US Dividends Tax in Thailand (Non US Citizen)?

[corkman]

Dear All,

 

As a non-US citizens (non-US expat) living and working (tax resident) in Thailand, what tax would I pay on US dividends? I am referring to US stocks, traded on the NYSE via a US based online broker. I have read it is 30% but it depends on your country of residence.

 

I have never lived in the US. Just visited a few times for short holidays.

 

Does anyone have any experience of this?

 

Thanks in advance.

 

 

[taxout]

Under the US-Thai Tax treaty, the withholding tax on dividends paid to a "resident" of Thailand is 15 percent, not the usual 30 percent.

 

For purposes of the Treaty, you're a "resident" of Thailand if you're subject to tax in Thailand by reason of domicile, residence, etc, with one big exception: even if you are so subject to tax in Thailand, you are not considered a "resident" if you're liable to tax in Thailand only in respect of income from Thailand.

 

In short, unless Thailand taxes you on your worldwide income, you are not entitled to the reduced rate of withholding under the treaty.

 

https://www.irs.gov/businesses/international-businesses/thailand-tax-treaty-documents

[Oxx]

The location of your broker isn't what matters.  What matters is whether the broker implements the lower 15% withholding rate for Thai residents or not.  In my experience Saxo in Singapore doesn't, so I paid 30%, but Internaxx in Luxembourg does, so I paid 15%.  Best to ask your broker.

[malathione]

As Oxx said, it depends on what your broker is willing to do. You would fill out a W8-BEN which your broker would file on your behalf entitling you to a lower withholding tax rate as tax resident in Thailand.

[Guderian]

Sorry, I'm new to this, but is there a similarly reduced rate of tax payable on dividend income from the UK, say from shares in the FTSE, or is it just a US-Thai thing?

[topt]

6 minutes ago, Guderian said:

Sorry, I'm new to this, but is there a similarly reduced rate of tax payable on dividend income from the UK, say from shares in the FTSE, or is it just a US-Thai thing?

It is specific to the US - and depends on where you are based/broker as Oxx said. When I was in the UK and had some specific US stocks I filed a W8-BEN form to reduce withholding tax.

 

No such thing for UK - but you do get an small annual allowance for nil tax on dividends - off hand 2k or something? 

 

https://www.gov.uk/tax-on-dividends

Edited July 4, 2020 by topt
added link

[Oxx]

19 minutes ago, Guderian said:

Sorry, I'm new to this, but is there a similarly reduced rate of tax payable on dividend income from the UK, say from shares in the FTSE, or is it just a US-Thai thing?

 

No.

 

15 minutes ago, topt said:

No such thing for UK - but you do get an small annual allowance for nil tax on dividends - off hand 2k or something? 

 

Wrong.  That's for residents.

 

With the UK, there is no further tax to pay upon dividend income if you're non-resident.  Only if you're UK resident and have substantial dividend (or other) income will you need to pay additional income tax.

[4MyEgo]

22 minutes ago, Guderian said:

Sorry, I'm new to this, but is there a similarly reduced rate of tax payable on dividend income from the UK, say from shares in the FTSE, or is it just a US-Thai thing?

In Australia if your dividends are fully franked, i.e. the usual 30% tax is taken out at the time they pay you your dividend, you don't pay any tax, and if you made a capital gain, there is no capital gains tax payable, suffice to say Thailand gets nothing, however you must be a non resident to qualify if investing in the ASX.

[topt]

16 minutes ago, Oxx said:

 

No.

 

 

Wrong.  That's for residents.

 

With the UK, there is no further tax to pay upon dividend income if you're non-resident.  Only if you're UK resident and have substantial dividend (or other) income will you need to pay additional income tax.

Oxx correct me if I am wrong but my understanding was if you are claiming the PA (which you can do as a non resident) you get taxed and if disclaiming it then as you say there is no additional tax to pay?

[partington]

3 hours ago, Oxx said:

 

No.

 

 

Wrong.  That's for residents.

 

With the UK, there is no further tax to pay upon dividend income if you're non-resident.  Only if you're UK resident and have substantial dividend (or other) income will you need to pay additional income tax.

It's a bit more complicated than that.

 

For non-residents,  UK investment income will not be taxed (is termed "disregarded income"), BUT only if you do not claim your personal allowance against any other income. You can choose whether to exercise this privilege or not.

 

So you need to work out whether you would pay less tax by including your UK investment income with all your other income, and claiming your personal allowance, or by not claiming your personal allowance and having all your investment income disregarded.

 

Obviously the closer your investment income gets to your personal allowance (£12,500) the less worthwhile it is to claim it, depending on how much other UK income you have.

 

One way to avoid this dilemma completely is to invest in funds where the income is deemed to arise outside the UK. Then you are a non-resident with income arising outside the UK (even if the funds are bought through a UK broker and paid into a UK brokerage account), and this is not subject to UK tax. All Vanguard ETFs for example are domiciled in Ireland, so dividends are not counted as arising in the UK.

 

Extracts from:

https://www.gov.uk/government/publications/non-residents-and-investment-income-hs300-self-assessment-helpsheet/hs300-non-residents-and-investment-income-2019

 

"With the exception of income from property in the UK and investment income connected to a trade in the UK through a permanent establishment, the tax charge for non-residents on investment income arising in the UK is restricted to the amount of tax, if any, deducted at source. If the tax charge is limited in this way, personal allowances won’t be given against other income. This restriction doesn’t apply in the overseas part of a split year.

[...]

