Does offshore pension income get taxed?

[kena]

Hi everyone,

 

Just signed up a few minutes ago.  I retired and moved to Thailand 10 months ago.  The manager in Canada who looks after the investments for my pension has sent me some forms that ask me to sign a Declaration of Tax Residence, which I guess would now be Thailand.  My pension comes from Canada and I do not work here in Thailand.  The last time I looked, if my income comes from Canada then I pay my taxes there and not here because Canada and Thailand apparently have a treaty to prevent double-taxation.

 

However, the fact they sent me the form described above makes me think otherwise.  Long story short:  are foreign pensioners living permanently in Thailand required to pay tax in Thailand on their pension income?  Also, does anyone know of a Thai website where I can read this information for myself?  I live in Bueng Kan province and haven't had any luck looking online for an accountant in the area.

 

Many thanks in advance for any assistance,

 

Ken

[Oxx]

Theoretically yes if the income is brought into Thailand in the same year it's received.  In practice, no.  Never heard of any foreign pensioner paying tax on their foreign pension here (and I did post a question on this forum to that effect a while back).

[userabcd]

If you are residing in Thailand for more than 180 Days a year then you are also tax resident in Thailand. You can be tax resident in more than one jurisdiction. You will probably need to fill in that form and send it back to your investment manager looking after your pensions.

 

What does the double tax treaty for your country say about the tax on the pension? The information is available on the RD website.

 

If you are already paying tax back home then you may be OK, you could also go and discuss it with your nearest revenue department in Thailand, they will clarify.

Edited May 15, 2019 by userabcd

[Kwasaki]

1 hour ago, kena said:

Long story short:  are foreign pensioners living permanently in Thailand required to pay tax in Thailand on their pension income? 

Well I never have only paid UK tax as you say Canada has a treaty to prevent double-taxation.

Only time I have paid tax in Thailand is on a interest Thai bank savings scheme, you can get the tax paid back but never bothered.

[allane]

Greetings from a fellow Canadian , not quite old enough to receive the CPP. I can't make the link work, so google "Thailand Revenue Department" and open their English-language website. Click on the Site Map. When it opens, click on the name of your country (and mine).

[Berkshire]

1 hour ago, kena said:

The manager in Canada who looks after the investments for my pension has sent me some forms that ask me to sign a Declaration of Tax Residence, which I guess would now be Thailand. 

Just curious:  Would it be possible for you to just provide a Canadian address?  That would alleviate all of your concerns. 

[Estrada]

They will deduct tax at first and then send you a refund by cheque after the end of the tax year. The following year onwards, you pay no tax on your pension.

[Jeffrey346]

On 5/15/2019 at 1:03 PM, Oxx said:

Theoretically yes if the income is brought into Thailand in the same year it's received.  In practice, no.  Never heard of any foreign pensioner paying tax on their foreign pension here (and I did post a question on this forum to that effect a while back).

Many pay Thai tax on pensions. It depends on the agreement with your country.

Those that pay here usually find that the Thai rate is less than their home country. 

[Oxx]

35 minutes ago, Jeffrey346 said:

Many pay Thai tax on pensions. It depends on the agreement with your country.

Those that pay here usually find that the Thai rate is less than their home country. 

 

Do you have any evidence to back your assertion, because I simply don't believe you.

 

I previously asked, back in 2017 "Do you pay Thai income tax on your pension?".  60 or so replies, and not a single person said "yes".

 

 

[ballbreaker]

You can download copy of Thailand/Canada double tax agreement from Thai revenue department here:

 

https://www.rd.go.th/publish/766.0.html

 

You can download a nice Thai tax booklet here:

 

https://www.pwc.com/th/en/tax/thai-tax-booklet-2018.html

 

[Naam]

On 5/15/2019 at 12:20 PM, kena said:

Long story short:  are foreign pensioners living permanently in Thailand required to pay tax in Thailand on their pension income?

NO! and that applies whether a double tax agreement exists or not.

[Naam]

2 hours ago, Jeffrey346 said:

Many pay Thai tax on pensions. It depends on the agreement with your country.

