Vietnam's Trust Law Gap: Why the VIFC Cannot Yet Serve as a Wealth Structuring Centre

Vietnam has classified trust activities as a recognised business line, introduced its first statutory definition of beneficial ownership, and built a functioning international financial centre — all within a single legislative cycle. What it has not done is enact the law that would make trusts actually work. For wealth managers, family-office operators, and private-client lawyers evaluating the VIFC as a booking or structuring centre for Asian high-net-worth clients, the gap between institutional ambition and legal infrastructure remains the binding constraint.

Two Steps Forward, No Bridge#

Two 2025 legislative instruments have created the impression of progress on trusts. Both matter, but neither does what wealth structuring requires.

Decision No. 36/2025/QĐ-TTg, effective 15 November 2025, updated Vietnam's Standard Industrial Classification to include "trust and pension fund activities" under Code 643. This is a classification instrument — it permits a business to register the activity on its enterprise registration certificate. It does not define what a trust is, how one is formed, who may serve as trustee, what fiduciary duties apply, or how trust assets are ring-fenced from a trustee's personal estate. Code 643 is a label on an empty shelf.

Law No. 76/2025/QH15 — the Amended Law on Enterprises, effective 1 July 2025 — introduced Vietnam's first statutory definition of "beneficial owner": an individual holding 25% or more of charter capital or exercising controlling influence over an enterprise's strategic decisions. Implementing rules followed in Decree No. 168/2025/ND-CP. This is a transparency and anti-money-laundering measure. It identifies who benefits from a corporate structure. It does not create the enforceable separation of legal and beneficial title that underpins every common-law trust.

The distinction matters because both instruments are frequently cited — including in practitioner commentary published in The Saigon Times in April 2026 — as evidence that Vietnam is building toward a trust framework. They are necessary preconditions, not sufficient ones.

Where the Legislative Floor Ends#

The structural obstacle is in Vietnam's Civil Code 2015 (Law No. 91/2015/QH13). Chapter XIV treats property ownership as a single, indivisible right. An owner holds title, enjoys the property, and disposes of it as one unified bundle. There is no mechanism for one party to hold legal title while another holds beneficial interest — the foundational architecture of every common-law trust from Jersey to Singapore.

This is not an oversight. Civil-law systems, Vietnam's included, historically reject split ownership as doctrinally incoherent. The question is whether Vietnam's VIFC framework creates a carve-out, and the answer today is that it does not.

Decree 323/2025/ND-CP — the VIFC's founding charter — identifies six priority business groups. "Investment funds and asset management services" is included. But the decree contains no provisions for:

• Trust formation, registration, or recognition
• Trustee licensing or fiduciary standards
• Family office services with trust mandates
• Estate planning or succession structuring
• Cross-border trust recognition or enforcement

The decree-suite that followed (Decrees 324 through 330) covers tax incentives, capital markets, banking, foreign exchange, commodities, and dispute resolution. Trust and fiduciary services infrastructure is absent from the entire package.

The Sham-Transaction Risk#

Practitioners working around the trust gap face a specific legal hazard. Article 36 of the Law on Investment 2025 permits project termination where an investor acts on the basis of a "sham civil transaction." Nominee arrangements and trust-like structures that obscure actual beneficial ownership — precisely the workarounds that wealth advisers have historically used in Vietnam — could be challenged under this provision.

The risk is not theoretical. Vietnam's beneficial-ownership disclosure regime under Law 76/2025 and Decree 168/2025 was designed to increase transparency in corporate structures. A trust arrangement that interposes a nominee between the beneficial owner and Vietnam-sited assets sits in direct tension with this policy direction. The legal exposure is not that trusts are prohibited — they are simply unrecognised, which may be worse from an enforcement perspective.

The Usufruct Workaround and Its Limits#

Academic analysis published in the VNUHCM Journal of Economics, Business and Law has identified a partial civil-law analogue: usufruct rights under Civil Code Articles 257–266. A usufruct separates the right of enjoyment from ownership — the usufructuary uses and benefits from property they do not own. In theory, this could provide a statutory basis for trust-like asset management where one party holds title and another enjoys the economic benefit.

In practice, the gap between usufruct and trust is wide. Usufruct rights in Vietnam are personal, time-limited, and do not carry the full apparatus of fiduciary obligation, protector mechanisms, discretionary distribution powers, or multi-generational succession planning that trusts provide. No legislative instrument has codified usufruct into a trust-specific framework, and no court has tested the analogy in a wealth-structuring context.

How Other Civil-Law IFCs Solved This#

The comparison that matters most for Vietnam is the Dubai International Financial Centre. The UAE's federal legal system is civil law — like Vietnam's, it treats ownership as indivisible under the national code. The DIFC solved this by enacting its own Trust Law (DIFC Law No. 4 of 2005, subsequently revised) as a standalone common-law instrument operating within the DIFC's ring-fenced jurisdiction. The DIFC courts apply common-law principles; the trust law is self-contained and does not require amendment to the UAE Civil Code.

