Most Americans living in Vietnam are getting it half right—and that’s risky.
You can’t just pick a tax home. You can’t just “use the FEIE” and call it done. If you’re a high-income American living abroad—especially in Vietnam—the real tax answer is more complex. Not because the rules are unclear, but because too many advisors still treat them as one-size-fits-all.
We’ve seen too many smart people pay too much, or worse, get it wrong and risk an audit. You don’t want to be one of them.
Let’s clarify how it really works.
If you’re a U.S. citizen or green card holder, you owe taxes on your worldwide income. This doesn’t stop when you move to Vietnam, or anywhere else. The U.S. is one of the few countries that taxes based on citizenship, not residency.
What changes when you move is not your obligation—but your strategy.
Yes—if Vietnam considers you a tax resident. Here’s how that’s defined:
You are a Vietnam tax resident if you:
If either applies, Vietnam expects you to report and possibly pay tax on your global income. There are exclusions, exemptions, and planning tools—but the default is: both countries want their share.
If neither applies, you may be considered a non-resident—which limits Vietnam’s tax reach. But most Americans who live here full time meet the 183-day rule.
The FEIE lets you exclude up to $126,500 USD (2024) of earned income from U.S. taxes if you meet either:
But here’s the catch:
In short: the FEIE is not a free lunch. For many six- and seven-figure earners, it’s the wrong tool.
If you’re a Vietnamese tax resident, foreign income is taxable unless excluded under specific laws or treaties.
Examples of taxable foreign income include:
Vietnam tax rates for individuals:
Vietnam has no comprehensive tax treaty with the U.S., but it does allow for some foreign tax relief. The rules are nuanced, and in practice, enforcement is evolving—but don’t assume it won’t apply.
Even if you’re fully compliant in Vietnam, you must still file and report to the U.S. The two big acronyms:
If you hold shares in a Vietnamese company, own foreign mutual funds, or operate through offshore trusts or entities, further reporting applies (Forms 5471, 8865, 3520, etc.). These are not optional. Get them wrong and the penalties can dwarf the taxes.
Here’s what we often see from informed clients:
For those genuinely living long-term in Vietnam, claiming FTC often yields better results than the FEIE. It lets you:
Owners of local or regional businesses often:
When investments are cross-border, or heirs are not U.S. citizens, using a trust or foreign entity may:
Every structure has trade-offs. But these decisions should never be made in isolation. U.S. compliance must always be considered first—then local obligations like Vietnam PIT, reporting, and remittances.
We’ve seen people make one-time decisions—like electing FEIE or setting up a Vietnam company—without understanding the long-term consequences.
Planning isn’t about minimizing tax today. It’s about controlling outcomes, preserving flexibility, and protecting your wealth across jurisdictions.
If you’re a high-earning U.S. expat living in Vietnam, you likely owe something to both countries. The goal isn’t to avoid—it’s to optimize.
There is no shortcut or “hack” that works for everyone. But there is a right approach for you.
If this is something you’re navigating, we’re available for a confidential conversation.
Yes, if you’re in Vietnam more than 183 days or have a permanent residence, you’re considered a tax resident and may owe tax on global income.
Only partially. FEIE excludes some earned income but doesn’t cover investment income, business profits, or self-employment tax. It’s often not the best option for high earners.
FATCA requires foreign banks to report U.S. account holders. If you have significant foreign assets, you must report them on Form 8938 and may face penalties if you don’t.
No. There is no comprehensive tax treaty. However, you can often use the Foreign Tax Credit to offset U.S. taxes with those paid in Vietnam.
The penalties are severe—up to $10,000 per non-willful violation or even more for willful failure. These filings are mandatory for qualifying accounts.
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