Lease / Building Permit To A Non Thai Company ?

[LivinLOS]

I hold assets in a offshore trust.

I am purchasing land via giving it to the wife.

I would like to secure that process with a 30 year lease and have lease and house that gets built in my name.

As shes my wife i understand the lease isnt security for this. I had hoped to put the assets purchased into the trusts holdings. It seems Thailand doesnt recognize trust formations.

However I have offshore companies, which its easy to have owned by the trust. So the same chain ultimately could be applied.

So can you have a lease, put into a non Thai companies name ?? Same with a building permit.

[InterestedObserver]

Lease the land from who, your wife? The non-Thai company is not registered to do business in Thailand. How is the company going to enter into a legal lease contract with your wife and register same at the Land Office who will ask to see the company documents? Same applies to the building permit. Why would an offshore (foreign) company not have to play by the Thai rules?

Edited May 11, 2011 by InterestedObserver

[LivinLOS]

I hold assets all over the world in companies.. Seems fairly natural and normal. Companies can hold assets without doing business, its simply a holding company. Normal no ?? That is what holding companies are for.

The company is not avoiding 'playing by Thai rules' it simply separates me personally (and legally) from the lease holding, simplifies inheritance issues, and covers the bases with having a lease from a wife. If a non Thai individual can hold a lease, why is a non Thai company different ??

As said I already operate trusts and have offshore corporate structures to hold assets, equities, bank and trading accounts, etc. This way should I die suddenly distribution of assets is all efficiently managed, family including the wife get the distribution and incomes I define etc etc. I prefer not to have assets owned personally if possible.

So the question remains... Will Thailand land officers issue a lease and building permit to a non Thai corporation ??

Otherwise its gets to be a hassle to have a Thai corporation, owned 49% by the offshore corporation. Another layer of annual costs and frankly I may as well own the land in a company rather than go leasehold.

Edited May 11, 2011 by LivinLOS

[InterestedObserver]

As said I already operate trusts and have offshore corporate structures to hold assets, equities, bank and trading accounts, etc........... I prefer not to have assets owned personally if possible.

In Thailand that's called a nominee and is not legal.

[LivinLOS]

For a lease.. not land ownership..

Never heard nominee issues applied to leases.

Edited May 11, 2011 by LivinLOS

[InterestedObserver]

For a lease.. not land ownership..

Never heard nominee issues applied to leases.

You want to do the deal in the name of a nominee offshore (foreign) holding company, not in your own name.

[LivinLOS]

But the restriction of ownership.. Hence illegality of 'nominees'.. ONLY relates to LAND ownership.

And companies have leases.. Thats TOTALLY normal. The only question is do the land office accept non Thai companies.

[thaiwanderer]

The restritions on nominees have absolutely nothing to do with an offshore company being a lessee.

It is not a gray area, distinction between letter or spirit of the law or theory and pratice.

Ownership of land or running a Thai company of whatever form (land owning or not) is where nominees are precluded.

Offshore companies can and frequently are lessees with no issues whatsoever.

Indeed it is an entirely prudent measure and can be better than the lease being granted to the foreigner's own personal name (for future transfer by sale, gift or inheritance).

In the OP's case despite having other existent offshore companies it may well be best to buy an off the shelf offshore company exclusively to be the lessee rather than mixing it with other business.

A potential issue is avoiding the offshore company / it's officers' illegally doing business / working in Thailand.

This can be avoided by the lease etc (officially) being signed offshore and a Thai lawyer being given an appropriately worded power of attorney for attendance at the land office.

Merely being a lessee and subletting doesn't of itself involve illegal in country activity though there will be tax issues.

Appropriate expert advice regarding all this should of course be obtained.

The building permit is more complicated.

I know of them being issued to offshore companies in the past but less so now.

Even where it is it gives rise to issues of ownership and transfer of the house to the OP / his company.

Again expert advice should be sought but I expect the building permit should better be in the name of wife or the builder / construction management company.

Edited May 11, 2011 by thaiwanderer

[LivinLOS]

Firstly thank you for a well written response.

Offshore companies can and frequently are lessees with no issues whatsoever.

Indeed it is an entirely prudent measure and can be better than the lease being granted to the foreigner's own personal name (for future transfer by sale, gift or inheritance).

