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    Vietnam – Social Security Agreement with South Korea

    GMS Flash Alert 2024-151 | July 16, 2024

    According to Announcement No. 50/2023/TB-LPQT issued on 22 December 2023, by Vietnam’s Ministry of Foreign Affairs, the Agreement between the government of the Socialist Republic of Vietnam and the government of the Republic of Korea on social security ("Agreement") officially took effect from 1 January 2024.  (Hereinafter, the Republic of Korea is referred to as “South Korea”.)

    This is the first bilateral agreement between the two countries in this field and the first bilateral agreement on social security between Vietnam and another country.  (For related coverage, see GMS Flash Alert 2022-007, 13 January 2022.)

    To facilitate the application and implementation of the Agreement, on 29 March 2024, the Vietnam Social Insurance Agency issued Official Letter No. 862/BHXH-TST ("Official Letter"), guiding certain contents of the Agreement.1

    Why this matters

    The Agreement between Vietnam and South Korea is expected to promote mobility of workers between the two countries by virtue of eliminating double social security taxation of the same earnings and by filling gaps in benefits protections for workers who have divided their careers between the two countries. 

    Generally speaking, such an agreement – also sometimes known as a "totalization agreement" – serves to ensure that workers pay into one social security system at a time and that they will benefit from the contributions made, regardless of where they have worked during their careers.

    It is anticipated that this Agreement will help boost cross-border employee assignments and business travel, and cross-border business generally, between Vietnam and South Korea.  

    In General

    The Official Letter instructs Social Insurance departments in provinces and centrally-run cities on several matters regarding:

    • the scope of application;
    • the issuance and receipt of Social Insurance Certificates for individuals;
    • the suspension of compulsory social insurance contributions in Vietnam for Vietnamese workers working in South Korea.

    Operational Instructions

    The Vietnam authorities have provided guidance pertaining to:

    • the issuance and receipt of certificates of social insurance for workers overseas (“dispatched workers”2) and locally-hired workers;
    • the suspension of compulsory social insurance payments by Vietnamese workers working in South Korea.

    1.     Dispatched Workers

    The Vietnamese Social Insurance departments issue Social Insurance Certificates for Vietnamese workers participating in Social Insurance according to Vietnamese law.  These certificates indicate the period of validity for the certificate and serve as a basis for Vietnamese workers to be exempt from participating in Social Insurance under the laws of South Korea.  Similarly, the National Pension Service of South Korea issues certificates for Korean workers under Korean law, stating the period of validity of this certificate, thereby exempting them from Social Insurance in Vietnam.

    The period of the individual’s overseas work lasts for the initial 60 months from the date he or she is sent, extendable by up to an additional 36 months if the worker remains with the sending employer.  If a worker returns to his or her home country, for example, due to assignment termination, but gets sent overseas again, this will be deemed a new/different overseas work period, resulting in a recalculation of the exemption period.  For those workers who were sent overseas before the Agreement's effective date, the exemption period begins from the Agreement’s effective date.

    2.     Locally-Hired Workers

    For Vietnamese citizens working in South Korea, the National Pension Law of South Korea shall apply.  For Korean workers working in Vietnam, the National Pension Law of South Korea shall still apply during the employment period, but is not to exceed 60 months, provided that this person is subject to South Korean law.

    3.     Vietnamese Workers Working in South Korea under Contracts

    From 1 January 2024, Vietnamese workers in South Korea, under contracts covered by mandatory Social Insurance regulations, will no longer be obligated to contribute to Social Insurance in Vietnam.  Instead, they will adhere to South Korean Social Insurance laws.  This includes workers under contracts with companies sending employees abroad, those participating in skill-enhancement internships, and those under personal contracts.

    KPMG Insights

    In light of these new arrangements regarding social security between Vietnam and South Korea, organisations and individuals may have questions and concerns about their rights and responsibilities:

    • Assessing Korean employees or Vietnamese employees in light of the Official Letter’s applicable criteria;
    • Verifying documents which employees must prepare and provide, as required under the Official Letter;
    • Submitting applications to the Social Insurance Agency to apply for/receive the Social Insurance Certificate for relevant employees.

    Further guidance for implementation of the Official Letter is expected to be released by the provincial Social Insurance agencies this year.

    Contacts

    Thuy Ha Nguyen
    Thuy Ha Nguyen

    Associate Director

    KPMG in Vietnam

    minh-hang-le
    Minh Hang Le

    Director

    KPMG in Vietnam

    Footnotes

    1  For additional information, see Viet Nam Social Security Portal (in English), "Guidelines for Implementing the Social Insurance Agreement between Vietnam and South Korea" (04/04/2024). 

    2  Dispatched workers include: (1) Vietnamese employees working for employers with a registered office in Vietnam, participating in SI under Vietnamese regulations, assigned to work in South Korea on behalf of the Vietnamese employer and (2) Korean employees working for an employer with a registered office in South Korea, participating in SI under Korean regulations, assigned to work in Vietnam on behalf of the Korean employer. 

    Disclaimer

    The information contained in this newsletter was submitted by the KPMG International member firm in Argentina.

    GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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