Property Purchase Pitfalls - Juslaws & Consult Co., Ltd
Offshore Companies

05 Aug Offshore Companies

1) Definition of an Offshore Company

To understand the definition of an offshore company, we should first understand what a “company” is and what is meant by “offshore”. We can then better focus on comprehending an offshore company in detail and how it relates to the financial industry.

We can define a company as any legal entity engaging in legal business activities, such as a proprietorship, partnership, or corporation (either public or private). Companies have various rights under the law. Offshore is a term that means outside of your own jurisdiction. Being across water is not necessary to provide individuals with the benefits of security that come with managing money in this manner. Generally, offshore companies are situated in countries with low or non-existent tax.

An offshore company is a legal entity established in a tax haven or offshore financial center being protected by specific legislation which guarantees a status of full tax exemption, except for a small yearly license fee, and generally a high level of privacy. It is an entity specifically designed to be used by non-residents only.


2) Legal restrictions to set up an Offshore Company

The legal restrictions that offshore companies are subjected to generally prevent them having a fixed establishment in the country in which they were incorporated. For this reason, they are mostly used for activities which are not tied to a specific geographic location. They are also often used as holding companies or as asset protection or investment vehicles for their owners, mainly because of their simplicity of administration, as in the vast majority of jurisdictions it is not required to file annual reports or accounts.

An offshore company may be a company which is incorporated outside the jurisdiction of its primary operations regardless of whether that is an offshore financial center or a non-resident company. It is also any company, resident or non-resident, incorporated in an offshore financial center. For any of these companies, Offshore Company law may apply. Most offshore companies are incorporated to take advantage of: tax planning purpose, confidentiality, cost, legal protection. Most of legitimate uses are: international trading, asset protection, captive insurance, yacht registration, and legal tax avoidance, protection of intellectual property, succession planning or confidentiality.


3) Benefits of an Offshore company

By utilizing an offshore company, it may be possible to secure a number of advantages. There are different criteria to determine how and where a jurisdiction is acceptable for the incorporation of a legal entity, which are summarized briefly in the following:

1.      Favorable Fiscal Regime: An offshore jurisdiction should not have a repressive tax collecting authority and its main contributor to the income of the country should not be the collection of income tax or companies’ profits taxes. The following taxes are not subject to imposition in most Tax Havens:

–      Income tax on foreign income source

–      Capital Gains tax

–      Capital Tax

–      Tax on interest banking income

2.      Strict Anonymity Policies: it is widely considered that at an acceptable offshore jurisdiction the disclosure of the financial or corporate secrets of the company that is incorporated, should result in the wrongdoer being punished or fined.

3.      Stable Government Policies: An offshore company should be in a stable place of business. It should be completely democratic and its rules on corporations must be stable. Also, there should be established protectionist policy relating to foreign investors.

4.      Modern Communication Structure: A country that intends to attract offshore business or operations should have an attractive internet, financial and governmental communication structure. This is to ensure that a person abroad should have full access to their operations.

5.      Easy to Incorporate: The corporations or foundations found in an offshore jurisdiction should conform in less than four business days.



There exist many jurisdictions that are deemed suitable to carry out offshore business, nevertheless, based on our criterion, we will mention only the ones we consider the most important and the most widely used.

1. Panama: The Panama Corporation is governed by the Panama Corporation Statute Law 32 of the 1927 Commercial Code.

Panama enjoys favorable tax laws, operating a territorial tax system under which residents and non-residents are taxed based on income sourced in Panama. The taxable income includes all income derived from business activities in Panama, and there are less expenses incurred wholly and exclusively in the production of assessable income or the conservation of its source. Regarding the company structures, the liability of the shareholders of a Panama Corporation is limited up to the unpaid amount of the shares they hold. The minimum number of shareholders of a Panama Corporation is 2 and the maximum is unlimited. There is no restriction on the residence of the shareholders of a Panama Corporation. Panama Corporation’ shareholders can be individuals and/or legal persons.


