Buying House Using a Thai Company?

[wisemonkey]

How many people have had positive experience in doing this? It seems that it is a very common thing, as a lot of the houses I have looked at to buy when I was staying in Pattaya were "owned" by the the thai company with a farang having a majority stake.. Is this a relatively safe method? I would hate to make an investment and then have it taken away from me at some point.

[falang07]

If the company is legit (i.e. trading and active), this is perfectly safe and OK since any company has the right to have its own premises. If it is just a sleeping company created just to buy the house, there could be problems in theory. But I doubt it will happen unless you have a large beachfront plot in Phuket.

[spidermike007]

If the company is legit (i.e. trading and active), this is perfectly safe and OK since any company has the right to have its own premises. If it is just a sleeping company created just to buy the house, there could be problems in theory. But I doubt it will happen unless you have a large beachfront plot in Phuket.

I am told the most common way the authorities find sleeping companies, is to look at the tax records. If you do not pay annual taxes on the company, that is a huge red flag. Create some income, the company generates, and pay taxes on that income.

Spidermike

Chaiyaphum, Thailand

Sent from my iPad using Thaivisa Connect Thailand mobile app

[12DrinkMore]

I would not go down this route.

1. The company has to be majority owned by Thais, although you can have sole signing rights. The Thais could, however get together and outvote you......

2. If you are buying an existing company, it is difficult to find out of there are any debts taken on by the company, which could come back to bite you in the bum.

3. It is illegal for Thais to simply act as names on the company's list of shareholders unless they have paid money into the company for the shares.

4. There is no guarantee that at some point all these companies will be more closely looked at, and if they were set up solely to circumnavigate the laws of foreign ownership, you might be in for a few difficulties.

The safest option is to take a 30 year lease on the land and make sure it is entered in the land departments records.

The house you can own outright as your asset.

It is very easy to buy stuff in Thailand, but it is very difficult to sell later, particularly as a lot of newbies pay over the odds for a property, and then have the mindset that property should always increase in value.

The properties you see advertised are only a percentage of the properties that the owners would like to sell. I have heard so many times,

"I wish I could sell this house"

But they have resigned themselves to either living there, or trying to rent it out. Which leads me to

Rent is by far the safest option, and gives you total flexibility about where to live.

[jacko45k]

If the company is legit (i.e. trading and active), this is perfectly safe and OK since any company has the right to have its own premises. If it is just a sleeping company created just to buy the house, there could be problems in theory. But I doubt it will happen unless you have a large beachfront plot in Phuket.

I am told the most common way the authorities find sleeping companies, is to look at the tax records. If you do not pay annual taxes on the company, that is a huge red flag. Create some income, the company generates, and pay taxes on that income.

Spidermike

Chaiyaphum, Thailand

Sent from my iPad using Thaivisa Connect Thailand mobile app

Everyone I know who owns using this format pays taxes annually.

[Naam]

I would not go down this route.

1. The company has to be majority owned by Thais, although you can have sole signing rights. The Thais could, however get together and outvote you......

2. If you are buying an existing company, it is difficult to find out of there are any debts taken on by the company, which could come back to bite you in the bum.

3. It is illegal for Thais to simply act as names on the company's list of shareholders unless they have paid money into the company for the shares.

4. There is no guarantee that at some point all these companies will be more closely looked at, and if they were set up solely to circumnavigate the laws of foreign ownership, you might be in for a few difficulties.

The safest option is to take a 30 year lease on the land and make sure it is entered in the land departments records.

The house you can own outright as your asset.

It is very easy to buy stuff in Thailand, but it is very difficult to sell later, particularly as a lot of newbies pay over the odds for a property, and then have the mindset that property should always increase in value.

The properties you see advertised are only a percentage of the properties that the owners would like to sell. I have heard so many times,

"I wish I could sell this house"

But they have resigned themselves to either living there, or trying to rent it out. Which leads me to

Rent is by far the safest option, and gives you total flexibility about where to live.

1. The company has to be majority owned by Thais, although you can have sole signing rights. The Thais could, however get together and outvote you....

no they can't because usually you hold their share transfer certificates (signed blank). that of course does not prevent them to get together and have a beer

The safest option is to take a 30 year lease on the land and make sure it is entered in the land departments records.

again objection Your Honour. usufructs or superficies (especially the latter which is transferable without any time limit) are exponentially safer than any lease. both methods are of course also entered in the records of the land department and the chanote.

