SECTION 14: TRANSFERRING MONEY INTO PHUKET

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Transferring Money into Phuket

Any foreigner planning to purchase a property in Phuket must follow the correct procedures for transferring money into Thailand. If the proper steps are not taken it may prove impossible to repatriate the money when it comes time to sell your Phuket property, and for it to leave Thailand.

If more than US$ 50,000 is being remitted for the purchase of a Phuket condominium, a Foreign Exchange Transaction Form (FETF) must be requested from the receiving bank.

If funds are being remitted for the purchase of a villa, for a long term lease on a property, or to provide share capital for a Thai company, the FETF is not a statutory requirement. As long as all evidence of the original transaction can be presented and is clear, and there is proof that all requisite taxes have paid, the funds can be sent out of Thailand at a later date.

This process does take longer than it would with an FETF, so even if you are buying a villa in Phuket, it may be worth requesting one from your receiving bank/developer even though it is not required.

The FETF Required for a Phuket Condo Purchase

The Condominium Act states that any non-resident of Thailand who wishes to buy a condominium, must transfer the requisite funds from overseas specifically for that purpose. Regardless of the buyer’s country of origin, the funds must be sent in a foreign currency, to be converted into Thai Baht (THB) by the receiving bank upon arrival in the country.

In order to register a new condominium purchase with the Phuket Land Department, the FETF documentation must be presented to prove that the full purchase price was transferred into the Kingdom from abroad. (The instruction on the bank transaction form should also state that the payment is for the sole purpose of purchasing a condominium.) From an estate planning perspective, it is a good idea to always have multiple names (including children or grandchildren) added to the original telegraphic transfer, so they may be included on the FETF.

If the only way to arrange payment is by transferring funds to the developer directly, then the developer must arrange the FETF forms on behalf of the foreign buyer.

Taking the money out of Phuket at a later date is relatively straight forward, provided all the supporting documents can be presented. This is especially important if the funds have been borrowed from an overseas financial institution and/or there is an overseas mortgage on the condo.

Please also note that no repatriation of money will be possible until any income/capital gains taxes have been settled on the sale of the condominium. The FETF must also be presented to the tax authorities as proof of the legitimate ownership.

Whether ultimately remitting the funds back to a private account, or to repay a bank loan, the Foreign Exchange Transaction Form is an absolute requirement. By ensuring multiple names are on the FETF, not only is inheritance made easier, but funds can also be returned to the account of an heir. This document should be kept in a safe place at all times.

Again, it is wise to consult a good Thai lawyer throughout this process.

What Olaf Says About Foreign Currency Transfers & Taxes

When Transferring Money into Phuket – Document It Correctly

If you are investing in Phuket real estate, it is vital that you keep accurate, detailed records of all transfers, starting with the transfer of money into Thailand for the purchase. There are specific requirements you must understand before making your first payment. Your receiving bank in Phuket must prepare the correct documentation to confirm the transfer. The precise documents required will depend on purpose of the transfer and the amount you are sending.

If you are a foreigner, and you have purchased a freehold condominium unit in your own name, to register your ownership you will need the relevant documents for the transfer of each tranche of money related to the purchase. Once you have completed the transfer, have the necessary supporting documents from your bank, and have registered the property, please keep all the documents in a safe place.

If you have a safe at home, or a safety deposit bank at a bank, use these. The Foreign Exchange Transaction forms and title deed should be considered as important as any other valuables you possess. When it comes time to sell your Phuket condominium (or villa), these forms will be necessary in order to transfer your money out of Thailand and back to your home country.

All transfers of funds into Thailand must be documented!

Your Taxes: Pay Them!

For some reason, people in Phuket need a constant reminder of this universal requirement. They honestly don’t believe that accurately assessing their taxes is really that serious, and if you try to convince them they are wrong, they simply will not listen. Not only is the rental income earned subject to income tax, but if you live “rent free” in a company-owned property, the income not being collected is also taxable. Failure to pay your taxes could be grounds for your property (or in the event it is owned through a company, the company’s property) to be seized by the authorities and sold.

One tax which we have not yet mentioned is also one which people all-too frequently attempt to cheat on: the tax on the sale price of the real estate. This tax must be paid to the authorities at the time of purchase, but countless people attempt to reduce their “tax burden” by under-declaring the purchase price of the property.

Apart from the fact that it is a criminal act (tax fraud), it is also not smart from a commercial perspective. It does not matter if the property is owned by an individual or a company, when it comes time to resell the property, your tax liability will almost certainly be greater than what you think you “saved” by illicitly under-declaring the purchase price.

On top of that, you put yourself (and potentially your property) on the radar of the tax authorities for under-declaring your taxes for as long as you owned the property.