2. Seychelles: The International Business Companies Act, 1994, governs the operations of offshore companies.

Seychelles International Business Company (IBC) is the most popular and versatile type of offshore corporation available in Seychelles. Similar to other classic offshore companies, Seychelles IBC is designed to engage in international business. Being an IBC, it is subject to minimum red-tape. While being obliged to keep internal records and registries in good order, a Seychelles IBC does not nave to submit any financial reports to public file. There is also no mandatory audit requirement. A Seychelles IBC, by the definition of the law, is not subject to any tax or duty on income or profits. A shareholder of a Seychelles IBC is also not subject to any tax on his income derived from the IBC. In order to qualify as an IBC, a Seychelles company must satisfy the following criteria:

  1. It may not carry on business in Seychelles.
  2. It may not own real estate in Seychelles.
  3. It may not conduct banking, insurance and registered agent business without a special license.


3. Cayman Islands: Cayman Islands Exempted Companies are governed by the Cayman Islands Companies Law

The Caymans offer a number of tax-free incentives and little financial regulation and oversight. The Cayman Islands do not levy corporation tax, capital gains tax or any other direct tax on companies. The most common type of Cayman Company used for offshore activities is the Exempted Company. The service(s) it provides is to be carried on outside of the Islands. It cannot trade in the Islands with any firm, corporation or person unless furthering its business offshore.


4. British Virgin Island: British Virgin Islands Business Company (BVI BC) is governed by the BVI Business Companies Act 1984 (as amended).

A British Virgin Islands Business Company is exempt from the BVI income tax, the same exemption applies to all dividends, interest, rents, royalties, compensations and other amounts paid by a company, and all capital gains realized with respect to any shares, debt obligations or other securities of the company. No estate, inheritance, succession or gift tax is payable with respect to any shares, debt obligations or other securities of a BVI BC. All transactions and instruments relating to transfers of any type of property of assets, shares, debt obligations or securities to or by a BVI BC are exempt from the stamp duty, with a sole exception for land-ownership transactions in the British Virgin Islands, in which case stamp duty remains payable.


5. Hong Kong: The Hong Kong Private and public Limited Liability Company is governed by the Hong Kong New Companies Ordinance which came into effect on 3 March 2014.

Setting up an offshore company in Hong Kong is an excellent way to house a company’s global corporate profits while minimizing taxes. If there is no trade conducted within Hong Kong, companies will be legally tax exempt if their activities are outside of Hong Kong. Generally, only Hong Kong Source income is subject to Hong Kong profits tax. Incorporation requires only 1 director and 1 shareholder and both can be of any nationality.


6. Singapore: The Singapore Private, Private exempted and Public Limited Liability Company are governed by the Singapore Companies Act.

Holding companies in Singapore are typically registered as private limited companies. Individuals and business entities seeking to establish a holding company as a private limited company must meet the following basic requirements:

–  At least one shareholder and one director that is a Singaporean resident.

–  A company secretary who is a Singaporean Resident

–  The minimum paid-up capital (share capital) for the registration of a Singaporean company is S$1.

–  A physical local address must be provided as the registered address of the company. The address may not be a Post Office Box, and must be approved by the Urban Redevelopment Authority. Residential properties can only be used under the Home Office Scheme.

A company is considered to be tax resident in Singapore if its management and control is exercised in Singapore. Singapore tax resident companies are taxed on all income generated or remitted in Singapore whereas non-Singapore tax resident companies are taxed only on income generated or accrued in Singapore.


7. Bahamas: The Bahamas International Business Company (BIBC) is governed by the International Business Act 2000 and the International Business Companies (Amendment) Act 2004.

The Bahamas are one of the most popular of the Caribbean tax havens. Bahamas International Business Company is the most popular versatile type of offshore corporation available in Bahamas. BIBC can conduct business with Bahamians and may also own Bahamian real estate, but local exchange controls and stamp duty will apply in these cases. The Bahamas does not levy corporation tax. Indeed, A Bahamas International Business Company is exempt from the Bahamas income tax, the same exemption applies to all dividends, interest, rents, royalties, compensations and other amounts paid by a company, and all capital gains realized with respect to any shares, debt obligations or other securities of the company.


