FOSRLAW - THE STRUCTURES THAT WORKED, UNTIL IT DIDN’T
Thailand's nominee problem has long been discussed in hushed tones at expat dinners and property expos, with some less scrupulous agents offering various means of holding land, including nominee companies and the infamous, and illegal, 30+30+30 lease.
In a recent YouTube interview with Jett Gunther, available here: https://www.youtube.com/watch?v=4Rr_OIgims0, partner Dr. Paul Crosio https://fosrlaw.com/our-team/paul-crosio/ brought that conversation firmly into the open and dispelled myths, rumors and fallacies. Over 50 minutes, the two covered the mechanics of nominee land holding, why enforcement has fundamentally changed, and what legally compliant alternatives actually look like. This article summarises the key points for foreign property holders and prospective buyers.
To understand the current crisis, one must first understand the historical practice. The common method for a foreigner to effectively own land was to establish a Thai limited company. In this arrangement, the foreign investor would hold 49% of the shares, while 51% would be held by Thai nationals, who often had no real financial stake in the business. The company was the registered owner of the land, but the foreigner was the true beneficiary. For years, this was treated as a functional solution.
Dr. Crosio explained that this structure only “worked” because it existed in an era of limited enforcement. He emphasised that the arrangement was always illegal under the Foreign Business Act, which explicitly prohibits nominee shareholding, and the Land Code, which forbids foreigners from using Thai proxies to hold land titles. The structure was never a legitimate grey area. It was an illegal arrangement that authorities had simply not yet caught up with.
Why the Enforcement is Different Now
Thailand has made attempts to crack down on nominee arrangements in the past. What makes the current wave of enforcement fundamentally different is the technology and coordination now in place.
Since 2025, the Department of Business Development (DBD) has integrated its corporate registry with tax data from the Revenue Department. This integration allows authorities to automatically cross-reference shareholding structures against financial contributions. The results have been dramatic. In tourist and property hotspots like Koh Samui and Koh Phangan, the DBD identified over 7,000 businesses suspected of being nominee structures, primarily in the real estate, tourism, and hospitality sectors. A broader national probe has since flagged tens of thousands of juristic entities for inspection. As of early 2026, Thai authorities had initiated over 29,000 legal cases and prosecuted 852 companies, with estimated financial damages exceeding 15 billion baht.
Dr. Crosio noted in the interview that this is not a temporary campaign. It reflects a structural decision by the Thai government to move from form-based to substance-based verification. A company that appears compliant on paper will now be examined in depth. Officials will investigate whether the Thai shareholders made genuine capital contributions, whether they actually attend shareholder meetings, and whether the financial flows between the parties reflect a real business relationship. The era of simply filing the right documents and hoping no one asks questions is over.
The Heavy Price of Non-Compliance
The legal consequences for a company found to be an illegal nominee land holding are severe. Under Sections 36 and 37 of the Foreign Business Act, both the foreign beneficiary and the Thai nominee face criminal penalties. These penalties include imprisonment of up to three years, fines of up to one million baht, and the forced dissolution of the offending company. For foreign nationals, a conviction can also lead to deportation and being blacklisted from re-entry to Thailand.
Furthermore, the land held by such a company is subject to forfeiture proceedings. The situation is set to become even more dire. Proposed amendments to anti-money laundering legislation, currently moving through the legislative pipeline, would classify nominee arrangements as a predicate offence to money laundering. This change would grant the government the power to freeze and seize assets linked to unlawful structures, effectively removing any means of protecting the property.
A Warning From Past Enforcement
The case that has sent the most significant shockwaves through the investment community was prosecuted in Phuket in 2024 and 2025. A local firm had facilitated nominee arrangements for approximately 60 companies. In the resulting case, 23 defendants, including foreigners, Thai nationals, and legal entities, were found guilty. They were sentenced to ten years imprisonment, a punishment that was later reduced to five years for those who cooperated with authorities. Each defendant was also fined 200,000 baht, and all implicated companies were ordered dissolved.
Legal Alternatives That Are Here to Stay
While the news may seem bleak for those who have relied on nominee companies, Dr. Crosio was clear that Thailand does offer legitimate, well-defined pathways for foreign involvement in land and property. The key is for investors to be willing to use them.
