Taxes if living in Thailand on savings and passive income

[prb]

Good Morning,

 

I am a 43 years old French national and French Tax resident.

I have been staying quite a long time in Thailand since autumn 2015 on Tourist Visas and Visa exemptions and I have decided now to apply for the Elite Visa.

I don't work anymore I live on my savings and get a fair amount of interests, dividends and capital gains every years.

 

So, i will become Thai tax resident, staying french resident makes no sense due to the amount of taxes you have to pay there if living on passive income.

 

Here comes an important detail:

 

Source:

https://www.interactivethailand.com/accounting/personal-income-tax-on-thai-vs-foreign-income/

 

Quote

"FOREIGN SOURCED INCOME
Similarly, the income is considered foreign when it is derived from the same activities listed above, only taking place outside of Thailand. It will be taxed in Thailand provided the following conditions are met:

An individual is a Thai tax resident
The income is brought to Thailand in the same calendar year it is received
The first condition is clear – a Thai tax resident is a person residing in Thailand for at least 180 days or more in a year. Such residents are liable to pay tax on income from sources in Thailand as well as foreign sources brought into Thailand (non-tax residents are subject to tax only on Thai sourced income).

The second condition, however, may need some clarification. For example, when a Thai tax resident earns foreign income in 2015 and does not transfer the funds to Thailand until 2016, they are not liable to pay personal income tax on that portion of the income. They would have to pay tax only if the amount was transferred to Thailand in the same year it was received – 2015."

 

This raises some questions the first is:

 

I certainly have enough saving to live in Thailand one year and more without relying on my passive income.

Now if i transfer any large sums money to my thai bank to pay for the elite visa, buy a condo or even fund my daily expenses will I have to prove that this money was not earned that year to avoid being taxed?

 

Any help from people in that situation appreciated.

Edited May 29, 2019 by prb

[Beggar]

What I understood. Income earned outside Thailand transferred in the same year as earned will be be taxed here - like a pension. But in reality they do not do it at the moment. To avoid future problems it may be better to transfer your pension to a bank account in your home country and from there to a Thai bank account. If you just move money to Thailand it is not regarded as income where you have to pay taxes. 

Edited May 29, 2019 by Beggar

[prb]

Thanks, but i have no pension, only savings and interest paid on that savings.

Obviously any money transfer to my Thai Bank account will be done from my own accounts in europe, never by a third party.

[userabcd]

From lawyers website, Tilleke,

7. Territorial Rules

Under the Revenue Code, an individual, Thai or foreign, who derives assessable income from sources in Thailand is liable to pay personal income tax whether or not such income is paid within or outside Thailand. A person (Thai or foreign) who resides in Thailand at one or more times for an aggregate period of 180 days or more in any tax (calendar) year will be regarded as a resident of Thailand for tax purposes. A resident of Thailand is liable for personal income tax on income from sources inside Thailand and on assessable income derived from sources outside Thailand. However, the imposition of tax on income derived outside Thailand will apply only to income derived and brought into Thailand in the same year in which such income is earned. A non-resident is subject to pay tax only on income from sources within Thailand (irrespective of the place of payment). Assessable income from sources in Thailand include the following: a. income from a post or an office held in Thailand; b. income from a business carried on in Thailand; c. income from the business of an employer in Thailand; d. income from a property situated in Thailand. Assessable income from sources outside Thailand include the following: a. income from a post or office held abroad; b. income from a business carried on abroad; c. income from a property situated abroad

 

Many other large accounting firms have informational booklets explaining the same understanding of Thai tax laws.

Edited May 29, 2019 by userabcd

[prb]

Thanks, sounds like i would be on the safe (tax exempt) side.

Guess i better have a word with one of those lawyers when i'll be back in LOS to avoid any mistake...

[Crisu]

1 hour ago, prb said:

Thanks, sounds like i would be on the safe (tax exempt) side.

Guess i better have a word with one of those lawyers when i'll be back in LOS to avoid any mistake...

