The Thai Company loophole is closed –then what?

[Delight]

Consider 2 scenarios

Scenario 1

January 1^st 2019 the loophole is closed –but only affects new registrations

Scenario 2

January 1^st 2019 every single current and future  company using the loophole is deemed illegal  . A certain amount of time-maybe 1 year- is given to the foreigners to make alternate plans. With no action the property is confiscated

 I am thinking in terms of the effect on the building trade and also the effect on the existing foreign ownership in a condo-plus the effects on the wider economy

Edited October 20, 2018 by Delight

[swissie]

Taking into account, that there a massive efforts being made to "clean-up" the Visa Situation, the possibility to extend such "clean-up" efforts into "Loophole-Configurations" is high.

IF this should come to pass, what scenario will unfold is unknown at this point. Scenario 1 is likely, causing the least of turmoil.

Scenario 2 could only mean, that poperty shares will eventually have to be sold to Thai-Nationals. Relatively painless if the transfer can take place within a 10 year period. Very painful if only 1 year would be allowed to accomplish this, for obvious reasons. All speculative at this time.
-------------------
As a reminder: Reputable law firms have stopped establishing those "Constructs" for Farangs some 2 years ago.
- Under these circumstances, Farangs are well advised not to engage in new "company-owned-property" constructs.
Cheers.

[KittenKong]

As far as condos go, both scenarios would initially tend to make farang-name units more valuable than Thai ones (as they already are in many buildings). But the glut of Thai-name units would drive all prices down.

And the balance of farang/Thai owners would shift. Personally I would not want live in a building that had predominantly Thai ownership. In my experience they generally have very little interest in either good maintenance or good order.

And I dont want to live in a building that many cheap charlies can afford to live in either. So I might be tempted to sell up and go somewhere nicer, be it here or abroad. If many farangs felt as I do they might leave too. One sees this happening already. And of course that would drive prices down even more. Nasty spiral.

 

As for houses: dont know and dont care. But I imagine it would be similar.

[baansgr]

The saber rattling about Thai company  set ups rears it's head every so often  and has done for at least 15 years I know of.  The reality is, Thais are the only people to benefit from this system.  The Foreigners own nothing and pay all the money,  lawyers benefit, DBD benefit,  builders benefit,  all money in Thai pockets.  Why would any Thai agency want to change that. 

[Peterw42]

I think any crackdown would be more to do with the non trading/shelf company side of things. A big part of the loop hole is the companies dont trade, have a turnover, profit/loss, tax etc. Companies are entities to conduct business/trade etc, not an entities to hold property. I belive a non-trading company is also an issue for 100% thai ownership.

I dont think they would shut down foreigners owning half a "legitimate" company that actually runs a business, and as a result owns the premises they operate in, has property investments etc.

Its not so much foreigners indirectly owning land, its using a company for other than its purpose.

IMO, they would probably introduce mandatory company trading requirements, minimum turnover, minimum tax etc. Maybe even introduce laws to do with companies only owning property with a direct association with the company, a coffee shop can own the coffee shop premises etc. Maybe even some deeming laws, if a company owns only property, it must be income producing, tax the company on the possible rent etc.

 

[smutcakes]

2 hours ago, baansgr said:

The saber rattling about Thai company  set ups rears it's head every so often  and has done for at least 15 years I know of.  The reality is, Thais are the only people to benefit from this system.  The Foreigners own nothing and pay all the money,  lawyers benefit, DBD benefit,  builders benefit,  all money in Thai pockets.  Why would any Thai agency want to change that. 

If the Thais are the only one benefiting, why do countless foreigners do it?

[Esso49]

4 minutes ago, smutcakes said:

If the Thais are the only one benefiting, why do countless foreigners do it?

Why do Lemmings throw themselves off a cliff ?

[smutcakes]

1 minute ago, Esso49 said:

Why do Lemmings throw themselves off a cliff ?

Lucky all of our esteemed TVF users who have gone down the company route are Lemmings?

 

We are lucky to have esteemed members like Esso49, Baansgr who are simply a cut above everyone else.

