Key takeaways
The condominium unit and freestanding furniture sit under different tax systems. The unit bears SBT of 3.3% on the day the transfer is registered, while the furniture bears VAT of 7% as soon as a tax point arises under Section 78, which is usually when payment is received before delivery. The reason for separating the contracts is the input VAT credit on the furniture and the correct treatment of each asset according to its nature, not to reduce the transfer fee or SBT.
Starting facts
The company develops projects for sale and is VAT-registered. It buys furniture into stock for resale to customers in the project and holds complete 7% input VAT tax invoices. It receives a furniture deposit in advance, which will be deducted from the price (T1), and then registers the transfer of the unit and delivers the furniture on the same day (T2).
| Timing point | Condominium unit | Furniture | Accounting and CIT |
|---|---|---|---|
| T1 Furniture deposit received | No SBT yet | VAT arises immediately under Section 78(1)(b). Issue a tax invoice and include it in the PP 30 for that month | Revenue not yet recognised. Record a contract liability and output VAT |
| T2 Transfer registered and delivery made | SBT of 3.3% arises, paid at the land office | VAT only on the part of the price for which no invoice has yet been issued | Recognise revenue and cost for both items |
Two frequent errors: (1) Input VAT on furniture bought for sale can be credited in the tax month of the invoice, without waiting for the sale date (Section 82/3), so it should not be parked in WIP. (2) VAT arises before accounting revenue, so a separate account for advances is needed, and PP 30 must be reconciled to revenue every month.
Two separate tax systems, determined by the nature of the asset
| Issue | Condominium unit or leasehold right (immovable property) | Freestanding furniture (movable property) |
|---|---|---|
| Definitions | Civil and Commercial Code (CCC) Section 139, including component parts under Section 144 | CCC Section 140 |
| Output tax on freehold | SBT 3.3% (Section 91/2(6), Royal Decree No. 342) | VAT 7% (Section 77/1) |
| Output tax on leasehold | VAT-exempt under Section 81(1)(ta) and outside the scope of SBT | VAT 7% as well |
| Tax base | Sale price or appraised value, whichever is higher | Contract price, which must be reasonable |
| Tax point | Registration date | Delivery, transfer of ownership, receipt of payment or issue of an invoice, whichever occurs first |
| Document | Land Department receipt and form | Full-form tax invoice, Section 86/4 |
| Related input VAT | Not creditable; included in cost | Fully creditable |
| Account | Inventory, WIP or cost of rental works, then transferred to cost | Inventory: furniture, kept in a separate account, then transferred to cost of sales |
Accounting must be controlled alongside tax: TFRS 15 paragraph 17 requires contracts with the same customer entered into at or near the same time to be combined, and the price to be allocated by standalone selling price. The accounting figures may therefore differ from the contract prices. The SBT and VAT bases still follow the contract price, but if the two figures differ greatly, the Revenue Department can use the difference as evidence to assess market price under Section 65 bis (4) and Section 79/3.
Comparing 3 contract structures
| Issue | Separate contracts (recommended) | Single combined price | Permanently fixed built-in |
|---|---|---|---|
| Output VAT | SBT on the unit and VAT on the furniture | SBT on the whole amount | SBT on the whole amount, because it is a component part |
| Input VAT on furniture | Fully creditable | Not creditable; treated as cost | Included in WIP according to its nature |
| SBT base | Can fall only where the contract price of the unit is still higher than the appraised value | Highest base | Highest base |
| Transfer fee | Unchanged, because it is calculated from the appraised value | Unchanged | Unchanged |
| Documentation burden | High: 2 contracts, package list, tax invoice | Low | Medium: BOQ as evidence |
| Tax risk | Low where the price is reasonable and the documents are complete | High: may face a retrospective VAT assessment with penalties and surcharges | Low where it can be proved to be a genuine component part |
| Conclusion | Use as the standard | Should not be used unless the furniture value is very low and the loss of the credit is accepted | Use only for genuine built-in work |
5 misunderstandings to correct before setting policy
- Separating the contracts reduces the transfer fee: not true. The 2% fee is based on the appraised value of the property, while the 1% WHT for a juristic-person seller (Section 69 ter) is based on the sale price or the appraised value, whichever is higher.
