alexanderhu

Terek: You're funny my friend. Well, the risk is mine not yours so it's a maniacal obsession for you but an actual risk for someone like me. I get your point though, things work in a different way here and I should understand that I won't get any legal clarification.

lkv: Well, if you pay ~€55,000 for a visa that allows you to stay for 20 years then you expect the government to honor it otherwise they'd ruin their reputation so bad that investors would probably think not twice but for long before believing them in any matter in the near future so I kinda think that it's a guaranteed way to be able to live here for 20 years although they may decide to cancel all of it and not to refund the fees but I find this highly unlikely.

I will just find one more where the highest marginal tax rate that's applicable on my income is below 20% and will spend the other 7 months there.

lkv: I see, then probably I'll try to obtain a tax id and will pay taxes based on my assumption that my trading income is locally sourced. The other option is to spend only 5 months in Thailand and setup a tax residence in a low tax jurisdiction because the up to 37% marginal income tax rate here is a bit steep.

lkv: I have never bribed nobody, I don't even know how that works or how it can be done, I highly doubt that I'd be good at it. In fact I'm almost sure that I'd try to bribe the wrong person so I just wouldn't try it ????. On the serious side, some clarity from the legislators would be happily welcomed. By the way, your plane won't crash, all your flights will be completed safely, without a single issue and you won't get hit by a car.

lkv: Exactly. Imagine the hefty fines (not to mention the criminal proceedings) if someone is found out to be cheating on the tax man in Thailand for years because he or she thought that his or her income is foreign sourced but the authorities and the court says that it is in fact not. So the fines, the interests and back taxes are a horror on their own but the criminal proceeding is the really bad part because even if the taxpayer is willing to pay all the fines, back taxes and interests they may sentence the taxpayer for some jail time. Not to mention the situation if the taxpayer doesn't have the funds to cover all the fines, back taxes and interests.

BertM: In most countries with territorial tax system or with a remittance basis tax system for certain taxpayers, trading income is categorized as locally sourced income because it is not considered as capital gains. In the following countries this is the case: UK, Ireland, Netherlands, Spain, Portugal, Italy, Malta, Cyprus, Hong Kong, Singapore, Malaysia, Philippines, Australia, New Zealand, Chile, Switzerland. I have checked every single one of them with local tax advisors. You may say that in some of these countries the foreign sourced income is always taxable but you'd be wrong. In some cases there is either a special system for expatriates, for foreigners or in general for certain individuals. The grey area is Panama, Thailand, Costa Rica and Paraguay. Most of the countries where there is any option to pay no tax on foreign sourced income has been checked by tax advisors on my request. So, to answer your question, no, I do not know if day trading is considered as foreign sourced income in Thailand.

arithai12: The Thai tax authority refused my request for a tax id and quoted me the law which explains when I'd be eligible for one. It has been quoted in this topic numerous times as well. Basically I'd have to do business, work, etc. When I sent them a request to clarify whether trading income is locally or foreign sourced, they never responded.

Ks45672: I get that and thank you for your ideas! The real question is whether trading income is table at the time the profit is made. If yes then it’s a whole different story. If not, then of course I can transfer it anywhere in this same tax year except to Thailand and it’ll remain untaxed and I’ll be able to bring it back to Thailand the next tax year.

Misty: I read this before. I’m not really worried about the work performed in Thailand part but more about the business in Thailand section. Some could argue that a day trader is in the business of trading on the financial markets and it’s neither a passive investment nor a simple activate wealth manager because the trades are too frequent, they’re leveraged and speculative in nature therefore it is a business. I have asked the local tax authority in writing and they have not responded at all. They said that they have forwarded my questions to the relevant department and they’re going to get back to me. It’s been months since I have sent my questions to them. In fact, I sent them more than once.

Rugon: If you were not trading with cryptocurrencies but you simply bought some and you sold them at a higher price then in my opinion that income should be foreign sourced if you bought the cryptocurrencies on an overseas exchange and sold them on an overseas exchange as well.

Naam: Are you trying to imply that income from active wealth management means and day trading is both locally sourced because the taxpayer is considered to be engaged in a business?

LivinLOS: Could you please tell me more about those busts of professional day trading operations? I haven’t heard about that. By the way, I wasn’t talking about stock trading but currencies and other derivatives.

lkv: This is how I think so too. The problem with not clearly defined laws is the risk of abuse because the tax authority may turn a blind eye over a guy who makes €50,000 a year from day trading and pay zero taxes but may use a totally different approach with someone who makes €250,000+ a year. These are just examples but I agree with you that the current legislation allows the system to misused by both parties.