I think KPMG is a reputable international Tax lawyer and if they (and by the way other tax advisors too) are declaring on their recent tax publication abut Thailand, that only the income that is brought into Thailand the same year earned is taxable, then you can rely on this and dont need a Thai lawyer´s opinion anymore
 

 

https://home.kpmg/xx/en/home/insights/2014/04/thailand-thinking-beyond-borders.html

Edited May 29, 2019 by Crisu

[prb]

Thing is, let's say I sell some shares or withdraw from a saving account to transfer in my Thai account in Thailand (buying condo, paying elite visa ...)

This money was earned years ago but produce interest or dividends on a yearly / monthly basis.

Could I be liable to pay taxes then if  I have the Thai fiscal residency?

[elviajero]

4 hours ago, prb said:

So, i will become Thai tax resident, staying french resident makes no sense due to the amount of taxes you have to pay there if living on passive income.

If you stay in Thailand longer than 6 months (180 days) in a tax year you are automatically ‘resident for tax’.

 

Unless you are transferring income you’ve earned in the same tax year it’s unlikely you’ll have any tax liability. If you want a definitive answer you’ll need to consult an accountant, but thousands of expats are in your situation and do not have any tax liability in Thailand.

[userabcd]

Gains derived from sales of shares are generally subject to PIT. However, gains derived from sales of securities listed on the Stock Exchange of Thailand are exempt from tax.

Gains derived from sales of real property are subject to PIT. A standard allowance is deductible, depending on the number of years of ownership. This tax also applies to gains derived from sales of real property used in a trade or business.

 

If there was an appreciation in the price of those shares or investments when they are sold then there is capital gain and gains would be subject to income tax if you transfer to Thailand in the same year they were earned.

Edited May 29, 2019 by userabcd

[Crisu]

This money was earned years ago but produce interest or dividends on a yearly / monthly basis.
Could I be liable to pay taxes then if  I have the Thai fiscal residency?

If you transfer this interest/dividends the same year you earn them into your thai account, then YES.
If you transfer interest/dividend the next year or the following years, then NO

See the above statement of KPMG tax advisor.

[prb]

3 hours ago, Crisu said:

 

 

If you transfer this interest/dividends the same year you earn them into your thai account, then YES.
If you transfer interest/dividend the next year or the following years, then NO

See the above statement of KPMG tax advisor.
 

 

 

Yes i understand this part of the law.

 

Just would have like to get infos from people in my future situation to know if they had to justify that this money was already in their foreign account the year before being transfered to Thailand.

[topt]

1 hour ago, prb said:

Just would have like to get infos from people in my future situation to know if they had to justify that this money was already in their foreign account the year before being transfered to Thailand.

Nobody has ever said that they have had to do this which is not to say it may not happen in the future.

10 hours ago, prb said:

will I have to prove that this money was not earned that year to avoid being taxed?

No.

Currently, and for the foreseeable future, you have nothing to worry about.  

[mshs]

12 hours ago, prb said:

Thing is, let's say I sell some shares or withdraw from a saving account to transfer in my Thai account in Thailand (buying condo, paying elite visa ...)

This money was earned years ago but produce interest or dividends on a yearly / monthly basis.

Could I be liable to pay taxes then if  I have the Thai fiscal residency?

No, not liable for taxes.

 

a) Thai Elite does not make you a tax resident.

b) Thailand like France is a territorial system, taxed within the territory.

Unlike the Republique, the Kingdom has that 1 year provision (perhaps a twisted attempt at avoiding being labelled a tax-haven) for tax residents.

 

I would put more thought into buying condo, paying elite visa ... than on taxes.

 

 

 

[vukovar77]

13 hours ago, prb said:

 

Yes i understand this part of the law.

 

Just would have like to get infos from people in my future situation to know if they had to justify that this money was already in their foreign account the year before being transfered to Thailand.

I have almost same situation as You.I am tax payer in Thailand,cos. I live here permanently for 6 years.You are not obligate to pay tax for Your savings transferred in Thailand.

