Land&House ownership via a Thai Company : How much do your Annual Accounts cost ?

[BangkokBoyJohnny]

Morninal All,

 

I posted this in another forum and got a few replies, quoting figues 12k to 15k thb pa.

 

So can anyone recommend an accountant in Phuket who can do Annual Accounts and Audit for less than 20k thb pa ?

ie for a Thai Company that owns a piece of Land & a house.

 

And Yes Ps I'm not asking if it's 100% the correct Company structure....

[BangkokBoyJohnny]

OK !

[pagallim]

It's about 10 years since I closed the company I had (same as you, land/house) and from recollection I was paying just over 20,000 then.

[Kakricas]

trying to help, i pay 18k but most of the accountants in Phuket will charge 20k or more (for the very same task, yearly balance it only). if you need the accountant company name let me know and i will share the info with you (pm me).

[BangkokBoyJohnny]

On 1/26/2022 at 10:16 PM, Kakricas said:

trying to help, i pay 18k but most of the accountants in Phuket will charge 20k or more (for the very same task, yearly balance it only). if you need the accountant company name let me know and i will share the info with you (pm me).

Thanks I'm sorted now .....

[KhaoYai]

I hope you realise that your company has to trade and has to have a reason to own land?  If not then land ownership is illegal if the company has simply been set up for the purpose of land ownership be a foreigner.  Simply paying tax does not establish trading.

 

Yes, there are many that 'own' land that way but if its ever challenged, you will lose.  Check out the clause in the Thai land law re: circumvention.

 

Its actually not that difficult to comply but most don't, they think paying a little tax will be sufice.

[Kakricas]

"Its actually not that difficult to comply but most don't" @KhaoYai can you elaborate on this? How you can 100% comply if the company is not really trading anything but owns an asset (like land and house)?because you write is not that difficult i want to hear more. In Thailand you can always be challenged as you are NOT in your country(this is EXACTLY how it is either we like it or not) BUT 99% of farangs residing here do exactly the same (set up a Thai company if they want to own land and house). This a VERY long discussion topic  but you wrote 'is not that difficult' and i am talking about the particular cases that a Thai company is being established in reality to own land and a house only. The real estate industry in Thailand is being feed from this 'scheme' no?and then we will start the 30 years leasing discussion....BUT no let's stick on the 'is not that difficult'. cheers

 

Apologies to the owner of the post for the spam but i think your question is being answered now and you got what you where looking for.

[KhaoYai]

1 hour ago, Kakricas said:

"Its actually not that difficult to comply but most don't" @KhaoYai can you elaborate on this? How you can 100% comply if the company is not really trading anything but owns an asset (like land and house)?because you write is not that difficult i want to hear more. In Thailand you can always be challenged as you are NOT in your country(this is EXACTLY how it is either we like it or not) BUT 99% of farangs residing here do exactly the same (set up a Thai company if they want to own land and house). This a VERY long discussion topic  but you wrote 'is not that difficult' and i am talking about the particular cases that a Thai company is being established in reality to own land and a house only. The real estate industry in Thailand is being feed from this 'scheme' no?and then we will start the 30 years leasing discussion....BUT no let's stick on the 'is not that difficult'. cheers

 

Apologies to the owner of the post for the spam but i think your question is being answered now and you got what you where looking for.

Compliance depends on what the company does. I am not saying that a company that doesn't trade or have any reason to own land can comply - I have always said exactly the opposite. Yes, people do it but considering the sums involved, I wouldn't take the risk.

 

I can't remember the clause number but one of the clauses in the Thai land law states that any attempt to circumvent the Thai land laws can lead (I think) to forfeiture. Forming a company that does not in fact do any trading and pays tax each year based on fictitious 'income', simply for the purpose of owning land is quite clearly, circumvention.  It would be quite easy to prove that in court.  There will be, I have no doubt, no receipts, no bills and probably no bank account.

 

Why does is go on?  Who knows, maybe because a whole industry has grown around such 'company formations' and therefore, money is being made. The powers that be have 2 arms, 2 eyes and 2 legs just as we do, so to think they are not aware of such 'company formations' would be asking rather too much - the internet is full of Thai legal specialists, lawyers etc. offering such services.  But, I doubt any one of those outfits would, if asked, give a cast iron guarantee, in writing, that the holding is 100% secure.  I can only think that the authorities, bouyed by the fact that these 'companies' do not actually own any precious Thai land, simply leave their cronies to make money out of the situation - no harm done and everything to gain - so to speak.

 

A good friend, now sadly deceased, made me aware of a case in Pattaya around 8 to 10 years ago where a foreign guy had 'bought' a house, as thousands have, through the formation of a Thai Ltd company.  Said owner was caught playing the field by his wife who then filed for divorce.  She was aware of how the house was held and her father was a police captain - long story short, the foreigner lost the house.  In court it was shown that the company did not in fact trade. All that happened was that his lawyer, who was also the company book-keeper, filed a tax return each year so the company paid a little tax.  The company was not set up as an investment holding with a portfolio of properties.

 

You ask then, how can it be done legally - because I stated that its not that difficult to comply.  Well, there are several options and I'll leave it to you to explore others, of which there are several but consider this:

 

Mr. A sells his house in Farangland, forms a Thai Ltd Co, for the purpose of property investment (of course taking all the necessary steps to ensure he controls the company and that the company complies with company law). He invests the proceeds of his house sale in the Thai company which then buys several houses and rents them out - one to himself.  There is nothing I know of in Thai law that prevents a director from renting a house from his own company which Mr. A does. He has a proper lease and pays rent each month.  I believe that is fully legal.  The company has been set up to invest in property, it is trading, making a return on the investment and pays tax on real accounts.  As such it can be shown to exist as a real company, set up as any other, with the intention of making money.  If enough houses are owned, the company would surely need staff for maintenance etc. - further proof of its genuine existence.

