost recharge from the parent company for part or all of the salary? A. If the economic burden of labor costs effectively falls on the Vietnamese entity, the eligibility for the intra-company transfer classification may be called into question. A careful review is strongly recommended. |
In light of the above, the number of companies falling under Case 2 is expected to increase going forward. While mandatory insurance enrollment entails certain additional costs, it also brings benefits in terms of reduced compliance risk in tax and social insurance audits and a clearer framework for legal compliance—both of which contribute to stable business operations.
２.Contribution Rates and Employer Cost
Contribution Structure and Rates
Insurance contributions for foreign nationals consist of social insurance and health insurance, with both the employer and the individual contributing at prescribed rates. Social insurance is the Vietnamese equivalent of Japan’s employees’ pension insurance; Vietnamese nationals typically receive it as a pension upon retirement. Foreign nationals, however, may receive their accumulated contributions as a ‘one-time social insurance withdrawal’ upon repatriation, provided certain conditions are met. By taking advantage of this refund, the effective employer cost can be significantly reduced.
The contribution base salary is capped at 20 times the civil servant basic wage, currently VND 46,800,000 per month. The table below shows the contribution rates and effective employer cost (net of refund) at this cap.
| Social Insurance | Health Insurance | Total / Month | Annual % | Annual Amount (VND) | |
|---|---|---|---|---|---|
| Employer Contribution | 17.5% | 3.0% | 20.5% | 246% | 115,128,000 |
| Employee Contribution | 8.0% | 1.5% | 9.5% | 114% | 53,352,000 |
| Total | 25.5% | 4.5% | 30% | 360% | 168,480,000 |
| One-Time SI Withdrawal | — | — | — | ▲ 200% | ▲ 93,600,000 |
| Employer Net Cost | — | — | — | 160% | 74,880,000 |
| ☑ Notes ✓ The ‘One-Time SI Withdrawal’ row reflects the refund of 2 months of the calculation base salary per year of contribution (see Chapter 3). In this table, the calculation base salary (monthly) is expressed as 100%, making 2 months equivalent to 200% on an annualized basis. ✓ For expatriates in Case 2 (receiving salary from the Vietnamese entity), companies often bear both the employer and employee portions in order to guarantee the expatriate’s take-home pay. |
Mandatory insurance should not be viewed simply as an expense. Through the one-time social insurance withdrawal mechanism, a portion of the cost is effectively recovered upon repatriation. With a proper understanding of the system and a contribution design that anticipates the refund, the actual employer burden can be kept to a level lower than initially expected.
３. Overview of the One-Time SI Withdrawal and Practical Considerations
3.1 Eligibility Conditions for the One-Time SI Withdrawal
Under the Social Insurance Law 2024 and related regulations, foreign nationals may apply for a one-time social insurance withdrawal if any one of the following conditions is met:
| Eligibility Conditions |
| ① Contribution Rates and Employer Cost1. Has reached retirement age but has fewer than 15 years of contribution ② Meets pension eligibility conditions but permanently departs Vietnam ③ Employment contract in Vietnam is terminated prior to retirement age ※Only conditions commonly applicable to foreign nationals are listed. |
| ☑ Notes ✓ Applications may only be submitted once per person. If the foreign national plans to change jobs or continue working in Vietnam, it is advisable to defer the application until the final departure from Vietnam ✓ Social insurance encompasses sub-categories including ‘pension,’ ‘sickness,’ and ‘occupational accidents.’ The one-time social insurance withdrawal applies only to the pension component, contributions for which commenced in 2022. Accordingly, foreign nationals may only claim refunds for contributions made from 2022 onward. |
3.2 Calculation of the Refund Amount
The refund amount is calculated based on total contributions made and the length of the contribution period, as follows:
| Contribution Period | Formula |
|---|---|
| 1 year or more |
Calculation Base Salary × 2 months × Years of Contribution Example (2 years, at the salary cap): |
| Less than 1 year |
Calculation Base Salary × Months of Contribution (not to exceed 2 months) ※If months of contribution are 2 or more but less than 12, the refund equals 2 months.
|
| ☑ Notes ✓ Even when the contribution period is 1 year or more, partial months may apply (e.g., ‘2 years and 3 months’). Under the previous circular (Circular 59/2015/TT-BLDTBXH, Article 19, Paragraph 4), partial months were treated as follows. ・1–6 months: calculated as 0.5 years ・7–12 months: calculated as 1 year (e.g., 2 years 4 months → ‘2.5 years’; 3 years 9 months → ‘4 years’) ✓ While the latest regulations (Circular 12/2025/TT-BNV) no longer contain this provision, the calculation method under the previous rules continues to be referenced in practice. It is recommended to confirm with the competent Social Insurance Authority. |
3.3 Practical Points for Both Employers and Foreign Nationals
The social insurance refund application is, in principle, processed based on documents that become available after the employment contract ends. Since attempting to handle procedures after repatriation may cause delays in obtaining the necessary documents, it is critical to complete all preparations before the departure date.
<Pre-Departure To-Do List＞
| 2 Months Before Departure | 1 Month Before Departure | After Departure (End of Employment Contract) |
|---|---|---|
| ✓ Confirm eligibility conditions ✓ Estimate refund amount |
✓ Prepare required documents ✓ Secure Vietnamese bank account for receiving the refund ✓ Prepare and notarize power of attorney |
✓ Submit application via authorized representative ✓ Receive refund to Vietnamese bank account ✓ Transfer funds overseas |
The following summarizes points that frequently give rise to questions for both employers and foreign nationals.
<Common Practical Issues>
|
🏢 A
When the Company Has Paid the Employee’s Portion ✓ The right to receive the refund belongs solely to the foreign national as an individual.
✓ If the individual returns the refund to the company, it is recommended to retain a written agreement as supporting documentation. ✓ Amounts returned to the company may be treated as corporate income for corporate tax purposes. |
👥 B
Receiving the Refund ✓ The refund must be received via a Vietnamese domestic bank account.
✓ If the foreign national intends to keep the Vietnamese account open after returning home (rather than closing it to receive the refund), confirm the treatment with the relevant bank. ✓ If the foreign national has already departed Vietnam and closed their domestic account, consider having an authorized representative submit and receive the refund. |
|
📄 C
Procedures via Power of Attorney ✓ The power of attorney must be prepared in Vietnamese, with notarization of the foreign national’s signature.Two notarization options:
1) Notary Public in Vietnam: approximately 1 day / minimal cost 2) Consular authentication at a Vietnamese embassy after departure: approximately 1 week / higher cost ⚠️ It is strongly recommended to complete notarization within Vietnam before departure. |
🏷️ D
Overseas Transfer of Refund Proceeds ✓ Proof of transfer purpose is required under the State Bank of Vietnam’s foreign exchange regulations.
✓ As receiving-side banks (e.g., banks in Japan) have strengthened anti-money laundering controls, advance notification before the transfer is recommended. ✓ Required documents vary by Vietnamese bank’s internal policies; confirm in advance. |
Conclusion
A thorough understanding of the full process—enrollment determination, cost estimation, and refund application—is the foundation of sound management practices in the employment of foreign nationals. Rather than treating social insurance contributions as a pure cost, companies should view the system through the lens of managing actual net costs in light of the refund mechanism and leveraging it as a tool for compliance risk management. Staying abreast of regulatory developments and incorporating them into employment design will be essential going forward.
Contact
I-GLOCAL CO., LTD.
https://www.i-glocal.com/
info@i-glocal.com
Ho Chi Minh Office: +84-28-3827-8096
Hanoi Office: +84-24-2220-033
