Mike Teavee

5 minutes ago, MistyBlue said:

 

This becomes a "Section 104 holding".  An example of how to work out the gain is given in HMRC helpsheet HS 284.  Need to use the PDF example 3 shown in this link:  https://www.gov.uk/government/publications/shares-and-capital-gains-tax-hs284-self-assessment-helpsheet 

I know that's the case for normal UK CGT calculations, but in the scenario where it's a Non-Dom remitting Gains into the UK from the US is it still the same calculation or could they avail themselves of the flexibility in the US rules to minimise the gain? 

Although this does not meet the criteria of the example above, I came across this example of remitting interest to the UK which shows how the UK treats "Income" that has already been taxed in the Foreign Country ((again I'm using the UK as it's the only country I know that taxes foreign income on a remittance basis)... 

Jenny is taxable on the remittance basis and is liable to UK tax at the rate of 40%. Interest of £9,000 is paid into her foreign bank account after deduction of tax in the ‘other’ country at the rate of 10% which is available as a credit against UK tax on that income. Jenny decides to remit £4,500 of this interest to the UK.

As Jenny has remitted half of the net amount of the interest she was paid, she’s able to claim half of the admissible foreign tax as a credit against UK tax on the income. Jenny must pay UK tax as follows:

Half the income has been remitted and so half the foreign tax is available as a credit against UK tax.

If Jenny does not claim FTCR but instead claims a deduction for the foreign tax paid, she is liable to UK tax on the amount remitted of £4,500 × 40% = £1,800

https://www.gov.uk/government/publications/remittance-basis-hs264-self-assessment-helpsheet/remittance-basis-2021-hs264

4 hours ago, stat said:

Immovable objects like real estate is a different beast as it is situated fixed in a country and some countries can charge whatever tax they want. CGT of shares are usually only taxed in the residence country, however dividends are taxed in the country of tax residence of the company. We simply do not have to care about share CGT calculation of other countries as it can only be an indication. As long as we do not know what accounting method TRD will use, we cannot calculate any thai CGT. If you are only tax resident in TH it is of no help to us what other countries calculate as we are not paying those taxes anyway and TRD maybe has another method. The easy solution is to have a completly segregated account that was filled with cash beginning of the year before 2024 or before one becomes Thai tax resident.

I agree with you on the Property side & as already been mentioned, this can be a nightmare to calculate for UK/US guys who are selling property that isn't considered their primary property - in the UK we have to file a separate tax return within 60 days of completing the sale!

For CGT, I think we're agreed on how to do the core calculation but what we don't know/agree on is what to use as the basis of the costs for the original assets (FIFO, LIFO, Average etc....) the videos I've seen seem to be saying that it's on you to calculate the gain & use the calculated percentage to work out what you're assessable income is & as Thailand doesn't seem to have a way of calculating it the only way I can see of doing it would be to apply the rules of the country in which the Asset is. 

As we don't know what Thailand uses, perhaps we could look to a similar scenario where Gains are remitted to the UK (Only other country I'm aware of that taxes Non Doms based on remittance) & where the rules are hopefully a bit clearer.

So lets say we use an example of a German (or any other nationality apart from US/UK) Living & a Tax Resident in the UK remitting gains from shares in the US (Where they're Non-Citizen & Non-Tax Resident) on $12,000 of shares made up of 1,000 units bought as:-

1. 300 @ $100 = $3,000 
2. 250 @ $110 = $2,750 
3. 250 @ $130 = $3,250
4. 200 @ $150 = $3,000 

... The gain was made up by selling 200 units at $2 to give proceeds of $4,000... What would the reported "Income" be for their UK Return??? 

I'll leave it as a question in case there's anybody here who can provide the answer from experience rather than me trying to trawl through HMRC documents at 4:50am!!!

1 hour ago, stat said:

Tax resident where: in TH only, or double residence?

 

My gut feeling:

 

1. No Thai CGT as you paid taxes in your home country not assesable

2.No Thai CGT not assesable

3. We will see maybe not assesable

 

This all is heavly dependant if Thai RD accepts your documents. In case they do not, you have to pay tax.

My 2 cents for a UK Expat only resident in Thailand would be

1. Thai CGT is applicable as there is no provision in the UK-TH DTA that would prevent you having to pay tax on a Gain even if you've already been taxed on it.

