EU National, resident in UK, now working in Thailand - TAX?

[HereIAm1]

I am an EU national (not British), I have been a UK resident for over a decade, I moved to Thailand on tourist visas a year ago and I now have a job with a non B visa and work permit. Does anyone know what I am supposed to do with regards to my UK legal/Tax status? I'd like to keep my residency there if possible as it seems I can't be a resident in Thailand (I need 3 years of non B visas first for that). Thank you

[Jimbo1964]

I would have thought it depends on what happens with the Brexit negotiations. Currently it seems that if your living in the UK when it happens, as an EU citizen your ok and have protected rights, but not sure if your living in Thailand.

[sawadee1947]

in your EU country

[HereIAm1]

Sorry sawadee1947, in my EU country what? I should move back my residency there, like at my parent's place? What if I do nothing, will the UK Inland Revenues tap me on the shoulder in let's say one or two years (The Brexit thing might take longer to settle, it seems)? I have not communicated my new job to them (as it's fairly recent and I want to understand what to do properly before I do). Thx

[DUS]

Have you done the Statutory Residence Test on the HMRC website? What was the result? Are you still considered a UK tax resident for tax purposes? 

 

Apart from that, are you asking if you will have to pay tax on your income generated here in Thailand? 

 

 

 

[DUS]

9 hours ago, HereIAm1 said:

as it seems I can't be a resident in Thailand (I need 3 years of non B visas first for that)

What makes you believe that?

 

To become a Thai resident for tax purposes does not require anything like spending 3 years on a Non-B visa. 

[sometimewoodworker]

U.K. Resident information probably has the details you need and it is only 103 pages.

[HereIAm1]

On 15/01/2018 at 8:26 PM, DUS said:

What makes you believe that?

 

To become a Thai resident for tax purposes does not require anything like spending 3 years on a Non-B visa. 

Thanks... I probably need low-cost professional advice. I am in Samui. Any recommendations? Thank you...

[HereIAm1]

On 15/01/2018 at 9:38 PM, sometimewoodworker said:

U.K. Resident information probably has the details you need and it is only 103 pages.

Thank you... 

[Oxx]

11 hours ago, HereIAm1 said:

Thanks... I probably need low-cost professional advice. I am in Samui. Any recommendations? Thank you...

 

You don't need professional advice.

 

You are confusing "Permanent Residence" which is the right to stay in Thailand long term, with tax residence, which is based upon the number of days you stay in the Kingdom each calendar year.  Spend more than 180 days in Thailand, and you're automatically resident.  Even as a non-resident you're liable for income tax on income arising within Thailand.  http://www.rd.go.th/publish/6045.0.html  It's Permanent Residence that requires 3 years' worth of tax returns, and a whole lot of other requirements such as passing a language test.

 

UK tax residence is also based upon the number of days you spend in the UK, but also a number of other factors.  It's explained fairly clearly at https://www.litrg.org.uk/tax-guides/migrants-and-tax/residence-and-domicile/when-someone-resident-uk  The official guide is at https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt

 

Do you have income arising in the UK? If not, then there's nothing to worry about.  Resident or non-resident makes no difference to your UK income tax position.  If you have UK income, then there may not be a difference if that income is from bank accounts, or equity and bond investments.

 

As for "keeping your UK residency".  You are again confusing tax residence with the right to live in the country.  As things stand, your right to live in the UK is covered by EU rules.  Once the UK is free from the EU, well, nobody knows.  However, it's perhaps unlikely that you'll automatically be permitted to return.  (This is assuming that the UK only gives the right to remain to people who are actually living in the UK at the appropriate time.)

[DUS]

1 hour ago, Oxx said:

 

Do you have income arising in the UK? If not, then there's nothing to worry about.  

 

Following up on this point with another question then:

 

Assumimg the OP is French, now moves to Thailand and works “under the radar” as a freelancer for 10 companies in 10 different (European) countries. Legally, where would he have to declare this income and pay his (income) tax? 

