Funding a Thai villa company with a shareholder loan: written contract, stamp duty and 15% interest withholding

If I fund the company that owns my villa, should it be a loan or share capital? Either can be lawful, but a loan must be documented and taxed like one. Under the 49/51 model the foreign owner is usually a minority shareholder, so the money that actually pays for land and construction is often a loan. Authorities now look closely at where such money comes from and whether the structure is genuine; see Land Office source-of-funds checks and 49/51 Thai companies.

Paperwork that makes it a real loan

• Written agreement — loans above THB 2,000 require written evidence signed by the borrower to be enforceable, and repayment should also be evidenced in writing (Civil and Commercial Code Section 653, as summarised by practitioners).
• Stamp duty — commonly stated as THB 1 per THB 2,000 of the amount (0.05%), capped at THB 10,000 per instrument. An unstamped instrument may not be admissible in court until duty and a penalty (reported as up to six times the duty) are paid.
• Board and shareholder approvals — the company's minutes should record the borrowing, so later buyers and auditors can follow it.
• Bank trail — the transfer into Thailand should be documented; see bringing money into Thailand and the FET form.

Tax on interest

• Withholding — interest paid to a foreign lender is generally subject to 15% withholding tax; a treaty may reduce it, and reductions are described as most relevant for financial institutions. Check the treaty and the lender's status.
• Filing — the company withholds and files (PND 54 for foreign recipients), with a deadline reported as the 7th of the following month; failure to withhold can make the company liable for the tax, plus surcharges.
• Interest cap — private lending is subject to Thai interest limits; see private loan interest cap.
• Interest-free loans — often used for simplicity. Ask an accountant about transfer-pricing and deemed-income questions on related-party loans before choosing; this guide does not confirm a specific rule.

Why it matters at exit

A documented loan can be repaid to the lender as repayment of principal, rather than treated as a dividend, but only if the paper trail exists. Repayment is a separate step from taking dividends and from repatriating sale proceeds. Undocumented money in a company is a common due-diligence red flag for buyers of company-held villas.

General information only; the foreign-exchange reporting requirements for foreign loans were not confirmed from a primary source here, so verify them with your bank and lawyer.