Crisu: The 2 million THB or ~€55,000 for the 20 years visa may be a lot but it also gets you a guarantee. The guarantee to be able to live in Thailand for two decades. Yes, there are other and cheaper options but any government can simply cancel those cheaper and shorter options without prior warning as it was the case with Malaysia M2H program. Again, I do not trade stocks but Fx and other derivatives.

BertM: The taxes in my home country are so low that it’s not even worth not paying the taxes. If I would have wanted to pay very little then I would have stayed there. I clearly know that cheating on the tax man seems to be easier in theory than it is in practice because you not just have to somehow access the funds but if something goes against you then you have to bring it home as well. Assuming that you don’t want to openly confess that you had been cheating on the tax man for years and you don’t want to pay back taxes and interests, it’s not a good idea. Then the only option left is somehow transferring your money back to your home country without causing much attention but that usually is categorized as money laundering. I know this all, we all had offshore accounts in the EU, it was so popular in the 90s that they were being sold like ice creams on the summer. When we tried to reverse everything the time the EU savings directive then later the CRS was introduced, it was such a nightmare that I highly doubt that a sane person would do this ever again. Personally I won’t do it no matter how much I could save. I would rather move to Paraguay to pay 10% legally if I’d like to save on taxes.

ThomasThBKK: How do I get the tax id and what statement should I fill and file?

Crisu: That's right but show me another tourist visa that allows the holder to stay for multiple years without interruption.

ukrules: I see, so technically speaking if a Thai Elite member pays some tax for three years in a row, then he or she may be able to secure a PR. I presume there must be some other requirements as well or it is that simple?

simon43: I wouldn't call it a tourist visa since it allows you to spend 7,300 days (20 years) continuously in the country. This would be strangest tourist visa which allows you to rent a property, to open a local bank account, to stay for decades without interruption and so on. I know it's a non immigrant visa and doesn't give you permanent residence but 20 years is pretty close especially if we'll be able to renew it for another 20 years.

ukrules: You mean someone who has been residing in the country for 3+ years could qualify for the citizenship if he or she could produce a tax return with some type of active income in it?

I see, thank you Crisu. I do not want to pay tax, except if I have to. I simply want to avoid landing in hot water should the tax authority decide to check on my financial situation.

Crisu: you mean it's locally sourced and taxable on the arising basis?

lkv: Well, they're part of the AEOI or under the process of becoming a member, almost the same. Sooner or later but they're going to exchange that information. Yes, that makes sense, thank you! I have asked so many people about the tax treatment of trading income and most people just say that it's not taxable but when I tell them it may be locally sourced since it is considered to be locally sourced in SG or HK then they go quite and doesn't seem to know the answer because I don't trade stocks but currencies and I have triple digits positions in a month so we are definitely not talking about investments here. Your point makes sense but you know if I don't pay any tax but one day if they get information within the AEOI framework and decide to investigate my tax matters because I have X balance and I pay zero tax in Thailand, then I would be in a really hot mess.

Crisu: I know, I read those and talked with many tax advisors (not KPMG though) but the question is not whether foreign sourced income is taxable on the remittance basis or not but whether trading income itself is foreign sourced if let's say the taxpayer is trading on the currency market with a foreign brokerage account or it's locally sourced because the trades were placed from Thailand.

lkv: I already explained that Thailand is a part of the AEOI. They joined it about a year ago but indeed the first packet of information has not yet been sent but they're going to send it this year or the next year.  Furthermore, are you positive that trading income from derivatives is considered as foreign income in Thailand?

I see, that's good news and really useful information, thank you Ks45672! Are you sure they trade not just stocks but derivative products, fx and cryptocurrencies as well? Haha, yeah, if that's the case then indeed it sounds really good. ????

Yes, all my banks and brokers are asking for my new tax id. I do not want to open an account in the US for multiple reasons, two of them are the lack of currency accounts which is an issue since I trade, deal and transact in Euros only and US brokers offers far less products and markets outside the US to trade on. Yes, there is one exception, IB but there are other options in the EU and when it comes to banks. Thanks, but I do not want to deal with US banks. They work like if we'd still be in the 90s. Going to a branch to open an account? What for? A non EU citizen, non EU resident person can open a fee-free EUR current account over the internet, all he or she  needs is a webcam. Plus EUR transactions takes an hour on average compared to the 1-3 days with USD and some banks in the EU offer unlimited fee-free transactions.