- Separating the contracts definitely reduces SBT: not true. SBT uses the higher base. If the appraised value equals or exceeds the contract price of the unit, the base does not fall at all.
- VAT on furniture arises on transfer day: not true. A down payment or instalment designated as payment for furniture gives rise to VAT as soon as it is received.
- Leasehold bears SBT like freehold: not true. The lease of immovable property is exempt from VAT under Section 81(1)(ta) and falls outside the scope of SBT.
- Furniture held for sale is a fixed asset: not true. It is inventory, is not depreciated and should not be on the asset register.
The measure reducing the transfer fee from 2% and the mortgage registration fee from 1% to 0.01% each takes effect under a Ministry of Interior notification published for the period 1 Jul 2026 to 30 Jun 2027. It applies to buyers who are Thai-national individuals, for residential property whose sale price and appraised value do not exceed THB 7 million. Check the full conditions before applying it to each unit.
The line between movable property and component parts
| Item | Classification | Output VAT | Input VAT |
|---|---|---|---|
| Sofas, beds, tables, chairs, freestanding cabinets | Movable property | VAT 7% | Creditable |
| TVs, refrigerators, washing machines and other removable electrical appliances | Movable property | VAT 7% | Creditable |
| Freestanding curtains, floor lamps, rugs, kitchenware, decorative items | Movable property | VAT 7% | Creditable |
| Built-in cabinets and kitchens fixed to the permanent structure | Component part | Included in the unit price, subject to SBT | Included in WIP |
| Sanitary ware, taps, bathtubs, mirrors embedded in walls | Component part | Included in the unit price, subject to SBT | Included in WIP |
| Wall-mounted or ceiling-concealed air conditioners, refrigerant pipes embedded in walls | Component part | Included in the unit price, subject to SBT | Included in WIP |
| Recessed ceiling lights, permanently installed electrical and plumbing systems | Component part | Included in the unit price, subject to SBT | Included in WIP |
| Ambiguous items, e.g. curtain tracks recessed in the ceiling, semi-freestanding cabinets | Tax team decides | Record the reasoning in a tax memo | According to the decision |
Can be removed without damaging the unit or the property itself = movable property (VAT). Cannot be removed without damage = component part (SBT).
Freehold and leasehold structures
Freehold + furniture sale
- Recognise revenue on the unit when the transfer is registered, and on the furniture when it is delivered
- Transfer fee of 2% of the appraised value; stamp duty is exempt because SBT is paid
- WHT of 1% of the sale price or appraised value, whichever is higher, creditable against CIT
- Input VAT on construction is included in WIP; input VAT on furniture is creditable
Leasehold + furniture sale
- A lease is registered for no more than 30 years at a time, under CCC Section 540
- Lease registration fee of 1% and stamp duty of 0.1% of the rent over the lease term
- For rent received in advance under Revenue Department Directive No. Por. 73/1998, confirm the timing of tax recognition with the auditor
- Do not write that the furniture is leased together with the unit, because leasing movable property bears 7% VAT and 5% WHT on every instalment. Use an outright sale contract instead
Consideration for the renewal period in a 30+30 structure is only a promise to lease, so it should be recognised separately when the renewal is actually registered, not averaged over 60 years from day one
WHT in leasehold depends on the lessee's status
| Lessee (rent payer) | Duty to withhold | Rate and form | Effect on the lessor |
|---|---|---|---|
| Thai or foreign individual | None | - | Receives the full amount |
| Thai juristic person | Yes (Tor.Por. 4/1985) | 5%, PND 53 | Creditable against CIT; keep the Section 50 bis certificate |
| Foreign juristic person with a branch in Thailand and paying from Thailand | Yes | 5%, PND 53 | Same as a Thai juristic person |
| Foreign juristic person not carrying on business in Thailand, paying from abroad | Usually none in practice | - | Record the reasoning in the file |
| Existing lessee assigns the leasehold right | Consider separately | According to the nature of the income | Seek the tax team's view before entering into the transaction |
Tax point by payment instalment
| Period | Condominium unit: SBT 3.3% | Furniture: VAT 7% |
|---|---|---|
| Booking | Not yet arisen | Not yet arisen, if stated as payment for the unit |
| Contract and down payment | Not yet arisen | Arises immediately if the payment is allocated to furniture |
| Instalments during construction | Not yet arisen | Each instalment allocated to furniture gives rise to a tax point for that instalment |
| Transfer notice and unit inspection | Not yet arisen | Not yet arisen, if the furniture payment has not been received |
| Transfer and delivery day | Arises; paid at the land office | VAT on the remainder; issue a tax invoice |
The simplest approach is to have the furniture paid in a single instalment on transfer and delivery day. If the business must receive furniture payments during the instalment period, issue a tax invoice on the date of each receipt.
