How to Buy Property in Thailand by Setting Up a Company

Many foreigners are drawn to Pattaya and Jomtien for retirement, vacation homes, or investment properties. While purchasing a condominium in your own name is relatively straightforward, provided the development has available foreign quota, buying a house or land is more complex due to Thai legal restrictions on foreign ownership. However, many foreigners successfully navigate this challenge by using a Thai company structure to purchase property, enabling foreigners to legally own land and houses in Thailand.

Pattaya Property Guide will walk you through the essential steps to establish a company in Thailand for the purpose of buying property.

1. Understanding the Legal Framework

Before diving into the setup process, it’s crucial to understand the legal framework surrounding property ownership in Thailand. According to Thai law, foreigners are generally prohibited from owning land in their name. However, they are allowed to own buildings or condominiums outright, and they can lease land or own land indirectly through a Thai company.

A Thai company can purchase and own land in Thailand, but the majority of the company's shares (51%) must be held by Thai nationals. The foreign ownership of the company is limited to 49%, but as a foreigner, you can still have control over the company by structuring it correctly and appointing yourself as the director.

2. Setting Up the Company

The process of setting up a company in Thailand involves several steps. Here's a simplified breakdown:

• a. Choose a Company Name
  The first step is to choose a unique company name and submit it for approval. It's advisable to have a few alternatives in case your preferred name is already taken. The approved name will be reserved for 30 days, during which you must complete the registration process.
• b. Prepare the Memorandum of Association (MOA)
  The MOA is a key document that outlines the company’s name, registered address, objectives, the names of the shareholders, and the number of shares each shareholder holds. The MOA must be registered with the Department of Business Development (DBD).
• c. Register the Company
  Once the MOA is prepared, the company must be registered with the DBD. This involves filing several forms and documents, including the list of shareholders, the company’s objectives, and the names of the directors. The company must also have a registered office address in Thailand.
• d. Appoint Directors and Shareholders
  As part of the company registration, you will need to appoint directors and shareholders. As mentioned earlier, Thai nationals must hold 51% of the company’s shares. However, these Thai shareholders can be silent partners, while you, as the foreigner, can retain control of the company as the director.
• e. Capital Requirements
  The minimum registered capital for a Thai company is 2 million THB if the company is to own land. This capital must be paid up and shown in the company's bank account. The amount of capital required may increase depending on the size and location of the property you intend to purchase.

3. Acquiring the Property

Once your company is set up, it can proceed to buy the property. Here are the key steps:

• a. Property Search
  Start by identifying the property you wish to purchase. Conduct due diligence to ensure the property has a clear title and no encumbrances. Engaging a local real estate agent or legal advisor is recommended to navigate the complexities of Thai property law.
• b. Sales Agreement
  Once you’ve found the right property, a sales agreement should be drafted. This contract will outline the terms of the sale, including the purchase price, deposit amount, and payment schedule. It’s advisable to have this document reviewed by a legal professional.
• c. Transfer of Ownership
  The final step is the transfer of ownership, which is done at the Land Department. Both the buyer (your company) and the seller need to be present, or they can appoint representatives with power of attorney. At this stage, all government fees and taxes related to the transfer must be paid.

4. Ongoing Compliance and Maintenance

After the property purchase, it’s crucial to ensure ongoing compliance with Thai laws:

• a. Annual Reports and Taxes
  Your company will be required to file annual financial statements and pay corporate taxes. Ensure that your company remains compliant with all reporting obligations to avoid penalties.
• b. Maintaining the Property
  If the property is for rental or business use, you’ll need to manage and maintain it. This may include hiring a property management company to handle tenant relations, maintenance, and repairs.
• c. Changes in Shareholding
  If there are any changes in the shareholding structure of your company, these must be reported to the DBD. This is particularly important if any Thai shareholders sell their shares, as the company must maintain a majority Thai ownership to continue holding the property legally.

5. Consider Professional Assistance

While it’s possible to navigate this process on your own, it’s highly recommended to seek professional assistance. A lawyer specializing in Thai property law can guide you through the legal complexities, ensuring that your company is set up correctly and that your property purchase is secure.

Conclusion

Setting up a company to buy property in Thailand is a viable option for foreigners, allowing them to legally own land and property. However, the process involves careful planning, legal compliance, and ongoing management. By following this guide and seeking the right professional advice, you can successfully establish your company and enjoy the benefits of owning property in Thailand.