Who this guide is for, and what the key issues are
This article is for foreigners looking for a location to open a restaurant or café in Thailand, and for Thai partners who will invest alongside a foreigner.
The key point is sequence. The most common problem is not one missing licence, but paying the key money (ค่าเซ้ง), fit-out costs and deposit first, and only then discovering that the shareholding structure is illegal or that the lease does not support the licence applications. Work through the sequence below before signing the lease and before transferring any large sum.
- Company and shareholding structure
- Licences and taxes the business must have
- The lease and the building itself
- Employees, and the owner's working status
Step 1: How much can a foreigner own in a restaurant?
The sale of food or beverages falls under List Three, Item 19 of the Schedule to the Foreign Business Act B.E. 2542. List Three covers businesses in which Thai nationals are not yet ready to compete with foreigners. A foreigner may carry them on only with a licence (the Department of Business Development has previously ruled that the sale of food and beverages for consumption falls under List Three, Item 19).
Who is a "foreigner" under Section 4 of the Foreign Business Act B.E. 2542 — three groups are relevant to our restaurant:
- A natural person who does not have Thai nationality.
- A juristic person not registered in Thailand.
- A juristic person registered in Thailand in which shares representing one half or more of the capital are held by the first two groups.
So a Thai company that is exactly half foreign-held is already a foreign company. The figure that is safe for Thai company status is therefore foreign ownership of less than one half of the capital. Section 4 of the Foreign Business Act B.E. 2542 also provides that shares in a limited company issued as bearer shares are shares of a foreigner, unless a ministerial regulation provides otherwise, and a registered partnership in which the managing partner or manager is a foreigner is also a foreigner.
If the company is a foreigner, it must obtain a licence before starting to carry on business, and Section 14, paragraph 2, of the Foreign Business Act B.E. 2542 provides that a business requiring a licence under the lists in the Schedule must have a minimum capital for each business of not less than three million baht. The granting of a licence is at the discretion of the Board, not a registration, so you should not take over a shop lease or begin fitting out on the assumption that the licence will certainly be granted. For guidance on assessing the different routes, read on at Foreign business licence: how to classify service and trading businesses and Can you hold 100% of shares in Thailand?
What are the risks of having Thai nominees hold shares?
The common structure is for Thai nationals to hold more than half of the shares on paper, while the foreigner provides the money and makes all the decisions. Points to know:
- Section 36 of the Foreign Business Act B.E. 2542 punishes anyone who assists or joins with a foreigner in carrying on business in violation of the law with imprisonment for not more than three years, or a fine of 100,000 baht to 1,000,000 baht, or both, and the court may order that the act be discontinued.
- In civil terms, shares belong to the shareholder whose name appears. If the relationship breaks down, the foreigner's investment may leave no effective way of recovering it.
If the Thai co-investor has money and plays a genuine role, make it a genuine partnership, with a shareholders' agreement that clearly sets out rights, duties and exit routes.
Step 2: Licenses and Taxes a Restaurant or Café Must Have
This section consists entirely of legal obligations, except where stated as recommendations.
| Matter | Required when | Where to apply or register |
|---|---|---|
| Food premises | Every shop; document type depends on area size | Local authority where the shop is located |
| Liquor sales license | If selling beer, wine, or liquor | Area Excise Office |
| Value added tax | When revenue exceeds the threshold prescribed by law | Area Revenue Office |
| Sign tax | If a shop sign that falls within the criteria is installed | Local authority |
| Music copyright | Playing music for customers to listen | Copyright owner or collecting company |
License or Certificate of Notification for Food Premises
Under the Public Health Act B.E. 2535, a shop with an area exceeding 200 square meters must obtain a license from the local official (Section 38 of the Public Health Act B.E. 2535). As for a shop with an area not exceeding 200 square meters, it must notify the local official to receive a certificate of notification; it is not permitted to open without doing anything. Detailed criteria and fees are in the ordinances of each local authority (e.g., municipality, Subdistrict Administrative Organization, or district office), and inspectors will examine the sanitation of the premises under the ministerial regulations. Therefore, you should ask the local authority before designing the kitchen and bathrooms.
