Selling A Company On, Rather Than Closing It

[UKJASE]

Hi Guys, my wife and i have owned a company for 4 years now, that we bought from a Danish guy, when we purchased our house. The company owned the house, so to gain control of the house, we bought the company.

Now, 4 years on, we are about to sell the house to a thai couple, and they have no use for the company.

We will therefore have to close the company, and i believe the cost of closing the company is in the region of 200,000 Baht.

I read somewhere else, that people sometimes sell the empty shell of the company on to somebody else who is thinking of starting a company. So rather than them set up a new company, they just buy an empty, existing company. And obviously, it saves us the cost of closing the company.

Can anyone advise me on this? Does this happen? Is it legal etc? what is involved?

Thanks for any advice / shared experience

Edited October 17, 2015 by UKJASE

[KittenKong]

I thought that closing a company cost around 20,000B, not 200,000B? Not that I am any sort of Thai company expert.

I would be very wary of buying a "used" company as in doing so you take on all its existing liabilities, known and unknown.

Edited October 17, 2015 by KittenKong

[rwdrwdrwd]

Yeah happens regularly, if the buyers are sensible they will want to make sure the company has no debts and has books up to date.

200k to close it sounds well overpriced though.

[dksharron]

I thought it was about 25,000

200,000 is way over the top

[blackcab]

I will be happy to arrange for the company to be closed for 200k. It costs 30k max, and that's too high a price.

[Langsuan Man]

You will pay anywhere from 20 to 50 K Baht to a lawyer or accountant to legally close the company, BUT, you may also get hit with a transfer tax since the assets (the house) of the company will have to go somewhere

A good lawyer may be able to structure the closing and purchase at the same time to satisfy the distribution of assets problem, but no way should it cost 200,000 THB to close a company (unless it has 200,000 THB in debts)

Edited October 18, 2015 by Langsuan Man

[UKJASE]

Sorry guys, i should have been clearer. when we sell the house, we should be selling it for a profit of about 500,000 baht

so, we will have to pay tax on the profit made, plus the costs involved of closing the company.

our real estate agent told us to expect to pay about 200,000 baht all in.

i guess this must mean about 25,000 accountancy fees, and 175,000 tax / land office tax bill.

is there anything i can do to reduce this amount?

i am going to see my accountant tomorrow, but i would like to be prepared a little before i meet with him, so as to ensure he is advising me correctly

[robblok]

As an accountant i would say no you cant reduce this. There is a profit on the house and that is taxed.

That is the disadvantage of having a company holding a house.

I hope im wrong and that the laws are different in Thailand.

[Langsuan Man]

Well I am sure that even the Thai tax code allows you to deduct legitimate expenses from any "profit' made.

So sharpen your pencil and think about all those " improvements you made over the years

[Swiss1960]

Sorry guys, i should have been clearer. when we sell the house, we should be selling it for a profit of about 500,000 baht

so, we will have to pay tax on the profit made, plus the costs involved of closing the company.

our real estate agent told us to expect to pay about 200,000 baht all in.

i guess this must mean about 25,000 accountancy fees, and 175,000 tax / land office tax bill.

is there anything i can do to reduce this amount?

i am going to see my accountant tomorrow, but i would like to be prepared a little before i meet with him, so as to ensure he is advising me correctly

Sell furniture and movable assets as private person with one contract and house through company at reduced price with none or very small profit with second contract

I assume you ain't going to pay taxes for the first part

[catman20]

its legal no problem costs about 5,000 baht to change director to new owner, get the new owner to pay that fee.

To close company cost about 50,000 baht as you will have to do the accounts for that year to close it, not 200,000 baht. I have done this many times in the past however I have given the company away as if you try to sell it you cant as people can buy new company for 30,000 baht off the shelf. if you don't give it away you will incur more charges yearly accounts taxes ect

[catman20]

Sorry guys, i should have been clearer. when we sell the house, we should be selling it for a profit of about 500,000 baht

so, we will have to pay tax on the profit made, plus the costs involved of closing the company.

our real estate agent told us to expect to pay about 200,000 baht all in.

i guess this must mean about 25,000 accountancy fees, and 175,000 tax / land office tax bill.

is there anything i can do to reduce this amount?

i am going to see my accountant tomorrow, but i would like to be prepared a little before i meet with him, so as to ensure he is advising me correctly

find a new accountant

[jacko45k]

Sorry guys, i should have been clearer. when we sell the house, we should be selling it for a profit of about 500,000 baht

so, we will have to pay tax on the profit made, plus the costs involved of closing the company.

our real estate agent told us to expect to pay about 200,000 baht all in.

i guess this must mean about 25,000 accountancy fees, and 175,000 tax / land office tax bill.

is there anything i can do to reduce this amount?

i am going to see my accountant tomorrow, but i would like to be prepared a little before i meet with him, so as to ensure he is advising me correctly

Is that profit of 500k based on the price you paid for the house (+company) and does that match the value listed in the company papers?

