Income tax in Thailand from money brought in from overseas

[CrossBones]

Hi

The law in Thaialand for Thai residents earning money from overseas is that you dont pay income tax on overseas investments as long as you dont bring the money to Thailand in the same year that the money was earnt. - I cant find the exact phrasing for this in any official documents though

 

My question

 

If i earn money from dividends in a company in another country. The dividend for 2019 is paid to me in 2020. So if this money goes directly to my personal account in Thailand in 2020 - is this considered money earnt in 2019 or 2020?

 

Would i be better off paying it to my current account in home country this year. Then trasferring it to Thailand in 2021?

 

I realise its unlikely anyone checking this stuff, and probably the Thai system has been set up so wealthy Thais dont pay tax on their overseas income on purpose!  

 

However for various reason I need to be 100 percent legal.

 

Thanks for any advice or insights on this. My accountant said "dont worry just send the money". However its more complicated this for reasons I cant explain everything needs to be 100 percent above board.

Thanks

[PerkinsCuthbert]

Your accountant is right; I've never heard of anyone paying income tax on private funds remitted from abroad. Even if they came after you for tax, how are they going to prove the funds were earned abroad in the current year?

But if you really cannot bring them in for whatever reason, then you yourself have already proposed the solution - wait.

Edited June 14, 2020 by PerkinsCuthbert

[lopburi3]

1 hour ago, CrossBones said:

I cant find the exact phrasing for this in any official documents though

And I do not believe you will - the law that I read was worldwide income is taxable unless exempt by treaty (as is pensions for some).  But indeed government policy has been to not tax funds if not remitted into Thailand in the year earned.

You probably should plan on paying tax if you need to be 100% legal if Thailand considers dividends as income and subject to the same tax treatment (don't have that issue myself).    

[wordchild]

From my understanding of your situation, a dividend received into an overseas account during 2020 , and then remitted into Thailand during 2020, would be considered as overseas INCOME brought into country.
It would therefore (in theory) be liable for Thai income tax, the level (of taxation)   dependent on the relevant double taxation treaty.

It really is not relevant when the company concerned earned the income to pay your dividend, all that matters is when did YOU receive the income. 
To avoid any doubt or question bring the funds into Thailand during week 1 Jan 2021. In which case it would be considered as a capital remittance and so not subject to any (Thai) tax.

Edited June 14, 2020 by wordchild

[boriga]

"Would i be better off paying it to my current account in home country this year. Then trasferring it to Thailand in 2021?"

 

Yes. Paying dividends here directly could possibly be interpreted as current year income. Remit the equivalent funds indirectly from your overseas bank account, even this year without waiting until 2021, could only be considered as remitting past income or savings, just like any other remittance used for living expenses.

 

If you are worried, why take the risk? 

[tonray]

Oh Brother...not this gem of a topic once again.......

 

 

[NightSky]

Quote

Would i be better off paying it to my current account in home country this year. Then trasferring it to Thailand in 2021?

Yes do this

 

you could always transfer savings from last year and rotate new money

Edited June 15, 2020 by NightSky

[maprao]

1 hour ago, tonray said:

Oh Brother...not this gem of a topic once again.......

 

 

+1

[Geordieabroad]

I live in Thailand on a retirement extension but occasionally work on projects around SE Asia. My salary is taxed in the country i earned it and then transferred to my Kasikorn account. There is no tax liability in Thailand for money you earned abroad and then transferred here

[lopburi3]

4 minutes ago, Geordieabroad said:

There is no tax liability in Thailand for money you earned abroad and then transferred here

Have you checked the laws?  If you are a resident here you owe tax on worldwide income from my reading, unless except by tax treaty.

[orientalist]

You never know when the law or the enforcement of laws will change in Thailand. To be on the safe side, I put my bank interest from the UK into a UK account each year and then use Tranferwise to move it over to Thailand on January 1st the following year.

[Captain Monday]

 

37 minutes ago, lopburi3 said:

Have you checked the laws?  If you are a resident here you owe tax on worldwide income from my reading, unless except by tax treaty.

This old chestnut again.  One never transfers money in, that you earned the same year.????Say I earn $30k USD per year. I have $100,000 in my account at Bank of America already. I transfer $30k USD per year into my account at Bangkok Bank. I am always transferring money I earned the previous year.