8. Isle of Man: The Isle of Man Limited Company is governed by the Companies Act 2006.

Offshore companies in the Isle of Man could be holding investment, e.g. portfolios, commercial property and other companies ‘shares; a Holding intellectual property since the Isle of Man is a signatory to the Paris Convention on Patents and Trademarks. Isle of Man tax resident companies are taxed on their worldwide income whereas non-Isle of Man tax resident companies are taxed only on income generated in the Isle of Man. Tax Advantages of the Isle of Man are as follows:

  • 0% corporate income tax dependent on certain circumstances
  • Dividends made to non-residents are taxed at 0%
  • No capital gains tax
  • No stamp duty
  • No inheritance tax
  • Double tax relief is available for foreign tax paid


9. Bermuda: The Bermuda Exempted Company is governed by the Companies Act 1981, as amended 2006.

The Bermuda Exempted Company (BEC) is the most popular type of offshore corporation available in Bermuda. A Bermuda Exempted Company is prohibited from:

  • Trading within Bermuda.
  • Owning real estate in Bermuda.
  • Undertaking the business of banking, insurance, assurance, reinsurance, fund management, collective investment schemes, rendering investment advice or any other activity.

Bermuda does not levy any taxes on profits, income or dividends, nor is there any capital gains tax, estate duty or wealth tax. In addition, under the Exempt Undertakings Act of 1976, an Exempted Company in Bermuda can obtain protection from any newly enacted taxes on income or capital gains until 2035.


10. Switzerland: Corporation (AG), limited liability company (GmbH) and branch of foreign company are governed by the Swiss Code of Obligations.

Officially Switzerland is not an offshore jurisdiction, but due to its taxation system it obtains the features of the offshore zone and becomes very attractive for the offshore companies’ formation. Switzerland has agreements with more than 100 other states for the double taxation avoidance. Tax system in Switzerland is different for every canton, so it is possible to register a company at the canton which offers the lowest taxation. At the moment Schwyz and Zug are the most attractive cantons for the offshore company formation.

Switzerland tax resident companies are taxed on their worldwide income (except profits from foreign branches and foreign immovable property) whereas non-Switzerland tax resident companies are taxed only on income generated in Switzerland.

Legal Aspects on renting out a condominium unit on AirBnB in Thailand

18 Aug Legal Aspects on renting out a condominium unit on AirBnB in Thailand

State agencies in Phuket recently warned condominium owners that renting out a condominium unit on daily basis using AirBnB might violate the Hotel Act. Furthermore, Land and House Tax and Personal Income Tax is rarely paid on such rental income (if not on any rental income). As if that wasn’t bad enough, renting out on a daily basis might in some cases be regarded as conducting a commercial business and consequently violate the Condominium Act, which forbids commercial activities, and in the case of foreigners the Foreign Business Act.

From a political perspective AirBnB has been criticized for various reasons in many jurisdictions worldwide: short-term renting to tourists is regarded as a misuse of limited rental space and takes away affordable apartments from the locals, it is regarded as unfair competition for hotel operators who have to comply with many requirements and pay taxes, and amounts to bypassing consumer protection regulations.

AirBnB tenants might not enjoy the standard of safety which they can expect in a hotel in case of accidents or disputes with the landlord. For example, under Sections 674 to 679 of the Thai Civil and Commercial Code (CCC) a hotel is liable for any loss or damage suffered by its guests, even if such loss or damage was caused by strangers, and it is not clear whether the Thai courts would apply these sections in the case where a condominium unit is rented out.

Finally, other co-owners often feel that frequent arrivals of new AirBnB tenants negatively affect the quality of life in the condominium in many regards.

The advocates of AirBnB reply that AirBnB is a success story. It was called one of the highest valued start-ups worldwide with a value of 30 billion USD. It offers affordable accommodation to budget-travelers and contributes to the growth of local economies, and is even increasingly popular with business travelers who wish to go local. It plays an increasingly important role also in Thailand’s hospitality sector, especially in Bangkok and in Phuket, and even though regarded as illegal by some, the law is rarely enforced by state authorities. However, all these are factual arguments and say nothing about the legality of AirBnB’s success in Thailand. Are there legal arguments which can be cited in defense of the short-term rental which became so popular thanks to AirBnB? And in what cases exactly is renting out a condominium illegal in Thailand?

The most fundamental legal provision in this context is Section 1336 of the CCC which provides that within the limits of the law, the owner of property has the right to use the property and is entitled to its fruits. And for co-ownership Section 1360 of the CCC sets forth that each co-owner is entitled to use the property in so far as such use is not incompatible with the rights of the other co-owners.

What are the “limits of the law” and the limits deriving from the rights of other co-owners when it comes to daily rentals in condominiums? Please note that we could not find any precedent court decision which would clarify the issues as discussed below. So we can only point out the statutory framework.

