Company Owning The House

[haveaniceday]

Lets say hypothetically that a company owned a house that the owner of the company occupied. What would be the tax implications of that?

I am aware of the start up cost, the dissolving cost and must do a annual audit etc, but what about when the company is holding assets for longer term investments, eg capital gains on the house/ land ?

What would be a annual tax liabilities for that?

Thanks.

[FritsSikkink]

If you live in the house you have to pay rent to the company. The company has to declare the rental money.

[Naam]

If you live in the house you have to pay rent to the company. The company has to declare the rental money.

you don't have to pay rent. 90% of the "illegal" land and property holding companies just pay a flat tax without collecting any rent or fees on their holdings. Thai authorities are since many years well aware of this fact.

[TPI]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

[jamescollister]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

[lovetotravel]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

Never happen. Bigger fish to fry here rather than some small plots of land. They're even talking about upping the percentage of farang owners for condos from 49 to 70%. They make too much money off this. They don't want to kill that.

[jamescollister]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

Never happen. Bigger fish to fry here rather than some small plots of land. They're even talking about upping the percentage of farang owners for condos from 49 to 70%. They make too much money off this. They don't want to kill that.

I never say never when it comes to Governments and taxes any where in the world. The thai tax department may not be up to speed compared to the west, but as the computers take over they will catch up. When they do they will want their blood, big or small. Jim

[lovetotravel]

This is already a well known fact here. Companies with Thai nominees and farang directors show up in their offices every day. Audits are done every day. Agreed something might happen in the future, but if they wanted it to happen now, they could easily do that. I think the big fish will be the first. Resorts, industrial estates, golf courses, farms, etc. Wasn't that the big stink down in Phuket not long ago? Among other things?

[Naam]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

another one who thinks Thai authorities are stupid, not aware of the facts and need computers to tie all bits together.

for the record: Thai tax legislation does not levy any tax on assets. tax is levied on turnover (VAT) and on incoem/profit (income tax).

[Chivas]

Interesting thread to follow.....

I'm always interested in the foreigners who claim to own clubs and bars within the Entertainment sectors.....

Can and do they actually own said premises or in effect they own bugger all when push comes to shove ??

Edited May 2, 2012 by Chivas

[theblether]

Interesting thread to follow.....

I'm always interested in the foreigners who claim to own clubs and bars within the Entertainment sectors.....

Can and do they actually own said premises or in effect they own bugger all when push comes to shove ??

+1

Just to open it out a little, I was looking at buying a new Soi with 20 bar units within it. Once I had a look at the highly convoluted Thai business and ownership laws I walked away. A trip through Alice in Wonderland while high on LSD would make more sense.

I've been a bit intrigued ever since with various people claiming to have full ownership of bars etc. It's a mystery to me.

[jamescollister]

Thai Nominee:

Means a Thai individual or a Thai company that agrees to hold shares on behalf of the foreign shareholder who remain the true owner/beneficiary of the shares and whom retains all rights of ownership and control of the shares even if those rights appear to be exercised by the Thai nominees. The use of a nominee or even of a Thai nominee is not illegal per se. What makes the use of a Thai nominee illegal is when said nominee is used to aide a foreign investor to exercise business activities said foreign investor is not permitted to operate under the form a majority foreign owned investment (in fine the business activities listed under list 1, 2 and 3 of the Foreign Business Act.

Thai nominees and the foreign investors who used them may be punished with imprisonment not exceeding three years or a fine from 100,000 THB up to 1,000,000 THB, or both.

About the Author:

The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.

http//:www.renephilippe.c

[jamescollister]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

another one who thinks Thai authorities are stupid, not aware of the facts and need computers to tie all bits together.

for the record: Thai tax legislation does not levy any tax on assets. tax is levied on turnover (VAT) and on incoem/profit (income tax).

Naam not saying that there is a tax on assets, just that nominee companies can't own land in Thailand.

. Majority Thai shareholding companies can. Now when Sadie the cleaning lady signs up to one of these companies in order to own the land, she has to be a shareholder and is entitled to dividends. Ergo she needs to pay tax on those dividends, as she gets nothing she has no tax to pay, but the tax is going to ask where she got the money to buy all these shares in the first place. Or want tax when the company [land] is sold, as nominee companies can't own land in the first place. Jim

[Naam]

Naam not saying that there is a tax on assets, just that nominee companies can't own land in Thailand.

