Help regarding residency and taxes

[Requiem]

Hi!

 

Here is my situation - I have a small online company based in a European country, I'm the director and the only employee there, kind of a digital nomad per se. My bank is based at the same country, as is the source of my income.

 

Currently I'm paying income taxes to the same European country, but I spend close to 6 months every year in Thailand on multi entry tourist visas.

 

I'm thinking that in the future I might settle in Thailand or spend more than 180 days there in a year.

 

My initial thought is to save on income tax - I understand that if I declare my residency in Thailand, I don't have to pay income tax to my European country. So the question is two fold:

 

a) I'm staying in Thailand more than 180 days in a year.

b) I don't stay in ANY country more than 180 days in a year, travel around like a digital nomad, but having declared my residency in Thailand.

 

Is there any case where I could keep a low profile and don't have to pay income tax to any country? And also, how does this work - does a bank send my data to tax authorities in Thailand? What if my income is foreign based, I don't work for thai company. Does it still mean I would have to pay income tax for Thailand. My bank account would remain the one from my European bank, I'm not planning to open a thai bank account.

 

If someone is in similar situation, I'd like to know how they're working this out.

[Snow Leopard]

I would move the company offshore. Pay yourself a small salary from that company, declare that and pay the tax on it in your own country. If you want to repatriate funds from your offshore company at a later date and pay the taxes on that then that is up to you. 

[elviajero]

1 hour ago, Requiem said:

Is there any case where I could keep a low profile and don't have to pay income tax to any country?

Yes, just don’t declare your income anywhere; it’s called tax evasion.

 

Your business will continue to owe taxes in your home country even though you are in Thailand over 180 days and considered resident. As a resident you are liable to pay any tax due in Thailand; however, as long as you don’t transfer earnings from your home country to Thailand — in the tax year it’s earned — you shouldn't have a tax liability in Thailand.

 

You could move your business to Thailand, but unless you’re a high earner it’s probably not worth the expense/hassle.

 

If you don’t move your business to Thailand and get formal permission to work, be aware that you are working illegally in a Thailand even if online and your business is in another country.

[Oye at Home]

 

21 minutes ago, elviajero said:

As a resident you are liable to pay any tax due in Thailand; however, as long as you don’t transfer earnings from your home country to Thailand — in the tax year it’s earned — you shouldn't have a tax liability in Thailand.

 

Unfortunately, tax residents of Thailand owe Thai tax on salary income on work that they did while being a resident of Thailand.  It doesn't matter where it's paid, or whether the funds are transferred into Thailand.  The rule that there's no tax due if the funds aren't transferred into Thailand only applies to offshore investment income.

[Requiem]

12 hours ago, Snow Leopard said:

I would move the company offshore. Pay yourself a small salary from that company, declare that and pay the tax on it in your own country. If you want to repatriate funds from your offshore company at a later date and pay the taxes on that then that is up to you. 

The way I do it now is similar - I pay myself a lower salary, pay income tax to my country for that and keep the rest in the company. The problem is on how to pay out the rest of the money without it being taxed. What difference would it make when moving the company offshore in that sense?

[Requiem]

11 hours ago, elviajero said:

Your business will continue to owe taxes in your home country even though you are in Thailand over 180 days and considered resident. As a resident you are liable to pay any tax due in Thailand; however, as long as you don’t transfer earnings from your home country to Thailand — in the tax year it’s earned — you shouldn't have a tax liability in Thailand.

I thought there's no double taxation and you only have to pay taxes to the country where you spend more than 180 days?

[Snow Leopard]

29 minutes ago, Requiem said:

The way I do it now is similar - I pay myself a lower salary, pay income tax to my country for that and keep the rest in the company. The problem is on how to pay out the rest of the money without it being taxed. What difference would it make when moving the company offshore in that sense?

Your company now must be due corporation tax on any profit and you would be responsible to pay tax on any dividend you take at the end of the financial year. If your company is offshore you would only be responsible for any monies you bring back onshore. 

 

I have my own way of dealing with this. My situation is unusual. I would suggest you talk to a good financial/tax advisor to ascertain the best way forward in your own particular case.

[topt]

On 7/30/2019 at 7:29 PM, Oye at Home said:

 

Unfortunately, tax residents of Thailand owe Thai tax on salary income on work that they did while being a resident of Thailand.  It doesn't matter where it's paid, or whether the funds are transferred into Thailand.  The rule that there's no tax due if the funds aren't transferred into Thailand only applies to offshore investment income.

If true I would have thought that would affect many offshore contract workers?

Do you have a link referencing this?

[elviajero]

25 minutes ago, topt said:

If true I would have thought that would affect many offshore contract workers?

Do you have a link referencing this?

Offshore workers do not work in Thailand.

[topt]

4 minutes ago, elviajero said:

Offshore workers do not work in Thailand.

No really.......

Suggest you may want to read what I quoted again. He mentioned -

Quote

tax residents of Thailand owe Thai tax on salary income on work that they did while being a resident of Thailand.

He did not say anything about "where" you work hence my query.

[elviajero]

34 minutes ago, topt said:

No really.......

Suggest you may want to read what I quoted again. He mentioned -

He did not say anything about "where" you work hence my query.

I would have thought my answer made it clear your question was moot.

 

To be clear ....

1. I doubt many offshore workers are in Thailand more than 180 days per year to qualify as resident.

 

2. I believe they were saying that someone (e.g. the OP) — resident and carrying out work, legally or not, in Thailand — is potentially liable for tax regardless of where the income is paid because the work was carried out on Thai soil. 

 

3. “A person’s liability for Thai tax is determined by both residence and source rules. A resident of Thailand for tax purposes refers to an individual who is present in Thailand for a total of at least 180 days in a given tax year (being the calendar year).

 

The general rule is that a person who is either a resident or non-resident of Thailand is assessable on income derived from sources in Thailand. A resident is also subject to Thai tax on foreign-sourced income, but only if that income is remitted to Thailand in the same year it is received.”

[jackdd]

On 7/31/2019 at 6:33 AM, Requiem said:

The problem is on how to pay out the rest of the money without it being taxed.

Legally that's not possible. Illegally there are many ways to do it, you have to be creative.