Withholding tax on a property sale: how the individual calculation differs from a company's flat 1%

Is withholding tax on a Thai property sale just "1%," the way it's often quoted? Only if the seller is a company. If the seller is an individual — the more common case for a foreign-owned villa on Phangan — the Revenue Department runs a multi-step calculation that has nothing to do with a flat percentage, and getting it wrong is one of the more common surprises at the Land Office on completion day.

The company route: flat and simple

When the seller is a Thai limited company — the entity that typically holds land under a 49/51 structure, see A Thai company for property — withholding tax at transfer is a flat 1% of whichever is higher: the government-appraised value or the actual sale price. It is deducted at the Land Office and credited against the company's annual corporate income tax (20% on net profit) when it files its return. There is no years-owned deduction and no progressive scale — the mechanics are the same whether the company held the asset one year or twenty.

The individual route: a five-step calculation

For an individual seller, withholding tax is a proxy for personal income tax on the gain, calculated in steps by the Land Office official at the moment of transfer, using the government-appraised value, not the market price:

• 1. Start from the appraised value. The Land Department's assessed value for the plot/building, which is typically below current market price and revised periodically.
• 2. Apply the years-owned deduction. A fixed percentage of the appraised value is deducted before any tax applies, and the percentage rises with how long the seller has held the property: 92% for 1 year owned, 84% for 2 years, 77% for 3, 71% for 4, 65% for 5, 60% for 6, 55% for 7, and 50% flat for 8 years or more. Part-years round up to a full year.
• 3. Divide the remainder by the years owned. What's left after the deduction is treated as if it were earned evenly across the holding period, capped at 10 years, giving a "deemed annual income" figure.
• 4. Apply Thailand's progressive personal income tax brackets to that annual figure — 0% up to ฿150,000, 5% on the next ฿150,000, 10% up to ฿500,000, rising in steps to 35% on amounts above ฿5,000,000.
• 5. Multiply the resulting tax-per-year back by the number of years owned to get the total withholding tax due at the Land Office.

A worked example

A villa with a ฿4,000,000 appraised value, owned for 5 years: the 65% deduction removes ฿2,600,000, leaving ฿1,400,000. Divided by 5 years, that's ฿280,000 of deemed annual income. Running that through the brackets — ฿0 on the first ฿150,000, 5% on the next ฿130,000 — gives ฿6,500 of tax per year. Multiplied back by 5 years, the withholding tax due is ฿32,500, well under 1% of the appraised value in this case. Change the years owned or the appraised value and the result moves in ways that don't track a flat percentage at all — a short holding period on a high-value property can push the effective rate above what a company would have paid on the same sale.

Why the gap matters for a foreign-owned villa

• The withholding tax is only one line item. Both individual and company sellers separately owe either Specific Business Tax (3.3%, if held under 5 years or the seller is deemed to be in the property business) or stamp duty (0.5%, if 5+ years and SBT doesn't apply) — never both — plus the standard 2% transfer fee, typically split with the buyer. See Costs, taxes and the FET form for the full transaction picture.
• An individual's occupied-home exemption doesn't extend to a company. A seller whose name has been on the house registration (tabien baan) at that address for a full year can qualify for SBT relief — a company can never meet that test, since tabien baan registration is personal, not corporate.
• Choosing to hold via a company changes which of these two calculations applies on exit, alongside everything else that decision affects — see A Thai company for property: when it makes sense, when it's toxic and, for the share-sale alternative some owners consider instead of a direct transfer, Selling a Thai company that holds your villa.
• The appraised value, not the sale price, drives the individual calculation — a villa selling well above its government appraisal doesn't pay proportionally more withholding tax on that excess, which is one reason cash buyers and sellers sometimes discuss the appraised figure separately from the headline price.

None of this is optional or negotiable at the Land Office — the calculation is run by the registering officer on the day of transfer, and the tax is collected before the deed changes hands. Bring a Thai accountant or lawyer into the numbers before you set a sale price, not after, since the years-owned deduction and the appraised-value gap can move the seller's net proceeds by a meaningful amount either way.