Why Consider a Thai Company?
For many foreigners, purchasing property directly in Thailand comes with significant legal restrictions, especially regarding land ownership. Setting up a Thai company is a common method used to effectively control land or property, offering more flexibility and control.
Thailand: Common Method for Foreigners to Effectively Control Land/Property
Since foreigners cannot directly own land in Thailand, the workaround involves establishing a Thai company where Thai shareholders hold majority ownership.
Through this structure, foreigners can indirectly control properties, often by owning most shares in the company while nominees provide the Thai shareholder status.
Thailand: Allows Purchase of Houses/Villas on Land
Unlike condominiums, which foreigners can own freehold, houses and villas are generally built on land that is subject to foreign ownership restrictions. Using a company allows foreigners to legally purchase these properties by owning the entire company which owns the land, thus sidestepping these restrictions.
Company Requirements
Must Have Majority Thai Shareholders
Thai law requires that Thai nationals hold the majority of shares in any company owning land. Often, nominees act as majority shareholders, which entails legal risks since the nominee arrangement may not be fully enforceable if challenged.
Yearly Accounting, Taxes, and Business Activity
Owning property through a company involves annual filing of accounts and paying taxes. Sometimes, the company may need to demonstrate business activity rather than being dormant to comply with regulations and avoid scrutiny.
Costs of Maintaining a Company
Accounting Fees and Minimal Taxes Even if Dormant
Maintaining a Thai company involves ongoing costs, including accounting, auditing, and minimal corporate taxes — even if the company is dormant and only holds property.
Work Permit Eligibility If Truly Operating a Business
If the company genuinely conducts business activities beyond property holding, foreigners may be eligible for work permits linked to the company, providing potential residency benefits.
Legal View and Risks
Gray Area: Using Companies Solely to Hold Property
Legally, companies are intended to conduct business activities. Using a company solely for property ownership falls into a gray area.
Thai authorities have been known to scrutinize such companies, especially if they appear dormant and exist only to hold land.
Thai Authorities Occasionally Scrutinize Dormant Companies Holding Land
There have been cases where Thai authorities have investigated dormant companies holding land to enforce laws on foreign land ownership or to assess tax compliance, adding a layer of legal risk.
Alternatives
Long-Term Leaseholds as Safer, Straightforward Option
Leasing land or property on a long-term lease (commonly 30 years with renewal options) is often seen as a safer and simpler alternative. This method avoids the complexity and risks involved with company ownership.
Thailand Elite or Other Visas That May in Future Allow Extended Lease Terms
Certain visa programs like Thailand Elite may enable foreigners to benefit from extended lease terms or other property-related privileges in the future, providing more straightforward legal options without company structures.
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