Money is a fungible asset. Corporations all over the world use these accounting moves, totally legal.I hope these dividends are not the only money the OP has but he should transfer it to his offshore account before wiring it to Thailand. If dividends earned in 2020 were transferred directly or say a bond that matured or proceeds from the sale of a particular asset that would not be allowed tax free if examined closesely by tax authorities.

That much said have you ever heard of a retiree who has has pension or social payments from abroad 

transferred to a Thai bank subject to income tax? I think not. When that starts it would be quite a signal from the authorities to to get out!

[Pedrogaz]

An ancillary question if I may? I have my SS from the US paid here....is it taxable here as well as in the US?

[Max69xl]

20 hours ago, PerkinsCuthbert said:

Your accountant is right; I've never heard of anyone paying income tax on private funds remitted from abroad. Even if they came after you for tax, how are they going to prove the funds were earned abroad in the current year?

But if you really cannot bring them in for whatever reason, then you yourself have already proposed the solution - wait.

"They" can ask for the source of the money even if it probably won't happen. But you never know. 

[Captain Monday]

9 minutes ago, Pedrogaz said:

An ancillary question if I may? I have my SS from the US paid here....is it taxable here as well as in the US?

For sure there is no dual taxation.

Did your bank in Thailand give you a resident or a non-resident account?

Do you file a yearly tax return in Thailand?

I do just to claw back the small amount of interest taken

Non 0-visa or extension is not legal residence in Thailand and domicile for tax purposes in a very complex topic

in most countries, USA one for sure. 

 

[Oldie]

2 minutes ago, Captain Monday said:

For sure there is no dual taxation.

Did your bank in Thailand give you a resident or a non-resident account?

Do you file a yearly tax return in Thailand?

I do just to claw back the small amount of interest taken

Non 0-visa or extension is not legal residence in Thailand and domicile for tax purposes in a very complex topic

in most countries, USA one for sure. 

 

The USA has a very simple law - as citizen you pay taxes independent where you stay in the world. If I understood the Thai law correctly in respect of pensions - you need to pay taxes if they are transferred directly to your account here. Whenever I go to the revenue department here in Pattaya they always ask me many questions about a pension in form of questionnaire. But as you said the law does not seem to be enforced - at least I don't know a case.

[lopburi3]

30 minutes ago, Pedrogaz said:

An ancillary question if I may? I have my SS from the US paid here....is it taxable here as well as in the US?

The USA has a tax treaty with Thailand making the paying country the country of tax payment.  Many countries have such treaties but not all and what it covers varies.

[khunPer]

21 hours ago, CrossBones said:

If i earn money from dividends in a company in another country. The dividend for 2019 is paid to me in 2020. So if this money goes directly to my personal account in Thailand in 2020 - is this considered money earnt in 2019 or 2020?

 

Would i be better off paying it to my current account in home country this year. Then trasferring it to Thailand in 2021?

 

I realise its unlikely anyone checking this stuff, and probably the Thai system has been set up so wealthy Thais dont pay tax on their overseas income on purpose!  

 

However for various reason I need to be 100 percent legal.

I've checked it, but for my home country.

 

You need to check the Double Taxation Agreement (DTA) between Thailand and your home country; you can find your DTA here.

 

The article about dividends might be article 10.

 

If your country's DTA follows the standard, it would say...

Quote

1. Dividends paid by a company which is resident of a Contracting State to a resident of the Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends

 

In other words, you can transfer dividends to Thailand same year as earned, or later – up to you...

 

If you have NOT paid dividend tax in your home country, you are eligible for paying 10 percent tax in Thailand, if you transfer the dividends into Thailand the same calendar year as earned.

 

If you are taxed in your home country – might be a withheld dividend tax – that tax shall not exceed 10 percent. However, you might need to claim any difference between the actual withheld dividend tax, and the 10 percent dividend tax due by Thai tax law, returned in your home country. To do that you will need to transfer the dividend to Thailand the same year as earned, and also prove that you are tax-resident of Thailand for that income year. If you transfer the dividend later than the year the dividend is earned, you cannot have the dividend taxed by tax rules, but shall pay your home country's dividend tax.