Edited July 1, 2014 by Naam

[JesseFrank]

I would not go down this route.

1. The company has to be majority owned by Thais, although you can have sole signing rights. The Thais could, however get together and outvote you......

2. If you are buying an existing company, it is difficult to find out of there are any debts taken on by the company, which could come back to bite you in the bum.

3. It is illegal for Thais to simply act as names on the company's list of shareholders unless they have paid money into the company for the shares.

4. There is no guarantee that at some point all these companies will be more closely looked at, and if they were set up solely to circumnavigate the laws of foreign ownership, you might be in for a few difficulties.

The safest option is to take a 30 year lease on the land and make sure it is entered in the land departments records.

The house you can own outright as your asset.

It is very easy to buy stuff in Thailand, but it is very difficult to sell later, particularly as a lot of newbies pay over the odds for a property, and then have the mindset that property should always increase in value.

The properties you see advertised are only a percentage of the properties that the owners would like to sell. I have heard so many times,

"I wish I could sell this house"

But they have resigned themselves to either living there, or trying to rent it out. Which leads me to

Rent is by far the safest option, and gives you total flexibility about where to live.

1. The company has to be majority owned by Thais, although you can have sole signing rights. The Thais could, however get together and outvote you....

no they can't because usually you hold their share transfer certificates (signed blank). that of course does not prevent them to get together and have a beer

And all those blank share transfer certificates have an ID card attached that has long been expired, there for is rendered useless

[falang07]

Indeed, this is what I was thinking about, after a few years the ID cards will be expired. Therefore, it is necessary to renew the share transfer certificates just before the ID card expires, or simply fire that transfer and change the shareholder, if he/she would not agree to renew it.

[JesseFrank]

Indeed, this is what I was thinking about, after a few years the ID cards will be expired. Therefore, it is necessary to renew the share transfer certificates just before the ID card expires, or simply fire that transfer and change the shareholder, if he/she would not agree to renew it.

That would be a busy schedule you have there. Keep in mind that the shareholders are most of the time provided by the accounting company or lawyer that set up your company, and the shareholder may have most likely disappeared or maybe died in the mean time. How you gonna manage a share transfer from a person who died several years earlier ?

Also keep in mind that any active company that owns property is allowed to have only 39% of foreign shareholders .

[Boss]

Also keep in mind that any active company that owns property is allowed to have only 39% of foreign shareholders .

I think it's 49 %.....

[JesseFrank]

Also keep in mind that any active company that owns property is allowed to have only 39% of foreign shareholders .

I think it's 49 %.....

It's 49% for companies that don't own real estate.

[BlackJack]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

[falang07]

even 60 years would do for most of us

[sawadee1947]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

.......it is possible soon that 90 year lease will come into effect........

Is this your opinion or have you read this somewhere? And if so, where?....Or is it your HOPE?

[steve73]

I've heard that it's possible to loan the money to a Thai "friend" as a mortgage to buy what you want, and then rent the property back from them on a 30 (+30 possibly) year lease... In this way, you have right of abode, and your friend cannot sell without paying you back to discharge the mortgage...

Anyone else know anything about this arrangement?

[JesseFrank]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

Thousands are jumping red traffic lights every hour in Thailand, and no problems, but one day they will have.

[JesseFrank]

I've heard that it's possible to loan the money to a Thai "friend" as a mortgage to buy what you want, and then rent the property back from them on a 30 (+30 possibly) year lease... In this way, you have right of abode, and your friend cannot sell without paying you back to discharge the mortgage...

Anyone else know anything about this arrangement?

+30 year leases are non existent in Thailand.

You can have a mortgage registered on the title deed, but you can't register a lease at the same time. It is either the mortgage or the lease, you make the choice.

Any lease more than 3 years need to be registered by law, but because you can't since there is already a mortgage registered on that land, the maximum lease you can get is 3 years.

[steve73]

I've heard that it's possible to loan the money to a Thai "friend" as a mortgage to buy what you want, and then rent the property back from them on a 30 (+30 possibly) year lease... In this way, you have right of abode, and your friend cannot sell without paying you back to discharge the mortgage...