How the restriction works

If you aren’t resident in the UK, the tax you pay on all your income can’t be more than:

the amount of tax that would be chargeable on income, other than the ‘disregarded income’ shown below, but before the deduction of any personal allowances due plus the amount of tax deducted at source from the ‘disregarded income’"

 

Edited July 4, 2020 by partington

[sencelebi]

You will be taxed at the source, means you will be paying tax in the US and Thailand have no double tax law. As long as you pay your tax in the US then you dont have to pay in Thailand. I do have an income in the US and I file my tax return and pay my taxes there, I don't have to pay tax here in Thailand since I ve been taxed at the source. Thailand and US have some special agreements about taxation etc. 

[khunPer]

On 7/3/2020 at 6:31 PM, corkman said:

Does anyone have any experience of this?

15 percent dividend tax is what I pay from US stocks, I'm also non US-resident (I'm European). The bank where I have my trading platform and stock deposit takes care of the approval – it's a Scandinavian bank – I believe it runs for three yeas, and can be renewed; I've got my renewed a couple of times.

There are no tax in Thailand of foreign dividends where tax already has been withheld, so you can tranfer the dividend into Thailand the same year as it's earned.

[Oxx]

5 hours ago, khunPer said:

There are no tax in Thailand of foreign dividends where tax already has been withheld, so you can tranfer the dividend into Thailand the same year as it's earned.

 

I believe this is incorrect.  According to KPMG:

 

"Interest, dividend, and rental income derived from sources outside Thailand by resident of Thailand are taxable in Thailand to the extent such income is paid or remitted into Thailand within the same calendar year it is received."

 

https://home.kpmg/xx/en/home/insights/2011/12/thailand-income-tax.html

 

 

[khunPer]

6 hours ago, Oxx said:

 

I believe this is incorrect.  According to KPMG:

 

"Interest, dividend, and rental income derived from sources outside Thailand by resident of Thailand are taxable in Thailand to the extent such income is paid or remitted into Thailand within the same calendar year it is received."

 

https://home.kpmg/xx/en/home/insights/2011/12/thailand-income-tax.html

What KPMG states does however normally not include dividends that has been withheld taxed in a country with a DTA (Double Tax Agreement), you might need to check the DTA for the country in question. 

 

For some countries the DTA states that you even can get the dividend tax reduced to 10 percent, following the Thai dividend tax, if the withheld dividend tax is higher than 10 percent, but you might need to apply for it year-by-year – I have to, so I talk from experience, I need to be registered as tax resident in Thailand, and make annual tax return form for the year in question, and apply for certificates for both.

 

For US – the origin of the dividend in question – the DTA says in Article 10...

Quote

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other 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 beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed

 

a) 10 percent of the gross amount of the dividends if the beneficial owner is a company which controls at least 10 percent of the voting power of the company paying the dividends; or

 

b) 15 percent of the gross amount of the dividends in all other cases.

 

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

 

However all other income is income-taxable in Thailand if transferred into Thailand during the same calendar year as it's earned, but again depending of the DTA some income might be excluded. Many states for example also exclude retirement pensions, even the WTO-model for DTAs says that retirement pension is taxable in the country of tax residence. You might see the expression in DTAs like "...can be taxed in both contracting states", meaning, that if one state tax it, it cannot be double taxed, as there is a DTA.

Edit: Link here to PDF-download of all present DTAs with Thailand.

Edited July 5, 2020 by khunPer

[taxout]

You also need to look at the definition of "resident." From the US-Thai Tax Treaty:

 

"For the purposes of this Convention, the term 'resident of a Contracting State' means any person who, under the laws of the State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature. . . The term, however, does not include any person who is liable to tax in the State in respect only of income from sources in the State."

 

Then, to the extent you are taxed only on remitted dividends, you need to look further:

 

"Where under any provision of this Convention income arising in one of the Contracting States is relieved in whole or in part from tax in that Contracting State and, under the law in force in the other Contracting State, a person in respect of the said income, is subject to tax by reference to the amount of the income which is remitted to or received in the other Contracting State and not by reference to the full amount of the income, then the relief to be allowed under this Convention in the first-mentioned Contracting State shall apply only to so much of the income as is remitted to or received in the other Contracting State during the calendar year such income accrues or the next succeeding year."

 

Basically, to get the reduced rate of US withholding, you have to remit the dividends to Thailand within two years. (Assuming Thailand only taxes remitted foreign dividends: I'm not familiar with the Thai tax rules.)

 

 

Edited July 5, 2020 by taxout

[corkman]

Thank you all for your very informative replies!

[corkman]

Hi everyone,

 

Such helpful replies. Thank you! My US broker is charging me 15%. So I am pleased with that.

On a similar note - same question for tax on capital gains (profits from selling stocks) for non-us-citizen living in Thailand. Does anyone know the rate, or can point me in the right direction?

 

Thanks.

[khunPer]

2 hours ago, corkman said:

Hi everyone,

 

Such helpful replies. Thank you! My US broker is charging me 15%. So I am pleased with that.

On a similar note - same question for tax on capital gains (profits from selling stocks) for non-us-citizen living in Thailand. Does anyone know the rate, or can point me in the right direction?

 

Thanks.

If you take the money into Thailand the same calendar year as earned, the gain is due for income tax – same for gains from any stock market, whilst gains from the domestic SET is free of tax – if you wait till next calendar year, or later, the gain can be transferred as tax-free savings; simple as that...????????

 

I don't think I know anybody that transfer foreign stock market gains to Thailand in the same year as earned...

[corkman]

12 hours ago, khunPer said:

If you take the money into Thailand the same calendar year as earned, the gain is due for income tax – same for gains from any stock market, whilst gains from the domestic SET is free of tax – if you wait till next calendar year, or later, the gain can be transferred as tax-free savings; simple as that...????????

 

I don't think I know anybody that transfer foreign stock market gains to Thailand in the same year as earned...

Excellent stuff, thank you so much!