2.  There wasn't a Gain so no CGT anyway. 

3. Assuming the interest was "Co-Mingled" with the original savings then we're yet to get a conclusive answer on this but my opinion would be that as you cannot pick & choose which part of the monies you're spending, it would be a percentage of the overall remitted amount.  

E.g. I have have £100,000 in a bank account that pays 4% Interest and at the end of the year I have £104,000 

If I were to remit all of that money into Thailand then the £4,000 would be Tax assessable, however if I spent £4,000 in the UK & remitted £100,000 then I believe the assessable income would be approx. 3.85% of the £4,000 interest earned i.e. approx. £154

2 hours ago, gamb00ler said:

I can definitely think of instances where this statement is not true.  I don't want to go into details but how capital gains are calculated for residential rental properties in the USA would make the heads of TRD staff spin.  I think it very likely that TRD would want to use a much simpler method to determine capital gains.

Maybe I worded it badly, but by snipping my reply you're taking me out of context a little as I actually said that you do the calculation based on the rules of the country where the asset is & report the percentage gain to TRD, not that they would use the country's rules to calculate it.

Nothing easier for TRD than you saying Here's $XX,000, YY% of it is the capital gain. 

Oh & I know exactly what you mean about the CGT regs around Non-Primary Property, they're just as bad in the UK - Something us Expats who only rent out our old homes (Not even Buy-2-Let) have to deal with when it comes time to sell them.  

1 hour ago, stat said:

CGT arises in the tax residence country of the individual! If you have sole residence in TH then TH CGT rules apply (some exceptions maybe for real estate i.e. house in the UK immovable object you could be liable for UK CGT I frankly do not know, no CGT in this case for a german house if I live in TH). For share transactions like you mentioned i.e. you sold  german shares then no German CGT tax is applied if you are not a resident of Germany! I have been buying and selling US and UK shares my whole life without ever paying CGT in the US or UK nor have I ever seen a client that paid CGT on shares without a tax residence (exception maybe US guys that live abroad as the US taxes the ww income for its citizens even if they are not linving in the US).

 

Maybe explain what made you think that you had to use the CGT rule of the asset home country?

 

NB: I work as a consultant in the international tax industry

I get my UK CGT knowledge from actually writing the code for the UK's largest Stockbroker that calculated it for Bed & Breakfasting & the code that was used to produce annual CTC certificates, but that was pre the 1998 changes so admit things have changed since then, however how you calculate a Gain hasn't, perhaps you could share an alternative way of calculating the gain than the one I listed. 

Would also be interested in learning about any countries that use FIFO for doing (normal) Gains calculations & anything at all about how Thailand calculates CGT, from the Tax videos that I've seen it's on you to calculate the Gain and on your return apply that percentage to what you've remitted when listing your assessable  tax - If you're not going to do it using the rules of the country that the Asset is in & the country you are resident in doesn't have any rules, what rules would you suggest should be used?

I can't find the one that went into the calculation in more details but it's briefly covered in this one...

1 hour ago, Dogmatix said:

This means that the average RD officer has little or know knowledge of Thai cap gains, let alone how they are treated in foreign tax jurisdictions or what tax credits they may qualify for for.

This maybe why the Expat Tax advisors have been saying that it's the Original Cost of the Asset that counts.

Doing a calculation that says Cost X, Realised Y, %Gain = (Y-X)/Y is very straight forward & repeatable irrespective of which country the asset is held in, trying to understand the different tapered reliefs of 60 different countries is not! 

1 hour ago, stat said:

@Mike Teavee Regarding the calculation of CGT: what makes you think the TRD calculation is based on tax laws of other countries? Which country laws should be used (asset sitiu i.e. bank, nationality of owner, tax residence of owner, jurisdiction of management of the company) ? This would be an absolute first for any country tax I ever heard of.

 

I am pretty sure TRD will (and have every right) to use their own calculation independant of other laws. If they codify their MO is another big question. My gut feeling tells me they will use Fifo but no one knows, however I am pretty sure the "tax laws of the asset" will not play into the calculation.

Think about it, you are not bringing the Asset over to Sell, you're remitting the proceeds of selling that Asset so the Gains are calculated according to the rules of the country of the Asset (If for no other reason than you could have a tax obligation in that country) E.g. if I'm resident in the UK & sell some shares on the DAX, I don't apply UK rules to calculate CGT, I apply German rules & then declare the net Gain to UK RD when I remit the monies.

