Thai law distinguishes between unregistered partnerships and partnerships registered with the government. The key difference lies in legal status. An unregistered partnership does not have the status of a “juristic person” — an entity granted most of the same rights and obligations as a natural person — whereas a registered partnership does. (Note, however, that an unregistered partnership is still treated as a juristic person for tax law purposes — see below.)
In both unregistered and registered partnerships:
- The individual partners are jointly and unlimitedly liable for the partnership’s obligations;
- The partnership is formed through partners’ contributions of money, other property, or services; and
- Each partner’s share of profits and losses is determined by the amount of their contribution.
Because an unregistered partnership is not considered a juristic person, all partners are jointly and unlimitedly liable for obligations incurred by the partnership. However, for tax purposes, an unregistered partnership is taxed as if it were a “person” — a personal taxpayer — separately from its partners. This means the partners are not separately taxed again on profits they receive from it.
A registered partnership, by contrast, is treated as a juristic person, similar to a company. As a result, a creditor of a registered partnership must first pursue their claim against the partnership itself. Only if the registered partnership defaults does the creditor gain the right to seek settlement from an individual partner for debts incurred on behalf of the partnership as a whole. Notably, a partner’s liability for the registered partnership’s debts continues for two years after that person ceases to be a partner.
A registered partnership is also treated like a company for tax purposes, and is therefore subject to Thai corporate income tax. The partners of a registered partnership are then subject to personal income tax on their respective share of profits received from it.