According to Article 562 of the Civil Code 2015, a power of attorney contract is an agreement between the parties, whereby the authorized party is obliged to perform tasks on behalf of the authorizing party, who is only required to pay remuneration if agreed upon or mandated by law.

Accordingly, a power of attorney contract may involve remuneration or not, depending on the agreement of the parties. A power of attorney, in general, and the authorization for the purchase and sale of apartments in particular, is understood as one party authorizing a third party to carry out the purchase and sale of an apartment on their behalf.

Based on this regulation, it can be seen that the power of attorney contract for the purchase and sale of apartments does not create a transfer of ownership of the apartment from the seller to the authorized party. Essentially, the transaction remains between the buyer and the seller.

In this case, the third party (the authorized party) is merely an entity "performing the buying or selling on behalf of the buyer or seller," and does not establish ownership rights to the apartment for themselves. Therefore, in this instance, the authorization does not generate income, and thus, if the parties engage in the authorization for the purchase and sale of apartments, they are not required to pay personal income tax.

Although, according to the legal provisions, authorization does not generate income from the purchase and sale of apartments and therefore does not require the payment of personal income tax, in practice, there are many cases where the parties "evade the law" by establishing a power of attorney instead of a purchase and sale contract.

Accordingly, in Official Letter No. 1133/TCT-TNCN in 2011, the General Department of Taxation addressed concerns regarding personal income tax in real estate transfers as follows:

Based on the above provisions, authorizing real estate transactions is a civil transaction activity permitted by law. However, when an individual with full civil capacity authorizes another individual who is not exempt from tax under the provisions of Clause 1 and Clause 4 of Article 4 of the Personal Income Tax Law, they have full authority to possess, manage, use, and dispose of their real estate, including leasing, lending, transferring, exchanging, gifting, mortgaging, and are not required to return the real estate to the authorizing party along with any benefits derived from the authorization; simultaneously, if the authorized party does not receive remuneration, this is essentially a real estate purchase and sale activity. Therefore, the authorizing party must declare and pay personal income tax in accordance with the provisions of the Personal Income Tax Law.

Accordingly, in this case, the authorization must pay personal income tax if three conditions are met:

• The authorization, in essence, constitutes a sale with the authorized content granting full rights to possess, manage, use, and dispose of the apartment, including leasing, lending, transferring, exchanging, gifting, mortgaging, and not returning the apartment.
• It does not fall under the exempt categories: transactions between spouses; biological parents and their children; adoptive parents and their adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; grandparents and grandchildren; and siblings.
• The authorized party does not receive remuneration.

In this case, the authorization is identified as a contract for the purchase and sale of an apartment. Therefore, the authorizing party must declare and pay personal income tax according to regulations.

If the authorized party uses this power of attorney to sell the apartment to another party, this is considered a sale. Therefore, if the sale of the apartment through the power of attorney essentially represents a purchase and sale contract, personal income tax would be due twice.

Conversely, if it can be proven that the authorization for the purchase and sale of the apartment is not a sale contract, then the parties will not be required to pay personal income tax twice.

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