Countries can tax that Gain at whatever rate they feel is appropriate & they can argue that you've got the calculation wrong, but they would have to do so by running through the CGT rules of the country of the Asset, and besides even if Thailand could use it's own calculation, it doesn't have any as it treats remitted Gains as Income Tax. 

Capital gains

Most types of capital gains are taxable as ordinary income. However, the following capital gains are exempt from tax:

• Capital gains on the sale of shares in a company listed on the Stock Exchange of Thailand, provided that the sale is made on the Stock Exchange of Thailand, and on the sale of investment units in a mutual fund.
• Gains on the sale of non-interest bearing debentures, bills, or debt instruments issued by a corporate entity, except in the case where the bonds or debt instruments were sold for the first time at a price lower than their redemption price to an individual.
• Gains on the sale of securities listed on stock exchanges in the Association of Southeast Asian Nations (ASEAN) member countries and traded through the ASEAN Link, excluding securities in the form of treasury bills, bonds, bills, or debentures.

https://taxsummaries.pwc.com/thailand/individual/income-determination

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However, having said all that out loud (or rather Typed it loudly 🙂), if we are following the rules of the country of the Asset then surely Taper relief must come into it, but Expat Tax videos I've seen say that it's the Original Cost of the Asset that's used. 

If I were calculating the CGT on some UK shares, I'd use a standard UK CGT calculator which would include Taper Relief & have the documentation to back up my rationale for why I came to the number I did, Worse case would be TRD re-calculate it without the Taper Relief. 

2 hours ago, rickudon said:

lso get a civil service pension which should be tax exempt in Thailand under the UK dta. Only issue is proving the provenance of where the money comes from

I'm assuming you get an annual P60 (or equivalent) for your Civil Service Pension which should be all the proof you need to show TRD even if it is in comingled funds. 

1 hour ago, TroubleandGrumpy said:

No challenge - but pointing out that the current TRD method for treating CGT is based on the current in country system, and is probably one of the many things they are reviewing when the CGT is overseas generated. That would include what they will do when the CGT is taxed already overseas. I know the standard tax credits apply under DTAs, but they may take the approach that if the CGT has already been taxed overseas then the TRD will not apply Thai taxes (that would be a lot simpler for them to do).  If I recall correctly it is Malaysia (or Philipinnes?) that under their implementation of this new rule has excluded any remitted income that has already been taxed in the source country. 

Not 100% sure about CGT paid on Property Sales (Most people don't need to) but for other asset sales there are no tax credits as UK Expats don't pay Capital Gains on the sale of (Non-Property) assets.

See #4 of Article 14 from the DTA...

Article 14 - Capital Gains

(1) Capital gains from the alienation of immovable property, as defined in paragraph (2)
Article 7, may be taxed in the Contracting State in which such property is situated.

(2) Capital gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing professional services, including such gains from the alienation of
such a permanent establishment (alone or together with the whole enterprise) or of
such a fixed base, may be taxed in the other State.

(3) Notwithstanding the provisions of paragraph (2) of this Article, capital gains derived
by a resident of a Contracting State from the alienation of ships and aircraft operated in
international traffic and movable property pertaining to the operation of such ships and
aircraft shall be taxable only in that Contracting State.

(4) Capital gains from the alienation of any property other than those mentioned in
paragraphs (1) and (2) of this Article shall be taxable only in the Contracting State of
which the alienator is a resident.

(5) The provisions of paragraph (4) of this Article shall not affect the right of a
Contracting State to levy, according to its own law, a tax on capital gains from the
alienation of any property derived by an individual who is a resident of the other
Contracting State and has been a resident of the first-mentioned Contracting State at
any time during the five years immediately preceding the alienation of the property. 

NB. Point #5 is the UK "5 Year Rule" which stops people becoming Non-Resident for less than 5 years to avoid paying CGT, if Thailand were to implement something similar then it would scupper a lot of plans to do a Hotblack Desiato

Edit: This explains the 5 year rule much better than I can 🙂

An individual needs to be non-resident for more than five years to escape UK CGT on assets owned at the time of departure (other than UK land and property) of which he or she disposes after leaving the UK. This five-year period is from when the individual’s sole UK tax residence ceases.

If a non-resident becomes resident again in the UK during this five-year period, any assets sold after leaving

the UK will be taxed in the UK when the individual returns. If he or she becomes resident again after this five-year period, any assets disposed of while non-resident will not be subject to UK CGT.