Edited October 22, 2018 by smutcakes

[Esso49]

8 minutes ago, smutcakes said:

Lucky all of our esteemed TVF users who have gone down the company route are Lemmings?

 

We are lucky to have esteemed members like Esso49, Baansgr who are simply a cut above everyone else.

I should think most TV members living in Thailand follow the rules of the land rather than try to circumnavigate them by dubious dodges and now complain when they get caught out ! ????

[Langsuan Man]

Expats like to think that they are so special that this "loop hole" was designed for them, it is and has never been for foreigners.  The company structure is designed for rich Thais to shelter their wealth from prying eyes, especially the tax man.  Company owned properties can be transferred around inexpensively since the Land Department is minimally involved

 

The only way the company structure is going to go away is if the Thai Government gets serious over taxing vacant and unused land, thus negating the tax saving of company owned land 

 

So far every attempt by either the previous civilian or present military governments to tax vacant land has failed and there is no reason to think that is going to change any time soon.  The company structure will only change if the Thai business community finds a  cheaper way to do business

 

And if the Thais do change the law, then I guarantee that the lawyers will find a way to use the new Thai law to benefit some foreigners.  That's what lawyers do 

[KittenKong]

19 hours ago, smutcakes said:

If the Thais are the only one benefiting, why do countless foreigners do it?

Because they are told that it is "the way to go", usually by people with vested interests (lawyers, property developers, vendors of property).

 

Of course, they do get the benefit of the property whilst they "own" it, but it does come at a price (legal fees, taxes, accounting fees, company closing fees) and ultimately of course they dont really own anything. I compare that with my condo which I own in my name and for which I haven't paid any legal fees or taxes since I bought it, and the total cost to me of buying and selling (when the time comes) will never exceed about 5% of the assessed value (plus any real estate agent's fee). And I wont have to use a lawyer at all for any of that, which suits me just fine.

 

Hardly a day goes by without someone posting on here complaining that their company structure has bitten them in the backside in one way or another (unexpected fees - especially company closing fees, extra taxes, fraud by nominees, fraud by lawyers .....). You rarely see similar complaints about freehold condo ownership in farang name.

[Langsuan Man]

15 hours ago, KittenKong said:

Because they are told that it is "the way to go", usually by people with vested interests (lawyers, property developers, vendors of property).

 

Of course, they do get the benefit of the property whilst they "own" it, but it does come at a price (legal fees, taxes, accounting fees, company closing fees) and ultimately of course they dont really own anything. I compare that with my condo which I own in my name and for which I haven't paid any legal fees or taxes since I bought it, and the total cost to me of buying and selling (when the time comes) will never exceed about 5% of the assessed value (plus any real estate agent's fee). And I wont have to use a lawyer at all for any of that, which suits me just fine.

 

Hardly a day goes by without someone posting on here complaining that their company structure has bitten them in the backside in one way or another (unexpected fees - especially company closing fees, extra taxes, fraud by nominees, fraud by lawyers .....). You rarely see similar complaints about freehold condo ownership in farang name.

Maybe, there have been no surprises for me in the last 10 years of ownership of a company owned house.  Other than one case in Phuket, involving a local motorcycle gangs, no one on Thai Visa has ever reported Thai authorities seizing a company owned house from a foreigner due to company structure

[lkn]

On 10/20/2018 at 11:44 PM, Delight said:

January 1^st 2019 every single current and future  company using the loophole is deemed illegal  . A certain amount of time-maybe 1 year- is given to the foreigners to make alternate plans. With no action the property is confiscated

Assuming rule of law is still followed in Thailand then the government would have to prosecute each company individually for the crime they believe has been committed, carry the burden of proof, and should they win, punishment would be within what the law prescribes, which is often a fine and/or imprisonment.

 

There would probably also be a requirement that the company stop violating the law, which would force them to sell the property, get rid of nominee shareholders, or whatever other offence they get convicted of, but just having the government confiscate condos without due process is probably not going to happen.

[androokery]

On 10/22/2018 at 5:45 AM, Esso49 said:

Why do Lemmings throw themselves off a cliff ?

https://en.wikipedia.org/wiki/White_Wilderness_(film)
"...noted for its propagation of the misconception of lemming suicide."