 

Depending of your status of stay in Thailand, it might be little difficult to obtain a tax registration – for example if you don't have a work income, I talk from experience – and you need to fill a tax-return form (typically PND 91) for the income year in question. Furthermore you need to apply for an Income Tax Payment Certificate R.O.21 and a Certificate of Residence R.O.22. The certificates are issued for the tax year in question only, so you will need to fill a tax return form every year, and also apply for certificates every year.

 

Depending of you home country's dividend tax percent, and the amount of dividends, it might not be worth the hassle with Thai documentation, if the saved tax is relative small.

 

In reply to your question: The dividends from the 2019 annual company report published in 2020, and dividend paid in 2020, is a 2020 personal income.

 

If your home country's DTA with Thailand is like my home country's DTA: If you have paid dividend tax at home, and it's not less than 10 percent, you can safely transfer the paid out dividend amount into Thailand whatever year you wish, and without any further concern. If you wish tax return from your home country, you need documentation from Thailand.

????

[khunPer]

2 hours ago, Captain Monday said:

This old chestnut again.  One never transfers money in, that you earned the same year.????

Actually not true, it depend of your home country and the Double Taxation Agreement (DTA).

 

Some countries has higher taxation than Thailand, so it will be a (huge) benefit to pay Thai tax instead...????

 

Retirement pension for example, is taxable in the country of tax residence (183+ days). If no DTA you might be eligible for paying tax in both your home country and Thailand. For some countries, if not many, it might be a be beneficial to pay Thai income tax instead; however, one's home country might in the DTA claim that retirement pension can be taxed in either State, som your home country can withheld a high tax, and with no double taxation one shall not also pay tax of the retirement pension in Thailand.

 

Other income might be beneficial paying Thai income tax instead, for example some royalties are taxed only 5 percent in Thailand, but 25 percent in other countries; but you need to transfer the money the same year as earned...????

[flexomike]

2 hours ago, Pedrogaz said:

An ancillary question if I may? I have my SS from the US paid here....is it taxable here as well as in the US?

only the US

[Captain Monday]

2 hours ago, khunPer said:

Actually not true, it depend of your home country and the Double Taxation Agreement (DTA).

 

Some countries has higher taxation than Thailand, so it will be a (huge) benefit to pay Thai tax instead...????

 

Retirement pension for example, is taxable in the country of tax residence (183+ days). If no DTA you might be eligible for paying tax in both your home country and Thailand. For some countries, if not many, it might be a be beneficial to pay Thai income tax instead; however, one's home country might in the DTA claim that retirement pension can be taxed in either State, som your home country can withheld a high tax, and with no double taxation one shall not also pay tax of the retirement pension in Thailand.

 

Other income might be beneficial paying Thai income tax instead, for example some royalties are taxed only 5 percent in Thailand, but 25 percent in other countries; but you need to transfer the money the same year as earned...????

Very good points. As a US citizen no way to avoid paying US income taxes of pension, dividend,  SS or other incomes if you owe it.

No matter where one "lives". The number of US persons renouncing passport is skyrocketing. I'm not a big fish but if I could afford to emmigrate to Singapore or other suitable jurisdiction I would do it in a minute. Ask Eduardo Saverin. And his lawyers got him a sweetheart exit deal.

I get nothing worthwhile there but right to work. After retirement sounds pointless.

Edited June 15, 2020 by Captain Monday

[Geordieabroad]

On 6/15/2020 at 9:54 AM, lopburi3 said:

Have you checked the laws?  If you are a resident here you owe tax on worldwide income from my reading, unless except by tax treaty.

If you have paid tax at the source of the income, you are NOT liable for tax in Thailand. Some people just seem to like to try to complicate things and/or pull Thailand down. If you haven't done it, don't comment, simple

[lopburi3]

6 minutes ago, Geordieabroad said:

If you have paid tax at the source of the income, you are NOT liable for tax in Thailand. Some people just seem to like to try to complicate things and/or pull Thailand down. If you haven't done it, don't comment, simple

The law is not a simple tax paid somewhere no further tax owed - and indeed can become very complex.  That is why there are tax treaties with various countries.   