Leasehold Arrangements. Under the Civil and Commercial Code, a registered long-term lease provides a foreign national with a legally recognised interest in land for a maximum term of 30 years. While it does not grant freehold ownership, it provides a protected right of occupation that is enforceable against third parties and cannot be arbitrarily dissolved, as a nominee company can. It is important to note that the term cannot exceed 30 years, and the lease must be properly registered with the Land Office. Although you cannot include an automatic renewal clause, the agreement can state that it will be renewed on updated typical commercial terms.
Leaseback Structures. In cases where a foreign investor contributes capital toward a land transaction, a leaseback arrangement can be a highly effective solution. In this structure, a Thai entity holds the freehold title to the land, while the foreign party simultaneously holds a registered lease of that land and its improvements. The economic terms of the lease can be structured to reflect the foreign investor’s financial contribution. This is not a loophole or a workaround. It is a fully compliant structure that accurately reflects the parties' respective legal positions.
BOI and EEC pathways. For qualifying commercial or industrial projects, the Board of Investment (BOI) and the Eastern Economic Corridor (EEC) provide a direct route to land ownership. Foreign entities that receive BOI promotion can be granted the right to own land for the purpose of conducting their promoted activity. Similarly, investments located within the designated EEC provinces can access incentives and land ownership rights. These pathways are not universally available for residential buyers, but they are appropriate for certain categories of commercial use.
Condominium Freehold. For residential purposes, the condominium freehold remains the most straightforward form of property ownership for foreigners. Thai law permits foreign nationals to own condominium units outright, provided that the total foreign ownership in any given building does not exceed 49% of the total saleable area, and that the foreigner brings the money in from overseas to purchase the unit.
IEAT Industrial Estates. Under the Industrial Estate Authority of Thailand Act, foreign juristic persons are permitted to own land outright within gazetted industrial estates. This is a direct statutory exemption from the general prohibition on foreign land holding. A foreign manufacturer or industrial operator can legally hold freehold title to its factory premises without any nominee structure. For foreign investors whose operations qualify, this pathway offers the clearest form of outright land ownership available in Thailand, with none of the legal risk associated with nominee structures elsewhere.
The common thread that runs through all of these alternatives is honesty. They involve straightforward legal structures rather than attempts to circumvent the rules. They may entail higher upfront legal costs and greater structural complexity, but they do not carry the risk of total financial loss or criminal prosecution.
If You Are Already in a Nominee Structure
Dr Crosio acknowledged that many investors watching this unfold are already in structures that do not meet the new standards. The question of what to do is complex, but it is not without solutions. A voluntary restructuring undertaken proactively before any investigation has commenced is treated very differently by the authorities than a restructuring exposed through an enforcement action.
For those who need to assess their position, Formichella & Sritawat have developed a comprehensive suite of resources. The firm offers a free, browser-based self-assessment tool that allows investors to evaluate their corporate structure against the specific indicators currently used by Thai authorities available at: https://fosrlaw.com/practice-areas/nominee-structure-assessment/#self-assessment. The firm’s website also hosts an extensive series of articles covering the full spectrum of the current enforcement landscape, from practical guidance for those under investigation to deep dives into how courts identify real ownership in litigation. https://fosrlaw.com/legal/nominee/
Foreign Property Ownership in Thailand: The Path Forward
The crackdown on nominee shareholding is not a sign that Thailand is closing its doors to foreign investment. Rather, it is a sign that the country is maturing and demanding that those who wish to invest here do so with integrity. Dr. Crosio discussed several genuine success stories in the interview. These were foreign investors who had restructured into compliant arrangements, who had sought proper legal advice before making a purchase, and who are now operating businesses and holding property in Thailand entirely within the law. There are also pathways in specific areas for foreign-owned companies to own non-residential property for their own benefit.
Thailand remains an incredibly attractive destination for foreign capital. The legal framework does accommodate foreign involvement in land and property, but it operates within defined parameters. The current enforcement environment is not hostile to foreign investment. It is hostile to structures that were never legally sound to begin with. For investors, the path forward is clear: seek early advice, pursue honest structuring, and commit to proactive compliance. That is the only sustainable foundation for owning a piece of Thailand.
If you are concerned that your property ownership structure may involve nominee arrangements, now is the time to seek advice rather than wait for a problem to arise. We encourage you to complete the self-assessment tool as an initial guide https://fosrlaw.com/practice-areas/nominee-structure-assessment/#self-assessment. If you would like tailored advice on your specific circumstances, please contact Formichella & Sritawat at info@fosrlaw.com.
