Usufruct and Thai Taxes: Registration Fee, Rental Income and Withholding

Reviewed by ThaiLawOnline, a licensed Thai law firm practising in Thailand since 2006. Thai lawyer of record: Wichuda Atthamethakon, LL.M., Thai Bar Licence 3149/2556.

Last updated on 26 September 2026

Key Takeaways

• Registration Fee: 50 baht per plot where nothing is paid for the usufruct. Where it is granted for consideration, a 1% registration fee plus 0.5% stamp duty on the consideration. Paid once at the Land Office.
• Income Tax Liability: The usufructuary is taxed on the income the usufruct produces, but only where the usufructuary is the person legally entitled to it. Under Supreme Court Decision 575/2560 rent under a lease belongs to the party who made that lease.
• Property Tax (Annual): The owner is the person the land and building tax is assessed on; section 1426 of the Civil and Commercial Code lets the owner pass the tax on to the usufructuary as between the two of them.
• Death Advantage: No transfer tax when usufruct ends at death. Property reverts automatically with no inheritance complications.
• Sequence Decides Attribution: Register the usufruct before the property is let, and make the usufructuary the party to the lease. That order is what Decision 575/2560 turned on.
• Income Splitting: Adult children as usufructuaries are taxed on the income where they are the persons legally entitled to it, under a usufruct registered before the lease and with the children as lessors.

Written by Sebastien H. Brousseau and Wichuda Atthamethakon. ThaiLawOnline.com: Practicing usufruct law since 2006

Tax is only one part of the picture. For how the right itself works, how it is registered and what it costs to set up, see our complete guide to usufruct in Thailand.

Last reviewed: 3 September 2026. Everything this page says about Supreme Court Decision 575/2560 was rewritten in this review, after the judgment was read in full in Thai to its disposition. The page had said the case established that tax follows economic substance rather than formal title, and it gave the reader the test who actually collects or controls the income. The case decides neither. The three grandchildren did collect the money and the tenant did withhold tax in their names, and the Supreme Court still held the income was the owner’s, because she was the party to the lease and the usufruct was registered only after the lease was made. The test the page previously gave would have decided the case the other way. What this review did not re-check, said rather than implied: the registration fee and stamp duty figures, the land and building tax rates, the withholding rates, and the comparison table outside its two income-tax cells.

Registration Fees and Transfer Taxes

Creating a usufruct right involves several one-time fees at the Land Department. Unlike property ownership transfers (which incur substantial transfer taxes), usufruct creation has relatively modest upfront costs.

Understanding the fee structure helps with budgeting. It also lets you compare usufruct to alternative property arrangements such as leases or direct ownership transfers.

Registration Fee: 1% of Consideration Value

Where the usufruct is granted for consideration, the registration fee is 1% (Ministerial Regulation No. 47, clause 2(7)(ฏ)), and stamp duty of 0.5% is paid on the consideration. Where nothing is paid, the registration fee is 50 baht per plot (clause 2(7)(ฑ)) and no stamp duty arises. For most of our clients, perhaps 90%, the usufruct is granted without payment and the whole bill at the Land Office is about 100 baht.

The 1% is charged on the consideration the parties declare, not on the appraised value of the land. A usufruct granted for 500,000 baht therefore pays 5,000 baht in fees and 2,500 baht in stamp duty, whatever the land is worth.

This 1% fee contrasts favorably with other property transaction taxes. A sale of the land itself pays a 2% transfer fee on the appraised value, plus either 3.3% specific business tax or 0.5% stamp duty, plus withholding tax. Usufruct registration at 1% is substantially lower. This cost advantage makes usufruct attractive for establishing long-term property rights at minimal upfront tax burden.

Stamp Duty

Creating a usufruct for consideration attracts stamp duty as a receipt under instrument 28(b) of the stamp duty schedule: 1 baht for every 200 baht of the consideration, or 0.5%, according to the Department of Lands’ fee manual. A usufruct granted without payment pays none.

The duty is paid at the Land Office at registration.

Fee Type	Rate	Frequency	Notes
Usufruct Registration Fee	1% of the consideration, or 50 baht per plot where nothing is paid	One-time (at creation)	Paid to Land Department
Stamp Duty	0.5% of the consideration	One-time (at registration)	None where nothing is paid
Land and Building Tax (Annual)	By use and value band; see the land and building tax guide	Annual (recurring)	Assessed on the owner; section 1426 lets the owner pass it on to the usufructuary. Local authorities rarely approach usufructuaries.
Personal Income Tax (on rental income)	0% to 35% progressive	Annual (on earned income)	Paid by the person legally entitled to the income; a corporate tenant withholds 5% and remits it to the Revenue Department.