The Astana International Financial Centre in Kazakhstan followed the same model — a common-law trust instrument operating within a civil-law host state, enforced by a specialised court that applies international norms.

Vietnam has the structural prerequisites for this approach. Law 150's specialised court applies international best practices and common-law norms for dispute resolution within the VIFC. In principle, a standalone VIFC Trust Instrument could be enacted within this framework — defining trust formation, trustee duties, beneficiary rights, and asset protection — without amending a single article of the national Civil Code.

The comparison with the DIFC and AIFC is instructive in another respect: both centres enacted trust legislation early in their development, recognising that wealth management and fiduciary services are upstream of capital markets activity. Trust structures feed assets into funds, insurance wrappers, and managed accounts. Without them, the VIFC's asset management licence category serves a narrower market than its competitors.

What Practitioners Are Doing Today#

Wealth advisers serving Vietnamese high-net-worth clients currently recommend offshore trust structures — booked in Hong Kong, Singapore, Guernsey, the Isle of Man, or Mauritius — that bypass the domestic gap entirely. The mechanics are well-established:

• Discretionary trusts hold family wealth outside Vietnam's legal system, with professional trustees in recognised trust jurisdictions
• Private Trust Companies allow families to retain management influence through a corporate trustee structure while maintaining trust validity under the governing law
• Purpose trusts and reserved powers trusts provide additional flexibility for clients who want settlor involvement without compromising the trust's integrity

These structures work. The problem is that they carry Vietnamese regulatory risk when the underlying assets are Vietnam-sited — real estate, equity in Vietnamese enterprises, or receivables from Vietnamese counterparties. The sham-transaction characterisation under Article 36, combined with heightened AML scrutiny under the beneficial-ownership regime, creates a compliance surface that offshore structuring alone does not eliminate.

For financial institutions considering VIFC membership, this creates a practical constraint: the centre's asset management and fund licensing framework is operational, but the fiduciary services that typically sit alongside those activities — trust administration, estate planning, family governance advisory — have no domestic legal foundation.

What a Credible Reform Path Looks Like#

Vietnam is not a party to the 1985 Hague Convention on the Law Applicable to Trusts and their Recognition. Signatories relevant to the VIFC's competitive set include Luxembourg, Malta, the Netherlands, and — for Hong Kong only — China. Accession would signal commitment to cross-border trust recognition, but it is not a prerequisite for domestic enabling legislation. The DIFC enacted its trust law without UAE accession to the Hague Convention.

The most credible reform path has three elements:

First, a standalone VIFC Trust Instrument — enacted as a decree or regulation under the VIFC framework, not as an amendment to the Civil Code. This instrument would need to define trust formation requirements, trustee qualifications and licensing, fiduciary duties, beneficiary protections, asset-tracing rules, and the relationship between trust assets and trustee insolvency. The Law 150 court would serve as the enforcement mechanism.

Second, a trustee licensing regime administered by the VIFC Management Authority. This would specify capital requirements, fit-and-proper standards, reporting obligations, and conduct rules for entities providing trust services within the centre. Without a licensing framework, Code 643 registration is cosmetic.

Third, a cross-border recognition mechanism — either through Hague Convention accession or through bilateral memoranda with key trust jurisdictions (Jersey, Guernsey, Singapore, Hong Kong). Vietnamese HNW wealth is already held in these jurisdictions. A recognition framework would allow orderly redomiciliation of trust structures into the VIFC as the legal infrastructure matures.

None of these steps requires constitutional amendment or Civil Code revision. All of them sit within the legislative authority that Resolution 222 and the VIFC decree-suite have already established. The question is sequencing and political will.

What Comes Next#

The VIFC's institutional reform roadmap and its broader readiness assessment both point to a centre that is building capacity faster than most observers expected. But the trust gap is not a detail to be addressed later — it is a structural limitation on the centre's addressable market.

Asian wealth management is a trust-intermediated industry. Hong Kong and Singapore do not compete on tax rates alone; they compete on the depth of their fiduciary infrastructure. Until the VIFC has a workable trust framework, it will attract fund managers and trading desks but struggle to position itself as a booking centre for private wealth.

The building blocks are in place: a business classification that recognises the activity, a beneficial-ownership regime that addresses the transparency concern, a specialised court that can apply common-law principles, and proven models from the DIFC and AIFC that demonstrate how civil-law jurisdictions solve this problem. What remains is the instrument itself — and the longer it takes, the more firmly offshore structuring becomes the default for Vietnamese wealth that the VIFC was designed to bring onshore.

This analysis reflects the legislative position as of April 2026. We will update it as new instruments are issued.