With dividends from abroad it depends of that did You pay tax in Your home country or not?No double taxation!Capital gain is tax exempted in Thailand and that is why Thailand is very interesting for people like me and You!Great advantage for us!Elite Visa is pretty expensive and stupid solution for You!No need for that at all!

[dragonballzzz]

6 hours ago, vukovar77 said:

Elite Visa is pretty expensive and stupid solution for You!No need for that at all!

So what is your cheaper & smarter solution?

 

If like us you are under 50, single, not interested in studying or working anymore...

 

Share your wisdom with us

[dragonballzzz]

To the OP "PRB" 

 

I am exactly in the same situation as you.. I am sending you a PM.. Hopefully we can help eachother

[khunPer]

On 5/29/2019 at 4:03 AM, prb said:

I certainly have enough saving to live in Thailand one year and more without relying on my passive income.

Now if i transfer any large sums money to my thai bank to pay for the elite visa, buy a condo or even fund my daily expenses will I have to prove that this money was not earned that year to avoid being taxed?

The short answer is "no".

 

The longer version in reply to your opening post is that France and Thailand properbly have a double-taxation agreement, which you might need to check.

 

Often retirement pension is taxed in the country that pay out the retirement pension, as that country might have given income tax-relief during the saving period, and tax relief on the retirement saving's dividends. If not, you might se a benefit in paying Thai income tax of your retirement pension, rather than your home country's income tax, depending of the tax percentage (I think France has some favorable tax arrangements for retired, but I'm not French, so I'm not familiar with these, but other EU-citizens prefer to move themselves and their retirement taxation to France).

 

Foreign income is in practice (the text is little different, but tis is the understanding) only taxable if transferred into Thailand the same calendar year as earned, whilst foreign savings transferred into Thailand are free from income tax, i.e. income transferred the next, or a later, calendar year than earned.

 

A lot of people live from their savings, in Thailand. You only need to register for taxation, if you have some income to be taxed. Bank interest from long-term accounts, and dividends from stock marked, are withheld taxed, and you don't need to do any further; however, in you have no other taxable Thai-income, you might be eligible for having the withheld tax returned.

 

Transferring larger sums of money into Thailand require a declaration to Bank- of Thailand, if the sum is equivalent to $50,000 or above. Your bank will do that, but remember to state the money is for investment in for example a condo, and ask for a receipt (might take a week to get), as that will make you eligible to transfer similar amount out of Thailand, i.e. if you sell a condo or other investments. Some banks might also check for whitewashing, which might be your French bank, or EU offshore bank, rather than the Thai bank.

 

You should also check the double-taxation agreement between France and Thailand concerning dividends from stock holdings. Living abroad, outside EU, you would often be allowed 15 percent in dividend tax – I think France is higher than that – however, if you transfer the dividend into Thailand, the same calendar year, as the dividend is earned, you might be eligible to pay Thai dividend tax, instead of French dividend tax. The Thai dividend withholding tax is 10 percent. The tax will still be claimed by the French tax authorities – i.e. you would apply for a tax-reduction or a tax-refund – and you shall not pay any tax, or declare anything, to the Thai authorities, as you then already have paid your tax in accordance with the double taxation agreement.

 

Above is a situation, where it might be a benefit to move income into Thailand the same calendar year as earned, rather than waiting till the next calendar year, and make it savings; because if you wait, your dividends are not taxable in Thailand, and you cannot apply for a reduction in accordance with a double taxation agreement. The French tax authorities – or one's home country's tax authorities – might wish to see proof for the dividends has been transferred into Thailand, same year as earned. However, you might always be eligible for the 15 percent dividend tax, if dividends has not been transferred into Thailand the same calendar year as earned, also for some offshore stock holdings, including USA (I talk from experience, a declaration will let US-authorities withhold 15 percent only, so one shall not even apply for a refund).

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[ThomasThBKK]

1 hour ago, dragonballzzz said:

So what is your cheaper & smarter solution?

 

If like us you are under 50, single, not interested in studying or working anymore...

 

Share your wisdom with us

 

There's nothing for people like us besides the elite PE visa, except marriage and work - both of them far more horrible than paying the elite fee for me personally.