[Oxx]

7 minutes ago, DUS said:

Assumimg the OP is French, now moves to Thailand and works “under the radar” as a freelancer for 10 companies in 10 different (European) countries. Legally, where would he have to declare this income and pay his (income) tax? 

 

As I understand it, and assuming he (or she) is non-resident in any EU country, and is resident in Thailand:

 

From the Thai perspective, he is liable for Thai income tax on all income brought into Thailand.

 

Since he will almost certainly be receiving income through a personal service company, so he/she will be liable for income tax at corporate rates in the country in which the company is incorporated.

 

This may lead to double taxation of income.

 

Of course, the freelancer is working in Thailand illegally and probably would experience issues paying tax here.

[DUS]

34 minutes ago, Oxx said:

 

Since he will almost certainly be receiving income through a personal service company, so he/she will be liable for income tax at corporate rates in the country in which the company is incorporated.

Thank you for your reply.

 

I am aware of many freelancers here on the ground in Thailand invoicing for their services using their private Thai addresses. So no officially registered company involved. Then what? As you rightly point out, as they’re working in Thailand illegally they’re in no position to declare their income in TH. 

[Oxx]

6 minutes ago, DUS said:

I am aware of many freelancers here on the ground in Thailand invoicing for their services using their private Thai addresses. So no officially registered company involved. Then what? As you rightly point out, as they’re working in Thailand illegally they’re in no position to declare their income in TH. 

 

As before, they are liable for Thai income tax on all income brought into Thailand.  (Just because you're working illegally doesn't mean you're not liable for income tax.)

 

If they are always paid into a Thai bank account, I think that's the end of it.  However, I believe, if they are paid into EU bank accounts they'll be liable for EU local income taxes in each individual country where they receive payment.

[DUS]

1 minute ago, Oxx said:

 

If they are always paid into a Thai bank account, I think that's the end of it.  However, I believe, if they are paid into EU bank accounts they'll be liable for EU local income taxes in each individual country where they receive payment.

That’s very interesting! Thank you!

 

 

[DUS]

I had never considered that the location of one´s bank account might determine where you have to pay your personal income tax. If true, a few people I know might have a rude awakening in the future. Oh oh....

[HereIAm1]

OK... Thank you very much, this is very useful.

So, if I understand correctly: someone in Thailand for more than 180 days a year and with a regular job and work permit can move his/her tax residency to Thailand. At the same time he/she can keep his residency address in the UK/Other EU country. If there's any income generated in any other EU country, depending on where the income is banked, the individual will pay tax in that country. All I have to do is to call the Inland Revenue in the UK, notify them I am working in Thailand, notify them my residency address is still the same one as before, and I'll be perfectly happy and compliant? If there's any little money originated in Europe, banked in the UK, I'll do a tax return once a year there and that will it...

[Oxx]

2 minutes ago, HereIAm1 said:

So, if I understand correctly: someone in Thailand for more than 180 days a year and with a regular job and work permit can move his/her tax residency to Thailand. At the same time he/she can keep his residency address in the UK/Other EU country. If there's any income generated in any other EU country, depending on where the income is banked, the individual will pay tax in that country. All I have to do is to call the Inland Revenue in the UK, notify them I am working in Thailand, notify them my residency address is still the same one as before, and I'll be perfectly happy and compliant? If there's any little money originated in Europe, banked in the UK, I'll do a tax return once a year there and that will it...

 

You are automatically tax resident in Thailand if you spend 180 days/year here.  Nothing to do with having a job or work permit.

 

No idea what you mean by "residency address".  If you're spending most of the year in Thailand you simply need to notify HMRC of your new Thai address, and tell them the date that you left the UK and that you are no longer resident in the UK.

 

And yes, you'll need to continue to submit a UK tax return.  You will *not* be able to do that online using the HMRC website since it does not cover the residence pages of the tax return.

[DUS]

8 minutes ago, HereIAm1 said:

OK... Thank you very much, this is very useful.