1.      Limitations under the Condominium Act

Unfortunately the Condominium Act provides relatively little clarification as to what this means for the rights and obligations of co-owners in a condominium regarding their relationships towards each other. Still, it contains provisions regarding the management, the Condominium Regulations, juristic condominium, co-owners’ general meetings and resolutions.

And according to Section 17/7 no commercial trading shall be conducted in a condominium building except in the commercial area specified in paragraph one. According to Section 65 whoever violates Section 17/1 shall be penalized with a fine of not more than fifty thousand baht and the offender shall be further penalized with a daily fine of not more than five thousand baht throughout the period of violation or not complying with such provisions.

2.      Limitations under the Hotel Act

The Hotel Act requires that a special Hotel License must be obtained before operating a hotel. For operating a hotel without license the Hotel Act imposes imprisonment of not more than one year or a fine of not more than 20,000 Baht or both and a fine of not more than 10,000 Baht for each day of violation.

The Hotel Act defines hotel as a the place established for business purposes providing temporary residence against remuneration, but according to Section 4 (b) excludes places which are rented out on a monthly basis.

This is good news for all condominium owners as it means that they can rent out their place on a monthly basis without worrying about a Hotel License. The Hotel Act might still apply to condominium owners who rent out on a daily basis, typically using AirBnB which has facilitated short-term rental for everyone, enabling any condo owner to operate his own small “hotel”.

The Ministerial Regulation to the Hotel Act of 2005 contains an exemption for certain places which has given rise to a passionate discussion whether these exemptions from the Hotel Act also apply to condominium owners renting out their places on short – term basis:

“Any residential premises open to the public for rental with no more than 4 rooms on all floors in aggregate whether in a single building or in several buildings, and with a total service capacity of 20 guests, operating as a small business which provides an additional source of income for the owners” is exempt from the Hotel Act. The owners of such premises are also required to report to the Hotel Registrar but do not require a Hotel License and do not have to comply with all requirements for hotels.

The controversial issue is: does “residential premises” refer to each condominium unit or to the whole condominium meaning the entire building? This legal issue has not yet been clarified in a court decision as far as we can see.

3.      Can a condominium apply for a Hotel License

If a condominium is to be rented out on a daily basis as on AirBnB, one might consider applying for a Hotel License in order to legalize such “condotel”.

This is possible in theory, but the requirements for obtaining a Hotel License are considerable. In order to be eligible, the hotel would not only have to have a qualified hotel manager but also to comply with the Building Control Act and have a Building Permit and Use Certificate which need to state that the building can be used as a hotel. If the Building Certificate and the Use Certificate do not cover such use, these permits can be changed, if the existing building fulfils the fire and other safety requirements for hotels which are higher than for condominiums.

4.      What taxes are levied on rental income

By Thai tax law rental income is subject to the current House and Land Tax with a rate of 12.5% and to Personal Income Tax with progressive rates (withholding tax rate 5% at source or 15% if the rent is transferred abroad unless a double taxation agreement provides otherwise). The House and Land Tax can normally be deducted from the assessable income of the Personal Income Tax.

5.      Legal recourse against co-owners renting out on a daily basis?

This question has been brought up by some co-owners who find that the renting out on a daily basis interferes with their enjoyment of the common areas in a condominium for various reasons.

The Thai Civil and Commercial Code contains provisions which protect the co-owner against excessive disturbance and damage. The affected co-owner can sue his renting out neighbor in a civil lawsuit seeking damages or an injunction order.

But what if the disturbance does not reach the threshold of disturbance and damage caused by the renting out which must be proven and must be substantial enough? Has the co-owner who is unhappy about the coming and going of AirBnB tenants any rights?

Supposed renting out on AirBnB actually violates the Hotel Act, can the co-owner invoke the Hotel Act and derive individual rights from it? He can surely bring a violation to the attention of the competent authorities and hope that they enforce the Hotel Act; but a complaint on grounds that the Hotel Act is violated filed by an annoyed co-owner would most likely not be found admissible by a court. But a complaint might be admissible on grounds that contractual obligations are breached or the Condominium Regulations are violated.