Anyone else know anything about this arrangement?

+30 year leases are non existent in Thailand.

You can have a mortgage registered on the title deed, but you can't register a lease at the same time. It is either the mortgage or the lease, you make the choice.

Any lease more than 3 years need to be registered by law, but because you can't since there is already a mortgage registered on that land, the maximum lease you can get is 3 years.

OK - thanks for that clarification...so you can never lease any property for more than 3 years if there's an outstanding mortgage on it....perhaps helps to explain why there are so many empty houses around.

[khunPer]

The company set-up for owning property is widely used, but you need an experienced lawyer to do it – or check an existing company – for you, as rules and regulations often change a bit.

Many sell the land (& house) by simply selling the company; then taxes, transfer fees, and owner registration is avoided when changing owner, as the landowner is the same company.

It is in theory illegal to use a company as proxy for foreign ownership, but it seems like the authorities mainly have checked on larger projects, rather than private foreign ownership of smaller land (& house).

If you buy an existing company it is important to have an experienced lawyer to check both land title at the Land Office and the company registration. Some companies have been established years back and may not be in accordance with present rules, i.e. the time when Thai proxy shareholders were widely used. That time minimum 7 shareholders where needed, and often the law firm registering the company just placed 6 Thai names in the registration document as proxies (using ID cards of for example employees at the law firm) and supplied the foreigner owner signed proxy letters granting vote rights and blanc transfer of shares. Today only minimum 3 shareholders are needed, but each Thai shareholder must prove they have funds to obtain their shares. The company need to be changed to an up-to-date status as it otherwise may be subject to scrutiny and closure.

A foreigner cannot own more than 49% of the shares, and it is sometimes recommended only 39% when buying land, as some Land Offices, but not all, do not accept more than 39% foreign ownership. It is also advisable that the company has some other activity/activities than just being owner of a plot of land (& house) used by a foreigner.

A foreigner can own a house, but not the land the house is build on.

The company method used at the moment – to my knowledge, but check for updates – is 49% foreign ownership, but with preferred shares, so the foreigner own some preferred shares with 10 votes each, and some ordinary shares with 1 vote each; whilst the 51% Thai shareholders owns ordinary shares with 1 vote each only. That gives the foreign shareholder(s) voting majority.

The 51% Thai shareholders cannot be proxies, so that cause a problem to find some who can prove access to fund for their shares. A wife or GF can be used, but that is often not advisable, if it’s a question of security of the foreigner’s investment. A child with Thai nationality can be shareholder, so if you have a child in Thailand, your child can own shares (under guardian) and you can gift shares to your child/children. A model can be: foreigner 49% shares (including preferred shares), foreigners Thai child/children 49%, some other Thai citizen 2%, which is a limited amount of money that can be proved available; if the company capital for example is 2 million baht then 2% equals 40,000 baht.

You can be board director without Work Permit, but cannot perform any active work in the company. A shareholder capital of minimum 2 million baht is often advisable, as that is also the limit for a Work Permit. The shareholder capital does not need to be paid in full. It may be advisable to have an employed Thai director, can be wife or GF, receiving a (small) salary from the company (which means the company need some income to pay the salary). In the company registration you can limit the directors authority to daily duties only, so no major transaction (sale of land, mortgage etc.) can be performed.

If it’s a newly formed company, then the company buys and own the land, and then lease the land to the foreigner on a 30-year Lease Agreement registered at the Land Office. A tax of about 1 percent of the total 30-year lease-sum has to be paid. An optional 2nd, and even a 3rd 30-year lease-period (on similar conditions) can be legal part of the Lease Agreement. When you’re in control of the company that can be an advisable solution. Ownership of land and house (buildings) can be split, so if/when sold each shall be sold individually. If the land is sold by its own, not the company shares changing ownership, then the profit from the land sale is taxable within the company at the company tax rate, however there are some deductions, depending of length of ownership. Also be aware of that the company shall show a small profit (from the lease paid or…) and pay company tax semi-annually, and also that there will be expenses for accounting and auditor, often in the range of 30k to 40k baht a year, which will only increase over time.

