Life with an LB in the suburbs.

[ShockToe]

(PogueMahone @ Apr. 09 2007,09:39) No shot for the foreseeable future in her getting a visa to come to the U.S. Maybe when same sex marriages are legal. However, since Vancouver, Canada does allow LB's to obtain a visa and it is only a stones throw away for the U.S.-Canada border I am planning on taking her there for a visit next year. This city has a very cosmopolitan feel to it, there is a large Thai presence in the city, the surrounding area is beautiful so she will get some idea of what North America looks like. This year though I am taking her on a second honeymoon to Paris on our wedding anniversery. Since I have been there myself it will be even more special. I can hardly wait to see the looks on the Frenchies faces when she walks the streets and into the shops and restaurants with me. She is a head turner wherever she goes and when she dresses to the nines, puts her makeup on to accent her beauty I just shake my head and wonder how I got so lucky. As far as learning Thai goes I have not given real serious thought to it. I find that it is easier said than done.

Could you, and others, share your experiences getting the French and Canadian Visas.

I understand that residents of those countries, and others, can usually get visas for LB friends, but I haven't heard too many experiences on "third-country" visas. I'm assuming you're a U.S. citizen.

I've been meeting quite a few LB's outside the bar scene and I am amazed at how many have traveled internationally, either on a term abroad or to visit/accompany family who might be living/working in another country. My Aunt, who is Thai, lives and works in the U.K., so her daughters can/do visit her there.

[rxpharm]

(PogueMahone @ Apr. 09 2007,09:39) No shot for the foreseeable future in her getting a visa to come to the U.S. Maybe when same sex marriages are legal. However, since Vancouver, Canada does allow LB's to obtain a visa and it is only a stones throw away for the U.S.-Canada border I am planning on taking her there for a visit next year. This city has a very cosmopolitan feel to it, there is a large Thai presence in the city, the surrounding area is beautiful so she will get some idea of what North America looks like.

PM, yes, I am pretty sure you are right that it is easier to get a visit visa to Canada than the US. I would make a suggestion, and that is apply for a multiple-entry/exit visa for Canada. The reason is that once she has the visit visa for Canada, it MAY be easier for her to also get a visit visa for the US to be used as part of her Canada visit. So, once she has her Canada multi-entry/exit visa, she should apply for the US visa.

Vancouver is indeed one of the most beautiful cities in Canada, if not the world! If you have time, take her to the Rockies to see Jasper and Banff. The highway between these two mountain parks is one of the most beautiful drives in the world!

Congratulations once again!

[Guest]

Ah we have 2 topics going, Visas and Legal control...

Visas - ShockToe, I take May to get a Canadian Visa next week. Well let you know. I'm Canadian.

Legal - I also have a 'high-powered' lawyer, and we've been through all the tricks, and you can legally protect yourself to the point that she would have to sell the property if you decided so. But you'd have to have set it up in the first place. You give her a loan to 'buy' the house. She has to pay you back. Of course you never exchange money. But if you get pissed, you call her on her loan, she can't pay, and the court orders the property to be sold and the proceeds go to you. That is only remaining trick I am aware of that is legally binding.

All that being said, I also agree with Mardhi, that you don't want to get into that situation. I'm reading a book now on a Bangkok Private Eye. 20K baht can get you killed, anywhere in the country, in one day. I think we should all assume if something goes wrong in a Thai relationship, you just walk away, eat the loss, and don't look back.

[katoeylover]

(ziggystardust @ Apr. 13 2007,17:35) I'm reading a book now on a Bangkok Private Eye. 20K baht can get you killed, anywhere in the country, in one day. I think we should all assume if something goes wrong in a Thai relationship, you just walk away, eat the loss, and don't look back.

Wow, thats quite scary! Think this is good advice-just walk away..

Thinking of getting a place in Hua Hin -do you think a 30yr lease is a better bet than buying through a nominee shell company?

[Guest]

I do not recommend buying a house through a shell company.