 

A property investement company clearly needs to have something to invest in and so has a reason to own land. A guy owning a sweet shop can only show a need to own that shop - not a 5 bedroom house with a swimming pool.

 

I  know of 2 guys in Hua Hin that each own a property through a Ltd company but each lives in the house owned by the other's company and rents it from him.  A little more difficult to show realism but providing the i's are dotted and the t's crossed, I see no reason why that would not be legal.  I ran that past a Thai barrister a couple of years ago and she said it was legal - there are no set minimum incomes for a Thai company.

 

As I say, there are several ways but the bases need to be covered.  If I was involved in any such scheme, I would not simply pay a Thai lawyer to concoct fake accounts each year and file tax returns.

 

The test on any such 'ownership' is whether the prosecution could prove circumvention if it went to court. With most of the 'companies' I've seen, that would be easy.  It is not illegal for a foreigner to be a director of a Thai company nor is it illegal for that company to own land. But if it can be shown that the company was simply 'created' to facilitate land ownership by a foreigner and nothing else, I'm pretty sure the foreigner would lose - its clear circumvention.

[Kakricas]

8 hours ago, KhaoYai said:

Compliance depends on what the company does. I am not saying that a company that doesn't trade or have any reason to own land can comply - I have always said exactly the opposite. Yes, people do it but considering the sums involved, I wouldn't take the risk.

 

I can't remember the clause number but one of the clauses in the Thai land law states that any attempt to circumvent the Thai land laws can lead (I think) to forfeiture. Forming a company that does not in fact do any trading and pays tax each year based on fictitious 'income', simply for the purpose of owning land is quite clearly, circumvention.  It would be quite easy to prove that in court.  There will be, I have no doubt, no receipts, no bills and probably no bank account.

 

Why does is go on?  Who knows, maybe because a whole industry has grown around such 'company formations' and therefore, money is being made. The powers that be have 2 arms, 2 eyes and 2 legs just as we do, so to think they are not aware of such 'company formations' would be asking rather too much - the internet is full of Thai legal specialists, lawyers etc. offering such services.  But, I doubt any one of those outfits would, if asked, give a cast iron guarantee, in writing, that the holding is 100% secure.  I can only think that the authorities, bouyed by the fact that these 'companies' do not actually own any precious Thai land, simply leave their cronies to make money out of the situation - no harm done and everything to gain - so to speak.

 

A good friend, now sadly deceased, made me aware of a case in Pattaya around 8 to 10 years ago where a foreign guy had 'bought' a house, as thousands have, through the formation of a Thai Ltd company.  Said owner was caught playing the field by his wife who then filed for divorce.  She was aware of how the house was held and her father was a police captain - long story short, the foreigner lost the house.  In court it was shown that the company did not in fact trade. All that happened was that his lawyer, who was also the company book-keeper, filed a tax return each year so the company paid a little tax.  The company was not set up as an investment holding with a portfolio of properties.

 

You ask then, how can it be done legally - because I stated that its not that difficult to comply.  Well, there are several options and I'll leave it to you to explore others, of which there are several but consider this:

 

Mr. A sells his house in Farangland, forms a Thai Ltd Co, for the purpose of property investment (of course taking all the necessary steps to ensure he controls the company and that the company complies with company law). He invests the proceeds of his house sale in the Thai company which then buys several houses and rents them out - one to himself.  There is nothing I know of in Thai law that prevents a director from renting a house from his own company which Mr. A does. He has a proper lease and pays rent each month.  I believe that is fully legal.  The company has been set up to invest in property, it is trading, making a return on the investment and pays tax on real accounts.  As such it can be shown to exist as a real company, set up as any other, with the intention of making money.  If enough houses are owned, the company would surely need staff for maintenance etc. - further proof of its genuine existence.

 

A property investement company clearly needs to have something to invest in and so has a reason to own land. A guy owning a sweet shop can only show a need to own that shop - not a 5 bedroom house with a swimming pool.

 

I  know of 2 guys in Hua Hin that each own a property through a Ltd company but each lives in the house owned by the other's company and rents it from him.  A little more difficult to show realism but providing the i's are dotted and the t's crossed, I see no reason why that would not be legal.  I ran that past a Thai barrister a couple of years ago and she said it was legal - there are no set minimum incomes for a Thai company.

 

As I say, there are several ways but the bases need to be covered.  If I was involved in any such scheme, I would not simply pay a Thai lawyer to concoct fake accounts each year and file tax returns.

 

The test on any such 'ownership' is whether the prosecution could prove circumvention if it went to court. With most of the 'companies' I've seen, that would be easy.  It is not illegal for a foreigner to be a director of a Thai company nor is it illegal for that company to own land. But if it can be shown that the company was simply 'created' to facilitate land ownership by a foreigner and nothing else, I'm pretty sure the foreigner would lose - its clear circumvention.

What you have written above all make sense. I just want always to hear different opinions (like brainstorming) and always be aware how the people handle this complicated matter. 

 

After the banks bankrupt in Cuprus/Ireland/Greece any investment is not safe. Only if you own a land in your own country under your own name. And i can refer many MANY other bankrupt cases of trustworthy investment companies etc. Reducing the risks of losing your investment or property is the point of this discussion here.

 

p.s for the particular case of your friend in Pattaya you do understand that a Thai wife was involved plus a high level police officer was involved....is too risky no?I read a lot of stories with Thai wifes and old age Farangs.....so very normal to me. 

 

Anyways cheers for the justified answer.