. Majority Thai shareholding companies can. Now when Sadie the cleaning lady signs up to one of these companies in order to own the land, she has to be a shareholder and is entitled to dividends. Ergo she needs to pay tax on those dividends, as she gets nothing she has no tax to pay, but the tax is going to ask where she got the money to buy all these shares in the first place. Or want tax when the company [land] is sold, as nominee companies can't own land in the first place. Jim

please define "nominee company" Jim. to the best of my knowledge "nominee companies" do not exist in Thailand. may i assume that you consider the Thai taxman has been decades stupid enough to ask stupid questions?

when a company, holding land and immobile property, is transferred in the names of different shareholders no land is sold generating a taxable profit. a different situation arises if a company is dissolved/closed down and therefore has to dispose/sell its assets any capital gains are or course taxed. but this tax is paid by the company and not by the individual shareholders. the latter receive taxfree whatever profit is left after taxation.

your assumption that nominee companies cannot own land is of course correct. nominee companies (as mentioned already) do not exist. logical conclusion: companies that do not exist cannot own any assets.

as simple as that.

[Time Traveller]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

IF ever the company pays dividends then they will be liable for tax on that. Usually those companies set up simply for the purpose to hold property don't pay dividends.

[beachyman]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

IF ever the company pays dividends then they will be liable for tax on that. Usually those companies set up simply for the purpose to hold property don't pay dividends.

You can do a repayment of loan to private party at a nominal intrest rate.

[jamescollister]

Seems legal enough. You're not intending to avoid VAT or tax on the company profits...What's the problem??

What about the Thai shareholders, who have probably signed loads of these shoddy company deals and on paper have millions of Baht in assets, but pay no tax. The tax man will cometh one day when the computers tie all the bits together. Then there will be problems. Jim

IF ever the company pays dividends then they will be liable for tax on that. Usually those companies set up simply for the purpose to hold property don't pay dividends.

Here is a extract from the English/ Thai law internet site.

Another issue to consider before registering a Thai company to purchase land or buy property, is maintaining regulatory compliance of the company. Thai law requires balance sheets to be filed yearly and a company address must be maintained. Technically, inactive companies (companies not earning income) are subject to de-listing.

Now if you earn income you have to pay dividends to your shareholders and they have to pay tax on that income. These are new regs 2009 I think, as things are generally slow here it may take time to sort through all the companies. No doubt biggest to smallest, Jim

[Naam]

Now if you earn income you have to pay dividends to your shareholders and they have to pay tax on that income.

let's be more precise and drop any milkmaid diction as well as àss-umptions based on that diction. income does not mean any profits were made. any income could have been nullified by expenses. dividends are paid from profits or from accumulated reserves derived from profits of earlier fiscal years.

but even if profits are achieved a company is not required to pay any dividends. to make a relevant decision is up to the company's management.

logical conclusion: if no dividends are paid no tax is levied.

[Naam]

Technically, inactive companies (companies not earning income) are subject to de-listing.

technically this claim is correct. however, not only in Thailand but globally godzillions of inactive companies exist in hundreds of different jurisdictions which are only activated whenever the owners (or the management) of these companies make a relevant decision.

Edited May 3, 2012 by Naam

[jamescollister]

Come on naam you are clutching at straws here. Law states that the shareholder has to put 25% of the value up front. Now sadie the cleaning lady or Joe clerk etc signs up as a shareholder, maybe they sign 10 or 100 of these illegal companies, for aliens to own land. Where did the money come from, they have paid no tax on this income [they never had it in the first place ]

Companies are formed that do not trade, pay no dividends or make no profits. Don't know where you are from, but good bet someone would be knocking at your door from the tax or Feds asking what's going on. Then if the owner ever sells the property the shareholers would be entitled to their investment monies back. Not sure many Farang home owners want to give the Thai sharehoders 51% of the money they get from the sale nor would anyone one want to pay for a house and land that was owned 51% by unknown Thais.

Whole thing is a mine field, set up to con the stupid into parting with money.

Or maybe my accountant is just not that smart. Jim

Edited May 3, 2012 by Crossy
Fixed the font

[jamescollister]

As a PS don't know why the writing has all gone small. Jim

[Naam]