A foreign company — for the purpose of acquiring property in Thailand — is treated as a foreign entity. Nevertheless, registering property under a legal entity may provide certain advantages, especially when it comes to future disposal of the asset.
What rights can a foreign company obtain?
A foreign company can act as a party to a transaction and acquire the following rights:
- Freehold ownership of a condominium unit
- Freehold ownership of a building (without land)
- Leasehold rights for any type of property, including houses, condominiums, and land plots
Mandatory conditions for purchase
As with individual foreign buyers:
- The purchase must be funded via a foreign remittance
- At the time of registration with the Land Department, bank documents confirming the transfer of funds must be provided
Advantages of purchasing property through a foreign company
- Simplified transfer of ownership: the property can be sold by transferring company shares to the buyer and appointing a new director
- No need to re-register ownership: no requirement to re-register the property with the Land Department
- Tax efficiency: no property transfer tax when ownership is transferred via shares
- Flexible payment structure: settlements between parties can be arranged in any jurisdiction convenient for them
Important considerations and limitations
- Expanded documentation package when registering property under a legal entity:
- corporate documents
- documents confirming the director’s authority
- translations into Thai
- Taxation:
- property owned by a company is not considered residential, even if used by the director
- commercial land and building tax rates apply
- if the property is rented out, the company must:
- obtain a Thai Tax ID
- file financial statements (interim and annual) in Thailand
- Internal taxation:
- reporting obligations in the country of incorporation must be considered, especially when holding foreign assets
- Resale risks:
- a potential buyer may refuse to acquire a company registered in an “inconvenient” jurisdiction
- in such cases, a standard property sale transaction in Thailand will be required
- the company holding the property will then need to be dealt with separately
Conclusion
Purchasing property through a foreign company can be an effective tool if you carefully evaluate in advance:
- ownership objectives
- potential tax implications
- jurisdiction of incorporation
- requirements of both local and international regulations
Author: Alexandra Agapitova.
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