So tax id is one problem, I'll try to solve it as soon as I can, I'll try the interest income tactic that someone here said and the other issue is whether my trading income is taxable or not.

BertM, Ks45672: I would like to stay legal and fully compliant. Indeed, I can't use my former tax id since I'm no longer a tax resident and I need a local one from Thailand. However, it has nothing to do with not paying taxes. In fact, I'm the one wanting to pay if I have to pay and truth to be told it's still not clear to me whether my trading income is taxable in Thailand or not. In other words, I cut all my ties with my country of citizenship not for tax reasons but for monetary reasons, i.e. I did not want to maintain a home in my home country considering I ain't gonna go back there anytime soon so I simply told the tax man that I leave permanently, I ticked the right boxes, paid the taxes on my final tax return and I left. Now I'm gonna need a tax id in Thailand because I assume that my trading income is fully taxable in Thailand for two reasons: 1) I trade actively, on a daily basis, and these are speculative short term positions; 2) I trade derivatives only so I do not own any assets when I'm in a position. Consequently based on the Thai income tax act that I found online on the tax authority's website, I believe that my trading activities would be categorized as doing business in Thailand and thus subject to income tax like any other locally sourced income.

Again, I'm not a US but an EU citizen and my bank and brokerage accounts are located in the EU not in the US.

I see, well I think the same and I should be able to obtain a tax id on a Thai Elite visa considering the fact that I become a tax resident once I spend 180 days in a tax year in the country. By the way, Thailand is now a part of the AEOI club and they're going to exchange banking and other related financial information with other countries so if you reside in Thailand and you wanna open a bank account in Singapore then you're gonna need a local tax id, a solid proof of address and a residence permit (in this case the Thai Elite visa). So, I think the same and trading income is taxable on the arising basis, i.e. when you make a profit regardless of where your accounts are located. I will try to obtain a tax id and I will talk with other tax advisors and accountants although I already talked with more than 10, literally.

Firefan, trading on capital markets is considered as gainful activity and the proceedings are usually taxable on the arising basis even in countries where foreign sourced income is not taxable or where there is a remittance basis taxation. It is because if you buy stocks, bonds or other assets that you own on your overseas accounts then you invest your money by converting your money into various movable and transferable assets. At the time of sale, you realize your usually long term capital gains and that's it. However, there are countries which says that no mater what you trade, if you're trading actively, i.e. on average you close your positions within 6 months, you're using leverage, you're using sophisticated techniques to bet on the price movements, then even if you buy stocks or bonds, you may be taxed regularly. Here in the EU usually if you trade then you pay income tax but if you invest then you pay capital gains tax and the latter tends to be lower in most cases, however there are countries where both types gets taxed at the same rates due to the flat rate income tax system. On the other hand, if you trade derivatives, i.e. Forex, CFDs, futures or options on various financial products, then you're not buying any asset or anything transferable. You simply open a position with that broker to basically bet on a price movement. You can't transfer your Fx or CFD positions to another broker because you don't own any asset that you could transfer. It's merely a contract between you and the broker based on which the brokerage company is obligated to credit or debit the results on your account at the time you close your position.

In my opinion it's not that simple. So let's take a closer look on the issue in practice. The applicant tells the tax authorities that he or she is going to become a non resident on this and that date. I don't know how it is where you are from but here in the EU usually when you file the paperwork to become a non resident for tax purposes, then you have to file a final tax return and pay your taxes by the date you file your last and final return. Then the applicant moves to Thailand with the Thai Elite visa, rents a flat in Bangkok and then comes the problems. He or she is no longer a resident in her or her former EU country, doesn't have a tax id, doesn't have a proof of address. The latter can be solved with the tenancy agreement and a utility bill which the person hopefully can get in a month or so. Some said that I should keep asking the Thai tax authorities for a tax id and tell them to issue one for me because I have to declare interest income on my local bank account. This may work, I'll give it a try. Then I have a tax id but I'm still not sure if my trading income is considered as a foreign sourced income or as a locally sourced active business/trading income. As far as I know, there is a difference between trading on the stock market and trading with currencies or derivatives because some jurisdiction says that if you're trading on the stock market then you buy or sell and actual asset and they may categorize such positions as foreign sourced income, however when it comes to the currency market, options, futures and so on, then the situation is less clear because the trader doesn't buy or sell any assets but more like bets on the outcome of the particular price movement with a financial instrument. For instance here the ESMA, the European equivalent of the SEC, categorizes FX (currency) trading positions as CFD (contract for difference) positions, or in other words their view is that the currency trader doesn't own or hold any particular assets during the trade. If the Thai tax authority would take a similar view on the issue, then in my opinion any trading income that doesn't involve equities may be categorized as locally sourced and thus subject to personal income tax the regular way.

