Paying Dividends from UK company to Thailand

[Satcommlee]

Hello guys,

 

Would be very grateful for some pointers here.. (Persons with direct experience preferred)

 

So I set up a UK Limited company and receive money for services from an international company, where there is no consumption of the service in Thailand.

 

I decide to pay myself a monthly dividend from UK company and remit it to my personal bank account in Thailand, this dividend will be near 100% of all receipts into UK.

 

Will I (and Juristic entity in UK) be exempt from taxes in UK (based on undisputed non-resident status in UK)

 

Then can I pay my tax on this only in Thailand under the Dual Taxation Treaty with UK?

 

I repeat there is no question of my tax residence, it is 100% Thailand.

 

I am not interested in tax evasion.

 

Would be delighted to hear some experiences and even professional advice arrangement via PM.

 

This is not a work Permit issue, so please do not go there, I have a work permit.

 

Cheers

 

Lee

 

 

[SGD]

You are only part way to the holy grail of answers.

 

Thailand treats income earned more than 12 months ago as capital and not income. This is key to the wider picture because of the dual taxation treaty, which also works when there is no tax to pay in the UK and hence, no tax to pay in Thailand.

 

You need to consider the issue of first VAT, then corporation tax and finally personal taxes on dividends over certain levels, which would give rise to personal taxation in the UK were they paid in the UK.

 

The whole answer is complex and needs careful understanding because the actual answer is very much dependent upon the sums involved, the time period you are thinking about and whether funds not taken out of a company can be better used than paying dividends and thus accruing tax liabilities.

If the numbers are small, you can self educate. If the numbers are more than £50k and less than £100/250k per year then you can get a mix of self education and professional advice. If over £100/250k then get advice.

[khunPer]

On 3/23/2021 at 6:36 PM, Satcommlee said:

Then can I pay my tax on this only in Thailand under the Dual Taxation Treaty with UK?

 

I repeat there is no question of my tax residence, it is 100% Thailand.

 

I am not interested in tax evasion.

I have experience from Denmark and the DTA between Thailand and Denmark, where a tax-residents of Thailand is entitled to pay either 15 percent dividend tax, or Thai dividend-tax of 10 percent, instead of the dividend tax of the country paying the dividend (in Denmark 27 percent).

 

The DTA between Thailand and Great Britain says something similar...

Quote

Article 11 Dividends

(1) (a) A dividend paid by a company which is a resident of the United Kingdom to a resident of Thailand may be taxed in Thailand.

(b) Where, under paragraph (2) of this Article, a resident of Thailand is entitled to a tax credit in respect of that dividend, tax may also be charged in the United Kingdom and according to the laws of the United Kingdom on the aggregate of the amount or value of the dividend and the amount of the tax credit at a rate not exceeding 15 per cent.

(c) Except as provided in sub-paragraph (b) of this paragraph, a dividend paid by a company which is a resident of the United Kingdom to a resident of Thailand who is subject to tax in Thailand in respect of that dividend shall be exempt from any tax in the United Kingdom which is chargeable on dividends.

 

(2) A resident of Thailand who receives a dividend from a company which is a resident of the United Kingdom and who is subject to tax in Thailand on that dividend shall be entitled to the tax credit in respect of that dividend which an individual resident in the United Kingdom would have been entitled to had he received that dividend and to the payment of any excess of that tax credit over his liability to United Kingdom tax. However, this paragraph shall not apply where the recipient of the dividend is a company which either alone or together with one or more associated companies directly or indirectly controls at least 10 per cent of the voting power in the company paying the dividend; for this purpose, two companies shall be deemed to be "associated" if one is directly or indirectly controlled by the other, or both are directly or indirectly controlled by a third company.

...

 

Link to DTA HERE.

 

If the dividend tax is withheld in Great Britain you might need to apply for a tax-return, which is the case for Danmark.

 

To be eligible for tax repayment you might – like us that are having dividends from Denmark – need to show proof of being tax-resident in Thailand; i.e. obtaining a Thai TIN (Tax Identification Number) and submit an annual tax-statement, in Thailand called Tax Return Form (PND 90 or PND 91, depending of you income sources), before end of March. After that you can apply for an Income Tax Payment Certificate R.O.21 and a Certificate of Residence R.O.22. You would need to do this every calendar year (tax year). You might need some kind of Thai income, which could be interest and/or dividends from holding Thai stocks, for example having some stocks in a SET-portfolio, to be eligible for a TIN and submitting tax-return form.

 

The above procedure should make you eligible to 15 percent dividend tax; however, if you prove that all the paid dividend is transferred into Thailand during the same calendar year as it's earned (paid out), you should be eligible to pay Thai dividend tax of 10 percent (your suggestion of having the dividends paid directly into a Thai bank account).

 

Note that you often hear that for tax-planning you shall not transfer foreign income into Thailand during the same calendar year as it's earned, but wait till the following calendar year or later, as the foreign income then is considered savings, but here you need to tax the income in Thailand, to be eligible to Tax-tax, i.e. 10 percent dividend tax, instead of the 15 percent withholding tax generally applying for foreign tax-residents.

 

In Denmark it's the Danish government that gets the tax, even it's after Thai tax rules.

 

You should be able find legal information and detailed advice for the procedure by the British tax authorities.

 

A tip: Check if you are eligible for other kind of salary or fees that is not income taxed in Britain, when working from abroad; these fees could include fee for being a board member (bord of directors), or fees for a certain contract work. If such fee, or salary, might be paid free from tax to a British bank account, or another offshore account, and if transferred into Thailand the following, or any later, calendar year than the year it's earned, the money is in Thailand legally considered as non-taxable savings.

 

Numerous foreigners seems to be living of savings in Thailand...????

[Satcommlee]

Thank you, some good info here, much appreciated