I've been to my lawyer more times than I want to count on the dream house I wanted to buy in Phuket, and 2 shops in Bangkok. He seems well connected, shows me drafts of the government circulars before they are issued. They have pretty much killed every loophole that was available for foreigners to buy land through shell companies. They continue to do so about 1 per month or so (ie, closing even the remotest last loophole).

Some lawyers, and pretty much all real estate agents will tell you 'no problem, can still do', however, you do it at severe risk these days. I know of 2 people who got caught. They then have 180 days to sell the house and get the proceeds. Due to a fairly fast sale, and the buyers knowing it, the price drops of course so you lose out as well as having an enormous hassle.

So, it is highly, highly recommended to go the lease route now. Even if you put it 100% in the girlfriend's name, there are some cases where they check her assets to see if she is a nominee.

So while you could get through all this and nothing happens, all the laws are set up now to screw you, and it is basically up the Land Office Department in the district where you are buying whether they will enforce everything and check you. Due to Hua Hin being the King's residence, and rumors that these laws were put in place due to farangs buying too much in Hua Hin, I would be very careful there.

For example, even the shell company must now pay tax on a minimum amount per year at 15%. Because, of course, if a company owns the house and is renting it out (to you), then it must make income right? The income is taxable. So, practically, this means you must pay tax on the rent you are paying yourself. I heard the minimum rent / year is quite high that is taxable.

With the 30y leases, you should still try and protect yourself as much as is possible to get the 30+30 extensions mandatory (which they are not legally mandatory), through side letters, agreements in principle, blah, blah. Not perfect, but better than nothing.

So, sure, you can do a shell company and it might all go fine, but there are a lot of risks these days, which is why the Phuket housing market almost died the last 5 months, and you see lots of lease deals now there.

[katoeylover]

Thanks for this.

I think the lease route is the best way to go.

Interesting notes on paying the tax on the rent, something the builders and realtors fail to tell you

[Guest]

The 'mandatory tax' for a shell company leasing to you (you renting to yourself) is quite new, I think it was introduced in January or February, to close the loophole that you have your girlfriend be the majority owner in the Thai company, and then you live in the house, in theory, renting it from her & the shell company.

[mardhi]

(ziggystardust @ Apr. 14 2007,10:58) The 'mandatory tax' for a shell company leasing to you (you renting to yourself) is quite new, I think it was introduced in January or February, to close the loophole that you have your girlfriend be the majority owner in the Thai company, and then you live in the house, in theory, renting it from her & the shell company.

Its actually been in place for many years - the essence of the law is that the company must trade. In order to trade, the easiest way is that it simply rents to the house to someone. Just so happens that it rents it to one of the directors/shareholders of the company. You form a rental agreement and then pay either 12.5% or 15% (can never remember which), of that rental income. If you structure the company smartly, it also depreciates the assets (ie cost of building the property in the first place) and thus minimises corporate income tax. FYI, the rental tax is seperate to the corporate tax - they are for different things.

You have two options to work around the rental tax - common sense would dictate that you make a 3 way agreement which is what most (smart) Thai landlords do. Basically you have 3 agreements covering rent for the property, rent for the furniture, misc service charges. The rental property tax is then the 12.5% or 15% of the rent for the property (but not the furniture or services). If need be, you include a copy of the signed rental agreement when you pay the tax. So assuming your living in property for say 40,000b month.

Agreeement for property rental may show 20,000 month (furniture 15k and services 5k) therefore tax (assuming 12.5%) is just over 2,000b month. That gets paid to the local Tambon or council and can be shown as an expense on the company accounts.

If you try and 'ignore' the property tax - the council may come and value a rental level themselves - they will probably say its 40,000b and apply tax at the 12.5% on full 40,000b - there is no appeal process that I am aware off and its totally up to them how they value it. Therefore if you go down this route, providing the rental value you document is fair, you will not have a strong liklihood of being investigated - they will just take the money, issue a receipt and your all done. If you value the rent at 2,000b month for a 3 bedroom house with pool, your just inviting trouble.

