Setup Company to own a Property in Thailand

Setting up a company to own property in Thailand is a common strategy for foreigners, as Thai law generally prohibits foreign

individuals from directly owning land. Here’s a step-by-step guide to structuring a company for property ownership in Thailand:

  • Land Ownership: Foreigners cannot own land outright in their name but can own buildings (e.g., a house) separately from the land.
  • Company Ownership: A Thai-registered company can own land, but it must comply with the Foreign Business Act (FBA). The company must be majority Thai-owned (51% or more) unless it qualifies for exemptions (e.g., BOI promotion).

To comply with Thai law, a typical structure involves:

  • 51% Thai Shareholders: Usually Thai nationals (can be nominees, but this carries legal risks if not properly structured).
  • 49% Foreign Shareholders: You or other foreign investors can hold up to 49%

 

Key Considerations:

  • Nominee Shareholders: Using Thai nominees to hold the 51% is common but legally risky if done improperly (may violate the FBA). The Thai authorities scrutinize nominee structures.
  • Preferred Shares: You can retain control via voting rights, profit distribution, or preferred shares, but this must be carefully drafted in the company’s articles.

Amity Treaty (For Americans): US citizens can form a 100% foreign-owned company under the US-Thai Amity Treaty, but it cannot own land for real estate business purposes (only for operational needs like offices or factories).

Steps:

  1. Reserve a Company Name at the Department of Business Development (DBD).
  2. File Memorandum of Association (MOA): Includes company objectives (must include land ownership).
  3. Hold a Statutory Meeting: Appoint directors and set company rules.
  4. Register the Company: Submit documents to the DBD (registration fee based on capital).
  5. Tax Registration: Obtain a tax ID from the Revenue Department.
  6. Open a Thai Bank Account: Deposit the registered capital (minimum usually THB 2–5 million for land ownership purposes).

Registered Capital:

  • For land ownership, the company’s capital should be proportional to the land value (e.g., THB 5 million for land worth THB 5 million). This is not a strict rule but a common practice to avoid scrutiny.
  • The company can now buy land in its name.
  • Transfer fees, stamp duty, and taxes apply (typically 2–6% of the property value).
  • The Land Department may investigate the company’s structure to ensure compliance with the FBA.
  • Annual Financial Statements: Must be filed with the DBD.
  • Corporate Income Tax: 20% on net profits (if applicable).
  • Withholding Tax: If renting out the property.

VAT Registration: Required if engaged in real estate business.

Risks:

  • Nominee Issues: If the Thai shareholders are deemed nominees, the land ownership could be voided.
  • Legal Scrutiny: Authorities may investigate companies set up solely to hold land.
  • Alternatives:
  • Leasehold: Lease land for up to 30 years (renewable, but not guaranteed).
  • Condominium Ownership: Foreigners can own 100% of a condo unit if at least 51% of the building is Thai-owned.
  • BOI Promotion: If your company operates in a promoted industry, you may qualify for land ownership privileges.

Engage a Thai lawyer and accountant to:

  • Ensure compliance with the FBA.
  • Draft shareholder agreements to protect your interests.
  • Handle tax and reporting obligations.

Conclusion

Setting up a Thai company to own land is feasible but requires careful structuring to avoid legal issues. Many foreigners opt for a combination of company ownership (for land) and direct ownership (for buildings) or explore leasehold/condo options. Always consult a legal expert before proceeding.