Note: page for informational purpose only. Please talk to a Thai lawyer for direction.
Land Ownership via a Thai SPV: The Leasehold Structure
Since foreign individuals cannot generally own land freehold in Thailand, one structure increasingly used by buyers and their advisors involves a Thai-owned special purpose vehicle (SPV) that holds the land, while the foreign buyer secures a long-term right to use it through a registered lease. This article explains how the structure works, its ongoing costs, and where the limitations lie.
How the structure works
A Thai limited company — the SPV — is set up to purchase and hold the land itself. This company must be genuinely and wholly Thai-owned; it isn’t a vehicle for foreign shareholding, and its role is limited to holding the freehold title.
The foreign buyer then registers a lease against that land at the Land Department — a contractual right to occupy and use the land, building, or both, for a fixed term of up to 30 years under Thai law. The lease is registered directly in the foreign buyer’s name, giving independent, documented legal standing — separate from relying solely on the SPV’s goodwill or a private contract.
Why this structure is used
It avoids the foreign land-ownership restriction under the Land Code without resorting to disguised or nominee shareholding, provided the SPV is a genuine, independently funded Thai entity rather than a pass-through for the foreign buyer’s money. Pairing an SPV-held property with a directly registered lease gives the buyer a documented right that doesn’t depend on trusting an individual landowner’s future cooperation or circumstances.
Yearly costs to budget for
- Land and Building Tax (LBT) on the SPV’s land: Company-held land is taxed under the commercial-use rate schedule, not the residential-owner exemption available to individuals. Rates run from 0.30% of appraised value at the lowest bracket up to 0.70% at the highest, with no exemption threshold — tax applies from the first baht of value. This is materially higher than the near-zero rate an individual would pay on a primary residence, and is a cost typically passed through to the buyer indirectly via the SPV’s operating costs or the pricing of the lease.
- SPV compliance costs: annual financial statement filing, corporate income tax on any SPV income, auditor’s fees, and company secretarial/accounting costs to keep the entity in good standing.
- Vacant land surcharge: if the land sits unused for more than 3 years, the LBT rate increases by an additional 0.3% every 3 years, up to a 3% cap.
Drawbacks and limitations
- Dependency on the SPV’s integrity: the buyer’s lease exists over land owned by a separate company. If that company mismanages its affairs, is dissolved, faces creditor claims, or its Thai shareholders change, the registered lease generally survives against the land itself — but practical complications can still arise, and buyers should have a lawyer review exactly how the lease is protected in these scenarios.
- Higher ongoing tax load: company-held land is taxed at meaningfully higher rates than individually-held residential property, a cost that has to be accounted for somewhere in the deal structure.
- Setup and maintenance cost: forming and maintaining a genuine, compliant SPV involves real legal and accounting costs — an ongoing obligation, not a one-time exercise.
- 30-year term cap: leasehold is capped by law at 30 years per term. Any stated renewal beyond that is a contractual promise, not a guaranteed right, and depends on the landowner’s — in this case the SPV’s — cooperation at the time of renewal.
- Restricted transferability: unlike some other registered rights, a lease typically can’t be assigned or transferred to a third party without the landowner’s consent, which can complicate resale or estate planning unless the lease agreement specifically addresses this.
- Regulatory scrutiny remains a factor: even where the SPV is genuinely Thai-owned, authorities continue to review company structures involved in foreign property arrangements. Documentation, real capitalization, and arm’s-length dealing all matter if the structure is ever examined.
Who this structure suits
This approach tends to suit straightforward, moderate-value purchases where the buyer wants a documented, registered right to occupy the property without the added legal complexity of superficies or Sap-Ing-Sith. It’s also the most familiar structure to land offices, lawyers, and buyers alike, which can make the registration and any future dealings with the property more straightforward in practice.
A note on due diligence
The line between a compliant SPV structure and a prohibited nominee arrangement depends on substance, not paperwork — genuine Thai ownership, real capital contribution, and arm’s-length dealing all matter. Anyone considering this route should work with a qualified Thai lawyer to ensure the SPV is properly structured and the lease is correctly documented and registered.