Therefore, our recommendation to co-owners and juristic condominiums who dislike AirBnB would be to draft and approve regulations which forbid renting out of units on a daily basis, or to seek a reconciliation of interest between the interest of renting out a property and the interest of the neighbors who disapprove of such renting out. Condominium regulations, sales and purchase agreements and hire of property agreements can be drafted to such an effect and will be binding on all parties.

Finally, based on a resolution of the co-owners the juristic condominium can take measures to enforce such resolution, and according to Section 39 of the Condominium Act the juristic condominium may exercise the right of joint-owner covering all the common property in defending it against outside persons or demanding the return of property for the benefit of all joint-owners. Appropriate measures would not violate ownership rights of the co-owners who have subjected themselves to the Condominium Regulations. What measures precisely the juristic condominium can take to enforce Condominium Regulations is to be decided by the courts on a by-case basis.

Phorn Patimon, Senior Associate at Juslaws & Consult

Christian Moser, Senior Associate at Juslaws & Consult

 Money Transfer: Regulations, Tax and Fees

02 Sep Money Transfer: Regulations, Tax and Fees

Part 1:  Exchange Control Regulations in Thailand

a. Rules and Regulations

The legal basis for exchange control in Thailand is derived from the Exchange Control Act (B.E. 2485) and Ministerial Regulation No. 13 (B.E. 2497) issued under the Exchange Control Act. These laws set out the principles of controls under which Notifications of the Ministry of Finance and Notices of the Competent Officer are issued.

b. Administration

The Bank of Thailand has been entrusted by the Ministry of Finance with the responsibility of administering foreign exchange. The governor of the Bank of Thailand shall appoint the officials of the Bank of Thailand as the Competent Officers under the Exchange Control Act (B.E. 2485).

c. Currency Regulations

Foreign currencies can be transferred or brought into Thailand without limit.  Any person receiving foreign currencies from abroad is required to repatriate such funds immediately and sell to an authorized bank or deposit them in a foreign currency account with an authorized bank within 360 days of receipt, except for foreigners temporarily staying in Thailand for not more than three months, foreign embassies, international organizations including their staff with diplomatic privileges and immunities, and Thai emigrants who are permanent residents abroad or working abroad.

Purchase of foreign currency from authorized banks is generally allowed upon submission of documents indicating international trade and investment. Companies in Thailand can engage in derivatives transactions with authorized banks to hedge against foreign exchange risk provided that supporting documents indicating future foreign currency receipts or obligations are submitted.

d. Bank deposit

Regarding Bank Deposit regulation, Bank of Thailand distinguishes the Foreign Currency Account of Thai Residents, the Foreign Currency Account of Nonresidents, and the Nonresident Baht Account.

1.       Foreign Currency Account of Thai Residents

Thai residents are allowed to maintain foreign currency accounts with authorized banks, and deposit or withdraw funds from such accounts under the following conditions:


Foreign currencies originating from abroad (foreign-source) can be deposited into foreign currency accounts without limit. Foreign currencies purchased or borrowed from authorized banks (domestic-source) can be deposited into 2 types of foreign currency accounts:

–  Foreign currency accounts with future obligations: deposits can be made in an amount not exceeding future obligations to pay in foreign currencies to entities abroad.  Such obligations include loan repayment to authorized banks.

–  Foreign currency accounts without future obligations: the total outstanding balance shall not exceed USD 5 million for both a natural person and a juristic person.

–  Deposit of foreign currency notes and coins must not exceed USD 10,000 per person per day.


–  For payment to entities abroad of the account holder’s own obligations or its subsidiaries’ obligations.

–  For payment to authorized banks of the account holder’s own foreign currency liabilities or its subsidiaries’ foreign currency liabilities.

–  For deposit into another foreign currency account of the same account holder.

–  For conversion into another foreign currency, prior to depositing into another foreign currency account of the same account holder or for payment to an entity abroad or for payment of liabilities to an authorized bank.

–  For conversion into baht.

Thai companies having export proceeds in foreign currency from overseas are allowed to transfer funds from their foreign-source foreign currency accounts to deposit into foreign currency accounts of their counterparties in Thailand for payment of goods or services.

2.       Foreign Currency Account of Nonresidents

Nonresidents may maintain foreign currency accounts with authorized banks in Thailand without limit.  The accounts can be freely credited with funds originating from abroad. Payments from Thai residents or borrowing from authorized banks can be deposited subject to supporting evidences.  Balances on such accounts may be freely withdrawn.