Income Tax During Usufruct

Income tax treatment of usufruct is one of the most complex and litigated issues in Thai tax law. The basic principle: the usufructuary holds the right to use, enjoy, and collect income from the property. The usufructuary is entitled to the fruits of ownership and thus bears corresponding income tax obligations.

Who is taxed is settled by who is legally entitled to the income rather than by who banks it. Where the property is let, that is the person who contracted as lessor, which is the point Decision 575/2560 turns on and is set out below.

Who Pays: The Usufructuary (Section 1426)

Thai Civil and Commercial Code Section 1426 provides that, while the usufruct lasts, the usufructuary must bear the expenses of managing the property, pay the taxes and duties on it, and pay the interest on debts charged on it. Ordinary maintenance and petty repairs are the usufructuary’s under section 1424, and extraordinary expenses the owner’s under section 1425.

Section 1426 allocates the burden between owner and usufructuary; it does not decide whom the Revenue Department or the local authority assesses. If the usufructuary leases the property in their own name, the rent is the usufructuary’s income.

The usufructuary must file annual personal income tax returns or corporate tax returns (depending on their status). They declare the income from the property. Rental income is taxed at progressive personal income tax rates: 0% to 35%. Corporate usufructuaries pay corporate income tax, at a standard rate of 20%.

Rental Income Obligations

When the usufructuary collects rent from tenants, the usufructuary must:

1. Declare gross rental income in their annual personal or corporate income tax return
2. Deduct allowable operating expenses: maintenance, repairs, property management fees, insurance
3. Calculate net income and apply personal or corporate income tax
4. Expect a company or partnership tenant to withhold 5% of the rent and issue a withholding certificate in the lessor’s name
5. Request tax certificates from the tenant for income tax reporting purposes

The question that decides who is taxed is who is legally entitled to the income, not who physically receives it. Where the property is let, that is the person who contracted as lessor; a usufructuary who is not a party to the lease is treated as receiving the owner’s rent for the owner.

Supreme Court Decision 575/2560: Who Is Taxed on the Rent

Decision 575/2560 is a judgment of the Supreme Court sitting in its Tax Division and it is the case usually cited on this question. It decides which of two people is taxed on the rent when a property is let and a usufruct over the same property is given to someone else: the lessor who made the contract, or the usufructuary who is paid the money.

Supreme Court Decision 575/2560: Case Analysis

Facts: On 7 July 2011 Mrs P, the owner of a titled plot in Bang Na, Bangkok, let it to Company B for thirty years, the term running from 1 January 2014, against key money of 87,500,000 baht payable in five instalments. On the same day she signed a written agreement giving a usufruct over that land, for their lifetimes, to her three grandchildren, who were minors, and Company B agreed to pay the key money and the rent to them as usufructuaries and to withhold tax. The company did pay them, withholding 828,750 baht for the first grandchild and 804,375 baht for each of the other two in the 2011 tax year. The usufruct was registered at the Land Office only on 29 March 2012, after the lease had been made and after those payments. The three then spread the key money over the thirty-year term, prepaid income tax on it in advance under the Ministry of Finance announcement of 19 February 1985, and asked for the tax withheld by the company back. The Revenue Department refused.

Taxpayers’ Argument: The grandchildren argued that the usufruct made them the persons entitled to the income, that the tenant had recognised their right by agreeing to pay them directly, and that under Section 1417 of the Civil and Commercial Code a usufructuary holds, uses and takes the benefit of the property. Having prepaid tax on the key money themselves, they said the tax withheld at source was an overpayment they were entitled to recover.

Revenue Department Position: Mrs P had let the land in her own name, so the income from the letting was hers under Section 61 of the Revenue Code. The clause directing the tenant to pay the grandchildren was only a division of money she was entitled to receive. The usufruct had not been registered when the payments were made, so their real right was not yet complete and they received the money on her behalf.