Those that pay here usually find that the Thai rate is less than their home country. 

there can't be that many stupid pensioners.

[khunPer]

On 5/15/2019 at 7:20 AM, kena said:

Long story short:  are foreign pensioners living permanently in Thailand required to pay tax in Thailand on their pension income?  Also, does anyone know of a Thai website where I can read this information for myself?  I live in Bueng Kan province and haven't had any luck looking online for an accountant in the area.

 

Many thanks in advance for any assistance,

It actually depend of the double taxation agreement between your home country, i.e. Canada, and Thailand.

 

Normally foreigners don't pay tax of retirement pension in Thailand, if is already taxed in their home country, due to double taxation agreements. Often the home country will claim the tax, so you don't have a choice, if your home country gave you tax benefits when saving up for your retirement, or if its a government pension.

 

If you have a choice of where to be taxed, income tax might be cheaper in Thailand – I would have loved that...????

 

In general, the understanding of the Thai tax law for foreign income is, that if you transfer the income into Thailand during the same calendar year as the income is earned abroad, it is taxable in Thailand; whilst if your bring the income into Thailand a following calendar year, the income is considered as savings, and savings are tax-free to bring into Thailand.

 

There can be other positive reasons for making a "Declaration of Tax Residence", for example if you have invested in the stock market. Your dividend could be taxed with 15% only – for example are my US-stock dividends withheld taxed with 15% only after I moved out from my Scandinavian home country, and made a Declaration of Tax Residence – and again depending of the individual double taxation agreements, you might be able to claim dividend tax back, and pay only the Thai rate of 10%, which is possible for dividends earned in my home country; for the latter you must transfer your dividends into Thailand during the same year as the dividends are earned, as the dividends otherwise would not be taxed in Thailand (later the money would be tax-free savings), and you there should pay full dividend tax in country of dividend-origin (home I explain it understandable, I'm not native English-speaker).

 

Often – and I think that covers most of us retired expats – you won't need an accountant, or tax-registration in Thailand. However, if you wish to claim Thai dividend tax-rate of 10%, you will ned a TIN (Tax Identification Number), which you can obtain at the local revenue office, or if you have a Yellow House Book, then the number is stated there, as its the same number as used for a Thai-ID. If your Thai-taxable income is under the limit – in general term 150,000 baht a year – you don't need to declare anything.

 

The Thai Revenue Departments official homepage about Personal Income Tax is here.

????

[Geir Rasch]

1 hour ago, Naam said:

there can't be that many stupid pensioners.

Who is the stupid one?

Thailand has agreement with most Countries to avoid double tax and I believe they are simular to the one I know: Norway/Thailand. That agreement is very clear about Taxation of pension from your home country. If you live in Thailand for 180 days or more within a tax year, you are obliged to pay tax to Thailand of that part of your pension you transphere to Thailand within that year.

i know many expat does not pay tax to Thailand, and if you ask your local revenue office, many of then are not aware of this. I myself had to educate my local office. But now more and more are aware of this and I have heard stories where expat has been imposed to pay tax years back. In the future they might connect paying tax to visa extemtion, so again: who is the stupid one?

[Captain 776]

Never........in my 14 yrs.

[Naam]

3 hours ago, Geir Rasch said:

Who is the stupid one?

Thailand has agreement with most Countries to avoid double tax and I believe they are simular to the one I know: Norway/Thailand. That agreement is very clear about Taxation of pension from your home country. If you live in Thailand for 180 days or more within a tax year, you are obliged to pay tax to Thailand of that part of your pension you transphere to Thailand within that year.

i know many expat does not pay tax to Thailand, and if you ask your local revenue office, many of then are not aware of this. I myself had to educate my local office. But now more and more are aware of this and I have heard stories where expat has been imposed to pay tax years back. In the future they might connect paying tax to visa extemtion, so again: who is the stupid one?

stupid ones are those who spread irrelevant stories they heard when sitting on barstools.

[Thailand J]

An expat who declares ex-Thai income/pension and pays Thai tax is like a deer who sneaks behind a hunter, taps on his shoulder, and says : "Shoot me."

