Should you buy your condominium unit in person or should you register an offshore company to purchase it on your behalf? Both options are available with their advantages and drawbacks.
Advantages of the Offshore Purchase
For those of you who are considering placing the ownership of their condominium title in an offshore company, the answer is, yes, there are definite benefits to such a method of purchase.
The first advantage of purchasing your condominium freehold through an offshore company is visible in the event of resale to another foreign buyer who is not a tax resident in Thailand.
In this case, you might choose either to sell the condominium unit or to transfer the ownership of the company to your buyer instead. In this last case, the transaction will consist of the sale of the shares of a foreign company to a foreign buyer.
If neither the seller nor buyer is a tax resident of Thailand, the transaction will happen offshore and the resulting profits will not be taxable in Thailand.
Furthermore, if you choose your offshore jurisdiction carefully, the amount won’t be taxable overseas, either.
The second advantage is that it makes your succession easier to manage, because your estate will consist of movable property (i.e. the shares of the company owing the condominium), not immovable property (the condominium itself).
But as always no solution is perfect and there will also be drawback such as the fact that the offshore company will be subjected to the Land and House Tax.
Only individual owners living into their condominium are currently exempted. The tax rate is 12.50% on the rental assessed value of the condominium or on the actual rental value if the unit is rented out whichever is the highest. This drawback will however disappear if the Land and House tax is replaced by a real property tax as it should be soon.
Also there will be the matter of corporate income tax and of withholding tax if the appartment is rented out
Finally, you will have to bear the costs of maintenance of the offshore company for the duration of your ownership.
Note: This post is an excerpt of Rene Philippe Dubout first book: “How to Purchase Real Estate Offshore Safely: The Case of Thailand” published in february 2009.
About the Author:
The author Rene-Philippe DUBOUT is a lawyer since 1990 when he was admitted to Geneva bar (Switzerland). He practiced as a litigator there for 10 years until he moved to Thailand in 1999. In 2002 he founded with a group of Thai lawyers Rene Philippe & Partners Ltd a local law firm that specialized in Cross Borders Investments and Real Estate. He has been lecturing in several Thai Universities and a speaker to numerous conferences and seminars. He is the author of a must read book:”How to Purchase Real Estate Offshore Safely: The Case of Thailand”.
© Copyrights 2009 – Rene Philippe Dubout – This article may be reprinted if information about the author, the websites, and the URLs remain intact.
Originally posted 2009-08-24 11:43:20.