Shinhan Bank

As part of Shinhan Bank Vietnam’s ongoing support for Business Household and Corporate Customers in risk management and compliance awareness, we are pleased to share our latest monthly brief note on selected tax topics. Detailed information is available on the Shinhan Bank Vietnam website.
The following information is for reference purposes only and is designed to support our Valued Customers to identify key operational considerations early on and minimize future risks. 

APARTMENT AND RESIDENTIAL PROPERTY RENTAL INVESTMENT: OPERATING MODELS DETERMINING TAX AND CASH FLOW

For many individuals today, using personal savings or bank financing to invest in apartments or residential properties for rental purposes has become a means of generating additional income. Some investors prefer long-term leasing to secure a stable source of income, while others opt for short-term accommodation models to maximize their cash flow. Even exploiting the same type of asset, each model has a different operational nature and may entail different legal requirements and tax obligations. In this edition of Tax Newsletter, the Bank would like to highlight one factor that might easily be overlooked when considering those two approaches, starting from the question: “When purchasing an apartment or a house for rental purposes, which operating model should I choose?”

Actual operating models of properties

 Within the above context, the same apartment or residential property would generate incomes through different operating models. Consider the following two common scenarios:

Case 1: Long-term lease
Mr. A purchases an apartment and signs a 12-month lease agreement with a family. During the lease term, the tenant exclusively occupies the apartment, bears all day-to-day expenses, and the landlord has little involvement in the property’s use. 

Case 2: Short-term accommodation
Ms. B purchases a similar apartment but lists it on online short-term booking platforms that operate in accordance with applicable regulations, for instance, Airbnb. Guests rent the apartment on a daily basis, with frequent turnover. Ms. B assists guests with check-in, check-out and provides other services throughout their stay. 

Why does the operating model matter?

Although Mr. A and Ms. B may own similar properties with comparable initial investment values and even generate equivalent rental income over a given period, the different operating models result in substantially different requirements regarding business registration, administrative procedures, ongoing compliance obligations, i.e. fire prevention and safety requirements, and other sector-specific regulatory conditions. From a tax compliance perspective, tax authorities also regard these as two fundamentally different types of income-generating activities. If these requirements are only considered after the property has already commenced operations, owners might subsequently need to restructure the business model or incur additional, unanticipated compliance costs. 

Consequently, after the same operating period, the net profits remaining after deducting all related costs differ materially between Mr. A’s and Ms. B’s properties.

Initial tax duty determination based on business activities

In the mentioned examples, Mr. A’s case represents the common model in which a property owner leases residential premises to individuals or businesses for stable, long-term use. Individuals could refer to the legal framework governing “real estate business activities”, corresponding to Industry Code 68 (Appendix II – “Vietnam Standard Industrial Classification”, issued together with Decision No. 36/2025/QD-TTg dated September 29, 2025 from the Prime Minister).

Alternatively, Ms. B’s model is commonly found in major cities or tourist destinations and differs in substance from conventional property leasing. As a result, it is subject to separate business registration requirements, other business conditions under the Law on Tourism and tax compliance requirements applicable to the “accommodation services sector” (Industry Code 55).*

It should be noted that the current tax legislation also distinguishes between the tax treatment applicable to real estate business activities and accommodation service activities.

Under the Law on Personal Income Tax No. 109/2025/QH15, the tax regime applicable to real estate business activities is designed separately from that applicable to other business activities including accommodation services. These differences include applicable tax rates and the tax base for personal income tax. For individuals and household businesses engaged in real estate business, personal income tax is generally calculated based on the portion of revenue exceeding the statutory taxable threshold.

Meanwhile, income derived from accommodation services is no longer subject to a single personal income tax rate or a single tax calculation method. Instead, a more flexible tax regime applies depending on the revenue scale, under which: different tax rates apply to different revenue levels; and certain taxpayers may either select or are required to apply a particular personal income tax calculation approach, either based on taxable revenue or on taxable income (i.e., revenue less deductible expenses).

Similarly, the Law on Value-added Tax No. 48/2024/QH15 classifies different categories of services separately for Value-added Tax purposes.

In addition, individuals and household businesses earning income from real estate business leasing fall within one of the categories exempt from the mandatory use of electronic invoices under the regulations governing electronic invoices and electronic documents, effective from July 1, 2026.

The distinction made under the tax regulations between different business activities demonstrates the importance of properly identifying the relevant business category in order to apply the corresponding tax regime. Within the scope of this Newsletter, we only provide an overview of the policy direction and highlight several key differences between the two common business operations. The determination of the applicable tax rates, tax calculation methods, and specific tax obligations in each case will ultimately depend on the actual substance of the transactions and the extent to which the relevant legal conditions are satisfied.

A perspective for residential rental property investors

Before deciding to invest in an apartment for rental purposes or to operate it as serviced accommodation, investors should first determine their intended business model early from the strategy stage. A property leased on an annual basis and a property rented on a daily basis might appear to generate similar levels of revenue. Nonetheless, the applicable tax administration and other legal obligations differ significantly. Properly identifying the nature of the intended business activity from the outset can help investors develop a more effective financial plan - particularly where the acquisition is financed by bank borrowings and future rental cash flows are expected to support loan repayments.

This article also refers to certain guidance provided under Official Letter No. 4062/CT-NVT issued by the Tax Department on June 18, 2026.
This material is provided only for general informational purposes at the publication time and does not constitute an assessment, conclusion, or opinion on any specific transaction, documentation, or counterparty of the Customers and the Bank. The content reflects general risk patterns observed in practice, in consideration, kindly consult with your competent authorities or independent tax consultants for appropriate guidance. The Bank will not be responsible for any loss or damage arising from reliance on this general information.
Within the scope of services permitted, Shinhan Bank Vietnam is always available to partner with Valued Customers in updating and sharing tax information to enhance financial management efficiency.