Thanks.. As I keep emphasizing I am not trying to 'game the system'.. In fact the very reason I want to go leasehold is it seems the more legal avenue than company ownership.

I simply wish to keep my assets held within structures that are readily administered and handleable by trustees. To reduce succession planning etc. This is a process I have been setting up for my entire family so our assets are held within a group system. Hence doing the same with this is desirable.

In the OP's case despite having other existent offshore companies it may well be best to buy an off the shelf offshore company exclusively to be the lessee rather than mixing it with other business.

I agree, and a shelf co isnt a huge hurdle. However as I already have a company thats purely a holding co, with zero biz activity, I would have thought this is ideal.

A potential issue is avoiding the offshore company / it's officers' illegally doing business / working in Thailand.

This can be avoided by the lease etc (officially) being signed offshore and a Thai lawyer being given an appropriately worded power of attorney for attendance at the land office.

Good point.. Hadnt considered that signing the paper could be working. Very well pointed out.

Merely being a lessee and subletting doesn't of itself involve illegal in country activity though there will be tax issues.

Appropriate expert advice regarding all this should of course be obtained.

I am seeing a lawyer on Friday, but so as to enable better questions.. Which tax issues are we talking here ??

The building permit is more complicated.

I know of them being issued to offshore companies in the past but less so now.

Even where it is it gives rise to issues of ownership and transfer of the house to the OP / his company.

Again expert advice should be sought but I expect the building permit should better be in the name of wife or the builder / construction management company.

Sounds like a 'local interpretation' issue.. Ideally I would love to have lease and house all neatly tied up into 'holding company a' with myself as an officer of the company. But we will see.

Which 'issues of ownership and transfer' should I research ??

Again thanks. Just the kind of reply I was looking for, some new things to consider.

[thaiwanderer]

Firstly thank you for a well written response.

- Not at all but I'm no expert and am glad you are taking proper advice.

Offshore companies can and frequently are lessees with no issues whatsoever.

Indeed it is an entirely prudent measure and can be better than the lease being granted to the foreigner's own personal name (for future transfer by sale, gift or inheritance).

Thanks.. As I keep emphasizing I am not trying to 'game the system'.. In fact the very reason I want to go leasehold is it seems the more legal avenue than company ownership.

I simply wish to keep my assets held within structures that are readily administered and handleable by trustees. To reduce succession planning etc. This is a process I have been setting up for my entire family so our assets are held within a group system. Hence doing the same with this is desirable.

In the OP's case despite having other existent offshore companies it may well be best to buy an off the shelf offshore company exclusively to be the lessee rather than mixing it with other business.

I agree, and a shelf co isnt a huge hurdle. However as I already have a company thats purely a holding co, with zero biz activity, I would have thought this is ideal.

- I would suggest better to have an offshore holding company exclusively for this lease, i.e. not holding anything else. Not expensive and just all together neater.

A potential issue is avoiding the offshore company / it's officers' illegally doing business / working in Thailand.

This can be avoided by the lease etc (officially) being signed offshore and a Thai lawyer being given an appropriately worded power of attorney for attendance at the land office.

Good point.. Hadnt considered that signing the paper could be working. Very well pointed out.

Merely being a lessee and subletting doesn't of itself involve illegal in country activity though there will be tax issues.

Appropriate expert advice regarding all this should of course be obtained.

I am seeing a lawyer on Friday, but so as to enable better questions.. Which tax issues are we talking here ??

- Not an expert but you (in your personal name) may want to be a sub-lessee (or usufructuary, have right or habitation or superficies) - your company would then be 'making' some money?

(Are we then defeating the point of you not being personally tied to the head lease? What are your exact reasons for wanting to go the offshore route? Voidability of husband and wife contracts? Concern over the land office viewing your wife as a nominee? Might there not be better ways round it?)

Alternatively, you personally not having formal permission from the company lessee to be at the house may throw up tabian ban issues etc.?

The building permit is more complicated.

I know of them being issued to offshore companies in the past but less so now.

Even where it is it gives rise to issues of ownership and transfer of the house to the OP / his company.

Again expert advice should be sought but I expect the building permit should better be in the name of wife or the builder / construction management company.

Sounds like a 'local interpretation' issue.. Ideally I would love to have lease and house all neatly tied up into 'holding company a' with myself as an officer of the company. But we will see.

Which 'issues of ownership and transfer' should I research ??