If the individual purchases assets during a period of temporary non-residence, these assets will not be subject to UK CGT if sold while not resident, even if the individual returns before the end of this five-year period.

Complications can arise in respect of the purchase during this temporary non-residence period of a further shareholding in a company that was already in existence at the time the individual left the UK, and the pooling rules that apply (see CG26600). As with everything, there are exceptions to this rule, which are explained in CG26610. Examples of such exceptions are:

https://library.croneri.co.uk/cch_uk/gcabe/7-2

10 minutes ago, khunjeff said:

 

Ditto (though I've had mine for "only" 17 months). No visits to immigration, no forms to fill (I leave the country regularly), no bank statements, no photocopies. Visa matters are no longer the constant irritant in my life that they used to be - and I just now sped through Fast Track at the airport in under five minutes. I'm an LTR fan.

If you ever wanted to put a "Value" on access to Fast Track, pre-Covid I used to pay 20,000 THB pa for unlimited Arrivals/Departures with Thailand Longstay Management (was alternating between working 10 days in Singapore & spending 5 days in Bangkok so in & out twice per month).

I thought the service (& other paid for Fast Track services) were no longer available, but when I was in the Fast Track queue coming back from the UK on Tuesday I spotted them helping somebody through, it could be that you now need to get the Retirement Package to get this...

https://www.thailongstay.co.th/retirement_visa.html

31 minutes ago, Mike Lister said:

Thanks. That's pretty much what I had in my mind also but I put the issue back on the list some time ag as a result of discussions that didn't conclude. Let's see if there any challenges that arise, if not, I'll be inclined to go with that.

One thing that could be different depending on the country of the asset is how original costs are calculated & in particular how to calculate the cost of an asset when it was bought in "Chunks" at different cost points - I.e. do you use FIFO, LIFO, Average Cost etc...

E.g. Let's say the £12,000 example is made up of 1,000 units of an Asset bought as:-

1. 300 @ £100 = £3,000 
2. 250 @ £110 = £2,750 
3. 250 @ £130 = £3,250
4. 200 @ £150 = £3,000 

Selling 200 units at £2 would give proceeds of £4,000 and a gain of:-

• FIFO - £2,000 (Units cost £100 each) - Gain = 50%
• LIFO - £1,000 (Units cost £150 each) - Gain = 25%
• AVG - £1,600 (Average cost of each Unit is £120) - Gain = 40%

[Ignoring 30 day Bed & Breakfast transactions], I'm pretty sure UK uses Average Cost (AKA "Section 104 Holding") so in this example the assessable gain would be £1,600 or 40%.

20 minutes ago, 1tent42 said:

You don’t have to earn your pension for two years to qualify. You only need to show that you are earning $80K/year in passive income at the time of application for LTR-WP.

 

I retired last year and my tax returns showed that my passive income did not reach the $80K threshold. Though I was able to show that my annual pension meets the requirement. 

Thanks for that, I have read that somebody managed to show 1 year at >$80K & a pension statement showing that they'll continue to be receiving that but it's good to know that I might be able to apply by showing what I receive today & proof that it will be >$80K going forward.

My birthday is in Feb so once I get 1 or 2 pension payments in my account I'll try applying for the Visa, if I'm successful it will give me more flexibility as to when I bring the monies over & if not I can just revert to my original plan.

29 minutes ago, oldcpu said:

Correct me if I am wrong, but even though you don't have an LTR visa, if you ALREADY could prove you had the $250k US$ equivalent before 1-Jan-2024, then you do NOT have to pay tax on it - even if brought into Thailand in later years ... ??

 

If I am not wrong, then keep a record of your bank accounts as of end-Dec-2023, and that money will be considered savings and a good record for the future. 

The money would come from selling shares I've held for many, years so I'd need to pay Capital Gain's on >65% of the $250K, cheaper to use the money to have a 6 month holiday!

Plus as I'm only a couple of years away from being 60, my "Plan" is to spend 6 months outside of Thailand in 2026 & use the Tax Free Lump Sum from my pension to purchase a Condo & then apply for the LTR-WP using the $40K + $250K invested method as I'll be able to show an income of >$40K for >2 years to support this.

If I don't go down the Investment route then I believe I'd need to wait until I've received 2 years of pension before I could show the required ">$80K for 2 years". 

9 minutes ago, Ben Zioner said:

You do realise that bringing this money in a year you are in Thailand less that 180 days would make it untaxable?