[khunPer]

4 hours ago, Geordieabroad said:

If you have paid tax at the source of the income, you are NOT liable for tax in Thailand. Some people just seem to like to try to complicate things and/or pull Thailand down. If you haven't done it, don't comment, simple

But it still depends on the DTA (Double Taxation Agreement) where you are taxable, and if no DTA, you are fully taxable, even in two countries. Simple as that, but can be quite complicated in real life...????

[wordchild]

10 hours ago, lopburi3 said:

The law is not a simple tax paid somewhere no further tax owed - and indeed can become very complex.  That is why there are tax treaties with various countries.   

Completely correct, those who claim that “I have already paid my tax in xyz country therefore nothing due in Thailand”,  need to check the actual Thai Tax Law.
Because one day Thailand  might try to enforce it.

The reality is that the situation is not so clear cut.

[wordchild]

10 hours ago, Geordieabroad said:

If you have paid tax at the source of the income, you are NOT liable for tax in Thailand. Some people just seem to like to try to complicate things and/or pull Thailand down. If you haven't done it, don't comment, simple

Sorry but this is misleading nonsense!

[Geordieabroad]

On 6/16/2020 at 8:46 PM, wordchild said:

On 6/16/2020 at 10:14 AM, Geordieabroad said:

If you have paid tax at the source of the income, you are NOT liable for tax in Thailand. Some people just seem to like to try to complicate things and/or pull Thailand down. If you haven't done it, don't comment, simple

Sorry but this is misleading nonsense!

I am from UK but retired in Thailand. As i said, i am still working in SE Asia and am NOT required to pay income tax on salary remitted monthly from abroad to Kasikorn bank. You are the one misleading people, post a link to back up your (false) information

[wordchild]

1 hour ago, Geordieabroad said:

I am from UK but retired in Thailand. As i said, i am still working in SE Asia and am NOT required to pay income tax on salary remitted monthly from abroad to Kasikorn bank. You are the one misleading people, post a link to back up your (false) information

As others have posted above, the liability for taxation (on overseas income)  in Thailand depends upon;

  1) where the income arose (and from what kind of  activity) and the nature of that countries Tax Treaty  agreement with Thailand, EVERY country is different  and some of these DTA,s are very old and out of date; eg in the case of certain countries pensions are covered , in the case of the UK most pensions (other than certain  Government pensions) are NOT covered by the UK/Thailand DTA (which was last updated in 1981!); so, in the case of the UK there is a, theoretical, risk of further tax to pay on an already taxed (private) UK pension. I am well aware that, the Thai tax authorities do not enforce anything around this issue at the moment, nevertheless the legal position is such that it 'could' happen. Google UK-Thailand Double Taxation Treaty for more info.

 2) When the income was brought into Thailand: As has been discussed many times before , on this site, Thailand only regards income brought into country in the year it was earned as potentially taxable. Income which is brought into country during  the calendar  year following the year it was earned is treated as Capital (ie savings) and not subject to taxation.  

The situation is not as simple or straightforward (unfortunately) as you suggested. There are a number of situations in which income brought in from abroad could be liable for tax in Thailand, even if already subject to taxation at source.

I work in Thailand and also, like you , earn income from abroad. I think , those of us who work in Thailand and therefore,  already file taxes here,  need to be careful around these kinds of issues, because we are already on the radar. So i , like others i know,  pay a Thai tax adviser to check everything. For expats who are not on the "radar" ie who do not have a Thai tax code these kinds of issues are unlikely to ever be a concern.  

Tilleke and Gibbins ,  PWC plus others produce regular Thai taxation updates, maybe helpful to google those plus (if you want primary sources) most of the various Thai Double Taxation  treaties, incl the UK one,  are available on the internet in English.

 

Edited June 18, 2020 by wordchild

[wordchild]

BTW, there is nothing unusual about Thailand in this regard. It is the same in most places around the world. Most countries  reserve the right to impose further levels of taxation on income earned outside that country by a resident entity (company or individual) even if there has already been some amount of tax paid at source. That is the whole point of DTA Treaties between countries. They define types of overseas income that maybe exempt and also what could be subject to further tax, in your country of residence. 

In fact Thailand is quite liberal and flexible , compared to some eg UK,USA. Especially with the  fairly unique situation, in Thailand, of being able to avoid local taxation, on overseas income, completely, by deferring the bringing in of  income into the following year

Edited June 18, 2020 by wordchild