Court Ruling: The Supreme Court, Tax Division, held that the person with the income under the lease was Mrs P, because she was the contracting party to it. The three grandchildren were not parties to the lease and were merely receiving her rent for her. Its reasons:

• Mrs P was the lessor under the lease and the grandchildren were strangers to it
• They acquired the usufruct by juristic act after the lease had already been made, and registered it at the Land Office later still
• The key money was therefore Mrs P’s assessable income and the withholding certificates should have been issued in her name
• Certificates issued to the wrong taxpayer give that taxpayer no right to a refund

Tax Consequence: The refund was refused and the dismissal of the claim by the Central Tax Court was affirmed. The Supreme Court did not agree with the Tax Court on the route to it: the Tax Court had held that the grandchildren were the persons with assessable income under Sections 39 and 40 (5) of the Revenue Code, and the Supreme Court held they were not.

What the case does and does not decide. The grandchildren did receive the money and the tenant did withhold tax in their names, and neither fact made them the taxpayers. So the case lays down no test of who controls or economically enjoys the income. It turns on the order of events and on who signed the lease: the usufruct came after the lease and the usufructuaries were not parties to it. The practical lesson is the sequence. Register the usufruct first, then let the property, and make the usufructuary the party to the lease.

Property Tax: Land and Building Tax

Beyond income tax, the property carries an annual land and building tax, calculated as a percentage of its appraised value.

The rate varies depending on whether the property is agricultural or non-agricultural.

The Usufructuary Bears the Burden

The Land and Building Tax Act B.E. 2562 assesses the tax on the person who owns the land or building on 1 January of the tax year (sections 5 and 9). A usufructuary is not that person. Between owner and usufructuary, though, section 1426 puts taxes on the usufructuary, so an owner who pays the bill can ask the usufructuary to reimburse it unless their agreement says otherwise.

The tax is administered by the local authority, the municipality or the sub-district administration, and its bill goes to the registered owner. Write into the usufruct agreement who pays it, so that the owner and the usufructuary do not argue about it later.

In practice and until now, it is extremely rare for the usufructuary to be approached to pay taxes by local tax authorities. Because taxes are changing quickly recently, maybe it will be more verified in the near future.

Rates

The Act sets ceilings by use: 0.15% for agricultural land, 0.3% for residential property, and 1.2% for other use and for vacant land. The rates actually charged are lower and rise in bands with value; residential property has been taxed at 0.02% to 0.1% and other use from 0.3%. An individual owner who lives in the property and is registered in its house book is exempt on the first 50 million baht of value (section 41). Our land and building tax guide sets out the bands.

So for a house the owner lives in, the tax is usually nil. Where the usufructuary is to carry it, it is a small annual cost to budget for.

Tax at Termination

Usufruct rights do not last forever. They expire or terminate under various circumstances. Tax treatment at termination differs markedly depending on the cause of termination.

This offers both advantages and pitfalls for tax planning.

On Death: No Transfer Tax (Major Advantage)

One of the most significant tax advantages of usufruct is termination at death. When the usufructuary dies, the usufruct right automatically terminates. The property reverts to the bare owner (Section 1418, Thai Civil and Commercial Code).

Crucially, no transfer tax is imposed on this automatic reversion.

If instead the bare owner died and the property passed to heirs, the Land Office would charge a transfer fee of 0.5% where the heir is a descendant or spouse and 2% otherwise, and inheritance tax would arise only on the part above 100 million baht received from that estate (5% for descendants and ascendants, 10% for others). By contrast, when a usufructuary dies, the property simply returns to the original owner. No tax is imposed. This is a major economic advantage, especially in family planning contexts where usufruct is granted to younger generation members.

However, if the deceased usufructuary’s estate includes accumulated rental income not yet declared or paid to the tax authorities, the estate will remain liable for income tax on that income. The termination of the usufruct right itself triggers no tax. Pre-termination income tax obligations survive.

On Expiry of Fixed Term

If the usufruct is created for a fixed term (e.g., 30 years), property reverts to the bare owner upon expiration with no tax consequence. The usufructuary ceases to have any right or obligation. Similarly, no transfer tax is assessed at the expiry date.

This clarity makes fixed-term usufruct an efficient and predictable property planning tool.

The usufructuary must still file a final income tax return for the year in which the usufruct expires. They declare any income earned up to the termination date and deduct proportionate expenses for that final year.

On Mutual Cancellation

If the usufructuary and bare owner agree to terminate the usufruct before the fixed term ends, mutual cancellation can occur. The tax treatment depends on whether any consideration is exchanged.