[HampiK]

On ‎10‎/‎21‎/‎2018 at 6:37 AM, KittenKong said:

Personally I would not want live in a building that had predominantly Thai ownership. In my experience they generally have very little interest in either good maintenance or good order.

I live in a condo Building where the major ownership is in Thai hands. actually I think if there is more even a 2-3 foreign ownership this would surprise me. In the last condo Committee meeting I was actually the only foreigner there. And the Thais were very interested that the condo stays in a good shape and maintenance. I think it depends of what kind of owners are there, same as you complain about the cheap Charlies I think similar it would be with the more uneducated Thais. As they "maybe" less interested.

[NanLaew]

On 10/20/2018 at 5:44 PM, Delight said:

I am thinking in terms of the effect on the building trade and also the effect on the existing foreign ownership in a condo-plus the effects on the wider economy

Home construction paid by a foreigner is a drop in the ocean compared to Thailand's home-grown and home-funded residential and commercial building industry. No impact on this.

 

The foreign condo ownership vehicle is the only legal way for a foreigner to own property in his name. I don't see any impact on this.

 

To paraphrase Viola Wills, they're gonna get along without us.

 

 

 

[NanLaew]

On 10/22/2018 at 4:57 AM, Esso49 said:

I should think most TV members living in Thailand follow the rules of the land rather than try to circumnavigate them by dubious dodges and now complain when they get caught out ! ????

Like the TV members that rant and rail when their moving traffic violation results in the totally unreasonable "ticket-only, surrender license, pay fine" sort of liaison with the MiB instead of the casual bung of 3 red bills?

[Mavideol]

On 10/21/2018 at 6:37 AM, KittenKong said:

As far as condos go, both scenarios would initially tend to make farang-name units more valuable than Thai ones (as they already are in many buildings). But the glut of Thai-name units would drive all prices down.

And the balance of farang/Thai owners would shift. Personally I would not want live in a building that had predominantly Thai ownership. In my experience they generally have very little interest in either good maintenance or good order. 

And I dont want to live in a building that many cheap charlies can afford to live in either. So I might be tempted to sell up and go somewhere nicer, be it here or abroad. If many farangs felt as I do they might leave too. One sees this happening already. And of course that would drive prices down even more. Nasty spiral.

 

As for houses: dont know and dont care. But I imagine it would be similar.

In my experience they generally have very little interest in either good maintenance or good order.

 

been there done that, very difficult to live with them as majority owners

[rodpav]

Word of advice don't even go there well i wouldn't, stick to falang title on condos or put land/house in your missus name, i know of a few people that actually registered there marriage and converted titles from company name to there wife's name due to uncertainty of these Company Owned titles.

[khunPer]

On 10/20/2018 at 6:44 PM, Delight said:

Scenario 1

January 1^st 2019 the loophole is closed –but only affects new registrations

Scenario 2

January 1^st 2019 every single current and future  company using the loophole is deemed illegal  . A certain amount of time-maybe 1 year- is given to the foreigners to make alternate plans. With no action the property is confiscated

In both scenario cases, a lot of Thai company limiteds would suddenly have additional activities instead of just owing one plot of property, being leased out to a shareholder; including the company limiteds would probably employ some Thai staff and pay their staff's Social Security fees.

 

It's not likely to be a problem for condo buildings, and the up to 49% foreign condo owners, as the whole building is considered like one company with up to 49% foreign shareholders allowed.

 

However, not likely for the small company limiteds owing one reasonable sized plot of land used for a private home only will be forced to sell off property, i.e. scenario 2, as there are that many of them, that the value of property would drop too much – including value of property owned by Thai nationals – if all that land-and-houses should be put on the market for sale within for example one year...????

[Caine]

On 10/23/2018 at 12:28 AM, KittenKong said:

Because they are told that it is "the way to go", usually by people with vested interests (lawyers, property developers, vendors of property).

 

Of course, they do get the benefit of the property whilst they "own" it, but it does come at a price (legal fees, taxes, accounting fees, company closing fees) and ultimately of course they dont really own anything. I compare that with my condo which I own in my name and for which I haven't paid any legal fees or taxes since I bought it, and the total cost to me of buying and selling (when the time comes) will never exceed about 5% of the assessed value (plus any real estate agent's fee). And I wont have to use a lawyer at all for any of that, which suits me just fine.

