What are the penalties for starting a Thai company purely for property ownership?

[KannikaP]

7 minutes ago, nobodysfriend said:

 I do not know anybody to whom that happened .. ut I know that setting up a Thai company with the sole intention of buying property in Thailand , is nothing more than a ' tolerated loophole ' .

It is not 100% legal , and , if they are not confiscating the company owned property  , ( I doubt that ) , they will still be able to impose fines or create other kinds of problems in the future .

As another poster said , If you do not have the right to legally own property in your name here , why not just rent ?

There are a lot of places up for rent , and it is becoming more and more ...

If you just want to enjoy your life without having to worry constantly about future developments , do not buy .

And if you do rent, make sure your landlord is not a Farang who has set up a company to buy the property you rent, and who is being investigated, as you may have to move when the legal proceedings finish!   LOL

[alianware]

1 hour ago, LukKrueng said:

That's not true. Anybody can rent out their property, just not on a daily/ weekly basis. Must be for a minimum of a month, or else you need a hotel permit. Paying/ not paying income tax on rentals is a deferent issue

Yes for thai owner but not for farang. 

[parallaxtech]

I moved to Samui in 2004, rented for 3 years, built a house in 2007, put house in my name and land in company name, all stamped by the Thai government through my lawyer.  Suratthani Land Office came to see my house and check my company papers in 2010; said everything was 100% ok.  

 

If I came to Thailand now, I would do the same thing: rent for at least a year and not buy unless I felt that I would commit at least 10 more years to Thailand.  Go see 1-3 lawyers.

 

I don't know of many financial decisions that come without risk.  My risk was 10% of my net worth -- well worth the risk and I am extremely happy.  Don't fall for the cheap Charlies who justify living in a hovel by saying to only rent.

[LukKrueng]

1 hour ago, alianware said:

Yes for thai owner but not for farang. 

Any link to relevant laws saying foreigners not allowed to rent out? 

[Senechal]

The entire rationale for property as an investment is its limited downside.

 

Now you're asking for an assessment of a property investment with a potential 100% downside.

 

If I was going to invest in something with a risk of a complete wipeout in principal, I'd need an exponentially higher upside.

 

 

[KKr]

21 hours ago, soi3eddie said:

A German "friend" of mine bought two houses and a truck in "his" company name at a resort town here. He's a 49% shareholder and is stuck outside LOS due to Covid and now his "ex" who is a 45% shareholder in the company is living in one property with her new boyfriend. She knows that she cannot be evicted even if the German came back to Thailand. The other property is empty. The other 6% shareholding is held by a lawyer/nominee. Even if buyer/s could be found for the propreties (totalling over 12 million Baht on purchase) the only way the German guy is going to get anything back is by taking a massive haircut to get himself out of the mess. Even though the ex signed resignation documents on formation of the company, she is holding the German to ransom unless she gets to keep property or gets a significant payoff. Be warned about going company route.

Hence it seems prudent to secure the holdership of the beneficial owner by an encumbrance: mortgage, usufruct, superficies;  whether the owner is a legal person or not. 

[a10ams]

2 hours ago, parallaxtech said:

I moved to Samui in 2004, rented for 3 years, built a house in 2007, put house in my name and land in company name, all stamped by the Thai government through my lawyer.  Suratthani Land Office came to see my house and check my company papers in 2010; said everything was 100% ok.  

 

If I came to Thailand now, I would do the same thing: rent for at least a year and not buy unless I felt that I would commit at least 10 more years to Thailand.  Go see 1-3 lawyers.

 

I don't know of many financial decisions that come without risk.  My risk was 10% of my net worth -- well worth the risk and I am extremely happy.  Don't fall for the cheap Charlies who justify living in a hovel by saying to only rent.

 

My views exactly, especially the last line.

 

I came here, and bought in Jan 2007 using the company scheme. Had I rented at the same price my neighbour pays then I am now about one year past 'break even' for the initial outlay.

 

Bloke across the road from me has the totally opposite view, been here sixteen years and rented from day one. Must've paid for one and a half houses and still owns nothing.

[PaoloR]

The cost, both to set up the company and to maintain the company (accountants fees, taxes etc.) is high and does not go away.

Additionally it is one more thing (and one more cost) to unscramble  should you wish to sell.

Plus you don't own the company - only 49% of it, so trust in your partner is a necessity.

I have done it 3 times with no problems

 

[redpill17]

16 minutes ago, a10ams said:

 

My views exactly, especially the last line.

 

I came here, and bought in Jan 2007 using the company scheme. Had I rented at the same price my neighbour pays then I am now about one year past 'break even' for the initial outlay.

 

Bloke across the road from me has the totally opposite view, been here sixteen years and rented from day one. Must've paid for one and a half houses and still owns nothing.

Did you account taxes, maintenance costs, lawyers, etc. in the calculation? I don't want to live in a house, but I'm curious if it's cost-effective to buy property here.

