CF Condominium Foreign Purchase Guide (Version 1)

7/31/2019 CF Condominium Foreign Purchase Guide (Version 1)

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Introduction

This guide has been created for

Foreigners desirous of purchasing

Condominium Units in Thailand, solely

on the additional requirements

applicable to foreign purchasers.

For more information on buying

property in general, please visit our

write-ups on Thailand Real Estate on

BANGKOK LEGAL BLOG (BLB)

@ www.BangkokLegal.wordpress.com .

This guide has not been contemplatedfor Condominium Units falling o u t of

their respective Foreign Ownership

quotas with their Condominium

Buildings, and similarly had not been

contemplated for any form of land

ownership, usufruct arrangements,

superficie arrangements, Board of

Investment allowances, foreigner

investment exceptions, and so forth.

Thai Condominium Laws are

encompassed in the following statutes,

in addition to the Land Code and the

Civil & Commercial Code:

Condominium Act B.E. 2522 (A.D.1979) Condominium Act (No.2) B.E. 2534(A.D. 1991)

Condominium Act (No. 3) B.E. 2542(A.D. 1999) Condominium Act (No. 4) B.E. 2551(A.D. 2008)

Imperative: Foreigners may only hold

4 9 % of the total Condominium floor

area - Section 19(2 bis) Condominium

Act.

Foreign Exchange Transaction Forms / Certificates

Since the 1991 Act, the Land Office has required the production of Foreign Exchange

Transaction Forms / Certificates (FET Cer ts ) to evidence the monies having been

brought in from the foreign bank as foreign currency i.e. to fall within the ambit of

the class of foreign entity allowed to purchase Thai Condominium Units:

aliens or juristic persons deemed by Thai law to be aliens, w ho hav e brought in to

the Kingd om fo r e ig n ex ch a n g e o r w it h d r a w n t h e m on ey fr o m t h e n o n -

r e s id e n t B a h t a c co u n t o r w i t h d r a w n t h e m o n e y f r o m t h e fo r e ig nc u r r e n cy d e p o s it a c co u n t

Note that as banks do not issue FET Certs for amounts less than 20,001 USD, credit

notes have to be obtained in lieu. It is crucial to remember certain salient points in

order to obtain the appropriate FET Cert as acceptable by the Land Office and

further to smoothen the transaction:

Telex Tr an sfe r

Identification of Purchaseras transferor and/or

transferee

Tr a n s f e r I n s t r u c t io n

Clearly indicating that themonies is for the Purchase

of a Condominium Unit

FET Cer t

Transferred Amount(In foreign currency & Baht)

Names of Transferor Transferee

Purpose of Transfer


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Specific Business Tax

Specific Business Tax (SBT) is

applicable where the target

Condominium Unit has been held for aperiod le s s t h a n 5 ye a r s . Imposition

of the SBT is at the rate of3.3%.

Common exemption is when the

Condominium Unit is held for a period

less than 5 years but the Owner can

show proof of having resided in the

Condominium Unit for more than 1 year

normally by furnishing a HouseRegistration Book (Tabien Baan in

case of foreigners, a yellowTabien

Baan ).

Conversely, in the case of new

developments, only SBT is applicable.

Property Income Tax

Only sales by individual Vendors will be considered as opposed to Corporate Vendorsfor which instead a Corporate Income Tax of 1% is levied. Property Personal Income

Withholding Tax (P IT) is imposed during the registration of the Transfer unless

any of the limited exemptions apply. Thailands PIT is based on progressive rates and

holding period of ownership, method of calculation of which is detailed as follows:

Tha i lan d s P r og re s s ive Pe r son a l Incom e Tax Ra te s

Ta x a b le I n c o m e [ As s es s e d I n c o m e D e d u c t io n s E xp e n s e s ] R a t e

0 150,000 Exempt

150,001 500,000 10%

500,001 1,000,000 20%

1,000,001 4,000,000 30%

> 4,000,000 37%

PIT rates (above) and applicable deductions based on holding period of ownership

(below)

H old ing Pe r iod (Yea r s ) Dedu c t ion1 92%

2 84%

3 77%

4 71%

5 65%

6 60%

7 55%

8 or more 50%

Taxes


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Method of Calculation

This method of calculation is specifically for Condominium Unit transfers not by way

of inheritance, gifts and not by non-individuals.

1. Ascertain Official Assessed Value (OAV)

2. Holding Period (Ownership Registered Year of Transfer) (H P ). A fractionof a year is considered a full year.

3. OAV [(applicable deduction percentage) x OAV] / HP = Annual PersonalIncome

4. Apply Progressive Personal Income Tax (P IT) rates on Annual PersonalIncome to determine Annual PIT payable

5. Annual PIT x HP = Total PIT payable

Calculation IllustrationJoel is desirous of selling a Condominium Unit of which Official Assessed Value is

10,000,000. He has held ownership of the said Condominium Unit for a period of 6

years and 2 months fraction is rounded up = holding period of 7 years. The

applicable deduction for OAV based on HP would be 55%(10,000,000) = 5,500,000.

I l lu s t r a t ion o f Me thod o f Ca lcu la t ion

No. Deta i l Ca lcu la t ion

1. OAV 10,000,000

2 . H P 7 years

3 . An n u a l P e r s o n a l

I n c o m e OAV [(app licable deduction percentage) x OAV] / HP

10,000,000 5,500,000 = 4,500,000

4,500,000/ 7 = 642,857

4 . An n u a l P I T 642,857 breaks down into 150,000 + 350,000 + 142,857

1st 150,000 = exempt

2nd 350,000 = 10% (350,000) = 35,000

3rd 142,857 = 20% (142,857) = 28,571

35,000 + 28,571 = 63,571

5. Tota l PIT An nual PIT x H P

63,571 x 7 = 4 4 4 , 9 9 7

Based on the case sample, the PIT imposable on Joels sale is 444,997.


