Taxes and Government Fees for Property Transactions

Through Company Takeover

In circumstances where a company is taken over and where the company owns property, the company remains the owner of the company. Because of this there has been no transfer of property and no taxes or fees need to be paid. Rather the transaction is seen as a transfer of shares.

In cases where it is a Thai company that is being taken over, there is a fee for the transaction of 0.1% stamp duty based on the value of the shares. The seller of the company may have to pay personal income tax on any capital gains they receive. If the company is taken over by a foreigner it is viewed that there has been no taxable action within Thailand. Taxes in these circumstances may be payable in another country.

Leasehold Properties

There is both stamp duty and a lease registration fee due when a lease is acquired on a piece of land. These fees are based on the total value of the lease with a stamp duty of 0.1% and a lease registration fee of 1%. In Thailand it is most common for the seller to pay the stamp duty and for the lease registration fee to be split between the seller and the buyer, 50:50. The fees remain the same whether the parties involved is a person or a company.

Summary of Leasehold Transfers

Tax/Fee Rate Party Liable
Stamp duty 0.1% Seller
Lease registration fee 1% Buyer and seller share 50:50

Freehold Properties

For freehold properties the following taxes and fees need to be considered:

If any transaction is made in a company name or has been held by an individual for less than five years, this is deemed a commercial venture and Specific Business Tax will apply. Otherwise stamp duty will apply.

Currently the registration fee is 2% of the value of the land as appraised by the land office. This is often significantly lower than the purchase price or the market value of the land.

In circumstances where the seller is a company, the tax is calculated as 1% of either the land office value or the purchase price, whichever is the greater. If the seller is an individual then the tax is calculated in a different way, using a combination of the value of the land, the length of time it has been owned and the progressive personal tax rate.

Specific Business Tax is 3.3% of either the appraise land value or the purchase price, whichever is higher. Stamp duty is calculated as 0.5% of the land office appraised value and the purchase price.

Transfer fees and taxes are usually split equally between buyer and seller but may be subject to negotiation.

Summary of Freehold Transfers

Tax/Fee Rate Party Liable
Transfer registration fee 2% Buyer and seller share 50:50
Withholding tax 1% Seller
Specific Business Tax 3.3% Seller
Stamp duty 0.5% Seller

Tax on Capital Gains

If you sell a lease or the freehold of a property, or if you sell shares in a Thai company, you are subject to tax on capital gains. For an individual a capital gain is subject to income tax. For a Thai company, corporation tax in applicable. For a foreign company, the company is subject to 15% withholding tax.

Foreign buyers of property in Thailand must be able to show that the money for the purchase was sent into the country in a foreign currency. They will need official documentation that shows the funds were sent into the country specifically for the purchase of the property.

Personal Income Tax

When a foreigner earns income from the sale of a property they must file a personal income tax return. This tax is calculated using progressive rates from 5 to 35%.

Income After Expenses (THB) Tax Rate (%)
Up to 150,000 0
150,001 – 300,000 5
300,001 – 500,000 10
500,001 – 750,000 15
750,001 – 1,000,000 20
1,000,001 – 2,000,000 25
2,000,000 – 4,000,000 30
Over 4,000,000 35

Corporation Income Tax

Limited companies in Thailand are subject to corporate income tax on their annual net profit. This would include the sale of any property held by the company and would be taxed as any other capital gain.

Net Profit (THB) Tax Rate (%)
Up to 300,000 0
300,001 – 3,000,000 15
Over 3,000,000 20

Tax on Rental Income

Any income from renting properties in Thailand is subject to income tax. The rates of taxation will depend on how the property is registered, to the individual or to a company.

Property that is registered under an individual’s name

Any income from rented properties in Thailand, regardless of whether the individual lives in the country or abroad, is subject to income tax. The individual is responsible for filing an income tax return in the Kingdom.

Rental income is subject to a progressive tax rate of between 5 and 35%.  This is based on net income after allowances and expenses are deducted. A 30% deduction is allowed on all rental income for tax purposes.

Property that is registered in a Thai company name

Income for a Thai company is subject to corporation tax ranging from 15 to 20%.

Property that is registered in a foreign company name

For foreign companies who earn income from rented properties the tax is calculated on whether the company is carrying out business in Thailand. If a company is not carrying out business in the country, that is they have no offices here or employees, the income will be subject to a flat rate of 15% withholding tax. If the company is carrying out business in the country they are subject to the same corporate tax as any Thai company.

Other Taxes

Building and Land Tax

This tax is collected by the local government where the property is located and is a commercial rental tax. The rate of tax is calculated at 12.5% of the value of the property.

Local Land Tax

This tax is calculated on the size, location and value of the land and is collected by the local government in the area where the land is located. This tax is often very small and may even not be collected at all.

 

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