[redpill17]

4 minutes ago, PaoloR said:

Plus you don't own the company - only 49% of it, so trust in your partner is a necessity.

What about US-Thailand agreement that allows US citizens to own 100% of the company? Anyone knows if it's still the case?

Edited November 6, 2020 by redpill17
Typo

[DefaultName]

My take is that, although this is not what these companies are intended for, you'll likely get away with it.  However, a "Big Joke" type in charge, making a name for himself, could invalidate thousands of these companies at the stroke of a pen. 

 

Up to you, can you afford to walk away if that happens?

[samtab]

To easy to setup any potential business without profit and no tax to pay, but anyway they will never catch you and the worst that could happen is to have to bribe a little more.

Don't worry,  maybe millions to catch before you.

 

[Pravda]

6 hours ago, LukKrueng said:

Misconception of the foreigners quota. There is nothing in the condo units papers indicating "foreign" or "local" quota. A foreign owned unit can be sold to Thai and a Thai owned unit can be sold to foreigner.  There is no price deference just because it is owned by Thai or foreigner. 

Every time a foreigner buys a condo unit, the juristic person must calculate % of ownership to verify that at this point in time at least 51% of the building is Thai owned. The document stating this fact must be shown at the land office at time of transferring ownership to a non Thai buyer

 

Oh really? So you say? 

 

That's funny because having gone through a condo purchase myself recently a major developer (and a mean majorly major famous) was advertising price of a condo for 5 million, but foreign price was 7 million. 

 

Then I'd mention my Thai wife is taking a loan the price dropped back to 5 million. 

 

I have both line chats and email of this. 

[a10ams]

48 minutes ago, redpill17 said:

Did you account taxes, maintenance costs, lawyers, etc. in the calculation? I don't want to live in a house, but I'm curious if it's cost-effective to buy property here.

 

Adding all that in I am at break even right now. To date, my costs average out at 38k per month. House next door(slightly smaller and no pool) rents for 35k/month.

 

Another 'plus' is due to the currency fluctuations over the years.

I bought the house using US$, to get my initial outlay back in US$ I could take a baht sale hit of 16% on the original purchase price.

If I chose to convert back to my home currency of £, then I could take a baht sale hit of 32% on the original purchase price.

 

I would suggest anybody coming here for the long haul, ie 10+ years, should buy.

[a10ams]

1 hour ago, PaoloR said:

The cost, both to set up the company and to maintain the company (accountants fees, taxes etc.) is high and does not go away.

Additionally it is one more thing (and one more cost) to unscramble  should you wish to sell.

Plus you don't own the company - only 49% of it, so trust in your partner is a necessity.

I have done it 3 times with no problems

 

 

We pay 11k a year to the lawyer who does our accounts. The land taxes started out at 12k pa in 2007 and jumped to 13k around 2013 when they discovered we had a pool. This year we got a discount in the land taxes and paid only 54 baht. They told my wife it will be 500 baht next year! No idea what triggered this huge reduction.

 

[CanadaSam]

If you own/operate a company in ANY country around the globe, simply keep up with tax and reporting requirements, and you are ok.

 

Don't overthink it, mate, just make sure you comply with all regulatory requirements (requires a good accountant).

[dddave]

Ten plus years ago, the Governor of Phuket announced a crackdown on  properties owned by foreigners using the "Thai Company loophole and initiated confiscation of a number of such properties.  They also began carefully examining the transfers of funds into girlfriends and wives bank accounts for the purchase of property.   It was a hot issue and then kind of went away quietly, probably a result of mega-pressure on the central government by real estate developers.

It did go to show that the laws regarding the use of non-performing "businesses" as property holders were vague and subject to different interpretations. 

[Pilotman]

On 11/5/2020 at 11:03 AM, Tapster said:

As the title says: your comments please.

no penalties or disadvantages in doing it, so long as you don't use proxy director's and the company is set up in accordance with the  regulations laid down by the Thai Department for Business Development and the Articles of Association are in accordance with Thai law.  I don't want to get into yet another 'yes you can,.no you can't ' debate with some TVF members, who mostly haven't a clue about the subject, but just listen to rumour and bar chat.  PM me if you want more information, correct information that is.  

[Pilotman]

28 minutes ago, CanadaSam said:

If you own/operate a company in ANY country around the globe, simply keep up with tax and reporting requirements, and you are ok.

 

Don't overthink it, mate, just make sure you comply with all regulatory requirements (requires a good accountant).

Correct, and a good lawyer to set up the company. .

[Pilotman]

1 hour ago, redpill17 said:

What about US-Thailand agreement that allows US citizens to own 100% of the company? Anyone knows if it's still the case?

its not correct

[Tapster]

2 hours ago, a10ams said:

 

My views exactly, especially the last line.