Cheers
Mardhi

[mardhi]

(ziggystardust @ Apr. 14 2007,02:35) I do not recommend buying a house through a shell company.

I've been to my lawyer more times than I want to count on the dream house I wanted to buy in Phuket, and 2 shops in Bangkok. He seems well connected, shows me drafts of the government circulars before they are issued. They have pretty much killed every loophole that was available for foreigners to buy land through shell companies. They continue to do so about 1 per month or so (ie, closing even the remotest last loophole).

Some lawyers, and pretty much all real estate agents will tell you 'no problem, can still do', however, you do it at severe risk these days. I know of 2 people who got caught. They then have 180 days to sell the house and get the proceeds. Due to a fairly fast sale, and the buyers knowing it, the price drops of course so you lose out as well as having an enormous hassle.

So, it is highly, highly recommended to go the lease route now. Even if you put it 100% in the girlfriend's name, there are some cases where they check her assets to see if she is a nominee.

So while you could get through all this and nothing happens, all the laws are set up now to screw you, and it is basically up the Land Office Department in the district where you are buying whether they will enforce everything and check you. Due to Hua Hin being the King's residence, and rumors that these laws were put in place due to farangs buying too much in Hua Hin, I would be very careful there.

For example, even the shell company must now pay tax on a minimum amount per year at 15%. Because, of course, if a company owns the house and is renting it out (to you), then it must make income right? The income is taxable. So, practically, this means you must pay tax on the rent you are paying yourself. I heard the minimum rent / year is quite high that is taxable.

With the 30y leases, you should still try and protect yourself as much as is possible to get the 30+30 extensions mandatory (which they are not legally mandatory), through side letters, agreements in principle, blah, blah. Not perfect, but better than nothing.

So, sure, you can do a shell company and it might all go fine, but there are a lot of risks these days, which is why the Phuket housing market almost died the last 5 months, and you see lots of lease deals now there.

The checks by the land office are for transfer of title. If a property is already owned by a company and your merely changing the shareholder/directors - then the land office is not involved - as the LAND has not changed hands - its still owned by the same company. Those company changes are done at the commercial dept.

If you have already got a company owned property and it dates back a few years and have not been regualrly changing shareholders - the liklihood of investiagtion is remote and even more to the point, highly unlikely as there was no requirement at that time to show where the funds came from. That is the whole issue with the Shin/Temasek situation. In law, there had been no requirement to show the source of the funds, merely that they had been paid in. WHile everyone knows, its a front, there had been no mechanism to actually prove it. It is those 'loopholes' that are being tightened up on new companies going forward, however there are still plenty of loopholes available.

For example, if a 2,000,000 baht company had been set up - whats to say that the shareholders did not sell Gold to get the cash? Have you ever got a legal tax receipt from a gold dealer? - thats the crux - the problem is endemic across mutliple juristictions of Thai government. Its similar to asking why policeman who have a salary of 20,000b a month are driving round in 4,000,000b Mercedes cars. everybody knows the reality but the processes, checks and balances have not been in place. Even this latest set of moves is flawed, as too much onus is being placed on the land department. Easy way around it is for a Thai company to be formed, acquire the land and then one of the Thai shareholders sells out to a foreigner. No further checks done at the land office.

Having said all of that, I am in agreement that from now on either 30 years leases or unlimited 'use of land' agreements are put in place.

Cheers
Mardhi

[Guest]

Mardhi, I think you missed the 2 new laws...

1. If a new company is formed with a foreigner that has controlling interest (not majority share, but the majority of shareholder votes), and
purchases land, the land office is to inform the commerce office for an investigation of other shareholders merit (do they really
have money or are they blind nominees), and is this a bogus transaction.

2. If an existing company has a change of controlling interest, whereby a foreigner gets control, either because Thais were in control
before, or because a different foreigner is in control now, that triggers an investigation by the commerce department.

