FAQs About Buying Real Estate Through a Foreign-Controlled Thai Company.
- What is the practice of buying real estate through a foreign-controlled Thai company?
It was common practice for foreigners to form Thai companies to purchase land or condominiums beyond the foreign ownership quota in Thailand. This allowed them to legally acquire properties as long as the company had majority Thai shareholdings.
- Are there any recent changes to this practice?
Yes, the government is now restricting the illegal use of Thai companies and nominee shareholding structures by foreigners. New regulations for land offices and business registration departments require officials to prevent such unlawful practices.
- How do these regulations affect the process of buying property through a Thai company?
Under the new procedures, when a foreigner is advised to buy property in Thailand through a Thai company, the foreigner generally will not appear on the company formation documents initially. Only after the property has been transferred to the 100% Thai company will up to 49% of the shares be transferred to the foreigner.
- Why is using a Thai company formed as a front for foreign property ownership illegal?
Such practices lead to unlawful foreign ownership due to the purpose and Thai nominee shareholding structure. A company that owns real estate must appear to be a normal active business entity, conducting business activities, holding shareholder meetings, and complying with accounting and foreign business laws.
- Can a Thai company solely serve as a property holding entity for a foreigner?
No, a Thai company formed solely for the purpose of holding land on behalf of a foreigner, without engaging in any legitimate business activity, is illegal. It must operate as an active company and comply with all relevant laws and regulations.
- What are the risks of using nominee shareholding structures for property ownership?
Using nominee shareholding structures to conceal foreign ownership can lead to legal consequences, including fines and potential seizure of the property. It’s crucial to ensure compliance with all regulations and seek legal advice when purchasing property in Thailand.