Background

A married couple—one British, one Vietnamese—decided to divorce after five years of cohabitation, during which they acquired joint ownership of various assets located in both countries. Specifically, the marital estate includes two houses in London (UK), an apartment in Hanoi, and a holiday villa in Da Nang (Vietnam). The asset division process faced significant challenges due to legal and practical issues arising from the cross-border nature of the case.

Analyze

First, the valuation of assets in both countries presented numerous difficulties due to differences in the real estate markets, appraisal methodologies, and liquidity levels for each property type.

Second, the legal frameworks governing matrimonial property regimes in Vietnam and the United Kingdom differ significantly, particularly in relation to ownership rights, forms of joint ownership, and the legal principles used to determine asset division upon divorce.

Third, the parties were exposed to currency exchange rate risks between the British Pound (GBP) and the Vietnamese Dong (VND), which directly impacted the conversion of asset values and the fairness of the proposed distribution.

Finally, any transfer or division of property was likely to trigger tax obligations in both jurisdictions, including taxes on capital gains, income from property transfer, and registration fees.

This case serves as a typical example highlighting the necessity of coordinated legal consultation between domestic and international lawyers, independent valuation experts, and cross-border tax advisors, to ensure a fair, lawful, and financially optimized division of assets.

Legal Issues Arising in the Division of Cross-Border Marital Property

Challenges in Valuing Assets Across Jurisdictions

Property valuation in Vietnam and the UK presents inherent difficulties due to differing appraisal standards, levels of market transparency, and local market conditions.

• In Vietnam, appraisal activities are regulated under the Vietnamese Valuation Standards issued pursuant to Circular No. 42/2024/TT-BTC. However, the real estate market remains relatively opaque, with inconsistent transaction data—particularly outside major cities—making it difficult to establish accurate market values.
• In the United Kingdom, valuation adheres to the Royal Institution of Chartered Surveyors (RICS) Valuation – Global Standards (commonly known as the Red Book). The UK benefits from a transparent real estate market, publicly available transaction data, and a robust oversight mechanism. Market value is determined on the basis of an assumed transaction under fair, open market conditions.

Differences in Property Law and Asset Division Upon Divorce

In Vietnam, pursuant to Article 33 of the Law on Marriage and Family 2014, any property acquired during the course of the marriage is presumed to be marital (joint) property, unless the spouses have entered into a written agreement establishing separate property.

By contrast, the United Kingdom does not recognize a default regime of community property. Instead, the division of marital assets is governed by the principle of “fairness”, as codified in Section 25 of the Matrimonial Causes Act 1973 and developed through case law, notably White v White [2000]. The courts adopt a holistic approach, taking into account various factors, including the parties’ contributions, needs, and the welfare of any children.

Exchange Rate Risk

The exchange rate between the British Pound (GBP) and the Vietnamese Dong (VND) may fluctuate significantly over time, which can substantially affect the converted value of the assets and the overall fairness of the division. If the valuation and division of assets are not synchronized at the same point in time, the parties may suffer unintended financial losses due to currency exchange differences. This is a critical consideration when structuring asset transfers and allocations in multiple stages.

Tax Implications Under Both Legal Systems

The transfer or division of property—particularly real estate—between a Vietnamese and a UK national may give rise to tax liabilities in both jurisdictions.

• In Vietnam, personal income tax is levied on real estate transfers under Article 29 of the Law on Personal Income Tax No. 04/2007/QH12, with a standard tax rate of 2% of the transfer value.
• Conversely, in the United Kingdom, Capital Gains Tax (CGT) may apply when a UK resident disposes of assets that have appreciated in value, including real property and shares.

Importantly, Vietnam and the United Kingdom are parties to the Double Taxation Avoidance Agreement (DTA) signed on 22 April 1994, which remains in force. The DTA allocates taxing rights between the two countries and establishes mechanisms for tax exemption or credit to prevent double taxation of the same income.

Therefore, in cases involving cross-border asset division, it is crucial to seek advice from qualified legal and financial professionals to develop a strategy that ensures legal compliance, maximizes financial efficiency, and minimizes unnecessary tax burdens.

Proposed Solutions

Given the complex cross-border nature of the case, the parties adopted a coordinated strategy for asset division in accordance with the applicable legal systems of each jurisdiction, with the following key steps:

• Jurisdictional Allocation According to Asset Location: The division of assets was conducted under the legal framework of each respective country—assets located in the United Kingdom were resolved in accordance with English law, while assets in Vietnam were divided pursuant to Vietnamese law. This approach ensured legal validity and minimized enforcement risks in both jurisdictions.
• Engagement of Valuation Experts in Both Countries: Independent valuation experts specializing in real estate, business interests, and investment assets were retained in both the UK and Vietnam to assess the value of the relevant assets accurately and in accordance with local standards.
• Coordination with Tax Advisors: The advisory team worked closely with tax consultants in both jurisdictions to develop a tax-efficient structure for the division and transfer of assets, thereby minimizing potential tax liabilities.
• Phased Transfer Plan Over 18 Months: To mitigate adverse currency fluctuations and minimize tax exposure, the parties agreed to implement a phased asset transfer plan over a period of 18 months. This approach also ensured compliance with foreign exchange control regulations and cross-border fund transfer laws.
• Separate Asset Division Agreements Executed in Each Country: The parties executed separate asset division agreements in accordance with the formalities and procedures of each country. This ensured the enforceability and legal effectiveness of the agreements under the respective national laws.
• Estimated Timeline: The full process, from initial filing to completion of asset transfer and division, was concluded within approximately 3 to 8 months.

Experience of Harley Miller Law Firm

• Over 15 years of experience in handling international divorce cases involving complex cross-border assets;
• Bilingual legal team proficient in both English and Vietnamese legal systems;
• A trusted network of real estate, financial, and valuation experts in both the UK and Vietnam;
• Proven track record of successful resolutions in high-value transnational asset division cases;
• In-depth knowledge of property, family, and tax laws in both jurisdictions;
• Free initial legal consultation for prospective clients.

Contact Information

Address: 14th Floor, HM Town Building, 412 Nguyen Thi Minh Khai, Ward 5, District 3, Ho Chi Minh City, Vietnam
Phone: +84 93 721 5585
Email: [email protected]
Website: https://hmlf.vn or luatminhnguyen.com

With Harley Miller’s professional support, cross-border divorce and asset division involving Vietnamese and foreign nationals can be handled efficiently, lawfully, and with full compliance with the applicable legal regulations.