So these close two loopholes - you create a new company to buy land, was always there, but now the land office must inform the commerce office. The second, your case, an existing company is used, and the land remains in the company, but the shareholders change, that triggers an investigation by the commerce dept if controlling interest is changed. The first law was issued in July, the second in August last year; I have copies of those.

In the first case, the land office MUST inform the commerce dept, but some do, some don't. In the second case, the commerce dept has all the info and you're fucked from the get go.

For the tax case, yes, I believe there was a loophole in the old law and that loophole was recently changed in Jan/Feb. For that one, I don't have the details; as my lawyer just told me about it verbally, but I understand something has changed to make the shell company renting to yourself more tricky.

Now all this boils down to enforcement or not. You would normally think they go after big guns, however, I have 2 friends of friends who had to sell their houses in 180 days due to somehow being discovered. An ugly neighbor? A new company they bought? I'm not sure on what triggered the investigation.

[mardhi]

You may well be correct about how the government has attempted to tidy up the law - however, in its simplest form, a Thai company with a farang having a 39% share as an example and is the sole director, cannot be removed by the other shareholders if a caveat is in place that all amendments to the structure of the company require a 70% vote or greater agreement. Basically the company is Thai and the foreigner cannot be removed as a director unless he himselfs agree's it. Dont forget Directors are there to run a company - shareholders have minimal rights - as would exactly be the case in any company. I may be a shareholder in someone like GE, however, that gives me virtually no right to go and change decisions made by the directors. I have an opportunity to voice my opinion at AGM's etc - but everything is dependant upon how the company is structured.

Accepting that what you say is correct though, why did the farang not simply find a Thai to put it into their name (ie the land) and then sign a leaseback agreement.

In the scenario you describe of such an investigation that would be the end result, however for that too happen, the government has to go through the courts to get it agreed and that would have been picked up by the press in whichever area it was assuming it was a western orientated area such as Phuket, Samui, Pattaya etc. If its true, I suspect that the farangs just had a panic attack when somebody said something and they felt threatened. The actual process for this is complex - a Thai offical cannot just turn up on your doorstep and demand you sell something within 180 days unless its gone through a court process first. The only scenario I could think of something like that happening is where a company owned the property and had not filed ANY company accounts in 3 years. They can then apply to have that company wound up and sell any assets. Do your annual accounting, pay the taxes and your a legitimate trading company. If anyone actually got as far as saying or doing this on a tradng company or possibly suing nominees, then the easiest solution is simply to pay a dividend. All shareholders receive maybe 1b on each share they own. They are no longer considered nominees as they are receiving dividends from a trading company. Might not be a big dividend but its a damn site cheaper than losing the house/business. Thats how my company is structured by the way, our Thai shareholders receive dividends from the company albeit my company is somewhat larger than the average company that owns a single house + we are VAT registered, work permits in place, etc etc.

Cheers
Mardhi

[stogie bear]

Fascinating stuff... I'm writing notes as fast as I can...

[mardhi]

(ziggystardust @ Apr. 14 2007,17:15) 2. If an existing company has a change of controlling interest, whereby a foreigner gets control, either because Thais were in control
   before, or because a different foreigner is in control now, that triggers an investigation by the commerce department.

So these close two loopholes - you create a new company to buy land, was always there, but now the land office must inform the commerce office. The second, your case, an existing company is used, and the land remains in the company, but the shareholders change, that triggers an investigation by the commerce dept if controlling interest is changed. The first law was issued in July, the second in August last year; I have copies of those.

In the first case, the land office MUST inform the commerce dept, but some do, some don't. In the second case, the commerce dept has all the info and you're fucked from the get go.

For the tax case, yes, I believe there was a loophole in the old law and that loophole was recently changed in Jan/Feb. For that one, I don't have the details; as my lawyer just told me about it verbally, but I understand something has changed to make the shell company renting to yourself more tricky.

