In M&A, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
In an M&A transaction, the first question is often not "how much," but rather:
Will the buyer acquire shares/capital contributions of the target company, or directly purchase the assets of that company?
These two structures can lead to the same economic objective – the buyer controlling a business operation, a factory, a project, or a system of assets – but the legal and tax consequences are very different.
From 2026, the choice between a share deal and an asset deal will need to be considered simultaneously across three dimensions: tax, investment procedures, and the ability to transfer land, projects, and licenses.
In a share deal, the buyer does not directly acquire the assets of the target company.
The subject of the transaction is the shares or capital contributions held by the shareholders or members.
After the transaction is completed:
This is why a share deal is often suitable when the value of the transaction lies in maintaining the legal entity and existing business operations intact, for example, when the business holds licenses, long-term contracts, land use rights, or projects enjoying incentives. 1791193270190
In an asset deal, the target company or asset owner directly transfers one or more assets to the buyer.
These assets may include:
The biggest advantage of an asset deal is that the buyer can select precisely the assets they wish to acquire, rather than purchasing an entire legal entity with its complete operational history.
However, an asset deal does not mean that merely signing an asset purchase agreement completes the process. Each type of asset may require a separate transfer mechanism. 1791193270190
One common misconception is:
"If you buy a company, the buyer must pay all of the company's old tax debts."
Legally, this understanding is not entirely accurate.
If the target company has unpaid taxes, that tax obligation remains the obligation of the target company, and does not automatically transfer to the new shareholder as a personal obligation.
However, the buyer still bears economic risk.
For example, after acquiring 100% of the company, the tax authority demands an additional 20 billion VND from the company. The 20 billion VND is still paid by the company, but the company's cash decreases by 20 billion VND. This means the value of the buyer's investment also decreases proportionally. 1791193270190
Therefore, in a share deal, legal due diligence and tax due diligence are particularly important.
The buyer typically needs to review:
More importantly, identifying risks is only the first step.
Risks must be allocated in the contract.
In a share deal, the buyer usually cannot demand that "the company must be completely clean" before proceeding with the transaction.
Instead, the parties design mechanisms to determine:
If a risk occurs after closing but originates from the pre-closing period, who bears it?
Some commonly used tools include:
For tax risks, the contract may include a separate tax indemnity for tax periods prior to the closing date.
The parties also need to address cases where a tax period spans both before and after closing, define the claim period for indemnification, responsibilities for cooperation during tax authority inspections, and control over the dispute resolution process. 1791193270190
The important point is:
The agreement between the buyer and seller only allocates costs between the two parties; it does not alter the entity legally obligated to the State.
Not necessarily.
An asset deal often helps the buyer avoid inheriting the entire history of a legal entity, but this does not mean that the acquired assets are always "clean assets."
The buyer still needs to verify:
The original document also notes that an asset deal does not automatically burden the buyer with all of the seller's old tax debts, but the buyer must still verify the rights to the assets and the validity of the transaction itself. 1791193270190
Therefore, in an asset deal, due diligence shifts from examining the entire enterprise to examining each asset, right, and obligation being transferred.
For a share deal, income tax is primarily considered at the level of the seller of the capital.
According to the document's content:
Income from capital transfer is essentially determined based on:
Transfer price – Capital acquisition cost – Eligible transfer expenses
This income is typically subject to corporate income tax at the corresponding rate as stipulated. 1791193270190
The document notes that from late 2025, some groups of foreign enterprises falling within the scope of Decree 320/2025/ND-CP may be subject to a tax rate of 2% on taxable revenue for capital transfers.
This should not be interpreted as the tax rate applicable to all foreign enterprises or all share transactions. The classification of transactions must still be based on the entity, the nature of the income, and specific regulations. 1791193270190
The document also distinguishes between capital transfer and securities transfer, as the two cases may apply different calculation methods. 1791193270190
In an asset deal, the seller is typically the company that owns the assets.
Therefore, income from the sale of assets arises at the company level.
When analyzing tax, at least three issues need to be determined:
First: what is the taxable income from the transaction?
Second: what is the applicable tax rate?
Third: can that income be offset against carried-forward tax losses?
If the enterprise has eligible losses from previous years, whether those losses can be used for offsetting must be considered according to specific regulations. Financial statements showing "accumulated losses" are not sufficient to conclude that an asset sale transaction will not incur tax. 1791193270190
In addition, there is VAT.
It cannot be assumed that asset sales always incur a fixed VAT rate.
Each type of asset must be analyzed separately.
