Taking profit out of a Thai villa-holding company: dividend rules and 10% withholding tax

Can a foreign shareholder simply take money out of the Thai company that owns the villa? Not freely. Money leaves a company as a lawful dividend (or as repayment of a genuine shareholder loan), not as an informal transfer. Dividends have legal conditions under the Civil and Commercial Code (CCC) and tax consequences under the Revenue Code. Structure background: 49/51 Thai companies.

Legal conditions for paying a dividend

• Profit only (CCC Section 1201) — no dividend may be declared except by resolution of a general meeting, and none may be paid other than out of profits. If the company has losses, they must be made good first. Directors may pay interim dividends where profits justify it.
• Reserve fund (CCC Section 1202) — at each distribution the company must set aside at least one-twentieth (5%) of profit until the reserve reaches one-tenth (10%) of capital, or a higher proportion if its regulations say so.
• Meeting and records — practitioners describe board and shareholder approval and written minutes as the basis for the payment, and these are the documents banks ask for when dividends are sent abroad.

A company that only holds a villa and earns no rent usually has no profit, so it often has nothing lawful to distribute. Holding-company costs are then funded by shareholders, which is where loans and share capital come in.

Tax on the dividend

• Withholding tax — the commonly stated rate on Thai-source dividends is 10%, for resident individuals and for non-resident shareholders alike. The company withholds and pays it to the Revenue Department.
• Treaties — a double tax agreement can modify the rate or allocate taxing rights, but treaty benefits require documented tax residency and beneficial ownership. Do not assume a lower rate; some sources note that Section 70 withholding is not always reduced.
• Resident individuals — may be able to claim a credit under Revenue Code Section 47 bis in certain conditions; ask an accountant.
• Home-country tax — the recipient's country may tax the dividend as well, with credit for Thai tax depending on its rules.

Practical points for villa owners

• Do the paperwork first — resolution, adopted accounts and tax certificates should exist before money is wired abroad; remittances above roughly USD 50,000 are reported to be accompanied by foreign exchange forms.
• Link to annual compliance — dividends rest on accounts that are audited and filed each year; see annual audit, AGM and filing duties.
• Sale proceeds are different — selling the villa or the shares raises other taxes; see selling a company that holds a villa and repatriating sale proceeds.
• Rental tax interplay — rental profits are taxed at company level first; see double tax treaties and rental income.

Takeaway: dividends are a regulated, taxed channel that requires real profit. Plan the exit route with an accountant before the structure is built, not after. General information only; rates and treaty positions change.