Liquor Sales License
Liquor sales licenses are currently issued under the Excise Tax Act B.E. 2560 and the Ministerial Regulation on Liquor Sales Permits B.E. 2560 (the Liquor Act B.E. 2493 has been repealed). They are divided into two types according to the quantity sold per transaction. A shop selling to general customers uses Type 2, i.e., selling less than 10 liters at a time. The license is valid for 1 year from the date it is granted, and renewal must be submitted before it expires.
The point that tenants often miss is prohibited locations. A Type 2 license cannot be issued for locations that are educational institutions, temples, mosques, or places of religious worship, and gas stations (including connected areas as prescribed by ministerial regulations), including places where sales are prohibited under the Alcoholic Beverage Control Act B.E. 2551. An applicant that is a Thai company or a natural person of legal age may apply according to the criteria of the Excise Department. When renting a place, you should prepare evidence of rights in the premises, such as a lease agreement, as required by the Area Excise Office. Therefore, check the location before signing the lease, not after decorating.
If the shop will have live music, a DJ, or dancing, first check whether it falls under an entertainment place under the Entertainment Places Act B.E. 2509, because it is another license system and has location restrictions. Do not guess on this point; ask the local agency.
Value Added Tax, Sign Tax, and Music in the Shop
- Value added tax A business operator whose revenue from selling goods or providing services in the ordinary course of business exceeds 1.8 million baht per year must register within 30 days from the date the revenue exceeds that amount (Revenue Department).
- Sign tax Under the Sign Tax Act B.E. 2510, the sign owner must submit the form within March of the year, and a sign installed after March has a submission deadline under Section 14 of the Sign Tax Act B.E. 2510. The tax rate is divided according to the language on the sign; a sign with foreign characters is taxed higher than a sign with only Thai characters. Therefore, this cost should be included in designing the sign.
- Music played in the shop Playing music for customers to listen is a public communication, which in principle under the Copyright Act B.E. 2537 (Section 27 of the Copyright Act B.E. 2537) requires permission from the copyright owner. Normally contact is made through a copyright collecting company, not directly with the Department of Intellectual Property. The Department has a search system for which song belongs to which company. Playing music from a personal app does not exempt this requirement when played in the shop.
Company registration, business license application, and basic tax services can be viewed at Company Registration and Business Licenses.
Step 3: How to review the lease and the building before signing
The lease is the largest lump sum for a shop that has no revenue yet. A checklist before signing:
- Register the lease if it exceeds three years. Section 538 of the Civil and Commercial Code provides that a lease of immovable property for more than three years must be made in writing and registered with the competent official. If it is not registered, it can only be enforced for three years, so the decoration you invest in for the long term has no security beyond that.
- Check that the building can actually be used as a restaurant. Request copies of the building documents from the landlord, and ask the local authority whether use as a restaurant, or the alterations you intend to make, require permission under building control law. Not every shop needs a new building use permit, but the building itself and its use must be correct before you open.
- Is the landlord the real owner, or a sublessor? Request a copy of the title deed (chanote) or evidence of right. If it is a sublease, there must be a written consent letter from the owner.
- Permitted use clause. Write it clearly that the premises are used as a restaurant, café, and for the sale of alcohol, if you intend to sell it. If the contract is worded too broadly or too specifically, the landlord may later claim breach of contract.
- Consent for alterations and signage. Specify the scope of the alteration work, pipes, exhaust hood, and grease trap, along with the position and size of the signage the landlord permits, in writing.
- Key money. No specific law governs this matter, so its legal effect depends on the wording in the contract. You should write what it is paid for, whether it is refundable and when, and who receives it. Do not pay before there is a signed main lease.
- Conditions for transferring lease rights. If you will sell the business in the future, must the landlord consent to the transfer?