- I am disagreeing with someone on a similar point in another recent thread in this section but (my non-expert) view is that (even if locally allowed) its simply unnecessary to have the building permit in your offshore company's name (also avoids the suggestion your company is 'doing' anything in country).

I believe the offshore company can establish their ownership of the house by construction contract with the builder or sale and purchase contract with the builder or wife.

Alongside this the lease also should of course give the right to build in detail and underline the house owner being the lessee (although its the construction or sale and purchase contract which actually establishes the ownership).

Yours is an unusual situation in as much as normally offshore companies are utilised at both ends of the transaction.

You wish to avoid one end of that by not having the land owned by a Thai nominee company leading to an offshore company.

In one sense the complicating factor for you may be your wife's involvement.

While I appreciate your desire to be more legal I do have to wonder whether a Thai company as landowner (leading to offshore company/s) and an offshore company as lessee might be better.

Your wife being landowner, the land being subject to a lease and you being there of itself points to a nominee set up.

Your lawyer will be better placed to del with all this.

[LivinLOS]

(Are we then defeating the point of you not being personally tied to the head lease? What are your exact reasons for wanting to go the offshore route? Voidability of husband and wife contracts? Concern over the land office viewing your wife as a nominee? Might there not be better ways round it?)

Alternatively, you personally not having formal permission from the company lessee to be at the house may throw up tabian ban issues etc.?

[/color][/i]

Theres 2 primary reasons..

1) the voidability of husband wife leases and or the division of assets with a divorce. Plus simply protection against legal attack in any other way, I like being 'asset less' legally.

2) the fact I have been going to great lengths, to get my entire extended families assets held within a trustee setup, with centralized banking, assets held, each person with plastic, etc etc etc.. This has been non trivial but now means that our entire family (4 separate groups in fact) now have assets and banking held this way. It seems crazy after going to all this effort, and being the driver of the process, that I would then own a home personally or outside of this system.

If this was just going to be a couple of million baht build I wouldnt bother, I would just gift it to her, but this is going to end up as a substantial asset and as such would like it protected. However theres plenty of time between now and any building, and I am happy to let her simply own the bare land while thats all sorted out down the rd. Right now we just have to get the simple land Tx process done.

Secondly perhaps I am over thinking the building permit aspect.. I would prefer the trust (offshore company) to hold the house outright, but as long as the lease is tight its not that important for it to be land and house separate or simply land + house leased. For me the important part is that the company, not myself, is the holder / user etc of the land.

As I havent built here yet (and thats going to be a saga no doubt) I kind of wanted the tabien baan etc all to be in the company name. I dont know how that changes if she owns it (the house) and the co leases and I want a yellow farang tabien baan.

[thaiwanderer]

(Are we then defeating the point of you not being personally tied to the head lease? What are your exact reasons for wanting to go the offshore route? Voidability of husband and wife contracts? Concern over the land office viewing your wife as a nominee? Might there not be better ways round it?)

Alternatively, you personally not having formal permission from the company lessee to be at the house may throw up tabian ban issues etc.?

[/color][/i]

Theres 2 primary reasons..

1) the voidability of husband wife leases and or the division of assets with a divorce. Plus simply protection against legal attack in any other way, I like being 'asset less' legally.

2) the fact I have been going to great lengths, to get my entire extended families assets held within a trustee setup, with centralized banking, assets held, each person with plastic, etc etc etc.. This has been non trivial but now means that our entire family (4 separate groups in fact) now have assets and banking held this way. It seems crazy after going to all this effort, and being the driver of the process, that I would then own a home personally or outside of this system.

If this was just going to be a couple of million baht build I wouldnt bother, I would just gift it to her, but this is going to end up as a substantial asset and as such would like it protected. However theres plenty of time between now and any building, and I am happy to let her simply own the bare land while thats all sorted out down the rd. Right now we just have to get the simple land Tx process done.

Secondly perhaps I am over thinking the building permit aspect.. I would prefer the trust (offshore company) to hold the house outright, but as long as the lease is tight its not that important for it to be land and house separate or simply land + house leased. For me the important part is that the company, not myself, is the holder / user etc of the land.

As I havent built here yet (and thats going to be a saga no doubt) I kind of wanted the tabien baan etc all to be in the company name. I dont know how that changes if she owns it (the house) and the co leases and I want a yellow farang tabien baan.