3.       Nonresident Baht Account

Nonresidents may open Thai Baht accounts with authorized banks in Thailand as follows:

–  Non-resident Baht Account for Securities (NRBS): The account may be debited or credited for the purpose of investment in securities and other financial instruments such as equity instruments, debt instruments, unit trusts, derivatives transactions traded on the Thailand Futures Exchange and the Agricultural Futures Exchange of Thailand.

–  Non-resident Baht Account (NRBA): The account may be debited or credited for general purposes (i.e. other than investment in securities) such as trade, services, foreign direct investment, investment in immovable assets, and loans.

–  The total daily outstanding balances for each type of account shall not exceed THB 300 million per nonresident.  Transfers between different types of accounts are not allowed.


a. Bank transfer fees

If you need to transfer large amounts of money at once, or need bank records of your transfers (like a TT3 for buying property) then transferring money from a foreign bank account may be the best answer.  You can move money from a foreign bank account to a Thai one via 3 different methods: wire transfer, cheque, or bank draft.

1 Transfer bank to bank

When transferring funds into a Thai Bank account from abroad via SWIFT, remember to have the below information on hand:

–  The account number

–  The account name

– The address of the bank branch (if required by the remitting bank abroad)

– Bangkok Bank’s SWIFT

Depending on the amount and the banks involved the transfer could cost anywhere from a minimum of THB 200 to THB 2,400 for very large transfers, and it may take several days. If the amount involved is greater than USD 50,000, the Thai bank will require the recipient to complete a Foreign Exchange Transaction Form when the funds arrive. There are fees taken from both the receiving and sending banks.

2 Cheque

Some Thai banks will accept foreign cheque, so though you can send a cheque to cash in a Thai account, you need to be sure that the receiving bank will take the cheque. Processing cheque can take between 4-6 weeks and accrue charges up to 2,000 THB.

Bank drafts can be prepared by your home bank and sent to a Thai bank account.  The processing takes only 3-7 days and fees for any amount tend not to exceed 1200 THB.  An international money order, which is different only in that the certificate is pre-paid, can also be used but again may not be accepted by all banks.

3 Wire transfer services

Western Union, MoneyGram and transfer wise are three wire transfer services that are extremely quick, handling transfers from abroad to Thailand in a matter of minutes.

Western Union is the fastest way to send money but is the most expensive way with even 20% on small amounts. MoneyGram works just like Western Union but you get a better exchange rate with MoneyGram and lower fees, compared to Western Union. Transfer wise remain cheaper than the two others mentioned above.

b. Currency conversion charge

Additionally, your bank will make more money by adding a margin on the exchange rate.

The exchange rate is the rate at which banks and brokers buy and sell money to each other. Private individuals and small-to-medium-sized businesses cannot access these rates. Remember exchange rates often change by the minute, so to compare providers properly you need to do it one after the other.

The rate you are offered will be dependent upon a number of factors including:

–  The amount of money you are transferring

–  The time-frames you are working to (i.e. whether you are looking to lock into an exchange rate for up to 12 months)

–  The currencies you are buying and selling and the volatility of those currencies

–  The exchange rate levels at the time of purchase

c. Transfer fund in order to purchase a condominium

As mentioned in our previous Newsletter: Buying a condominium in Thailand, there are no restrictions on nationality and every foreigner (there are no visa-class requirements) can buy and own a condo unit within the foreign ownership quota of the condominium but only two conditions to acquire 100% :

1)      The ratio of foreign ownership must not exceed 49% of the total floor area of all units combined. The law looks at the whole condominium building or condominium project.

2)      Additionally, the foreign individual or foreign company who wishes to acquire 100% must personally qualify for ownership under section 19 of the Condominium Act.

Usually this means that the purchase price for the condo must have been transferred into Thailand as foreign currency and exchanged into Thai baht by a licensed financial institution inside Thailand.

Under the 1991 Condominium Act, non-residents who purchase condominium units must transfer the funds to pay for the unit from overseas, with the money entering Thailand as foreign currency. Purchasers need to obtain a “Foreign Exchange Transaction Form” certificate for each payment from the beneficiary bank, and all these certificates must be shown to the Land Department in order to register the condominium.


For foreigners to be eligible to purchase a condominium unit in Thailand, they must present proof to the Department of Lands that the funds have been remitted from overseas in foreign currency. Without such proof, the Department of Lands will not register the transfer of ownership to the foreign buyer.