So, if I understand correctly: someone in Thailand for more than 180 days a year and with a regular job and work permit can move his/her tax residency to Thailand. At the same time he/she can keep his residency address in the UK/Other EU country. If there's any income generated in any other EU country, depending on where the income is banked, the individual will pay tax in that country. All I have to do is to call the Inland Revenue in the UK, notify them I am working in Thailand, notify them my residency address is still the same one as before, and I'll be perfectly happy and compliant? If there's any little money originated in Europe, banked in the UK, I'll do a tax return once a year there and that will it...

 

I am sure it is only me but I am always confused when you use the term "residency" in your posts and questions. As for the above, when you say "can I call HMRC and keep my residency address in the UK", you actually just mean your postal address, right? If you´re not living in the UK and as you don´t hold a British passport, what is it that you want to achieve with letting HMRC know your (fake?) postal address in the UK. Is it that you would want to keep the door open that once the UK leaves the EU you as an EU citizen can go back and claim permanent residency or whatever it will be called at the time? Very much doubt that only letting HMRC know a postal address for future correspondence will do the trick.

Edited February 2, 2018 by DUS

[HereIAm1]

I might have a small online business which is making very little right now but which I am intending to grow, digital nomad style. As I am already set up in England as a solo trader, it's easier for me to keep it this way. As revenues grow I will then set up a limited company. If that can be done in the UK, better, as in easier. If not then I'll have to find some other solutions in another EU country, or somewhere else. I intend to go back to London and spend one month every summer there anyway. Would this be enough to keep my postal address and UK solo trader status there? Or what do you recommend I do? It seems there is no proper, legal way to do this, or not?

 

[Crisu]

I woul recommend to study the double tax agreement between GB and TH very carefully if you intend to keep two residences

https://www.gov.uk/government/publications/thailand-tax-treaties

[Oxx]

10 hours ago, HereIAm1 said:

As I am already set up in England as a solo trader, it's easier for me to keep it this way. As revenues grow I will then set up a limited company. If that can be done in the UK, better, as in easier.

 

Being a sole trader is a common but stupid practice.  If there are problems with the business you can be personally sued and bankrupted.  Far better to set up a limited company.  If the company then fails, you are not liable for its debts and in almost all circumstances you can't be sued.

 

Setting up a UK limited company is quick and easy and can be done online.  The only issue you might face is having a permanent address for the company.  However, you can use an accommodation address - no problem.  Life can be made even easier by using an agent (company formation service) to handle the paperwork for you.  Some wrap the service with additional services such as an accommodation address and mail forwarding.

 

You will need to keep careful accounts for the company and make an annual return to Companies House.

[SantiSuk]

On 2/2/2018 at 1:31 PM, Oxx said:

You are automatically tax resident in Thailand if you spend 180 days/year here.  Nothing to do with having a job or work permit.

 

No idea what you mean by "residency address".  If you're spending most of the year in Thailand you simply need to notify HMRC of your new Thai address, and tell them the date that you left the UK and that you are no longer resident in the UK.

 

And yes, you'll need to continue to submit a UK tax return.  You will *not* be able to do that online using the HMRC website since it does not cover the residence pages of the tax return.

Good solid advice there Oxx.

 

Just to note that you do not automatically qualify for immediate status as 'non-resident UK for tax purposes' by changing address to Thailand and notifying UK HMRC that you (think you) are non-resident. Possibly yes, if you don't return again to the UK in the current or next tax year (or do so for a very short period) but even then you might be caught for the rest of the UK tax year. It might work but you would still be advised to trawl through the rules - particularly if HMRC ask you to justify why you are claiming and if you are required to file a UK tax return in the year you move, including the Foreign pages. Certainly check into it before making (even any casual short visits) back to the UK.

