Foreign Property Ownership Using a Thai Limited Company

Understanding Foreign Property Ownership Laws in Thailand

Foreigners are generally prohibited from owning land in Thailand directly. This can be a roadblock for many potential buyers looking to invest in real estate in Koh Samui. However, there is a mechanism that allows this: the Thai Limited Company structure.

How the Thai Limited Company Structure Works

• A Thai limited company can own land and property in its name.
• The law stipulates that a company is considered “Thai” if at least 51% is owned by Thai nationals. Consequently, foreigners can own no more than 49% of the shares.
• In practice, some foreigners create companies where Thai nationals hold the majority of shares but retain control through preferred shares or other legal mechanisms.
• The company must conduct legitimate business activities, generating revenue and providing profits to its shareholders.

Legal and Practical Considerations

There are important legal restrictions when using a Thai Limited Company for property ownership:

• The company cannot merely exist as a shell or holding company for property.
• Using nominee shareholders—Thais who hold shares on behalf of foreigners without legitimate business intent—is considered illegal.
• Structures set up to bypass foreign ownership laws may be subject to prosecution and the landholding deemed invalid.

Risks Involved in Using a Thai Limited Company

As the authorities are increasingly scrutinizing company structures used for property holding, there are risks involved:

• Legal action and forced asset sales if it’s found that the structure does not comply with the law.
• Companies set up without genuine business operations face penalties and loss of their properties.

Key Aspects of Thai Limited Company for Foreign Property Ownership

Alternative Structures for Foreigners

If the Thai Limited Company route seems risky, other options include:

• Long-Term Leasehold: Foreigners can lease land or property for up to 30 years, with the possibility of renewal.
• Right of Superficies: This allows property ownership of structures built upon land without owning the land itself, also for a renewable term of 30 years.
• Condominium Ownership: This is the simplest option, permitting foreigners to own up to 49% of a condominium building’s total area.

Summary Table, Foreign Ownership Mechanisms in Thailand

Conclusion

While the Thai Limited Company structure has been a popular choice among foreigners for property ownership in Koh Samui, recent legal developments and increased scrutiny by authorities highlight the need for caution. If you’re considering this option, ensure that your business is legitimate and genuinely operational to avoid penalties or invalidation of ownership.

If you’re looking for more information or need assistance with property ownership in Koh Samui, contact us at Koh Samui Villas for expert guidance tailored to your needs. Let us help you make your dream of owning a piece of this beautiful island a reality!