In this process, 4 conditions must be respected:

1.       Remittance must be sent in exactly (to the letter) the same name as appearing on the purchase contract. If the buyers are two individuals, then two names should appear on the contract and two separate remittances should be made by such two persons, in equal amounts

2.       Transfer of funds must be made in foreign currency only and not in Thai baht

3.       The purpose of the remittance must be stated on the remittance advice. This should be: For the purchase of buying a condominium, unit…… In tower……. In the project”

4.       Money transfer :There are 2 options to transfer money to the developer as describe bellow:

–  Transfer the funds into la local bank account of the buyer in Thailand in the prescribed format as outlined above, and execute a domestic transfer of this amount onwards to the Developer. In this case, the buyer must request the local bank of the buyer to issue the Foreign Exchange Transaction Form. The amounts transferred should be at or greater than USD 50.000 in order to automatically qualify for a Foreign Exchange Form. The buyer must request this document directly to a Thai Bank. If the amount is less than USD 50.000, the buyer must send a letter to the bank who will in turn send you a letter confirming the purpose of the remittance is for purchasing a condominium unit. Please note that without providing either the foreign Exchange Transaction Form or the letter from the bank, the lands Department will not register the transfer of the condominium unit into your name.

–  Transfer the funds directly to the developer’s bank account in the prescribed format, and the Developer will arrange for the foreign exchange transaction form to be issued by the Developer’s Bank.



Taxation is another factor that needs to be taken into account when making your purchase. Those considering investing in property in Thailand are often unaware of the taxes that may arise when buying and selling property.

a. Transfer Fee

The transfer Fee applies to purchases of freehold properties. It is equivalent to 2% of the official appraised value of the property. Whether the buyer or the seller pays the Transfer fee depends on the terms agreed to both parties in the sale and purchase agreement. At the date of the ownership transfer, the transfer fee is paid to the District Land Office where the property is located.

b. Specific Business Tax (SBT)

SBT is payable by companies and individuals who wish to sell a property that has been held for less than a period of 5 years. The tax rate is calculated at 3.3% (including municipal tax) of either the sale price or the official appraised value of the property.

c. Stamp duty

Stamp duty is imposed at varying rates on certain legal instruments Stamps duty only applicable in cases where SBT is not applied. Stamp duty does not have to be paid if specific business tax is applicable. The stamp duty in Thailand for the transaction is 0, 5% of the sale price of the property.

d. Withholding tax (WHT)

Where the seller is a company, the WHT is calculated at 1% of either the Land Department’s official appraised value or the contracted sale price (whichever is greater).

If the seller is a company withholding tax is fixed at 1% over the registered sale value or appraised value (whichever is higher). If the seller is a private person withholding tax is calculated at a progressive rate based on the appraised value of the property.

An individual who earns income from selling a property, which includes condominium units, is subject to WHT under the Revenue Code of Thailand. The WHT is calculated at progressive rate based on the official appraised value of the property.

f. The specific business tax

The specific business tax does not need to be paid if the seller is a person and not a company under the following conditions:

– The property is being transferred (gifted) to a church, temple or mosque;

– The property is transferred (gifted) to a government agency;

– The property is transferred to a legitimate child not an adopted child;

– The property is transferred to a legal heir or heir in a will in an estate;

– The seller has had the property for more than 5 years and it was the seller’s principle place of residence and the sellers name is in the house papers for at least 1 year before the sale.


Transfer fees rate= 2% the buyer’s duty or shared
Specific Business Tax rate= 3.3 % the seller’s duty
Stamp duty rate= 0,5%* the seller’s duty
Withholding tax (income) rate= 1% or progressive rate the seller’ duty (as this relate to the seller’s personal or corporate income tax)


Mr. Laurent Benoit, Of Counsel at Juslaws & Consult

Property Purchase Pitfalls

Purchasing Property In Thailand
It is recommended that you discuss your options and the process of purchasing in Thailand as a foreigner as it is essential to know the legalities involved in such an acquisition of property by foreigners before making any decisions on your purchase whether this is a condominium, land, house or a villa anywhere in Thailand.  Foreigners may own condominiums freehold and outright 100% therefore making this option the least complicated and the best option for a foreigner wishing to purchase property in Thailand.  Thailand condominiums always have a foreign quota of 49% which means that only 49% of the total space of a condominium can be owned by foreigners on a freehold title. The other 51% refer to Thai Nationals. Before purchasing a condominium in Thailand, it is advised to ensure that the foreign quota has not exceeded.