- Make-good. Specify how much must be dismantled and restored when the contract ends, and who bears the cost.
- Termination and renewal conditions, including the tenant's rights if the necessary licences are not obtained, such as a licence to sell alcohol or a licence under the annexed list for foreigners. If possible, write that the tenant may terminate the contract and get the deposit back in that case.
The rights of tenants and landlords in general can be read in Renting a house, a room, a shop: rights that are often misunderstood. If the contract exists only in a foreign language, someone should review it before signing. See Drafting and reviewing business contracts and documents.
Step 4: Hiring employees and the owner's work status
How can a foreign owner work in the shop?
A foreigner working in Thailand must have a work permit under the law on the working of aliens, even if they own the shop themselves and do not receive a salary, and must have a status of stay in the country that permits working. See Work permits for employers and Visas and work permits.
Work prohibited to foreigners is currently set by the Ministry of Labour Notification on Work Prohibited to Foreigners (published in the Royal Gazette on 21 April 2563 B.E.), which replaces the earlier list annexed to the Royal Decree B.E. 2522. It is divided into four lists. The work that restaurants are usually concerned with includes:
- Selling goods at the front of the shop, and labourer work (List Four): permitted only for foreigners who have an employer and who entered under a Memorandum of Understanding between governments (MOU). An ordinary foreign owner therefore cannot do this.
- Hawking goods, and clerical or secretarial work (List One): absolutely prohibited.
- Supervising, auditing, performing or providing accounting services (List Two): prohibited, unless permitted under an international agreement.
This list does not include cooking, but that does not mean you can come in as a chef without applying for a work permit. In practice, a foreign owner should hold a position that is genuinely managerial, such as managing director, and should not spend most of their time standing at the till or taking orders at the front of the shop, because a position stated in the work permit that does not match the work actually performed is a risk for both the owner and the company.
Company criteria Authorities usually consider the paid-up registered capital and the number of Thai employees in the social security system per work permit. A small shop with only a few Thai employees may be caught by this criterion. The figures actually applied change with policy. Read the overview in the work permit guide for employers and ask the Department of Employment before planning staff numbers. This is a practice, not a fixed provision of law.
Employees in the shop
- Social security Under the Social Security Act B.E. 2533, employees aged from 15 years complete to 60 years complete are insured persons under Section 33 and Section 34 of the Social Security Act. Employers must submit the list form within 30 days from the date that employee becomes an insured person.
- Employment contracts and minimum wage Make the employment contract in writing, and check the minimum wage rate of the province where the shop is located. See Employment contracts, salary structures and employee handbook.
- Migrant workers in the kitchen Hiring migrant workers must follow the procedures of the Department of Employment; it is not a matter of taking on someone who applies without checking documents. See Migrant worker services.
Recommended Order Before the First Payment
This is a recommendation, not a requirement.
- Decide on the structure: a Thai company with genuine Thai shareholding, or a foreigner's licence.
- Check the location before booking: the building itself, permitted use of the space, and prohibited areas for alcohol.
- Ask the landlord to provide evidence of title and the building documents for review.
- Sign a lease that includes a termination clause if the required licences are not obtained, and register the lease if it exceeds three years.
- Obtain all licences and certificates from the local authority and the Excise Department before opening for sales.
- Plan the owner's position and work status, together with the planned number of Thai employees.
- Register for tax and social security, and check signage and music copyright before opening day.
If you have already paid or started, and have run into problems
- Already holding shares through a nominee — do not wait for a problem to arise; consult a lawyer first in order to restructure into a lawful form.
- The lease agreement has not been registered — apply to register it together with the lessor, or amend the agreement so that it contains conditions covering early termination.
- The shop is already open but some licences are still missing — stop the parts that require a licence, such as selling alcohol, and then apply for them properly. Continuing to operate while knowing increases the risk.
- The owner works at the shop front without a work permit — consult first before applying; do not let it be found out on its own.