The company set-up is considered safe, if you have some other activities in the company than just owing a land plot, and the minimum 2 Thai shareholders can be trusted. There might be other useable set-up models I don’t know about, but an experienced lawyer can advise you about further possibilities.

Looked at expenses for company set-up for plain ownership of land (& house) only, it may be cheaper to use a Lease Agreement from a Thai owner only (spouse or…) or a Usufruct Agreement. There are may treads and post with various points of view.

American citizens have some special benefits for company ownership under the American-Thai Treaty (called something like that), which is worth checking if you are American.

Edited July 1, 2014 by khunPer

[BlackJack]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

Thousands are jumping red traffic lights every hour in Thailand, and no problems, but one day they will have.

do u think that the property market is going to collapse because of a technicallity

hardly

[BlackJack]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

.......it is possible soon that 90 year lease will come into effect........

Is this your opinion or have you read this somewhere? And if so, where?....Or is it your HOPE?

watch this spot

[JesseFrank]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

Thousands are jumping red traffic lights every hour in Thailand, and no problems, but one day they will have.

do u think that the property market is going to collapse because of a technicallity

hardly

No I think that because everyone currently get away with the company route, which is illegal to the letter of the law, doesn't mean that the loophole will never be closed

[JesseFrank]

The company method used at the moment – to my knowledge, but check for updates – is 49% foreign ownership, but with preferred shares, so the foreigner own some preferred shares with 10 votes each, and some ordinary shares with 1 vote each; whilst the 51% Thai shareholders owns ordinary shares with 1 vote each only. That gives the foreign shareholder(s) voting majority.

I'm too lazy to look it up, but there are reports on this forum that the preferred shares is not legal.

Also the reason that some land offices accept 49% foreign shareholders is because as with every government office, they just write the law there and then.

[BlackJack]

1000's do it this way and no problems

it is possible soon that 90 year lease will come into effect

this will save all this setting up a company and proxy share holders

Thousands are jumping red traffic lights every hour in Thailand, and no problems, but one day they will have.

do u think that the property market is going to collapse because of a technicallity

hardly

No I think that because everyone currently get away with the company route, which is illegal to the letter of the law, doesn't mean that the loophole will never be closed

its not illegal

it is as per Thai Law

imagine if this so called loop hole was closed

what would happen to the foreign companies registered under Thai Law and employing and training Thai people

[JesseFrank]

No I think that because everyone currently get away with the company route, which is illegal to the letter of the law, doesn't mean that the loophole will never be closed

its not illegal

it is as per Thai Law

imagine if this so called loop hole was closed

what would happen to the foreign companies registered under Thai Law and employing and training Thai people

It is not legal.

A company in Thailand can not be set up solely to own a property, the company has to do a trading and create an income.

Because you fill a balance sheet every year, where the accountant fakes some trading and income, doesn't make the company a legal trading company.

The companies that employ Thai people are doing a legal trade and can own property as much as they want.

These are a completely different animal from the companies that are set up by foreigners and do only a trade on paper, but in reality have no incoming or outgoing business, and even less Thai people employed.

[BlackJack]

the law requires that 51% be Thai

and as major share holders they are responsible for the running of the company

[Robert24]

Also keep in mind that any active company that owns property is allowed to have only 39% of foreign shareholders .

I think it's 49 %.....

It's 49% for companies that don't own real estate.

maybe there is some new law that I'm not aware of. In my case I own 49% of the shares of my company (private partnership ltd) and the company owns Thai property. All officially registered at the government office.

[JesseFrank]

Which part of, it is not legal to register a Thai company with the sole purpose of owning a property, do you guys not understand.

Take a look in the ask the lawyer forum, the question was asked and answered there recently.

Byeeeee

[Naam]

the law requires that 51% be Thai

and as major share holders they are responsible for the running of the company

since when and where are shareholders responsible to run their company?

please dear Sir, stop torturing me. i beg of you!

[Naam]

Which part of, it is not legal to register a Thai company with the sole purpose of owning a property, do you guys not understand.

Take a look in the ask the lawyer forum, the question was asked and answered there recently.

Byeeeee

what part of nobody is stupid enough to establish a company with the sole purpose of owning landed property is it you don't understand?