Suggest a single new offshore company to be lessee (and house owner).

Your existent offshore company can be the sole shareholder in that or family members individually as the shareholders (suggest the former is better).

That way should you wish to transfer the lease and house to someone else nothing has to be done in country - just sell the sole purpose company (and potential tax advantages here).

However with wife as landowner that lease is of course diminishing and less attractive to a buyer.

On balance, Thai nominee company as landowner (with the foreign shareholding held by a sole purpose offshore company or layer of such companies) leasing the land to your offshore company may be worthwhile given amount investing and it being for family benefit. You / your family can control renewals forever. If wish to sell, just sell the single purpose offshore companies - no incountry hoops and buyer gets land, lease and house.

You can if you wish comfort your wife and hide her involvement by giving her shares in the offshore company that leads to the thai company but not having her as shareholder in that thai company.

Not sure on exactly what you meant by your last sentence above - as far as i know she (or thai company) can own land and have name on building permit but still lease land and sell the house to your company?

Tabian ban but remain asset-less? - Maybe rolling sub leases of less than 3 years from offshore company lessee to you personally - not sure.

Edited May 12, 2011 by thaiwanderer

[LivinLOS]

Thanks for all the time in this..

Suggest a single new offshore company to be lessee (and house owner).

Your existent offshore company can be the sole shareholder in that or family members individually as the shareholders (suggest the former is better).

That way should you wish to transfer the lease and house to someone else nothing has to be done in country - just sell the sole purpose company (and potential tax advantages here).

Exactly my desired plan.

The offshore company owning a Thai company was how a friend owned a multi million USD Phuket villa, when he wanted to sell it he just transfered the offshore company to new owners, no taxes, no trip to any land office, no dealing with Thai authority at all. Simple and fast.

However with wife as landowner that lease is of course diminishing and less attractive to a buyer.

On balance, Thai nominee company as landowner (with the foreign shareholding held by a sole purpose offshore company or layer of such companies) leasing the land to your offshore company may be worthwhile given amount investing and it being for family benefit. You / your family can control renewals forever. If wish to sell, just sell the single purpose offshore companies - no incountry hoops and buyer gets land, lease and house.

I considered this avenue.. But kind of wanted to avoid the dormant Thai company side.. I really get the feeling Thai law prefers leasehold to dormant holding companies and if they were to crack down (in the far future) it would be this that they do first. If it gets that far I may just let he have control of the house... I am looking to put in practical, economical, safeguards, but at the same time, its not the end of the world. My wife leaving me would be a far bigger mistake for her financially, then me losing the house to her. The idea of the lease is simply one more hurdle, a way to not change the balance of power as much as a real legal protection.

You can if you wish comfort your wife and hide her involvement by giving her shares in the offshore company that leads to the thai company but not having her as shareholder in that thai company.

No need to finesse or comfort her in any way.. She will go along with any plan and is just happy we will finally have a home and not keep renting villas which she has seen as a terrible waste of money. Shes more protective of my expenditure than I am.

Not sure on exactly what you meant by your last sentence above - as far as i know she (or thai company) can own land and have name on building permit but still lease land and sell the house to your company?

Was meaning.. I will want a yellow house book in my name (I guess) and unsure how that would work with her owning the house (as well as the land and with a a lease) or with an offshore company owning the house.. Lots of questions on that side as I have never owned in Thailand and this route is a less than usual way to do it.

Just a last thought.. Theres no way a company can be a usufruct holder is there ?? Due to the 'lifetime' time period aspect of usufruct ??

[thaiwanderer]

Suggest a single new offshore company to be lessee (and house owner).

Your existent offshore company can be the sole shareholder in that or family members individually as the shareholders (suggest the former is better).

That way should you wish to transfer the lease and house to someone else nothing has to be done in country - just sell the sole purpose company (and potential tax advantages here).

Exactly my desired plan.

The offshore company owning a Thai company was how a friend owned a multi million USD Phuket villa, when he wanted to sell it he just transfered the offshore company to new owners, no taxes, no trip to any land office, no dealing with Thai authority at all. Simple and fast.