 

 

Edited May 18, 2019 by Thailand J

[oznomad]

I wouldnt think the tax treaties differ much but in Australia's case here is the deal.

If the pension is a government one, then the originating state (Aus) is entitled to the tax on it, with no tax payable in Thailand.

It's unfortunate as the tax would be a lot less here. ????

 

[ThaiBunny]

Just now, oznomad said:

I wouldnt think the tax treaties differ much but in Australia's case here is the deal.

If the pension is a government one, then the originating state (Aus) is entitled to the tax on it, with no tax payable in Thailand.

It's unfortunate as the tax would be a lot less here. ????

How does the SAPTO handle the tax on the Australian government pension?

[onera1961]

On 5/16/2019 at 8:14 AM, Geir Rasch said:

Thailand has agreement with most Countries to avoid double tax and I believe they are simular to the one I know: Norway/Thailand.

What agreement do they have with USA? So, I can live here for 179-day and avoid taxation? 

[ThaiBunny]

3 minutes ago, onera1961 said:

What agreement do they have with USA? So, I can live here for 179-day and avoid taxation? 

There's this wonderful invention called "Internet search" and if you type in phrases at random like, say, "Thailand US tax treaty" you can discover all sorts of things

[Mac98]

I'm taxed but not taxed at home. You can declare pension up to about $24,000 and pay no tax. So does Thailand tax your tax exempt pension?

[JimGant]

Unlike some tax treaties, like the UK-Thai treaty, where pensions aren't even addressed, the Canada-Thai treaty goes right to the jugular:

 

Quote

1. Pensions and other similar remuneration, whether they consist of periodic or non-periodic payments, for past employment, arising in a Contracting State and paid to a resident or the other Contracting State shall be taxable only in the first-mentioned State.

Canada gets the taxes, period. Most other treaties will give priority to government pensions to the paying country, but private pensions to the country of residence. This is the US case, but nobody with smarts has their private pension direct deposited to Thailand -- but filtered through a financial account in the US, where other funds also reside, thus the fungibility of money would give pause to the Thais (should they even investigate, which they wouldn't due to the cost/benefit of such an investigation).

 

 

 

 

 

[JimGant]

On 5/16/2019 at 6:23 PM, Naam said:

On 5/16/2019 at 3:32 PM, Jeffrey346 said:

Many pay Thai tax on pensions. It depends on the agreement with your country.

Those that pay here usually find that the Thai rate is less than their home country. 

there can't be that many stupid pensioners.

Do your homework naam. Norway is an excellent example of why a Norwegian expat, resident in Thailand, would want to pay Thai taxes, if the taxes he paid to Thailand were less than the 15% tax at source that Norway charges expat earnings. Why? Because this not a tax credit situation, where total tax paid is the same, regardless of which country collects first. The Norwegian expat just has to show Norwegian tax authorities that he paid Thai tax on all his taxable Norwegian earnings -- and he gets a complete exemption from Norwegian taxes, regardless of how much he paid Thailand. Of course, for the wealthy Norwegian, if Thai taxes were higher than the 15% at source tax, then he'd do the "hold it offshore 'til next year" trick. Nice to have options written into tax treaties.

[topt]

On 5/16/2019 at 8:14 PM, Geir Rasch said:

I myself had to educate my local office. But now more and more are aware of this and I have heard stories where expat has been imposed to pay tax years back. In the future they might connect paying tax to visa extemtion, so again: who is the stupid one?

Well at least we will have a target if it comes to pass.............

[Naam]

17 hours ago, Mac98 said:

I'm taxed but not taxed at home. You can declare pension up to about $24,000 and pay no tax. So does Thailand tax your tax exempt pension?

no!

[Naam]

13 hours ago, JimGant said:

Of course, for the wealthy Norwegian, if Thai taxes were higher than the 15% at source tax, then he'd do the "hold it offshore 'til next year" trick. Nice to have options written into tax treaties.

i don't have to do any homework because the option you mentioned is available for the "not so" wealthy Vikings. please spare me a rebuttal pertaining to poor Vikings who can't afford... as my answer might not sound gentleman like.