If termination is mutual and without consideration, no transfer tax is imposed. If the bare owner pays the usufructuary to relinquish the right early, the payment may be subject to income tax. This depends on the circumstances and characterization of the payment.

Comparison: Tax Treatment of Property Rights

Investors and property planners often compare usufruct to alternative property structures. Options include leasehold interests, superficies, and outright ownership. Each structure carries distinct tax implications.

Understanding these differences helps you select the most efficient property arrangement for a given business objective.

Tax Factor	Usufruct	Lease	Superficies	Bare Ownership
Creation Tax (One-Time)	50 baht per plot, or 1% plus 0.5% stamp duty where granted for consideration	1% of total rent plus 0.1% stamp duty; registration required above three years	50 baht per plot, or 1% plus 0.5% stamp duty where granted for consideration	2% transfer fee, plus 3.3% specific business tax or 0.5% stamp duty, plus withholding tax
Annual Property Tax	Assessed on the owner; section 1426 lets the owner pass it on to the usufructuary	Lessor (owner) pays land and building tax. Lessee may pay negotiated portion.	Superficiary is assessed on the building it owns; the landowner on the land	Owner pays land and building tax
Income Tax on Rent	Usufructuary liable on rent it is legally entitled to. Under Decision 575/2560, rent under a lease the owner made stays the owner’s income.	Lessor liable on rent collected	Superficiary liable on rent collected	Owner liable on rent collected
Withholding Tax on Rent Payments	5%, withheld where the tenant is a company or partnership	5%, withheld where the tenant is a company or partnership	5%, withheld where the tenant is a company or partnership	5%, withheld where the tenant is a company or partnership
Tax on Termination (Death of Holder)	No transfer tax. Automatic reversion to bare owner. Major advantage.	Lease contract terminates. Tenant’s estate may owe final rent and taxes.	Passes to the superficiary’s heirs unless the instrument says otherwise (section 1411)	Transfer fee 0.5% for a descendant or spouse, 2% otherwise; inheritance tax only above 100 million baht
Transferability	Only the exercise of the right can be transferred, unless the instrument forbids it (section 1422)	Lease typically non-transferable without landlord consent. Assignee assumes tenant duties.	Transferable and inheritable unless the instrument says otherwise (section 1411)	Ownership freely transferable. Transferee becomes new owner-taxpayer.
Income Splitting Potential	Yes, where the adult children are the persons legally entitled to the income. Under Decision 575/2560 that means a usufruct registered before the lease, with the children as lessors.	Only through a sublease: a family member who leases and sublets with the owner’s consent (section 544) is taxed on the sub-rent	Yes, if superficiary is independent income earner	Limited. Ownership transfer triggers immediate tax on transfer.
Duration and Security	Fixed or lifetime term. Secure and registered at Land Department. Inherent in property right.	Contract-based. Depends on lease term and renewal. More vulnerable to non-renewal.	Fixed or lifetime term. Registered right. Secure.	Indefinite. Full ownership security.

Tax Planning Strategies

Legitimate tax planning using usufruct requires understanding the interplay between Thai property law and income tax law. While tax avoidance through sham arrangements is prohibited, genuine economic structures that also produce tax efficiency are permissible.

The following strategies are lawful uses of usufruct for tax-conscious planning. Each depends on the usufructuary being the person legally entitled to the income, which is the point Decision 575/2560 turned on.

Income Splitting Through Usufruct

One common tax objective is to split family income across multiple taxpayers in lower tax brackets. This reduces overall family tax burden. Usufruct can facilitate this if structured legitimately.

For example, a high-income parent could grant a usufruct over an income-producing property such as a rental apartment building to adult children. Where the usufruct is registered and the children then let the property in their own names, the rent is their income and is taxed at their individual rates, which may be lower than the parent’s marginal rate.

The order matters more than the degree of control. If the parent lets the property first and grants the usufruct afterwards, the rent under that lease stays the parent’s income and the children cannot reclaim the tax withheld on it. That is what Decision 575/2560 decided, and in that case the tenant was paying the children directly.

What puts the income in the children’s hands as a matter of law is the registered usufruct and their own signature on the lease. Their own contracts with tenants and separate bank accounts are worth having as evidence of that position, but they are not a substitute for it.

Using Usufruct for Minor Children

A minor can hold a usufruct; the three grandchildren in Decision 575/2560 were minors. The parents act for the child as statutory representatives, and file the child’s tax return and pay the tax as the child’s agent (Revenue Code section 57).

