Comparison between Land transfer and take over Thai Company

Comparison Between Land Transfer and Take Over a Thai Company.

After reading “5 Steps to Understand When Buying Real Estate in Phuket”, finding and doing the Due diligence on the property, the contract is signed, it is the time to transfer the ownership of the asset. But which way to use when an option is possible? Go to the land department or go to the DBD?

We provide you below the difference in cost and process of the two options.

1-At The Land Department.

The taxes to be paid depend on the quality of the Seller, if we are in presence of a Juristic person (company) or Natural person.

Two amounts will be used, the Crown property office estimated price and the parties declared price.

1-1Juristic Person

-Transfer fee 2% of the estimated price of the property

-Business tax 3.3% of the declared price or estimated price of the property (whichever is higher). 

-Withholding tax 1% of the declared price or estimated price of the property (whichever is higher).

1-2 Natural Person

-Transfer fee 2% of the estimated price of the property

-Stamp Duty 0.5% of declared price. Only payable if possession of more than 5 year before sale.

Or

Business tax if possession of less than 5 year before sale. 3.3% of the declared price or estimated price of the property (whichever is higher). 

-Withholding tax, This income tax is calculated at a progressive rate based on the declared price of the property.

Note that if the law designates which party has to pay the fees and taxes, the parties are free to split them as they want and these costs are generally shared by 50/50 between the parties.

2-At The DBD.

The solution to acquire the ownership in this case is to control the board of directors and the right of vote attached to the board of shareholders.

The maximum of all won’t be more than 30.000 THB.

After that you shall pay yearly accounting fees, around 25,000 THB.

The due diligence shall be made on the company itself, and the risk is that even if a clause of liability is inserted into the contract for the previous director/shareholders as Seller, no one knows the future and any debtor can sue the company, meaning you, to collect any remaining debt.  In charge of you to use the liabilities clause to sue your Seller.

Each solution has its benefits and risks, and the choice should be made case by case. So don’t hesitate to contact us.

Article by;
Frederic Retif, Master in Business law, French Lawyer and Thai Legal Advisor.