How could I pay tax with work permit (that I have no idea how to get) on trading income? It doesn't make much sense to me. Residence permits has very little to do with taxes so if a government creates a new residence category, in this case the Thai Elite, which allows the applicant to stay in the country for up to 20 years without leaving it, it is obviously expected from the applicant to be able to spend that two decades in legal clarity. If you live in a country where you clearly are a tax resident based on the tax laws and your income may be subject to taxes but you have no idea how to declare them because you can't even get a tax id, then I'm sure you would be looking for a solution as well unless you prefer cheating the tax man; - which may be the case based on your useless comment. However I have an advice for you as well, less labeling and more useful content.

We're not talking about US here. That's a whole different story. OECD AEOI/CRS doesn't apply to you. It applies to other citizens only. You have your own version, called FATCA. It serves the same purpose. Furthermore, I was talking about opening a bank account elsewhere. In Western countries. You won't open an account in Singapore, UK, Germany, Switzerland, Hong Kong, etc. without a tax id, solid proof of address, residence permit in your passport. Guaranteed.

I'm not from the US. Whether it's taxable or not is one question but whether is a Thai Elite member who is living in the country full time is a tax resident or not is another one. If yes then he or she should be able to obtain a tax id. If such person can't obtain a tax id then he or she must maintain a home elsewhere where you can obtain a tax id otherwise it's impossible to open and maintain bank accounts since all banks wants to know the customer's tax residency.

Hi there, I know that Thailand has a territorial tax system and foreign sourced income not brought into Thailand in the same tax year is not taxable but the situation in practice is more complicated and nobody seems to be able to address my concerns. According to the law an individual is a tax resident in the country if he or she spends more than 180 days in Thailand. In my understanding this means that such individual should be able to obtain a tax id and should be able to use the DTTs (double tax treaties) that Thailand signed with other jurisdictions. However, in practice this is not really possible. I talked with numerous tax advisors and accountants and the answer was that a Thai Elite member cannot become a tax resident and is not able to obtain a tax id because he or she cannot be employed in the country, cannot open and manage a business and so on. I decided to contact the tax authorities directly and guess what, they can't say for sure that either. Basically in order to be able to obtain a tax id, one must have taxable income and must have a visa that allows that person to obtain taxable income in the country. In my situation however and I believe I'm not the only one in Thailand with this issue, however I may be one of the few who wants legal certainty and clarity, it is not sure if I should pay taxes on my income or not. I'm a day trader and I'm trading on various markets on a daily basis. These are not investments but ultra-short term speculative positions. Consequently this type of income is usually deemed to be locally sourced (i.e. Singapore, Hong Kong all taxes day traders even if their bank and brokerage accounts are located overseas because they are placing the trades from the country) and therefore it is usually fully taxable like any other locally sourced income. When I asked this from the Thai tax authority they simply couldn't give me an answer.

So, it's not just not clear if a day trader should pay taxes on his or her income, but it's also not clear how he or she could obtain a tax id and consequently if one such person moves to Thailand to live there full time and to trade on his or her laptop then he or she may not be able to open or maintain bank accounts even in foreign countries because thanks to the automatic exchange or information by the OECD, now banks are increasingly asking for tax id and other documents to be able to report the account holders' balance to the appropriate jurisdiction. This seems to be a real mess to me and I feel like this visa best serves those long term retired tourists, who just want to spend the winter on Phuket and not those sometimes young, sometimes not so young entrepreneurs who work remotely on their laptops and have completely cut all their ties with their country of citizenship and moved to Thailand for 5, 10 or 20 years.

Also, don't forget those entrepreneurs who decided to live in Thailand full time and has a company in a foreign jurisdiction. Their company if controlled and managed by the only director who lives in Thailand would be unquestionably a Thai resident company and at the very least would have to register permanent establishment but these things are not simple to say the least and may not even be possible. Such person then would be subject to the Thai labor laws and minimum wage requirements, reporting requirements, accounting requirements and so on. In other words if a Thai Elite member who lives full time in Thailand has an LLC in the US and he or she sells physical or digital products in the US is likely braking the laws in Thailand if he or she failed to obtain a Thai tax id and pay corporate tax with his or her company and such person should pay personal income tax as well on the money he or she receives in various ways from the now Thai tax resident company. However obtaining a tax id is not that easy (or in some cases impossible unless you have rental income) as a Thai Elite member.