[fletchsmile]

The question really needs breaking down into a lot of constituent parts to get your answer, as well as understanding the rules for your citizenship/ residency.

 

Unfortunately people mix a lot of the points together, in blanket statements like do I have to pay tax. Hence the confusion

 

So to clear up a lot of the conflicting posts above and confusion:

 

Some key points to be clear on: 

 

1) pay Thai taxes or not

2) pay home country taxes or not 

3) impact of double tax agreements on 1) or 2) or not

4) Some citizens are taxed on worldwide income wherever they are living.

 

1) pay Thai taxes or not?

In theory the general rule for Thai tax is you're not liable for Thai income taxes if you don't bring it into Thailand in the year earned. But if you bring it in in the year earned you may be in theory. In practice the Thai Revenue never really bother enforcing this rule on individuals  or chasing anyone up on it.

It is possible though, that someone could push the Thai authorities so they could pay tax here instead of paying somewhere else, depending on the points below. Minority of people, but possible

 

2) home country taxes or not?

This really is going to vary widely. Also where your pension comes from and your nationality. For someone captured by countries that tax worldwide income on their citizens, for example, they may need to take into account UK pension income for someone living in Thailand, even though that person is neither UK nor Thai citizen. Unfortunately worldwide income captures them. Just one of a myriad of scenarios. Other countries may tax only on income arising in that country, and may differentiate residents,non-residents, original citizens/not. Other countries won't tax non-residents etc etc.

 

3) Double tax agreements (DTAs) 

 DTAs basically as the name suggest cater to ensuring you are not taxed the same amount twice on the same money. They are usually agreements between countries. In this case a country-Thai DTA

The DTA may allow you to choose where to be taxed and that is the end of it. In which case if Thailand is a lower tax rate than somewhere else you might choose to pay tax in Thailand. That can cause a lot of confusion at your Thai tax office that don't really understand this or haven't much experience of it, given it is not common for foreigners to pay tax in Thailand on their foreign pension income. Remembering point 1)

Also possible is rather than a straight choice, you can offset tax in one place against a total tax bill somewhere else.

It will also depend on what a DTA covers, and what type of pension arrangements

----------------

As an example, of all this for a UK national living in Thailand:

 

3) A UK-Thailand DTA does exist but specifically excludes most private and state pensions except government pensions (by government here I mean a government employee not state pension). So for most UK nationals (except ex-govt employees) they can't use a UK-Thai DTA in this respect

 

So

 

1) As above for that same UK national they would technically only pay tax in Thailand if brought in to Thailand in the year earned. In practice the Thai revenue authorities don't want to know, so no tax is paid here in practice. You could insist and try and educate your Thai tax office and insist on paying. But as alluded to above that's pretty stupid, if you won't be able to offset it against UK taxes in any way

 

2) UK tax. Will depend on your UK set up and arrangements, personal allowances, other income etc etc, specific to the individual.

 

So the key take-away for most UK nationals in Thailand, would be no Thai tax to worry about in practice (in theory yes, in practice no), and then tax payable in UK depends on your UK set up

----------------------------

For a Canadian,

 

The Thai tax viewpoint from Thai authorities will be similar to for a UK national, no Thai tax in practice (even though in theory)

 

The question would be whether Canadian tax is payable. Not really my expertise and best left to OP and Canadians and those with Canadian tax expertise. As pointers to look for though:

-When looking at your Canadian tax you need to be looking at whether you are considered a "factual resident or not" , "significant ties" or "secondary ties" or "non-resident"

-Canada and Thailand do have a tax treaty

- Tax planning is possible to lower the normal rate from 25% to 15%

 

Wouldn't like to post much more on Canadian tax, other than highlight the things to look out for...

 

...as I tend to post stuff only when I'm confident of what I'm talking about ????. I know that's uncommon on TV, but just one of my peculiar quirks

 

Cheers

Fletch :

Edited May 20, 2019 by fletchsmile