Buying property

[Jetlag]

Looking around estate agents i've been told that a non thais can buy a condo/ house buy setting up a company with thai partners who then become sleeping partners  thus leaving him as the sole director and therefore owner of the property/business. You then have to pay a small business tax each year. Is this a legal loophole / way for a foreigner to own property in Thailand or an illegal practice ?

[lopburi3]

Believe the answer is yes and yes.  Yes it can be used as a loophole.  But yes again that doing so would make it an illegal practice if used in an attempt to circumvent foreign land ownership laws.

[dr_Pat_Pong]

You'd need to be very brave or very stupid Jetlag.   The lands department would look carefully at your spurious partners and they wouldn't pass muster.

[sevinnow]

The lands department do generally accept house purchase in a company name as long as the company is operating a business  ie. running a bar/guesthouse.

Which is not a bad idea if you are intending to stay here at least you have a chance on making "some" money while you pass the hours away, as life on a beach for a couple of years can become boring!

SEV

:cool:

[Jetlag]

As i have no intention of running a business in Thailand this option of  property purchase seems to be inappropriate for me. However sitting on the beach sounds fine...

Thanks for the replies.  Jason :cool:

[lopburi3]

You do not have to have a company to buy a condo so that is an option for some foreigners.  But it has huge downside's as controls are lax and many fall into disrepair quickly.  With the low price of renting it is probably not a good idea unless you plan to live there full time and don't expect much in the way of increase in value (and are will to take the high risks involved here).

[seville]

What if a farang wanted to partner with a few Thais and take over a lease for a rest/Bungalow? Can you do that? And what kind of visa should one apply for.

[wolf5370]

The business idea is fine as long as the business earns money - i.e. does something. One one is for the company to be a property company that owns the land/house/whatever and is ion the business of earning from renating. That is, the co. owns the property and you pay rent to that company - that is the company profit (minus any loan the company took).

The company must be mostly in Thai hands (there are companies that deal specifiaclly with this) - I think must be 60%+ Thai for land ownership. They will allocate sleeping directors for an annual fee, you have power oif atterny and all the shares (in various names) locked in your safe and contractual protection.

What you can't do is start a company, buy the land and then do nothing. This is obviously an attempt to get around the law.

You will have to pay tax (or the co. will anyway) on the profit.

Yes this is a loophole. Every country has them. There is always a risk that it will be closed going forward. Use them at your own risk. You may be able to cover this eventallity with "company policies" after all you will be the writer.

[Brian]

From http://www.thaiproperty.com

Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.

Although Thai law prohibits foreigners from owning land in Thailand, there are various ways in which you can structure your affairs so that you can own land, and still comply with existing Thai laws:

Nominee with Lease and Option to Buy - you can use a Thai Nominee to purchase the house/land and have a 30 year lease with a 30 by 30 year option from the nominee. In order to be enforceable, any lease for a period of longer than three years must be registered, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. The drawbacks to a lease include the fact that the parties can contractually agree to renewals, but this right cannot be registered and is not effective against a purchaser of the property, and that the lessee cannot (without the lessor's consent) sublease, sell or transfer his or her interest.

Nominee with Mortgage - you can use a Nominee to purchase the house/land and have a mortgage (registered with the appropriate land department office) on the property in your favour. However, in some circumstances the Thai courts have ruled that this was not a bona fide mortgage, but rather it was a mortgage contrived to circumvent the existing laws of Thailand prohibiting foreign ownership of land. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege.

Usufruct Interest (Sidhi-kep-kin) - gives you temporary ownership rights to things on or arising from the land. In practice, a usufruct is limited to a 30 year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, a usufructury interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited.

Limited Liability Company - this form of purchasing property is the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land.

This results in the foreign ownership of the company being limited at 39%, but with the recommended changes to the Articles of Association, the foreigner can be the only director of the company, and the only officer of the company who can commit or bind the company in any contractual dealings - effectively giving the minority shareholder control over the company.