Instalment payments with furniture
Example: THB 100,000 per instalment
| Item | THB | Treatment |
|---|---|---|
| Unit instalment | 70,000.00 | SBT receipt, paid on transfer day |
| Furniture payment, VAT base (25,000 ÷ 1.07) | 23,364.49 | Tax invoice |
| VAT 7% | 1,635.51 | PP 30 for that month |
| Instalment interest | 5,000.00 | Confirm the tax status first (see note) |
| Total | 100,000.00 |
The tax invoice must cover only the furniture portion. Issuing an invoice covering the whole amount results in VAT being charged on the unit price without any entitlement to do so. Issue a single "tax invoice/receipt" document that can be divided into zones, with the VAT-base portion separate from the items outside the VAT base.
Note on interest: Do not assume that interest on instalments is automatically VAT-exempt. The part arising from the furniture sale may relate to the value of the goods under Section 79. Confirm with the tax adviser and state in the contract separate interest for the unit portion and the furniture portion. The approach that removes the most issues is to charge no interest on the furniture price.
Timing across different years: payment received in Y1, purchase in Y2, delivery in Y3
Example: 3 instalments of THB 25,000 each, including VAT
| Year | Event | Output VAT | Input VAT | Net |
|---|---|---|---|---|
| Y1 | Receipt, base 70,093.47 | 4,906.53 | 0.00 | Payable 4,906.53 |
| Y2 | Furniture purchase 45,000 | 0.00 | 3,150.00 | Credit 3,150.00 |
| Y3 | Delivery: do not issue VAT again | 0.00 | 0.00 | 0.00 |
| Total | 4,906.53 | 3,150.00 | 1,756.53 | |
In Y3, revenue recognised is THB 70,093.47, cost of sales THB 45,000.00 and gross profit THB 25,093.47. Net VAT of THB 1,756.53 is close to 7% of gross profit, which reflects the principle of taxing value added.
The company pays VAT up front, before it has any revenue and before it has bought the goods, so set the tax money aside in a separate account. Before transferring unsold furniture stock to cost, test NRV under TAS 2 and apply FIFO or weighted average consistently. LIFO is not permitted.
Procedure from D-30 to after transfer day
- D-30 Set the structure: confirm freehold or leasehold, draft two separate contracts, set the price from the BOQ plus a normal margin, and have the tax team approve the price split.
- D-14 Check the items: finalise the Furniture Package List per unit, count the actual items, remove built-in items from the list, and have the customer sign.
- D-3 Prepare documents: draft the tax invoice, compare the appraised value with the sale price, and prepare the unit receipt and power of attorney.
- Transfer day: register the transfer, pay SBT, fees and 1% WHT, deliver the furniture with a delivery note, and issue the tax invoice on the same day if one has not already been issued for advance payments.
- After transfer day: file PP 30 by the 15th of the following month, or the extended date for e-Filing under the latest announcement. Keep the SBT receipt and record the cost transfer.
The tax invoice must always match the tax point. If payment is received in advance, issue the invoice on the date of receipt, and never issue one in advance before a tax point has arisen.
