From 2021, the legal capital of 20 billion dongs is not applied to the real estate business anymore

Shortly, we plan to establish a real estate business. So I wonder if we need to secure and register the legal capital that is not lower than 20 billion. Please give me an advice. Thank you.

FDVN’s Opinions:

Previously, it was stipulated in Article 10 of the Law on Real Estate Business 2014 that the conditions for organizations and individuals doing real estate business as follows:

“1. Any organizations or individuals wish to conduct real estate trading shall set up enterprises or cooperatives (hereinafter referred to as enterprises) and have legal capital not smaller than VND 20 billion, excluding cases prescribed in Clause 2 of this Article.

2. Any organizations, households and individuals who conduct small-scale or irregular transactions of real estate sale, transfer, lease-out, and lease purchase shall not be required to set up enterprises, but they shall make tax declaration as prescribed.

3. The Government shall provide guidance on this Article.”

According to the above provisions, organizations and individuals doing real estate business must establish enterprises or cooperatives and must have legal capital of at least 20 billion VND, except for organizations, households, individuals who sell, transfer, lease, or lease-purchase real estate on a small and irregular scale. The level of legal capital mentioned above is determined based on the charter capital of the enterprise or cooperative under the provisions of the laws on enterprises and cooperatives. Enterprises and cooperatives are not required to carry out procedures for the registration and certification of legal capital.

However, from the effective date of Law on Investment 2020 (January 1, 2021), Clause 1, Article 10 of the Law on Real Estate Business 2014 is amended as follows:

“Any organization or individual engaged in real estate business must establish an enterprise or cooperative (hereinafter referred to as “the enterprise”), except for the cases mentioned in Clause 2 of this Article.”

The condition of "having a legal capital not less than 20 billion VND" is canceled by Law on Investment 2020. So, from January 1, 2021, real estate businesses and cooperatives do not need to meet the requirement of legal capital.

Nguyễn Công Tín – FDVN Law Firm

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