Aussie Relocates to Thailand and Builds Global Property Portfolio from Taxes Saved
Built with a US LLC, a BVI holding company and an ADGM SPV for UAE property
In this article
Summary
Client’s real name changed for privacy.
| Before | After |
|---|---|
| John, an Australian passport holder, is sole member of a Wyoming LLC, set up for US banking and to bill clients in non-US jurisdictions. Annual profits of 500k pass through into his personal name. | A BVI company with real substance is now sole member of the LLC, doing management services and group treasury, and holding investments. The pass-through funds are separate from his personal name. |
| Tax resident of Thailand where tax is based on remittance. But his LLC’s total profit could be exposed up to 35% if audited or Thai government changes rules. | John now decides how much dividend income to receive and how much tax to pay. The retained profit buys about one property a year in full cash. |
| No bookkeeping or accounting, which meant no credibility. He couldn’t provide information that banks wanted. | The books and financial statements are now clean, so KYC and moving money became easier. |
| No long-term plan to build wealth. John’s cash was building up and he was dabbling in side projects. | The BVI treasury lends to a wholly owned ADGM SPV that buys UAE property and earns rental income in dirhams, pegged to the USD. It pays interest back, and the pattern scales as he adds properties. |
| Holding all cash in a single EMI account, without any protections. Could be shut down at any time. | The BVI company holds a Singapore bank account for deposits and collections, with EMI accounts kept for operations. |
| Risks permanent establishment in Thailand as an agent of the LLC, triggering tax consequences. | Support work is separated from strategic management decisions with a clean paper trail, which lowers the PE risk and gives him a defence if audited. |
The problem
Good structure, but not scalable
John, an Australian passport holder, built a successful business selling services, consulting and digital products worldwide through a US LLC. The benefits of the US LLC are global reach, US banking and pass-through tax. It’s a known setup that works. It stopped working as his profits grew.
Relying on personal tax residency
He relocated to Thailand for tax residency and a better lifestyle with a lower cost of living. It’s a good base to travel from.
Thailand taxes on a remittance basis, but there are conditions that need to be met so he doesn’t trigger a permanent establishment.
Every dollar the LLC earned went through to his personal name, which could be classified as personal income despite not being remitted in Thailand, which would mean paying up to 35%.
No long-term wealth plan
Compared to Australia, John was saving approximately 150k a year in taxes alone. Combined with a low cost of living environment, he was generating cash a lot faster than before, and he did not have a place to invest this cash safely. It was all sitting in the EMI account, which is dangerous because they can be shut down overnight for any reason.
Converting cash into cash flow with properties
The goal was to convert John’s active cash flow into a holding structure that produces residual investment income outside his personal name. This way, long term, if his business ever stopped, he would have an ongoing income.
1. The BVI holding company
We formed a BVI company for management services and group finance, then made it sole member of the US LLC. The management services activity matches John’s own background, which supports the substance position. Lending for interest is a relevant activity under the BVI economic substance rules. Surplus cash now rolls out of the operating business and into the holding company. A US LLC with a BVI foreign owner still files Form 5472 with the IRS each year.
Substance was built deliberately. We engaged local management in the BVI to work alongside John, so the company’s management genuinely happens there. That is what makes the position hold if another country ever claims the company belongs to it.
We developed a robust company profile, including a website, commercial agreements, business plan documentation, KYC pack and CVs.
This is a genuine business doing intergroup activities that could be found in a compliance check.
2. The ADGM property SPV
John was interested in international property. While not a property expert, he could engage buyer’s agents to find genuine investments, but he needed the structure to do it outside his personal name. We set him up with an ADGM SPV in Abu Dhabi to hold the property and open a bank account for rent collection and international payments. The SPV is registered in Abu Dhabi and the property it buys is in Dubai.
3. Commercial loans, at arm’s length
The BVI company, as a treasury unit, issues loans to the UAE SPV to buy property. The SPV pays back interest on the loan. This is an arm’s-length commercial transaction. The BVI is tax neutral and has no tax on the interest. The UAE has no withholding tax on interest payments. Rental income from Dubai property is taxed at 9%. The interest payment is a genuine expense that reduces the SPV’s taxable income, as long as it is documented at an arm’s-length rate against a genuine property purchase.
4. His personal tax position
John holds an Australian passport but is not an Australian tax resident. We also looked back to make sure John had ceased his Australian residency accurately with deemed disposal of capital gains on assets and there were no outstanding tax debts that would be an unwelcome surprise later.
Thailand has no controlled foreign company rules, so profits kept in the BVI are not taxed on John until he takes a dividend. It also frees up the ability to move to another country for tax residency purposes if he wants to.
The risks, and how they are mitigated
There are several risks we have mitigated in this structure.
| Risk | How it is mitigated |
|---|---|
| A holding structure costs money to run, every year | The structure has to earn back its setup and compliance cost each year. The BVI company, the SPV and property management all cost money. It comes down to the size of the property portfolio and the long-term plan to keep investing in it, because the fees go down in proportion to the assets owned and the income generated. |
| The BVI requires real substance | Local management engaged alongside John, so management genuinely happens there, backed by a full document profile. |
| Accounting, tax, compliance and reporting | All jurisdictions need to have accounting and financial reports managed and tax returns filed where necessary. |
| Thai tax residency must not trigger permanent establishment | Contracts with a clear outline of duties, deliberate remittance, a Thai return filed each year. John leaves the country several times a year and has evidence of decisions made outside Thailand. |
The result
John’s assets now sit in a holding structure outside his personal name. He has a long-term wealth plan where the more money he makes, the more he can invest safely and create a residual income. The residual income will continue irrespective of his business active income.
Compliance is completely done for him every year. He just reviews and signs the accounting, the records and the administration. Substance is handled and robust, so it’s defensible if he’s ever audited.
He is not locked into living in Thailand. He can move elsewhere. He just needs to review the conditions.
If you want to save tax, and build a portfolio to replace your income, get in touch.
General information only. This article is not personal financial, tax or legal advice and does not take your circumstances into account. Speak to a qualified, licensed professional about your situation before acting on it.