REALWorld Law

How can investment in real estate by an individual/organization/company be set up?

The following taxes and fees arise upon the transfer of real property regardless of whether the transaction involves corporations or individuals.

1. Transfer Fee: 2% of the Land Department's appraisal value for the property. According to the Civil and Commercial Code, the seller and the buyer are equally responsible for paying the transfer fee unless agreed otherwise by the parties. (Currently, there is a notification from the Ministry of Interior regarding the collection of the registration fee for the concurrent transfer of land and buildings which is effective from 18 January 2022 until 31 December 2022. Under this notification, the rate of the transfer fee has been reduced from 2% to 0.01% of the Land Department's appraisal value for the concurrent transfer of the land and building (only for single house, twin house, row house or commercial building) which has a purchase price of not more than THB 3 million),
2. Withholding Tax: If the seller is a corporation, there is a requirement for the buyer (payer) to withhold and pay to the authorities withholding tax at the rate of 1 percent of the actual sales price or the Land Department's appraisal value, whichever is higher.
   If the seller is an individual, the Land Department's appraisal value of the property will be used and the personal income tax rates will apply after a complex calculation.
3. Specific Business Tax: Specific Business Tax (including municipal tax) applies at a rate of 3.3 percent of the appraisal value, or the actual transaction value, whichever is higher. Specific Business Tax applies if immovable property is sold in a commercial manner or for profit. Generally, a seller who is a corporate entity is liable to pay this tax. While an exemption may apply to a seller who is a natural person in situations where he or she has owned the immovable property for at least five years or his/her name has been entered on the house registration for the property for at least one year.
4. Stamp Duty: If the sale is not subject to Specific Business Tax, it shall then be subject to Stamp Duty of 0.5 percent of the Land Department's appraisal value or actual transaction value, whichever is higher. Liability generally falls on the seller. In other words, the Stamp Duty is exempt if the seller is subject to the Specific Business Tax.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

The sale or purchase of immovable property is not subject to VAT. However, VAT may be applicable in certain circumstances where the sale or purchase of immovable property is inclusive of moveable property, eg furniture.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

There are none.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

House and Land Tax and Local Development Tax were cancelled and replaced by Land and Building Tax under the Land and Building Act B.E. 2562 (2018) (the Act) which is published in the government gazette and is effective on 13 March 2019. However, the tax collection for land and building under the Act will be effective from 1 January 2020 onwards.

Under the Act, the properties which are subject to Land and Building Tax are (a) land, (b) building, and (c) condominium unit. Tax payer will be (a) the owner of those properties (if land, building, or condominium unit belongs to an individual/organization/company ), or (b) the possessor or the user of those properties (if land, building, or condominium unit belongs to the State), as the case may be. The calculation of Land and Building is based on the appraisal price of each property which is in accordance with the appraisal price of the property for collection of the government registration fee under Land Code. Regarding the tax rate, the Act specifies the different tax rate ceiling which depends on the purpose of utilization as follows:

• Agricultural purpose: Tax rate will be no more than 0.15%;
• Residential purpose: Tax rate will be no more than 0.3%;
• Other purposes (e.g. commercial or industrial purposes): Tax rate will be no more than 1.2%; and
• Land or building which is vacant or un-utilised: Tax rate will be no more than 1.2%.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

Other than Land and Building Tax, there are generally no taxes, charges, fees, duties, or assessments for ongoing ownership of immovable property, whether on a national or local level.

However, an owner of a condominium unit under the Condominium Act or of a residence unit under the Land Allocation Act is required to pay common expenses (known as Common Area Maintenance Fees or CAM Fees). Common expenses means expenditure required on common services and tools or facilities provided for joint use or joint benefit and expenditure required on maintenance and operation of common property as well as tax and duty costs (if any), based on the ownership ratio of common property of each co-owner. The CAM Fees amounts and timing for payment depend on the specific condominium's or residence's regulations.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

Rental/lease income and capital gains can be expected from the ownership of real estate in Thailand.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

Rental/lease income and capital gains would be treated as income subject to personal income tax (if the recipient of the income is an individual) or to corporate income tax (if the recipient of the income is a corporation).

As far as personal income tax is concerned, the owner is subject to progressive tax rates ranging from 5 percent to 35 percent. An allowance of 30 percent of total rental/lease income may be deducted from the taxable income. However, if the owner can substantiate that the cost is actually higher than the 30 percent threshold, the actual expenses evidenced by supporting documents may be deducted from the taxable income in computing the personal income tax.

For owners that are corporate entities, the normal corporate income tax rate is currently 20 percent of net profit. Some companies may be subject to progressive tax rates at 15 percent and then 20 percent provided that such companies have registered capital of not more than THB 5 million and total revenue of not more than THB 30 million per year.

If investment is made through a qualifying property fund, real estate investment trusts (REITs) or other relevant tax rules, the net profit is not subject to tax.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

The investment vehicle itself would not be subject to additional taxes on the transfer of income generated from real estate to its shareholders or partners. However, it will be required to withhold tax when applicable and appropriate. Generally, the withholding tax rate applicable to the dividend or profit remittances is 10 percent unless otherwise reduced by a relevant double tax agreement. Nonetheless, the withholding tax rate applicable to profit sharing to a foreign company that does not operate business in Thailand is 15 percent. However, the withholding tax may be exempt subject to certain conditions.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

No.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

No, but if the shareholders or partners reside outside Thailand, a bank fee may apply.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

Upon the transfer of real estate, the following taxes and duty would generally be payable.

Withholding Tax

If the seller is a corporation, there is a requirement for the buyer (payer) to withhold and pay withholding tax at the rate of 1 percent of the actual sales price or the Land Department's appraisal value, whichever is higher. This withheld tax can be used as a tax credit for the corporate seller, when calculating its corporate income tax liability.

However, in situations where the owner is a foreigner, the capital gain from the sale of immovable property is generally subject to withholding tax at the rate of 15 percent.

If the seller is an individual, the Land Department's appraisal value for the property is used and personal income tax rates apply after a complex calculation. Individuals may choose to exclude income from the sale of immovable property from their annual personal income tax return in certain cases (eg when there is a sale of immovable property acquired by bequest or gift).

Specific Business Tax

Specific Business Tax (including municipal tax) applies at a rate of 3.3 percent of the appraisal value, or the actual transaction value, whichever is higher. Specific Business Tax applies if immovable property is sold in a commercial manner or for profit. Generally, a seller who is a corporate entity is liable to pay this tax. An exemption may apply to a seller who is a natural person in situations where he or she has owned the immovable property for five years or his/her name has been entered on the house registration for the property for at least one year.

Stamp Duty

If the sale is not subject to the Specific Business Tax, it is subject to Stamp Duty of 0.5 percent of the Land Department's appraisal value or the actual transaction value, whichever is higher. Liability generally falls on the seller. In other words, the Stamp Duty is exempt if the seller is subject to the Specific Business Tax.

Last modified 19 Jul 2023

How can investment in real estate by an individual/organization/company be set up?

Transfer fee

2% of the Land Department's appraisal value for the property. According to the Civil and Commercial Code, the seller and the buyer are equally responsible for paying the transfer fee unless agreed otherwise by the parties.

Last modified 19 Jul 2023