Personal Lease vs. Company Contract in Thailand

We handle both company contracts and personal leases, whichever one the expat or their company prefers. We follow the preference of the prospective tenant or their company. Basically:

A "company contract" is where the expat's company leases the home (house / apartment / condo) on behalf of the expat tenant.

A "personal lease" is directly between the tenant and the landlord.

Many working expats coming to Thailand under sponsorship of their company ask us which is better -- a company contract with the landlord, or a personal lease? What are the advantages and disadvantages of each?

First of all, some tenants have expressed a false belief that if the company pays their rent as a benefit, then the company can pay them less in salary, and therefore they will pay less tax because they will have less salary, compared to the company paying them a housing allowance as part of their salary. This is incorrect by the legal tax code in Thailand. There are no tax advantages in Thailand to a company contract instead of a personal lease, because according to the Thailand Revenue Department's tax code, the law is that Personal Income Tax (PIT) includes "assessable income" from perks and benefits. Specifically:

"Income chargeable to the PIT is called “assessable income”. The term covers income both in cash and in kind. Therefore, any benefits provided by an employer or other persons, such as a rent-free house or the amount of tax paid by the employer on behalf of the employee, is also treated as assessable income of the employee for the purpose of PIT."

The main benefit of a company contract is that the company pays the deposit and assumes all liability for damages and other things. You normally get the deposit back if you do not break your lease, e.g., if you stay for a minimum of 1 year in most leases, but if the company relocates you back outside of Thailand, forcing you to break your lease, then whoever paid the deposit can lose it by breaking the lease.

I could write many pages about tax matters, but it is beyond the scope of this website. I can tell you some things about Thai taxes, but I cannot tell you a lot of things about taxes in a lot of other countries, generally.

However, as regards housing, many people have asked us whether they can reduce their taxes by having the company pay for renting the house instead of having the company pay them a housing allowance. For taxes paid in Thailand, the answer is "no", it is practically the same as regards your personal income tax, as regards company contract vs. personal lease.

Regardless of who pays the rent -- you vs. your company -- the occupant of the property pays personal income taxes in Thailand for the value of your rent, in addition to your salary.

Personal leasing is usually a simpler process, but if you are an expat coming with a company, then the company may want to at least review your lease to double check things before you sign it.

Of course, retirees and many other expats do not have the company lease option, and always use personal leases.

Usually, the lease is a standard one provided by the broker, which in our case is carefully written in fairly simple English because Thai landlords are not native English speakers. Usually, everybody is OK with this, after minor customizations, but it is up to you to decide.

Sometimes, the landlord will require that we use their English language lease, rather than deal with a new English language lease which they've never seen before. They may want to use a lease they are already familiar with and they've already had reviewed by their English language associate or lawyer (or adult offspring they already put thru an international school...). We need to see their lease first to consider this option. If the lease seems one-sided for the benefit of the landlord, then we will reject the lease and either propose our own or else make the necessary revisions to their lease. Many of these landlord leases have major shortcomings that need to be fixed, especially the English language in order to be clearer, and to include anything missing which they did not consider.

Some companies require that landlords use the standard "company lease" of their corporation, which typically uses difficult legal English whereby the landlord must "herefore and forthwith convenant" lots of pushy one-sided demands, such as return of full security deposit if the tenant is relocated outside of Thailand without any minimum period of stay (the latter of which landlords have said turns the lease into essentially a month-to-month tenancy). Many Thai landlords will not accept a company lease. We try to get landlords to accept company leases by having the two parties compromise (e.g., minimum stay duration), but this often takes time, between the company's bureaucracy and the landlord's more limited English.

As regards lease terms, many things can be out of our control as a real estate agency. It is up to the landlord and the company. We can only follow their decisions. We can provide analysis, suggestions, and proposed wording (in basic English), but it normally comes down to the tenant and the landlord as regards lease decisions.

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