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Stamp Duty & Transfer Tax

Documents Required for Registration of Transfer

Individual Purchaser

Passport FET Cert (or other proof of eligibility under Section 19 Condominium act) Power of Attorney if applicable with Notarization Certificate

House Registration Book Yellow Tabien Baan (To. Ro. 13)

Issued vide Registration Act B.E. 2534(A.D. 1991) and subsequent amendmentof B.E. 2551 (A.D. 2008). The Yellow

Tabien Baan is available for foreigners(not holding PRs) whereas the BlueTabien Baan is for Thai nationals. Acommon misunderstanding is thatHouse Registration Books are legaldocuments and have legal implications this is inaccurate and misled HouseRegistration Books merely identify theResidents / Occupants & Holders of thehouse.

Nonetheless, a House Registration Bookhas its utility, such as, inter a liaconstituting proof of residence towardexemption of Specific Business Tax inthe case of sale of the Condominium

Unit, obtaining a Thai drivers license,eligibility for certain health caresubsidies, and so forth.

Applications for House RegistrationBooks are made to respective districtoffices -Am phu rs and in the case ofBangkok Khets. In addition tolegislation, districts may have varyingrules. Typically, all that is required is aletter from the respective embassy,proof of identity and occasionally theproduction of witnesses that may berequired.

In lieu of a House Registration Book, aPolice Report may be obtained to thesame effect certification of onesresidence where the need arises.

If SBT pa id

0.01% Stamp Duty

I f on ly PIT pa id

0.5% Stamp Duty

Tr a n s f e r T a x

2%


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Inheritance of Condominium Units by Foreigners

There is no automaticsuccession / inheritance ofCondominium Units byforeigners.

Rights of Ownership may besucceeded in both testate &intestate estates, with thepermissive provision ofSection 19(5) Condominium

Act which provides foreligibility:

W hen the alien or juristicperson st ipulated in Section19 has acquired an

apartm ent unit by legacy in

the capacity of statutory heir

or inheritor under w ill or by

other means as the case may

be, and w hen included the

apartm ent already held by

aliens or juristic persons

stipulated in Section 19

w ithin the ratio prescribed

in the first para graph ofSection 19 b is.

For registration of suchinherited ownership withthe Land Department, theinheriting foreigner willneed to submit proof ofeligibility under Section 19of the Condominium Act.

Section 19 provides for thefollowing foreigners whomare qualified for foreignownership:

Permitted to reside inThailand as perImmigration law Permitted for entranceinto Thailand as perinvestment promotionlaw Section 97 & 98 ofLand Code registeredas juristic persons Foreign juristicpersons havingobtained a promotion

certificate underinvestment promotionlaw Foreigners / Foreign

juristic persons withFET Certificate

Therefore, the commonsolution is to re-purchasethe Condominium Unit forat least the OAV, obtain

the FET Cert, pay the taxesand come within the ambitof the last type of eligibleforeigner (similar to theinitial purchase by thelegator).

Where this is not the case,and the Foreigner does notfall within Section 19,Section 19(7) applies,

which gives:

An alien or jurist ic person

regarded by law as an alien

other tha n t hose specified in

Section 19 w ho acquires an

apartm ent by inheritance as

statu tory h eir or legatee or

otherwise as such case m aybe, s h a l l n o t i fy i n w r it i n g

the Competent Official

w ithin a period of sixty day s

from the date of acqu isition

of own ership of the

apartm ent, ands h a l l

d i s p o s e o f s u c h

a p a r t m e n t w i th i n a

p er iod o f n o t ex ceed in g

o n e y e a r fr o m t h e d a t e o f

a c q u i s i t io n o f o w n e r s h i p

o f a p a r t m e n t . Ifdisposition is not m ade

w ithin the said period, the

prov isions of the fourt h

para gra ph of Sect ion 19

shall apply m utatis

mutandis.

This means that where thesucceeding foreignerlegatee / heir / inheritor is

not eligible under Section19, the law requires suchineligible foreigner legatee/ heir / inheritor to give upownership of / sell theCondominium Unit within1 year failure to which

will attract empowermentof the Director-General ofthe Land Department toeffect the sale of such

Condominium Unit whileretaining a fee of 5% of thesale price (before theapplicable taxes &deductions).

Eligible (Section 19( 5))

R e - P u r c h a s e In eligible (Section 19( 7))

I n h e r i t a n c e


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Sale & Purchase Transaction Overview

Condominium Foreign Purchase Guide is brought to you by C u r t i s F o r d s in collaboration with

McWalden & Ba i ley. This guide is intended to be used for informational and educational purposes

only. Proper legal advice should be sought before acting on any of the information contained herein.

Cu r t i s Fo r d s is a purchaser / tenant centered team of property professionals. Start your Thailand

real estate matching with an enquiry to our experts. Visit our website atwww.CurtisFords.com.

With our sister international law & consultancy firm McWalden & Ba i ley, we aim to cater to ourclienteles real estate needs while keeping their legal interests in check. McWalden & Ba i ley

provides all the necessary associated legal services for properties begotten from Curtis Fords as a

complimentary effort to afford our esteemed clients, what we feel is much needed value add.

ALL CONTENT IS THE COPYRIGHT OF JOEL LOO SEAN EE, 2012.

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