Setting up a company to own a house and the land on it is a widely used method by foreigners to get around the strict laws that generally prevents foreigners from owning land.
The method of owning property in Thailand through a Thai company is technically legal under Thai law, but it exists in a gray area that has been subject to scrutiny and debate.
Today we break this topic down further:
Legal Basis:
- Thai Law: The Land Code Act B.E. 2497 (1954) prohibits foreigners from directly owning land, but it does not prevent a Thai-registered company from owning land. Under the Civil and Commercial Code, a company with at least 51% Thai ownership is considered a “Thai entity” and can legally purchase and hold land.
- Foreign Business Act (FBA) B.E. 2542 (1999): Foreigners can own up to 49% of a Thai company without it being classified as a “foreign entity,” which would restrict certain activities. As long as the company complies with Thai corporate laws, it can own property.
How It Works:
- A foreigner sets up a Thai limited company, typically with Thai shareholders holding 51% of the shares and the foreigner holding 49%.
- The company then purchases the land or property, and the foreigner may exert influence over it (e.g., as a director or through shareholder agreements).
Why It’s Controversial:
- Nominee Issue: Thai authorities frown upon “nominee” arrangements where Thai shareholders are merely proxies with no real financial stake or control, existing solely to help foreigners bypass land ownership restrictions. This is illegal under Section 74 of the Land Code, which prohibits foreigners from using Thai nationals as nominees to hold land on their behalf.
- Enforcement: While such setups are common, the government has cracked down periodically. If officials suspect the company is a sham (e.g., no active business operations, Thai shareholders with no real involvement), they can investigate, impose fines, or force the sale of the property.
- Practical Risks: The Thai shareholders legally own the majority and could, in theory, act against the foreigner’s interests unless safeguards (like contracts or power of attorney) are in place—though these safeguards may not always hold up in court if deemed to violate the spirit of the law.
Legality in Practice:
- If Done Properly: A Thai company with genuine business operations (e.g., generating revenue, paying taxes, employing staff) and active Thai shareholders is legally sound. For example, if the company runs a resort or a trading business and happens to own property as part of its operations, it’s less likely to raise red flags.
- If a Shell Company: If the company exists only to hold property, with Thai nominees who are paid to lend their names, it’s a violation of the law’s intent, even if it technically follows the letter of the law. Courts have ruled against such setups in the past when evidence of nominee abuse is clear.
Historical Context & Updates:
- Over the years, this method has been widely used by foreigners, especially for villas and retirement homes. However, the Thai government has tightened scrutiny since the early 2000s. For instance, in 2006, the Ministry of Interior issued directives to investigate nominee structures, and enforcement actions have occurred sporadically since.
- As of March 2025, no major legal overhaul has banned this outright, but authorities remain vigilant. Discussions about reforming foreign property ownership laws pop up occasionally, though nothing concrete has changed this route yet.
Conclusion:
Yes, owning property via a Thai company is legal if the company is a genuine entity with active Thai participation and complies with all regulations. However, using it as a loophole to solely own your home with nominees is illegal and risky, as it depends on flying under the radar of enforcement.
To make it work safely:
- Book a consultation with us to look into the planned structure of the company properly.
- Ensure the company has a real purpose beyond property ownership.
- Document everything meticulously to prove legitimacy.
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