[sometimewoodworker]

On 04/02/2018 at 8:59 PM, HereIAm1 said:

I might have a small online business which is making very little right now but which I am intending to grow, digital nomad style. As I am already set up in England as a solo trader, it's easier for me to keep it this way. As revenues grow I will then set up a limited company. If that can be done in the UK, better, as in easier. If not then I'll have to find some other solutions in another EU country, or somewhere else. I intend to go back to London and spend one month every summer there anyway. Would this be enough to keep my postal address and UK solo trader status there? Or what do you recommend I do? It seems there is no proper, legal way to do this, or not?

 

You desperately need professional tax advice. Becoming non resident in the U.K. for tax Is neither simple nor quick. 

 

Any income, at present,  generated in the U.K. Or E.U. Or anywhere else will be liable for tax. That will only change if you can convince HMRC that you are no longer resident.

 

Your intention to return regularly to the UK will probably prevent you becoming non tax resident, as will your intention to maintain your other ties to the U.K. 

 

"Cake and eat it" spring to mind

Edited February 8, 2018 by sometimewoodworker

[SantiSuk]

Agree - now I've seen the stuff about might want to stay in the UK/might not and might be revisiting the UK and his uncertainty about every aspect, I think he needs to talk it through with an adviser, not bounce general questions around on a thread like this.

 

If he really gets stuck into the HMRC guidance on non-residence rules it could help him chart his own path to more focussed questions. The rules are a bit complicated but they are well set-out and someone intelligent with a very cold towel and time to spend can get to understand where they are coming from.

 

Here's the starting point:

https://www.gov.uk/tax-foreign-income/residence

[rwdrwdrwd]

On 2/8/2018 at 7:26 AM, sometimewoodworker said:

You desperately need professional tax advice. Becoming non resident in the U.K. for tax Is neither simple nor quick. 

 

Any income, at present,  generated in the U.K. Or E.U. Or anywhere else will be liable for tax. That will only change if you can convince HMRC that you are no longer resident.

 

Your intention to return regularly to the UK will probably prevent you becoming non tax resident, as will your intention to maintain your other ties to the U.K. 

 

"Cake and eat it" spring to mind

It's not that difficult... Spend less than 16 days in the UK and bingo, not tax resident.

Page 9 - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/547118/160803_RDR3_August2016_v2_0final_078500.pdf
 

Quote

Automatic overseas tests
1.4 If you meet any of the automatic overseas tests for a tax year, you are automatically non-resident for that year. You should therefore consider these tests first, as if you meet any one of them, you will not need to consider any of the other parts of the test.

First automatic overseas test
1.5 You were resident in the UK for 1 or more of the 3 tax years preceding the tax year, and you spend fewer than 16 days in the UK in the tax year. If an individual dies in the tax year this test does not apply.

And once you've done that for 3 years, you can go back to the rainy place for 45 days per year.

 

Quote

1.6 You were resident in the UK for none of the 3 tax years preceding the tax year, and you spend fewer than 46 days in the UK in the tax year

Filing a P85 helps get this on the record, and enables one to claim rebates and stop receiving demands for self assessment forms, but it's not a requirement - Stay out of the UK for a 349 days of a tax year and you're legally not tax resident regardless of any other factor.

- All UK sourced income will continue to be subject to income tax, regardless of tax residency.
- Non UK income is not subject to tax if not UK resident.

My advice? Reduce the "month every summer" to two weeks, at least for 3 years.

 

Also give careful thought to whether you *really* want to put up with the UK bureaucracy (and tax implication) for an 'online business' - what's the benefit of having it as a UK entity? You could easily incorporate elsewhere where you do not have so much bureaucracy, and where your earnings from that venture would not be subject to neither personal income tax nor corporation tax. For example, BVI or Seychelles have no bureaucracy but can be tricky with PayPal and similar services if you're taking payment online - though there are workarounds. Hong Kong is great with payment providers but the yearly audited accounts are onerous and cost money (still less than the UK though). Pair any of those setups with an offshore personal bank account in a jurisdiction that does not tax income of non residents (Singapore, for example) and if you're able to wait a year until you bring it to Thailand you can live completely tax free (and tax return free).

Edited February 9, 2018 by rwdrwdrwd