For example, the document notes that the transfer of land use rights and the sale of structures on land are treated differently; it cannot be concluded that the entire transfer value is not subject to VAT simply because the transaction involves land. 1791193270190
This is a very noteworthy issue in transactions where most of the company's value lies in real estate.
Suppose a company owns a factory and land use rights worth hundreds of billions of VND.
The investor does not directly buy the factory but acquires 100% of the company's capital.
Can it be automatically concluded that this is a capital transfer?
It should not be.
The document notes that tax laws have specific cases where the transfer of an entire company associated with real estate needs to be handled under the tax mechanism for real estate transfers.
However, it also cannot be concluded that if a company owns land, then selling its shares automatically means selling real estate. The type of enterprise, the percentage of capital transferred, the characteristics of the real estate, and the nature of the transaction need to be considered. 1791193270190
For cross-border transactions, there is an additional layer of analysis: Double Taxation Agreements, protocols, and related international mechanisms.
Therefore, a seemingly simple structure:
Seller → sells 100% shares → Buyer
may need to be analyzed simultaneously from the perspective of:
Another common issue is when parties wish to label the transaction as:
"Transfer of enterprise with all rights and obligations."
And then assume this is a capital transfer and not subject to VAT.
The name in the contract does not determine the nature of the transaction.
One must look at what is actually being transferred.
The document distinguishes three cases:
The object of transfer is capital.
Assets still belong to the target company.
This case must meet the corresponding legal conditions; merely stating in the contract that the buyer "inherits all rights and obligations" is not sufficient.
If assets or projects are actually transferred from one legal entity to another, they must be handled according to the regulations applicable to those specific assets or projects. 1791193270190
This is a very important principle in transaction advisory:
Do not look at the contract name. Look at who actually owns, possesses, and is obligated to what.
Actual transactions are not always purely share deals or purely asset deals.
For example:
The buyer agrees to acquire 100% of the target company.
But before closing, the seller requests the target company to transfer a piece of real estate or a group of assets out so that the seller can retain them.
This is a carve-out.
This carve-out step must be analyzed as an independent transaction.
It could be:
Each structure will have different tax implications and documentation requirements.
The document recommends separating the documentation, valuation, and tax calculations for each step before incorporating them into the final purchase price determination mechanism. 1791193270190
There is no universal answer as to which structure is "better."
the value of the transaction lies in maintaining the enterprise in its current state, especially licenses, contracts, projects, land use rights, operating systems, or customer relationships.
In return, the buyer must accept that the enterprise's historical liabilities remain.
the buyer only needs a group of assets or a part of the business operations and does not wish to acquire the entire legal entity.
In return, the transfer of individual assets, licenses, contracts, and related rights can be more complex.
In summary, it can be understood as follows:
| Issue | Share deal | Asset deal |
|---|---|---|
| Subject of purchase | Shares/capital contributions | Specific assets |
| Target legal entity | Remains unchanged | Not necessarily transferred |
| Old debts and liabilities | Remain within the target company | Typically not entirely transferred automatically |
| Licenses/contracts | Usually remain with the company | Transferability must be checked |
| Tax | Primarily arises for the seller of capital | Primarily arises for the company selling assets |
| VAT | Capital transfer is in the non-VATable group | Analyzed by asset type |
| Due diligence | Focuses on the entire enterprise | Focuses on each asset and right to be acquired |
These differences are also summarized in the document in a comparison table regarding tax risks, licenses, contracts, land, tax losses, VAT, procedures, and labor. 1791193270190 1791193270190
A common mistake in M&A is:
The two parties finalize the price first → then ask lawyers and tax advisors how to execute the transaction.
A more logical approach is:
Structure → Tax → Risk → Price → Contract.
Because for the same economic value, a share deal and an asset deal can create:
Especially when the main value of the transaction lies in land, projects, or licenses, the feasibility of the transaction structure and tax costs should be examined from the outset, rather than finalizing the price and then figuring out how to implement it. 1791193270190
In an M&A transaction, the question is not just:
"Buy the company or buy the assets?"
But needs to go further:
A good transaction structure is not the one with the lowest tax on paper.
It must be a structure that is legally feasible, defines tax obligations, controls risks, and accurately reflects the commercial objectives of the parties.
In M&A, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
In M&A, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
In MA, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
In M&A, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
In M&A, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
In M&A, the choice between a share deal and an asset deal presents significant differences in terms of tax, procedures, and risks. This article provides a detailed analysis of these two forms.
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