How to Set Up a Company to Buy Property in Thailand: A Step-by-Step Guide for Foreigners

Thailand’s charm as a property investment destination is undeniable. However, strict laws govern land ownership by foreigners. Setting up a Thai limited company is a legitimate and widely-used method to purchase property and land in the country. 

This guide focuses exclusively on the steps and requirements for foreigners to set up a company to acquire property in Thailand, ensuring compliance with local laws.

Understanding Why Setting Up a Company is Necessary

Foreign Ownership Restrictions

Under Thai law, foreigners cannot own land outright. They can own buildings or condominiums but not the land they sit on. For those looking to invest in land, establishing a Thai limited company is a legal workaround, provided the company is structured and operated in accordance with Thai regulations.

Legal Compliance Overview

Thai companies with foreign shareholders must comply with the following key points:

• Foreign Ownership Cap: Foreigners can hold a maximum of 49% of the shares in a company.
• Majority Thai Shareholders: At least 51% of shares must be owned by Thai nationals.
• Nominee Shareholders: Using Thai nominees solely to bypass ownership laws is illegal.

Step-by-Step Process for Setting Up a Thai Limited Company

Establishing a company requires navigating specific administrative and legal procedures. Below is a detailed roadmap for the process.

1. Reserve a Company Name

Choose a unique name that complies with Thai naming conventions. Reserve the name with the Department of Business Development (DBD).

• Timeline: 1–3 business days.
• Tips: Avoid using prohibited words like “royal” or anything suggesting state affiliation.

2. Prepare the Memorandum of Association

Draft a memorandum outlining:

• Company name.
• Objectives of the company (e.g., property acquisition).
• Registered capital (a minimum of 2 million THB is recommended for property-related businesses).
• Shareholding structure (including details of Thai and foreign shareholders).

File the memorandum with the DBD for approval.

3. Convene a Statutory Meeting

Hold a statutory meeting to:

• Approve the memorandum.
• Appoint directors and auditors.
• Allocate shares to shareholders.
• Finalize the articles of association.

4. Register the Company with the DBD

Submit all required documents to formally register the company, including:

• Memorandum of Association.
• Articles of Association.
• List of shareholders (Form Bor Or Jor 5).
• Details of directors and their authority.
• Statutory meeting minutes.

5. Obtain a Tax Identification Number

Once registered, the company must obtain a tax identification number from the Revenue Department. If the company’s annual revenue exceeds 1.8 million THB, VAT registration is also required.

Structuring the Company for Property Ownership

1. Shareholding Requirements

A Thai limited company must adhere to the 51:49 shareholding rule, where Thai nationals own the majority.

• Legitimate Shareholders: All Thai shareholders must genuinely invest in the company. Fake nominee arrangements are illegal and heavily scrutinized by authorities.
• Preferred Shares: Assign different voting rights to shares to allow foreign shareholders more control, where legally permissible.

2. Appointing Directors

Directors manage the company’s day-to-day operations. Foreign investors can be appointed as directors, giving them control over decisions related to property ownership.

3. Registered Capital

To acquire land, the company should demonstrate sufficient registered capital, typically at least 2 million THB. Higher amounts may be required depending on the property’s value.

Key Compliance Considerations

1. Annual Reporting and Tax Filings

Companies must submit annual financial statements and pay applicable taxes. Regular audits ensure transparency and compliance with Thai laws.

2. Avoiding Legal Pitfalls

• Avoid nominee shareholders.
• Ensure genuine Thai shareholder participation.
• Engage professional legal and financial advisors for proper structuring.

3. Adhering to Property Laws

The land purchased by the company must be used in line with its stated business objectives. Any misuse could result in penalties or forfeiture.

Costs Involved in Setting Up and Maintaining a Thai Limited Company

Initial Costs

The costs associated with company registration in Thailand include a registration fee of approximately 5,000–7,000 THB, depending on the registered capital, and legal fees for hiring a lawyer, which can range from 10,000 to 20,000 THB. Additionally, there is a memorandum filing fee of around 1,000 THB.

Ongoing Costs

1. Accounting and Auditing: Annual fees range from 10,000–50,000 THB, depending on the company’s size and complexity.
2. Corporate Income Tax: 20% on profits.
3. Land and Building Tax: Varies based on property type and use.

Practical Tips for Setting Up a Company in Thailand

1. Hire Local Experts: Work with legal and accounting professionals familiar with Thai property laws.
2. Conduct Due Diligence: Verify property titles, zoning laws, and land office records before purchase.
3. Plan for Long-Term Management: Understand the tax and operational responsibilities of owning property through a company.

Conclusion

Setting up a company to buy property in Thailand offers a practical solution for foreigners navigating restrictive ownership laws. By following the steps outlined in this guide and adhering to Thai legal requirements, you can confidently establish a compliant company and secure your investment.

Engage experienced legal advisors, stay informed about regulatory changes, and take the time to structure your company correctly. With careful planning and professional support, owning property in Thailand can be a seamless and rewarding experience.

For expert guidance and assistance in navigating the property market in Pattaya, consider partnering with Pattaya Prestige Properties, where our knowledgeable team is dedicated to helping you make informed investment decisions.

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