How to start a business in Thailand: a practical guide for foreign founders (Part 2/4)
- Malika Ait El Mouden
- 3 days ago
- 6 min read
Bangkok, Thailand
Board Member
La French Tech Bangkok
1- The Thai definition of "work"
Under Thailand’s Emergency Decree on the Management of Foreign Workers' Employment B.E. 2560 (2017), the legal definition of “work” is extremely broad. Work covers “engaging in any occupation, with or without an employer, whether or not for wages or other benefits, by using physical strength or knowledge.”
This means the definition of work does not depend on receiving payment, having a formal employer, or even working with Thai clients. Simply carrying out business activities, using professional skills, or actively building and operating a business in Thailand can potentially fall within the definition of work.
In practice, the definition is broad enough to cover many activities that foreign founders would not consider as work in normal circumstances. For example, a founder travelling to Bangkok to pitch investors, negotiating with a Thai supplier over coffee, or attending a trade show and taking sales meetings could all potentially fall within the definition of work.
"Even relatively informal activity can create issues. For example, a founder answering client emails for several hours from a coworking space in Sukhumvit may still technically be considered to be working in Thailand, even if the client is overseas and the invoices are issued through a foreign company."
In reality, the Thai authorities do not focus on a founder casually answering emails from a laptop. The cases that attract attention are usually the more visible ones: a foreign founder actively operating a Thai-facing business while on a tourist visa, a remote worker caught during inspections at a public coworking space, or a startup promoting services at a Thai industry event without the proper visa or work permit.
The penalties, however, are still significant. A foreigner working without the proper authorization can face fines of up to THB 50,000, together with possible deportation. Employers or companies allowing unauthorized work may face fines ranging from THB 10,000 to THB 100,000 per worker, with additional criminal liability possible in more serious or repeated cases.
For founders, it is important to be aware that company formation, business development, and day-to-day operational activity should not be carried out under a tourist visa. The appropriate visa and work permit should be in place before undertaking such activities.
2- The DTV visa: working from Thailand, not in Thailand
Introduced on 15 July 2024, Thailand’s Destination Thailand Visa (DTV) was created to accommodate and support the growing number of remote workers, freelancers, and digital nomads choosing to live in Thailand while working for clients and businesses based overseas.
The main features of the DTV include a five-year multiple-entry validity period. Each entry into Thailand during that five-year period allows the holder to stay for up to 180 days, with the possibility of one additional 180-day extension per entry from within Thailand. The DTV is divided into two categories: the “Workcation” category for remote workers and freelancers and the “Soft Power” category for activities such as Muay Thai training, Thai cooking courses, and medical treatment. For most foreign founders and remote business owners, the Workcation category will generally be the most relevant option.
Applicants must also satisfy the financial requirement of at least THB 500,000 in liquid funds for the last 3 months, or provide equivalent proof of financial support, together with the THB 10,000 visa fee. While the DTV can be an excellent option for remote workers and founders serving overseas clients, there is an important limitation that applicants need to understand. The visa is designed for foreigners living in Thailand while working remotely for businesses or clients located outside the country. It is not intended for foreigners working for Thai employers, servicing Thai clients, or operating businesses focused on the Thai market.
For certain founders, this can be a very practical structure. A startup building a SaaS product for European customers, a content business serving a US audience, or an agency invoicing clients in Singapore may be able to operate effectively under the DTV model during the early stages. In these situations, there may be no immediate need to incorporate a Thai company, obtain a work permit, or take on the accounting and compliance obligations that come with a local company. This helps keep both operating costs and administrative requirements relatively low while the business is still growing.
The DTV structure, however, becomes more complicated in two common situations. The first is when the business begins generating revenue from Thailand. As founders spend more time living in Thailand, it is also quite common for local business opportunities to begin appearing naturally through networking, referrals, and day-to-day conversations about their work. However, for founders living and working in Thailand under a DTV visa, this can create complications, as this type of local business activity falls outside the scope of the DTV. Once a founder starts invoicing Thai clients or servicing the local market, a Thai corporate and immigration structure may become necessary, particularly if the activity moves beyond purely overseas work.
The second issue is tax residency.
A foreigner spending more than 180 days in Thailand during a calendar year will generally become a Thai tax resident. At that point, Thailand’s foreign-sourced income tax rules may become relevant, particularly where overseas income is later brought into Thailand.
3- When you actually need a Thai company
A Thai company structure may become necessary once the business begins establishing a real operational presence in Thailand. In practice, there are several situations that require changing from a purely remote structure into a local company.
These typically include:
● Generating revenue from Thai customers or issuing invoices resulting in Thai-source income
● Hiring employees in Thailand, including situations requiring social security registration and payroll compliance
● Operating physically within Thailand through an office, warehouse, or other local business presence
● Carrying out business development, sales, or marketing activities for the Thai market
Once these activities begin, the main consideration becomes which legal structure is most suitable for the business.
The main law governing foreign ownership in Thailand is the Foreign Business Act B.E. 2542 (1999). The Foreign Business Act (FBA) divides restricted business activities into three categories. List 1 contains activities reserved exclusively for Thai nationals on grounds such as national security, agriculture, or cultural importance, including sectors such as rice farming, land trading, newspapers, and broadcasting. Foreigners are generally prohibited from engaging in these activities.
List 2 covers sectors connected to national safety, culture, natural resources, and certain strategic industries, where foreign participation requires Cabinet approval.
For most founders and foreign-owned startups, however, the main issue is List 3. This category covers industries where Thai businesses are considered not yet ready to compete fully with foreign operators. Many common service-based activities and activities popular among foreign investors fall within List 3 restrictions, which is why the law becomes highly relevant for foreign founders establishing businesses in Thailand.
Examples of business activities restricted under the Foreign Business Act include:
• Software development and digital services
• Advertising
• Accounting, legal, architecture, and engineering services
• Brokerage and agency services
• Wholesale and retail trade below certain capital thresholds
• Most professional services
• Construction
Activities that are not included in the three restricted lists of the Foreign Business Act B.E. 2542 (1999) are generally open to 100% foreign ownership without the need for a Foreign Business Licence. In reality this is extremely limited and includes manufacturing activities for export, as well as export trading businesses.
There are, however, several important exceptions to the Foreign Business Act restrictions. Companies promoted by the Thailand Board of Investment can generally obtain approval for 100% foreign ownership for activities covered by their BOI promotion.
US investors may also benefit from the Treaty of Amity and Economic Relations, which allows majority US-owned companies to operate in many sectors on a similar basis to Thai companies. However, some industries remain restricted, including banking, communications, transportation, natural resources, and certain licensed professional services.
The penalties for breaching the Foreign Business Act are significant and actively enforced. Operating a restricted List 3 activity without proper authorization can lead to imprisonment of up to three years, fines ranging from THB 100,000 to THB 1,000,000, additional daily penalties, and possible closure of the business.
Thailand also prohibits nominee shareholder arrangements under Section 36 of the Act. These are structures where Thai shareholders hold shares on behalf of foreign owners purely to bypass foreign ownership restrictions.
The legal risks associated with nominee structures can be just as serious as operating illegally under the Foreign Business Act itself. In recent years, the Department of Business Development has also increased scrutiny and investigations into arrangements where Thai shareholders are suspected of holding shares on behalf of foreign owners.
Stay tuned for the next part of this guide, focusing on visa types and requirements in Thailand (Part 3/4).
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