House company ownership by foreign company?

[mran66]

 

Wondering how much additional hassle there will be if the 49% of shares of a house company, instead of being owned by me, are owned by an overseas company that is 100% owned & controlled by me, myself being the only director of the overseas (investment) company?

 

I would guess such cases exist, thus testing my luck in case any forum follower would have actual experience.

[Peterw42]

A foreign company needs a

 

Foreign Business License can be loosely understood as a Work Permit for companies. Just as foreigners in Thailand can only engage in certain occupations and are required to have a Work Permit to be able to work, foreign companies can also operate merely in the selected categories and need an FBL. This way, Thai government can control the influx of foreign businesses into the country and thus protect Thai nationals and their interests. Failing to acquire an FBL prior to starting a business can result in a fine ranging from 100,000 THB to 1M THB and imprisonment of up to three years.

 

https://thailand.acclime.com/guides/foreign-business-ownership/#part4

 

[ChaiyaTH]

The existing cases in Thailand use a BOI company for that purpose, as you can own that 100% yourself without needing anything abroad for it on top of that. And hassle free doesn't exist in Thailand.

[Phuketboy]

The other thing you can do to maintain control of company here in Thailand is through the allocation of the shares.  As you are already aware, a foreigner can only own 49% with 2 Thai owning the other 51%.  When you set it up make sure that all the ordinary shares (those with most voting rights) are allocated to you, and the preference shares (those with less voting rights) are issued to the Thai people you use.  This way even if they get together and try to vote you out or take over they won't be able to do so, as your votes in the company will always be greater than theirs.  You will however, be able to vote them out or change the Thai you use at any given time.  That way even with 49%, you will still have and maintain full control of the company.  Get a good lawyer to set this up for you. 

[khunPer]

23 hours ago, mran66 said:

Wondering how much additional hassle there will be if the 49% of shares of a house company, instead of being owned by me, are owned by an overseas company that is 100% owned & controlled by me, myself being the only director of the overseas (investment) company?

There is not such thing as "a house company", it a normal Thai company limited that also owns a property for rent out/lease out as part of their business; it's actually illegal to use a company limited for the only purpose as shell-owner of land for a foreigner.

 

A foreign company as shareholder for up to 49 percent of the shares is possible, the foreign company is a juristic person, and the set-up has been used before. One case in the media was the quite large beachfront land on Samui where a tunnel was build, the foreign owner was/is a company in a state often considered as tax heaven...

 

[mran66]

1 hour ago, khunPer said:

There is not such thing as "a house company", it a normal Thai company limited that also owns a property for rent out/lease out as part of their business; it's actually illegal to use a company limited for the only purpose as shell-owner of land for a foreigner.

 

A foreign company as shareholder for up to 49 percent of the shares is possible, the foreign company is a juristic person, and the set-up has been used before. One case in the media was the quite large beachfront land on Samui where a tunnel was build, the foreign owner was/is a company in a state often considered as tax heaven...

 

 

My understanding is same as yours, just wondering the practicalities and additional hassle to manage annual accounts etc if the 49% would not be owned my me personally, rather a company in another country (100% shares of which I would own, and be sole director of)

 

I understand all other replies too, however a bit off my issue.

- understand companies operating needs business license, however in this case the foreign company would not have any operation here, just would own 49% of shares of a Thai company that is properly set up here. Thus, I would assume the investor would not need biz license in such case, not sure though.

- Understand BOI, but not applicable.

- Understand preference vs voting share issue.

 

 I was just wondering this from perspective of estate planning as I am updating my will - IF one day I will die (not my plan though, just IF...), my heirs will have quite some hassle to manage the 49% of the shares of the Thai company they would inherit. 

 

On the contrary, if the shares would be owned by a company (that I own 100%) in my home my country, my heirs would simply inherit the shares of the company in my home country, and nothing would change in the Thai company unless/until the foreign company would decide to sell the shares of the Thai company. Obviously the heir(s) would need to nominate new director/management to the foreign company to be authorised to act on behalf of it.

 

Overall Managing the issue would be substantially easier, comfortable (and cheaper) for the heirs in home country (as none of the are familiar with or interested in owning anything Thailand). But I would expect there would be requirement for some paperwork etc from home country to prove the authority over Thai company as director - and possibly also some pitfalls that would make this not feasible or worth a consideration at all, like possibly the process to nominate the new director for the Thai company IF I die - or could the director actually be the foreign company as legal person, and the person acting then would be whoever would be authorised by the foreign company.

 

Thus, I was just wondering how much additional hassle I would need to accept when I am alive vs leaving the hassle to someone after me.

 

I would guess quite a few companies that own high value villas here (as well as in other countries) are 49% owned by companies based in tax havens, esp by Chinese and Russians but others too who may have reasons other than simplifying estate execution behind the structure, however the hassles would be the same...

 

 

 

[khunPer]

31 minutes ago, mran66 said:

- understand companies operating needs business license, however in this case the foreign company would not have any operation here, just would own 49% of shares of a Thai company that is properly set up here.

The foreign company that owns up to 49 percent of the shares is a shareholder, and to my understanding not performing any business in Thailand.

 

When you die it has nothing to do with the Thai company limited, unless your are a registered director, i.e. board member, and need to be de-registered; any inheritance will be in your home country, or the country where the foreign holding company is registered, and follow that country's law, and the laws of the country where heirs are tax residents.

 

If it would be cheaper for the heirs would be depending of the inheritance law, and inheritance tax, in the country of the heirs' residence, there are no inheritance tax at present in Thailand.

 

Company tax for the Thai company limited follows Thai law, and dividend payout will be subtracted 10 percent withholding tax, but you might wish to check if there is a Double Taxation Agreement between the country of registration for the foreign holding company and Thailand, and if any dividend tax refund is available.

 

As from an investment point of view, the reason for using a Thai company limited as owner of property is that you sell/transfer shares, not any property, so no tax and transfer fees applies when changing owner. The eventual gain on foreign owned shares will not be taxed in Thailand, if the foreign owner is not a tax resident in Thailand. If the foreign owner is a juristic person, i.e. holding company, in a tax-heaven, taxes might be generally avoidable or minor. Price paid in private share transfers don't need to be public know, in my home country we just write that "payment has been fulfilled".

 

Consult a law firm in Thailand that is used to handle property for foreign clients, they should know all rules and tricks...????