- A major benefit which you are cutting out is the land - who's going to buy just the house and remainder of the lease off you? Depending on the value involved there are ways to make the thai land owning company more resilient to any possible challenge involving nominee shareholders (corporate or personal) with adequate independent funds and an appearance that they are profitting from their involvement rather than a mere dormant thai land holding company (tied up and controlled by offshore private mortgages and or other agreements). These may reduce the nominee appearance in country but practically enforcing any such arrangements offshore might be another matter.

However with wife as landowner that lease is of course diminishing and less attractive to a buyer.

On balance, Thai nominee company as landowner (with the foreign shareholding held by a sole purpose offshore company or layer of such companies) leasing the land to your offshore company may be worthwhile given amount investing and it being for family benefit. You / your family can control renewals forever. If wish to sell, just sell the single purpose offshore companies - no incountry hoops and buyer gets land, lease and house.

I considered this avenue.. But kind of wanted to avoid the dormant Thai company side.. I really get the feeling Thai law prefers leasehold to dormant holding companies and if they were to crack down (in the far future) it would be this that they do first. If it gets that far I may just let he have control of the house... I am looking to put in practical, economical, safeguards, but at the same time, its not the end of the world. My wife leaving me would be a far bigger mistake for her financially, then me losing the house to her. The idea of the lease is simply one more hurdle, a way to not change the balance of power as much as a real legal protection.

- See above

You can if you wish comfort your wife and hide her involvement by giving her shares in the offshore company that leads to the thai company but not having her as shareholder in that thai company.

No need to finesse or comfort her in any way.. She will go along with any plan and is just happy we will finally have a home and not keep renting villas which she has seen as a terrible waste of money. Shes more protective of my expenditure than I am.

- But her as landowner and you personally living there points to an nominee set up, should anyone ever be that interested?

Not sure on exactly what you meant by your last sentence above - as far as i know she (or thai company) can own land and have name on building permit but still lease land and sell the house to your company?

Was meaning.. I will want a yellow house book in my name (I guess) and unsure how that would work with her owning the house (as well as the land and with a a lease) or with an offshore company owning the house.. Lots of questions on that side as I have never owned in Thailand and this route is a less than usual way to do it.

- Not too sure on this but what's your objective for having the TB?

Might it not make the wife being used as a nominee (even with the stepping stone of an offshore company between you) entirely transparent (again should anyone ever be that interested)?

Just a last thought.. Theres no way a company can be a usufruct holder is there ?? Due to the 'lifetime' time period aspect of usufruct ??

- My understanding (which may be wrong) is a company can be a usufructuary (local interpretations aside). Usufructs can be for a specified time rather than for life and since of course a company need never die the maximum usufruct for residential land to a company is 30 years.

Sorry if a little vague and rambling but just throwing potential issues out for you to consider and take appropriate advice on.

Hopefully that will allow you to assess the actual risks and rewards of the various possibilities.

[LivinLOS]

Thanks for the input.. Its given me some food for thought and a better set of questions for the legal people.

[katabeachbum]

Thanks for the input.. Its given me some food for thought and a better set of questions for the legal people.

a lease can indeed be issued and registered to a foreign company

however, a buildingpermit can as far as I know be issued to Thais, or foreigner residing in Thailand, (Certificate of resident needed.)

Another option is to lease the land with building completed, but to make lease bulletproof it should cover at least value of land and house which makes taxation heavy

another less expensive solution would be your wife borrow money from offshore company to purchase land and build house, loan registered in land title. cost to register is 1% of loan amonunt. Interest accepted 2,6% a month. No further taxes unless interest is actually payed. registered for 30 years. of course lender holds land title.

To secure your occupation of property in case of separation, 3 year nonregistered leases works in addition to registered loan

Land offices do not accept register loans between husband-wife or GF-BF

[stgrhe]

If the ownership of the house, and the house is not an existing dwelling, is intended to be separated from the land, I do recommend a superficies to be registered in addition to a thirty years lease. The superficies is the ONLY law paragraph where it is clearly stated that one is allowed to build a dwelling on land owned by someone else.

[Naam]

If the ownership of the house, and the house is not an existing dwelling, is intended to be separated from the land, I do recommend a superficies to be registered in addition to a thirty years lease. The superficies is the ONLY law paragraph where it is clearly stated that one is allowed to build a dwelling on land owned by someone else.

correct! unfortunately the legal clowns i was dealing with did not draw my attention to the fact that "superficies" contracts do exist in Thailand.