Accounting entries
| Event | Debit | Credit |
|---|---|---|
| Purchase furniture into stock | Inventory – furniture (excluding VAT), input VAT | Payables |
| Construction cost and built-in items | WIP (including non-creditable input VAT) | Payables |
| Receive booking deposit or down payment for the unit | Cash | Contract liability – unit price |
| Receive advance payment for furniture | Cash | Contract liability – furniture, output VAT |
| Transfer day: recognise unit revenue | Contract liability – unit price, cash or receivables | Revenue from sale of condominium units |
| Transfer day: seller's taxes and fees | Expenses: SBT, transfer fee, withholding tax (WHT) deducted | Cash |
| Transfer day: recognise furniture revenue | Contract liability – furniture, cash or receivables | Revenue from furniture sales, remaining output VAT |
| Transfer cost | Cost of sales – condominium units, cost of sales – furniture | WIP, inventory – furniture |
Leasehold: record advance rent as deferred income and recognise it gradually, only over the registered period. If the arrangement is a finance lease or an operating lease under TFRS 16, set the cost matching according to the classification result and confirm it with the auditor.
Common input VAT shared between the VAT and SBT businesses must be apportioned under Section 82/6 and the Director-General's Notification on VAT No. 29. See the section on input VAT apportionment for details.
Risks and control measures
| Risk | Level | Measures |
|---|---|---|
| Retroactive VAT assessment on furniture, with a penalty under Section 89 and a surcharge of 1.5% per month under Section 89/1, capped at the amount of tax. | High | Separate the contracts in every deal and do not state "fully furnished" in the unit contract. |
| Furniture priced abnormally low or high. | High | Refer to the BOQ plus a normal margin, and have the tax team approve before the contract is issued. |
| Forgetting to issue a tax invoice at the tax point of an instalment payment. | High | Take payment in a single instalment on transfer day, or link a trigger in the receivables system. |
| Furniture input VAT mixed into WIP cannot be separated retroactively. | High | Keep separate accounts for furniture inventory, creditable input VAT, input VAT awaiting apportionment, and non-creditable input VAT. |
| Furniture held for sale appears in the asset register. | Medium | Review the register quarterly. |
| Incorrect apportionment of common input VAT. | Medium | Keep a working paper every month and review the criteria used. |
| Leasehold: WHT withheld in the wrong cases, or income spread beyond the registered period. | Medium | Check the tenant's status in every deal. |
Example of the effect of failing to remit output VAT
Output VAT unremitted for 3 periods totals THB 4,906.53 and is discovered after 10 months. Tax 4,906.53 + penalty of 1x 4,906.53 + surcharge at 1.5% × 10 months 735.98 = THB 10,549.04. If no tax invoice was issued, separate penalties and sanctions may also apply. Forgetting to claim input VAT carries no penalty, but it costs you money: if THB 3,150 of input VAT becomes a cost, it saves only THB 630 of CIT, a net loss of THB 2,520.
Customer cancellation: if the money is refunded to the customer, issue a credit note in accordance with the rules. If the money is forfeited and not refunded, consider whether there are grounds to reduce output VAT. Do not issue credit notes automatically.
Defence File per deal
- Condominium unit sale and purchase agreement or registered lease, plus a separate furniture sale agreement
- Furniture Package List stating the items and price per piece, signed by both parties
- Delivery note, copy of the tax invoice, and receipts for SBT and the transfer fee
- WHT certificate: 1% for freehold or 5% for leasehold, when the tenant is a juristic person
- BOQ and furniture pricing method; a table separating built-in items from loose items per unit
- Monthly input VAT apportionment working paper
- Tenant status record and rental income recognition schedule
- Output tax invoice register reconciled to PP 30. Keep documents for at least 5 years.
30 / 60 / 90-day action plan
| Stage | Action required | Outcome |
|---|---|---|
| 30 days | Issue the contract separation policy and a furniture sale agreement template, open separate accounts, and prepare a Package List for stock not yet transferred. | Signing policy and chart of accounts in actual use |
| 60 days | Separate built-in items, move furniture held for sale out of the asset register, choose the input VAT apportionment method, and train the sales and transfer teams. | Clean register; the team knows the tax point |
| 90 days | Rehearse the transfer day procedure for one unit, and assemble a retrospective Defence File for deals already transferred. | Updated checklist and audit-ready file |