Whether to give expensive gifts to a “friend” (or their extended family members) is a dilemma typically brought up over beers and in online forums. Gifts may include jewelry, a car, a motorbike, or even a large mansion. Regardless of whether the benefactor is a blue-collar worker or a millionaire, gifting can sometimes develop into an interesting story.
Though there are some people who choose to take a very hard line of never giving gifts, others find themselves giving away more than they should have. In fact, we have seen several cases where a giver’s generosity went horribly wrong, leading them to question whether the recipient truly saw them as a wonderful friend, a potential life partner, or simply a cash cow.
In this article, we will cover situations where it is possible to get your gift back after your relationship turns sour or if you find that you have simply been swindled.
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Lending money: a word of caution
When lending money to a friend, partner, or their family, always make sure the loan is documented. A verbal contract may be enforceable but tends to be hard to prove when there are conflicting recollections, particularly if the receiver gathers a set of “witnesses” to verify their position.
Documenting the loan also benefits the receiver as it guarantees that they will receive the loan even if the giver has a change of heart or passes away. We have seen several cases of the latter where families tried clawing back their late father’s generosity, most of which led to bitter emotional battlefields.
When lending money, write down the loan terms on paper and be sure to include key conditions such as the amount, interest rate (which should not go over 15% per year in Thailand), and repayment date. If unsure about when the loan should be repaid, it is possible to say that the term can be extended at the lender’s absolute discretion. If the borrower isn’t comfortable with English, have them write what they think the terms are in Thai and get them translated by another person later. Once both parties agree, they should sign the paper with an independent witness present.
Doing this very simple task may save you a lengthy and costly legal battle later.
Thailand’s laws on gifts
In Thailand, regulations on gifts are generally covered by Sections 521 to 536 of the Thai Civil and Commercial Code. A gift is any property or money that is voluntarily given to another person without the expectation of receiving anything in return. So, for example, if you gratuitously forgive someone’s debt or hand someone a cheque to obtain pardon, this would be considered a gift under Section 522 of the Civil and Commercial Code.
We are not talking here of marriage where matrimonial property, or Sin Somros, is typically divided equally between spouses. Any gift that is given during marriage, such as a Dowry, is not revokable for ingratitude.
Under Section 531, you can claim back a gift if:
- the recipient committed a serious criminal offence against the giver;
- the recipient seriously defamed or insulted the giver, or
- the recipient refused to assist the giver in need of life sustaining support while being able to do so.
Section 533 states that a claim must be made within six months from the time the giver became aware of the ingratitude but note that no action can be conducted later than 10 years after it occurred.
It should also be noted that Section 535 says some gifts are not revocable for ingratitude, particularly remuneration, encumbered gifts, gifts made under moral obligation, and gifts given during marriage.
Revoking a gift
In the first instance, theft, fraud, or assault could be considered reasonable grounds for revoking gifts. In the last instance, elder abuse, or cases where aging parents are denied basic life necessities despite their children’s ability to do so after receiving a gift, may be considered. Nonetheless, both situations are extremes and are not commonly seen in our practice.
To revoke a gift due to ingratitude, you would need to prove that you were seriously defamed or insulted. Serious, in this case, means what it says – not trivial or minor.
An Insult is a violation of another’s honor by means of an expression, action, or by an offensive statement or gesture, whereas defamation is the act of communicating disreputable information to a third person that would likely damage the giver’s character. Two recent cases illustrate this point: in one successful revocation, the receiver called the giver, who was his father, a “despicable dog;” and in another, the giver was called a “parasite”.
Other incidents like this exist. Arguably, parading multiple partners to common friends during a relationship could be construed as an “insult,” while even more provocative statements such as the giver being a drunkard, gambler, or bankrupt may be considered both defamation and a cause for revoking a gift.
Once revoked, Section 534 states that the gift will be deemed as “undue enrichment,” meaning if the gift was passed to a third person in good faith as per Sections 412, 413, and 414, the third person is obligated only to return a part of the gift that still exists during the time compensation is demanded. Moreover, the third person is not liable for deductions or damages to the gift.
How Thailand taxes gifts
Since February 2016, gifts have been considered part of personal income. In Thailand, gift taxes can be defined as taxation on the transfer of property, and taxpayers can opt to pay a 5% gift tax on property values exceeding THB 10 or 20 million rather than including the excess into their net taxable income, which is subject to progressive tax rates. Both individuals, even if they are non-Thai citizens, and juristic persons are subject to the gift tax.
There are exemptions to the gift tax, particularly gifts worth less than THB 20 million given by a spouse or family member, or gifts worth less than THB 10 million from any other person. Gifts obtained for the purposes of preserving cultural heritage, upholding moral values, or performing parental responsibilities are also exempt.
As always, if you feel you have the need to revoke an ill-advised gift due to the reasons mentioned above, it is essential to quickly contact an experienced lawyer to guide you through this matter. Remember: the clock is ticking.
Probates, will, and Contact us to learn more about the law on gifts in Thailand and how to protect yourself from instances of ingratitude.