 

I came here, and bought in Jan 2007 using the company scheme. Had I rented at the same price my neighbour pays then I am now about one year past 'break even' for the initial outlay.

 

Bloke across the road from me has the totally opposite view, been here sixteen years and rented from day one. Must've paid for one and a half houses and still owns nothing.

That's a perfectly fine point of view, for the First World.

Here, with the chance of investigation by the Department of Business Development, it's a risk of losing 100%.

[Pilotman]

35 minutes ago, Tapster said:

That's a perfectly fine point of view, for the First World.

Here, with the chance of investigation by the Department of Business Development, it's a risk of losing 100%.

that is nonsense, provided you stick to the law. in setting up the company structure.  

[Oldie]

1 hour ago, a10ams said:

 

My views exactly, especially the last line.

 

I came here, and bought in Jan 2007 using the company scheme. Had I rented at the same price my neighbour pays then I am now about one year past 'break even' for the initial outlay.

 

Bloke across the road from me has the totally opposite view, been here sixteen years and rented from day one. Must've paid for one and a half houses and still owns nothing.

People might have a reason not to buy. I will tell you my story. My whole life I rented to be flexible. I moved to some different countries because of my job. Afterwards when I retired I stayed for years in hotels to be flexible. I traveled a lot. Then I decided to buy a condo in Pattaya because I thought it is better when you get old so that you don't have to move anymore. My biggest mistake.

 

The former extremely quiet condo is now surrounded by extremely noisy bars. For instance I hardly can watch TV and this with earphones. I can't invite people because a conversation is difficult. Endless complaints at the City Hall and police didn't change anything. And I am just one of VERY MANY complaining.

 

At the moment I am looking for a quiet apartment that I can rent. My big expensive condo I will abandon. It can't be used anymore. And I think nobody is that stupid to buy it with all the bar noise.

 

I understand that there are better places to buy a condo than in the middle of a big brothel. But the bars moved to me. When I bought my condo this area had no bars at all. My mistake. For sure I will never buy a condo here in Pattaya again. One very big mistake is enough. Let it be my last one ????

[Pilotman]

57 minutes ago, Oldie said:

People might have a reason not to buy. I will tell you my story. My whole life I rented to be flexible. I moved to some different countries because of my job. Afterwards when I retired I stayed for years in hotels to be flexible. I traveled a lot. Then I decided to buy a condo in Pattaya because I thought it is better when you get old so that you don't have to move anymore. My biggest mistake.

 

The former extremely quiet condo is now surrounded by extremely noisy bars. For instance I hardly can watch TV and this with earphones. I can't invite people because a conversation is difficult. Endless complaints at the City Hall and police didn't change anything. And I am just one of VERY MANY complaining.

 

At the moment I am looking for a quiet apartment that I can rent. My big expensive condo I will abandon. It can't be used anymore. And I think nobody is that stupid to buy it with all the bar noise.

 

I understand that there are better places to buy a condo than in the middle of a big brothel. But the bars moved to me. When I bought my condo this area had no bars at all. My mistake. For sure I will never buy a condo here in Pattaya again. One very big mistake is enough. Let it be my last one ????

I'm sorry for your experience, which many have had. In contrast , my wife , daughter and I I bought our house in a semi rural location in a beautiful part of the country, not tool far from Jomtein ( around 30km)  and frankly we  could not be happier with how it has turned out for us. The neighbours ( Thai) are friendly and helpful and this truly is our home and to be savoured and  enjoyed. We bought in an up market development, which may explain our quite good experience. 

[Pilotman]

7 minutes ago, Pilotman said:

I

 

Edited November 6, 2020 by Pilotman
double posting

[bkk6060]

I would never do it there are many people who have property agents can steer you in the right direction. 

 

I would ask what happens when you die?  Seems a little complicated with the company set up and others named as part owner of the property.

[mcl2504]

If you think this is the right place to seek legal advice, I predict trouble ahead for you. Talking to a (practicing, Thai) lawyer makes much more sense.

[ronaldo0]

Well if they took the property of people then they would have an awful lot of property to look after in places like Phuket and samui !

[alianware]

8 hours ago, LukKrueng said:

Any link to relevant laws saying foreigners not allowed to rent out? 

If you don't pay tax and have no company the law says that you are not allow to rent out. You must habe yearly balance sheet !  Ask your lawyer !

[soi3eddie]

20 hours ago, alianware said:

That could happen if you prepared your paper wrong since the first time.  Your partner or whoever have to signed the sell share holder document since first time before you even take her/his name to company. 

If you do it later, than that is your fault. 

His ex, the 45% shareholder signed company resignation papers (in case future was required) at time of company formation. She is however, well advised and rescinded her resignation and knows the predicament the foreigner is in with the legality of the nominee situation. He did try and avoid problems but it would appear that it's all gone wrong for him and now he will be left with virtually nothing and the "law" is not on his side.