 

Hardly a day goes by without someone posting on here complaining that their company structure has bitten them in the backside in one way or another (unexpected fees - especially company closing fees, extra taxes, fraud by nominees, fraud by lawyers .....). You rarely see similar complaints about freehold condo ownership in farang name.

No such animal as a freehold condo, they stand on leased land. Done run away with the idea your condo is freehold.

Edited October 27, 2018 by Caine
Miss spelling

[simoh1490]

1 minute ago, Caine said:

No such animal as a freehold condo, they stand on leased land. Done run away with the idea your condo is freehold.

Nonesence.

[Caine]

17 minutes ago, simoh1490 said:

Nonesence.

Your nonsense is bigger nonsense, a condo or basically a flat cannot be freehold you will find someone will own the land the condo is built on. And somewhere in the contracts the lease will need to be renewed in the future. So consequently not freehold.

[Rimmer]

A troll post and replies have been removed

[how241]

On 10/22/2018 at 10:45 AM, Esso49 said:

Why do Lemmings throw themselves off a cliff ?

Interesting point. People do seemingly crazy-stupid-foolish things all the time.

[Peterw42]

1 hour ago, Caine said:

No such animal as a freehold condo, they stand on leased land. Done run away with the idea your condo is freehold.

The condo block owns the land, have a look at the condominium act. Condominiums are not built on leasehold land.

 

Section 4. This Act.

'Condominium'

means the building where persons are able to hold ownership separately according to the section whereby each section consist of personal ownership in the property and joint ownership in common property.

'Common Property'

means part of the condominium which is not the apartment, land where the condominium is situated and land or other property provided for use or for joint benefits of joint-owners.

 

 

There is even a whole chapter in the Condo act pertaining to what happens if the block gets demolished, the land gets sold and everyone gets a share equivalent to their ownership.

Edited October 27, 2018 by Peterw42

[blackcab]

46 minutes ago, Caine said:

Your nonsense is bigger nonsense, a condo or basically a flat cannot be freehold you will find someone will own the land the condo is built on. And somewhere in the contracts the lease will need to be renewed in the future. So consequently not freehold.

 

You are thinking in terms of the law in places like the UK. In Thailand the system of property ownership is different.

 

As has been explained, the owners of the condominium units themselves jointly own the land, in a proportion that reflects the size of their unit. So if the land was 500 square meters, and there were 100 identical sized units, the owner of each unit would own a share of the land equal to 5 square meters.

 

This is quite an important concept if the entire building is demolished and the land is sold on.

[simoh1490]

1 hour ago, Caine said:

Your nonsense is bigger nonsense, a condo or basically a flat cannot be freehold you will find someone will own the land the condo is built on. And somewhere in the contracts the lease will need to be renewed in the future. So consequently not freehold.

you understand nothing about the way condominiums are established in Thailand, absolutely nothing!

[xylophone]

On ‎10‎/‎23‎/‎2018 at 10:22 PM, Langsuan Man said:

no one on Thai Visa has ever reported Thai authorities seizing a company owned house from a foreigner due to company structure

I posted that my friend's villa purchase was declared illegal because he bought it through the company route, and then the lawyer forged his signature and sold it again.

 

Friend went to court to fight that, but his argument was thrown out because the court ruled his original purchase was illegal and null and void, so he lost everything.

 

Also look at the number of farangs who have lost property to Thai girlfriends/wives because they went down the company route and now they have separated the farang has no recourse because his original "purchase" was through the Thai nominee company route...……...same same but different! 

[xylophone]

4 hours ago, rodpav said:

or put land/house in your missus name,

Still has its dangers...……….if you supplied the funds to buy it which makes it a no-no, and anyway you wouldn't own the land.

 

Really don't see the point in trying to circumvent the law, irrespective of the number who have supposedly "got away with it".

 

IMO if one HAD to buy something then a condo is the safest bet provided it is in the foreigner ownership section.