The question of enfocement is the key as you identify Ziggy but also so is the question of basically having the right tools. I changed a director in my company in September 2006. Took one foreigner out completely. I then added the same guy back in 1 week later. Aside from paying the due fee's (miniscule) - no investigation was done. The company I work for owns a load of land. In essence, it could have been interpreted (and indeed should have been done so) that we were changing control of the company. However as I say, no questions were asked as probably nobody in the commerce department even bothered to look at our registered assets which feature on our balance sheet. That same balance sheet would show substantial land assets. However as I say, its not even picked up on or checked. As a director, I can make those changes without even needing to go to my shareholders. Hence the difficulty and reality is that much of what is being talked about by the civil service is pretty much un-workable in practice.

Cheers
Mardhi

[Guest]

So, since there's some interest here....

No.1 -- May, 2006 -- If it looks fishy, they can investigate the Thais to see if they have money
No.2 -- July, 2006 -- They can look at all details of the Thais (salary, bank books, ...)
No.3 -- August, 2006 -- If a foreigner has control (majority voting rights), all shareholders are to be investigated

Land Department
Sub: Acquistion of land by juristic person having foreign shareholder(s), May 15th, 2006

It has been reported to the Ministry that there are foreigners collaborating with Thais or hiring Thais to set up companies to carry out real estate business....

The Ministry has considered that for prevention against law evasion on acquisition of land for the benefit of foreigners...following additional procedures shall be laid down...if it si apparent that a foreigner holds shares or is a director or it si reasonable to believe that a Thai holds shares as a representative of a foreigner, the officials shall investigate the source of income of Thais holding shares...

Land Department
TOP URGENT
No. MorThor 0515/Wor1562
Sub: Acquisition of land by juristic person having foreign shareholder(s), issued, July 25th, 2006

...if it is apparent that a foreigner holds shares or is a director or it is reasonable to believe that a Thai is a nominee shareholder in favour of a foreigner, an investigation of the source of income of Thai sharholders is required. The Ministry has considered that the following additional procedures should be laid down to enable the officials to conduct an investigation in the same proceeding:

1. ...
2. ...check profession, monthly salary,..., pass book, ...
3. If a sharholder in that juristic entity is a Thai limited company...investigation into source of funds with evidence...if borrowing money from others, evidence must be provided...
4. In the event that a juristic entity purchases land at a price that is greater than the registered capital, ..., without registering a mortgage, an investigation onto the source of the funds for acquisition of the land is required with evidence and, if borrowing money, then Minutes of the Meeting on the loan financing must be produced...
4.1 If borrowing money from foreign person or foregin juristic person, written evidence of the source
of the funds must be produced...
4.2 ...same for borrowing from Thai...


Commerce Department
No.102/2549
Re: Documentation required in support of application for registration of parnerships and companies, August 15th, 2006

For registering partnerships and companies to be in order...having foreign partners(s) or foreign shareholder(s) or having foreign shareholding in a partnership or limited company with shares greater than 40 but not exceeding 50 percent of registered capital. In the event that a foreigner holds shares in a partnership or a limited company less than 40 percent of registered capital but those foreign partner(s) or foreign shareholde(s) is/are the person(s) or shareholder(s) is /are the person(s) who is/are authorized to act for or on behalf of the partnership or company, every Thai partner(s) or sharholder(s) is/are required to produce documentary evidence showing the source of his/their investment fund...and show the amount of money related to the amount of investment of each and every partner or shareholder in the comapny in the following manner:

1. Copy of bank account book...
2. Letter issued by the bank certifying...
3. Copy of documentary evidence...

[Ladyboy_Loser!]

See. I just knew if I posted something about long term relationships, buying a home and car and life in burbs with an LB it would get great feedback. Now a lot of the guys have invaluable information for future decisions. Good job on posting a lot of great information. Of course, kudos to me for getting the ball rolling. Thank you, thank you, it was my pleasure.