I know & am giving serious thought to doing a Hotblack Desiato & spending a year dead so I can bring the money over!

6 minutes ago, Ben Zioner said:

But that's part of the careful planning bit isn't? Broke my heart (young wife with an adorable baby girl) but I stayed at the grinding mill until I was 62. Baby really enjoyed having her [hansum] dad full time  by the time she turned four. 

Absolutely, it's all part of the plan & I am trying stick to the plan, but as I'm retired & not adding anything to my pension pots, it's harder & harder not to take them early as the differential gets smaller & smaller.  

13 minutes ago, Lorry said:

This seems to be a specialty of UK tax law.

It's not necessarily similar in other countries. 

Am sure it will be slightly different in each country but the principle is the same, you sell an asset to lock in gains & use your tax free allowance. 

E.g. a quick Google tells me that the allowance in Germany is €1,000, so presumably I could buy an asset for €1,000 & if it doubled, sell it for €2,000 at the end of the Tax year without having to pay any tax. 

If I thought there were further gains to be made on the asset I could buy it back for €2,000 and the baseline for CGT will be the €2,000 that I paid for it so if I then sold it the next Tax Year for €3,500 I would only pay tax on €500 (€3,500 proceeds - €2,000 cost).

If I didn't do the "Bed & Breakfast" during the 1st Tax Year to crystalise the gain, then the tax due on the final sale would be on €2,500 (€3,500 proceeds - €1,000 costs).

Use it or Lose it 🙂 

10 hours ago, DrJack54 said:

Correct.

The issue with Bangkok bank is that they need several days to provide bank statement (ridiculous)

Kasikorn and most other banks can do it on the spot.. Thinking cost 200b.

You can also provide "credit advice" to show international transfer. 

Bangkok Bank will do up to 6 months (I think, definitely 3 months as I get one for my extension) on the spot, its ones longer than this (e.g. some people need a 12 month statement for their extension) that take 7 days. 

OP, What is the 3 letter code entry in your Bangkok Bank book If it's FTT then you're good, if it's anything else (e.g. TRF) then I'd recommend printing the Wise Transfer receipts to take with you to Immigration.

43 minutes ago, Mike Lister said:

All entirely credible and possible, I have no challenge. But coming back to your earlier statement:

 

"Thailand only taxes remittances & only has the right to audit what you remit, they cannot go digging through the whole history of  transactions".

 

What if in your most recent post, you didn't buy back the shares and simply sold them and declared them as savings, which at that point is what they are.......does the TRD still only have the right to audit what you remit?

Yes... They're only auditing what you've remitted & it's on you to tell them the source of the money which, in the case of the sale of an asset, includes whether any CGT was involved.  To show this you would provide evidence of the Purchase & Sale of that asset.

In your case the money in your "Savings" came from the sale of the original asset so includes the CGT element of that sale, in my case the money in my "Savings" came from the sale of the new asset so includes the CGT element of that sale. 

Example 1:

I sell my house, get a £250K gain put it into a "Savings" account & at some point in the future remit the money into Thailand... TRD ask me where the money came from, I say the sale of my house, they ask for purchase/sale details & I'm liable for tax on the gain from the house. 

Example 2:

I sell my house, get a £250K gain use it to purchase some shares, sit on these for 5 years, sell them & remit the money into Thailand... TRD  ask me where the money came from, I say the sale of my shares, they ask for purchase/sale details & I'm liable for tax on the gain from the shares.

Example 3:

I sell my house, get a £250K gain use it to purchase some shares, sit on these for 5 minutes, sell them & remit the money into Thailand... TRD  ask me where the money came from, I say the sale of my shares, they ask for purchase/sale details & I'm liable for tax on the gain from the shares.

In Examples 2 & 3 the original gain on the sale of my house doesn't come into it, nor does any other source of money used to purchase the new shares, the starting point for TRD is the Asset not what was used to purchase it. 

Now, Example 3 is an extreme example & you might be pushing your luck with them on a 10 Million Baht transfer but strictly speaking there is no different between that & Example 2 (especially if during the 5 years no gains were made on the shares) & I don't think anybody would argue that the gains from the original sale of the house come into it in Example 2.

However, If I were planning to do this on that kind of scale then I would probably look to do the Purchase & sale in different calendar years (i.e. Buy the Asset late December, sell it early Jan) as that's what TRD are used to operating in.