Income from the property is taxable to the minor. Often at a low or zero rate given limited other income. The expenses and investments are managed by the guardian or trustee.

This arrangement can transfer economic benefits to the next generation. It maintains a structured tax result.

Upon reaching adulthood, the child can assume direct control of the usufruct. They continue to benefit from the income at favorable tax rates. This multi-generational planning leverages both the usufruct structure and progressive income tax brackets.

Corporate vs. Individual Usufruct

Usufruct can be held by a corporation (juristic person) or by an individual. A corporate usufruct may be advantageous if the property will be operated as part of a larger business.

The standard corporate income tax rate in Thailand is 20%. This may be lower than an individual’s marginal rate if that individual is a high earner. Additionally, corporate deductions for operating expenses, administrative costs, and business-related expenditures may be broader than individual deductions.

Conversely, if the individual usufructuary has lower income and claims few deductions, the individual income tax rate may be lower. The choice between corporate and individual usufruct must align with the specific tax and business goals.

Avoiding Income Attribution Pitfalls: What Decision 575/2560 Requires

Decision 575/2560 shows how income is attributed when a usufruct and a lease sit on the same property. To keep the income with the usufructuary:

• Register First: Register the usufruct at the Land Office before the property is let. In 575/2560 the usufruct was signed on the day of the lease and registered more than eight months later, and that order was decisive.
• Be the Party to the Lease: The usufructuary should sign the lease as lessor. A clause in the owner’s lease directing the tenant to pay the usufructuary did not make the usufructuary the taxpayer.
• Certificates in the Right Name: A tenant who withholds tax must issue the withholding certificate to the person with the income. A certificate issued to the wrong person gives that person no right to a refund, which is what defeated the claim in 575/2560.
• Separate Accounts: Rent should be received in an account in the usufructuary’s name rather than mixed with the bare owner’s.
• Documented Transactions: Lease agreements, rent receipts and property management decisions should be documented in the usufructuary’s name.
• The Burdens Follow Too: Section 1426 puts the expenses of management and repair, and the taxes and other burdens on the property, on the usufructuary. That is an obligation of the right, not an optional way of showing good faith.

Where the sequence is wrong, the Revenue Department will assess the owner on the income and refuse the usufructuary a refund of anything withheld in their name. That is difficult to repair once the lease is signed, so it is worth getting the order right at the outset.

Last reviewed: 26 September 2026. This review re-checked what the 3 September review left open. Read in Thai: Civil and Commercial Code sections 544, 1411, 1418, 1422 and 1424 to 1426; the Land and Building Tax Act B.E. 2562 sections 5, 9, 41 and 94; the Inheritance Tax Act B.E. 2558 sections 12 and 16; Ministerial Regulation No. 47 clause 2(7) and the stamp duty rule for receipts (instrument 28(b)) as set out in the Department of Lands fee manual. Read in the Revenue Department’s English text: Revenue Code sections 40 and 57, and its published withholding rate for rent (5%).

Frequently Asked Questions

Conclusion

Tax on usufruct in Thailand sits where property law and tax law meet: the registration fees at the Land Office, the annual land and building tax, and the question of who is taxed on the income the property produces.

Understanding the registration fee (1%), the annual property tax obligations (0.02% to 0.3%) and who is taxed on the income is essential for property planning. The significant advantage of no transfer tax upon death is a major benefit.

Decision 575/2560 is the case to know before combining a usufruct with a lease. It holds that the income under a lease belongs to the party who made it, so a usufruct granted or registered after the property has already been let does not move the tax, however the rent is actually paid. Any plan to split income through a usufruct has to be built in that order: register the usufruct, then let the property, with the usufructuary as lessor.

For more details on registering usufruct, see our Guide to Registering Usufruct in Thailand. For a comprehensive comparison of usufruct to other property structures, see Usufruct vs. Lease vs. Superficies in Thailand. For inheritance and family planning applications, see our article on Usufruct and Inheritance Planning in Thailand.

Getting Your Usufruct Agreement: Three Routes

All three produce the same underlying document, the bilingual usufruct agreement this firm uses for its own clients. Download the editable template at 890 THB and complete it yourself, let the Document Maker build a finished personalised version if you are a Gold member, with translation available, or send us your details and we draft it around your facts in English and Thai for a fixed 3,900 THB, guiding you through registration at the Land Office. They are compared side by side in our complete guide, with our published fees.