Companies that already employ people in Vietnam through their own entity are choosing between in-house payroll and outsourced payroll administration. That is a different question, covered separately. This guide is for the company that has no employing entity in Vietnam yet.
The two routes in one table
| Dimension | Employer of Record | Your own Vietnam entity |
|---|---|---|
| Legal employer | The EOR’s local entity, under the agreed arrangement. | Your company’s Vietnam entity. |
| Time to first hire | Typically weeks, subject to documents and the employee’s circumstances. | Typically months, covering licensing, registrations, banking, and tax setup. |
| Up-front commitment | Service fee, employment cost funding, and any deposit. | Capital, incorporation costs, professional fees, and ongoing statutory obligations. |
| Ongoing overhead | A recurring per-employee fee; the provider runs agreed administration. | Accounting, tax filing, payroll, HR, and statutory reporting, in-house or outsourced. |
| Control | You direct daily work; the provider owns local employment administration. | Full control of employment terms, policies, and local operations. |
| Local activity | Generally not suitable where the business must contract, invoice, or trade locally. | Required where the business activity itself needs a local legal presence. |
| Reversibility | Ending the arrangement is a contractual and offboarding exercise. | Closing an entity is a formal process with its own timeline and cost. |
Choose an EOR when
- You do not yet have a Vietnam legal entity and need to employ someone soon.
- You are testing the market, validating demand, or building an initial team.
- Headcount is small or uncertain, and you want to keep the commitment reversible.
- The role is delivery, engineering, support, or research rather than local trading.
- You would rather fund employment cost than fund entity setup and its ongoing obligations.
Your company still defines the role, manages performance, supplies payroll inputs, approves employment changes, and funds every agreed employment cost. An EOR removes the need for a local entity; it does not remove the need to manage people.
Choose your own entity when
- The business activity itself requires a local legal presence, such as contracting with local customers, invoicing in Vietnam, holding licences, or importing.
- Headcount is large enough and permanent enough that per-employee service fees exceed the cost of running the entity.
- You need full control of employment terms, benefits design, internal policies, and local processes.
- Vietnam is a long-term operating base rather than a market test.
- You have, or will hire, the finance and HR capability to meet local accounting, tax, payroll, and reporting obligations.
Starting with one and moving to the other
The two routes are not mutually exclusive, and treating the first choice as permanent is the most common mistake. A frequent pattern is to hire the first few employees through an EOR, confirm that the market and the team work, then establish an entity and transfer the employees to it.
If that is a realistic path for your company, ask about it before signing, not afterwards. Confirm the notice period, transfer support, employee record handover, data return, and any fees that apply when employees move from the EOR to your own entity. A provider that cannot describe the exit is telling you something useful.
What to put side by side
Compensation and employer costs are common to both routes, so they are not the deciding factor. The comparison that matters is the service fee on one side against the setup and running cost of the entity on the other, over a realistic time horizon and headcount plan.
Where the break-even sits
Deel’s 2026 Vietnam guide estimates that setting up an entity takes about two months and costs ₫906.6 million one-off, with ₫894.8 million a year to keep it running (accounting, tax filing, payroll, office and compliance). Treat these as one provider’s order-of-magnitude estimate, not a quote; your own setup cost depends on the investment structure and licences you need.
At ₫26,000 per dollar, that is about US$34,871 to set up and US$34,414 a year to run. Salary and statutory cost are the same on both routes, so the break-even is the headcount at which annual EOR fees exceed the entity’s cost:
| EOR fee per employee (₫40m salary) | Annual fee per employee | Break-even on running cost only | Break-even incl. setup over 3 years |
|---|---|---|---|
| US$599 / month Remote, Deel | US$7,188 | 4.8 employees | 6.4 employees |
| US$199 / month RemoFirst | US$2,388 | 14.4 employees | 19.3 employees |
| US$152 / month Truzand, 8% of employment cost | US$1,824 | 18.9 employees | 25.2 employees |
Setup and running estimates from Deel’s Vietnam EOR guide. Illustrative only. Excludes management time, the capital requirement, and the cost of closing an entity, all of which favour the EOR route at small headcount.
On a US$599 platform, an entity starts to pay for itself at around five to seven employees. With a lower or percentage-based fee, the EOR route stays cheaper well into the teens, so the decision turns on control and local activity rather than cost.
Six questions that resolve the choice
- Does the business activity require a Vietnam legal presence, or only Vietnam-based employees?
- What is the realistic headcount in twelve and twenty-four months?
- How quickly does the first person need to start?
- What is the total annual cost of each route at that headcount, including running the entity?
- Who inside our company would own local accounting, tax, payroll, and HR obligations?
- If we start with an EOR, what does the transfer to our own entity involve?