Title Deed Search
A title deed to outline the property in which is purchased is usually not provided up front. For this reason, it is suggested that before making any such deposits or purchases, a title deed copy is obtained from the seller in which the original is contained at the relevant land department and a title deed search should be performed so as to avoid any negligent misrepresentations in the future with regards to the property that you wish to purchase.  This will determine the true legal owner of the land and determine as well whether there are any registered encumbrances on the actual property such as a mortgage or a lease.   This investigation will also investigate whether there you are permitted to build upon the land by determining what kind of title deed the property possesses. It can also be determined with a detailed due diligence the environmental zoning areas, residential and planning codes.

Reserving Your Property
Once a title search has been performed and you are happy to proceed with your purchase, it is usually requested by the developer or the seller that you make a first initial deposit or a reservation fee in order to reserve the property to provide for consideration.   The seller will then reserve the property for you until the actual due date for the sales contract for the remaining payment. Note that the remaining payment should not be made until the actual transfer at the land department. Please bear in mind that if you decide to not go through with the contract, that in usual cases the reservation deposit will be forfeited. It must also be noted however, that sometimes a reservation fee is requested prior to such obtainment of title deed.

Sales and Purchase Agreement
When you have provided the reservation deposits, the contracts should be provided to you by the developer or the Seller. Usually if this is a developer, they will have a copy in English and in Thai. Regardless, once you have received a copy of the contract, it is recommended that before signing such a contract, that you review this with a Lawyer or Solicitor. A review of the Sales and purchase agreement will involve identifying your rights as a buyer in order to protect your interest in the event that the Seller defaults in the completion of a property development, or in the event that there was a breach of contract. This will also determine the various taxes payable and the whether the payment method is appropriate.

Pitfalls in Purchasing Property in Thailand: Unfinished Projects-
this occurs in the event that there are condominiums, villas, houses, townhouses and any kind of residual or even business real estate are meant to be completed within a stipulated time as specified in a contract. If this occurs buyers will have recourse by Civil law as breach of contract and be able to demand that the project be finished within due course and/or the monies paid by the individual buyers be returned with full interest within a specified time period. To avoid this kind of situation, it is important to check the development company background of the project in order to determine whether the company has a good reputation and their prior projects timeline and execution.

Ownership Disputes-
this arises as a result of property disputes of ownership as there may be forgery of documentation when purchasing property or in a nominal structure. Although this is not a common occurrence, there are times when title deeds have been forged or signatures have been forged in order to sell a property and retrieve money that is not rightfully theirs to begin with. The buyers are then at a loss with not only a loss of money but nothing to gain from anything being paid. With this, sufficient evidence would be transfer slips, prior written and/or signed agreements, and identification and/or names of the fraudulent party or parties. It is always important to remember that no matter in what situation to always have track record of payments being made although the development or company may seem legitimate and well known.

this occurs when an owner of one property has built over their boundaries and have encroached onto another’s land. This is also a common occurrence however mostly out in rural areas in Thailand as most of the area is agricultural land. There are times when houses are built upon these agricultural lands without the knowing of the exact boundaries, hence having to encroach upon another’s land or property. This also includes disputes that arise in the event of a high rise building blocking the view of another high rise building. This usually occurs in areas of beachfront property. There is no such avoiding of such acts, however, there is always recourse to such acts upon your property

easements are described as a right of way such as a passage or a pavement in which may be the property of another however, is needed to be utilized in order to get to another property as a right of way. In this event, there are some occasions where some parties act upon an action of trespass, whereas it may not be as it is essential to pass through their property to get to another. There is not such avoiding of an easement upon your land or upon another’s, however, there is always a recourse in which a Court of law will have to interfere in this instance in order to grant a right of easement. Whether purchasing a condominium, villa or a house, it is suggested that prior to making such a purchase, once you have found something of interest, to contact a lawyer or solicitor before proceeding. At Jus Laws & Consult we offer specialized services with our knowledgeable lawyers on local and International law to assist with foreign acquisition of property. Contact us today at our office either in Bangkok or in Phuket for free basic consultation!