I ask as you mention paying tax on the profit made, which could be a different number depending on stated value and actual price.

Sorry I do not have answers, just questions.

[dotpoom]

I thought that closing a company cost around 20,000B, not 200,000B? Not that I am any sort of Thai company expert.

I would be very wary of buying a "used" company as in doing so you take on all its existing liabilities, known and unknown.

That would be about correct. I closed a couple of companies for around 20,000 Bt. It was suggested to me at the time to possibly sell them instead of closing them but I wasn't comfortable handing something over like a company to a complete stranger that had my name associated with it....that's just for me personally.

Edited October 19, 2015 by dotpoom

[FBlue72]

Are you leaving Thailand? Then don't do a thing. The officer at DBD in Phuket told me there are thousands of unclosed companies on the books in that province alone.

My accountant quoted me 75, 000. I always suspected she was a rip off.

[recycler]

I have a company and have not been able to sell it eventhough it has been dormant for 5 years, has a VAT registration, there are no taxes and liabilities in it and it has 5 million registered capital enough for 2 workpermits.

So it's difficult to sell an existing company as people are insecure.

Closing an empty company will cost about 10,000 Baht according to my accountant.

Profits or other assets in it require tax payments or a dormant period of as many years it takes to depreciate all the assets to 0 value, for moast assets that would be 5 years.

[AlQaholic]

I will close it for you for 150,000 Baht

[Srikcir]

Found this in a quick 1 minute google serach.

Good luck.

http://www.panwagroup.com/closingcompany.htm

[FBlue72]

I have a company and have not been able to sell it eventhough it has been dormant for 5 years, has a VAT registration, there are no taxes and liabilities in it and it has 5 million registered capital enough for 2 workpermits.

So it's difficult to sell an existing company as people are insecure.

Closing an empty company will cost about 10,000 Baht according to my accountant.

Profits or other assets in it require tax payments or a dormant period of as many years it takes to depreciate all the assets to 0 value, for moast assets that would be 5 years.

How does a company achieve this dormant status? I asked the same rip off accountant and she was very coy about it, obviously not behooving to her to do it.

[recycler]

I have a company and have not been able to sell it eventhough it has been dormant for 5 years, has a VAT registration, there are no taxes and liabilities in it and it has 5 million registered capital enough for 2 workpermits.

So it's difficult to sell an existing company as people are insecure.

Closing an empty company will cost about 10,000 Baht according to my accountant.

Profits or other assets in it require tax payments or a dormant period of as many years it takes to depreciate all the assets to 0 value, for moast assets that would be 5 years.

How does a company achieve this dormant status? I asked the same rip off accountant and she was very coy about it, obviously not behooving to her to do it.

In my case dormant meant that there was 0 turnover, but I still had to provide the annual financial statment where in 5 years you depreciate all assets to 0 value. So I paid a reduced accouting fee every year.

[FBlue72]

^ Thanks for that answer and it proves my accountant was a total scammer. Glad I just stopped paying her but I do need to sort out the company. I tried selling it for about 9 months but not one nibble.

[khunPer]

To my knowledge a Thai Company Limited shall pay normal company tax of real estate capital gain that year the property is sold. There should be some deductions, depending of time the property has been owned. Tax can be up to 30% of the gain; I was advised from a farang real estate agent, that in some cases most of the gain (???) ends up in fees and taxes.

“Siam Legal” writes:

Income from the sale of property is subject to Thai income taxation...

...When the property seller is a company, the Withholding Tax is 1% of the sales price or 1% of the assessed value, whichever is higher. After the sale, the company selling the property will need to report the income from the sale on their income tax return. (sic.)

And “Law Online Thailand” says:

Capital gain tax on the sale of property

The proceeds derived from the sale of property in Thailand are taxed as ordinary income (read more: Corporate Income Tax law, and Personal Income Tax Laws), withheld from the sale amount by the land office at the time of transfer of ownership. (sic.)

It seams a bit confusing, how company property sales capital gain is actually calculated and taxed – so check carefully with accountant, auditor and lawyer.

When my company – or rather the one I’m a major shareholder in – sold a plot of land, the company paid the small 1-percent or so tax at the Land Department, whilst capital gain was included in the annual balance and normal company tax paid; the accountant and auditor took care of that part.

When OP is selling the company, what happens with the company capital – i.e. has that money originally been used to buy the property, and in that case, how did it get out...?

I would be extremely skeptical buying an empty company shell, as it only costs around 30,000 to 50,000 baht in fees, including lawyer, to open a new blank shell – the risk of some unforeseen in a second hand company limited is not worth taking, compared to the take over will still cost you at least some fees...

[hhgz]

I formed a company to buy a townhouse. The deal fell through, and I had a company that I didn't use. I was told that, if you do not use a company and do not file any forms, eventually the government will stop pursuing the owner, and will close the company. As it turned out, that's exactly what happened to me, and had the company closed for exactly zero THB.