Working for a foreign employer in Thailand

[tezzaaa]

Hi,

I'm currently contracting (IT) for a company in the UK using my own limited company. I tend to pay myself dividends as it's more tax efficient.

My wife is Thai and we have for many years talked about moving to LOS and this might now be possible given I work fully remotely anyway and the client is interested in a long term play, either on a contract or permanent basis.

 

Here comes my question: what are my options, shall I set up a ltd cny in Thailand in my wife's name as main shareholder and pay ourselves dividends, or use an umbrella cny? I would be based in Thailand more than 183 days per year so domiciled there.

 

Thank you

 

Best wishes

 

 

 

 

[tonray]

Best advice would be to continue working remotely and keep it quiet, IE don't tell anyone outside of your wife. Keep life simple. 

[JRG23]

I have worked for many years in Thailand for a foreign firm.

Use a PEO.

It's legal and easy. Pay tax, pay social security (and receive card and vaccine rights), and get work permit etc sorted by the PEO. 

Couldn't be easier.

[scorecard]

On 8/13/2021 at 10:13 AM, tonray said:

Best advice would be to continue working remotely and keep it quiet, IE don't tell anyone outside of your wife. Keep life simple. 

If the OP is interested to apply later for Permanent Residence then it's a bit more complicated:

 

- OP needs to have continuous Thai work permits for several years, therefore need to be employed by a Thai registered company (to get the WP).

 

- OP needs to prove that his personal annual Thai tax return has been submitted and cleared for several years. 

[h3ith]

On 8/13/2021 at 7:13 AM, tonray said:

Best advice would be to continue working remotely and keep it quiet, IE don't tell anyone outside of your wife. Keep life simple. 

A Thai company registration requires that you hire at least 4 Thai employees, excluding your wife and her family, to my knowledge. I'm not sure about the minimum salaries you have to offer those 4: THB 15,000 per month? Thus, you'd have a "licensing fee" of THB 60,000 in the form of these 4 salaries every month and would have to think about what kind of work the 4 can contribute for their salary. Your wife may give you the evil eye if you try to hire 4 nubile "personal assistants" in tight pencil skirts. 

 

You can sign an employment contract with an IT service company licensed by the Board of Investment (BoI). The company will obtain an official work permit for you.

They will usually take a 30% cut of your client's payments, but this includes the withholding tax (income tax) on your Thai salary. Example: Your client pays GBP 5,000 monthly to your employer. You will receive a THB salary pay-out equivalent to GBP 3,500. The deduction of 1,500 also covers your Thai income tax (e.g. ~20%pts tax are included in the deduction of 30%; the remaining 10%pts are the profit margin of the BoI company). Thai personal income tax rates are lower than in many European countries, so the 30% may be a bargain, unless you realize even lower UK tax rates on dividends.

 

 

 

[tezzaaa]

Hi all, many thanks for your replies.

Best regards

Edited August 14, 2021 by tezzaaa
found out info

[tezzaaa]

2 hours ago, JRG23 said:

I have worked for many years in Thailand for a foreign firm.

Use a PEO.

It's legal and easy. Pay tax, pay social security (and receive card and vaccine rights), and get work permit etc sorted by the PEO. 

Couldn't be easier.

Can you please recommend a PEO? And do they charge much?

[scorecard]

1 hour ago, tezzaaa said:

Can you please recommend a PEO? And do they charge much?

Which would give you a work permit (WP), renew the WP every year for several years, and ensure your annual Thai tax returns are submitted and cleared and you have the basic requirements to apply for Thai PR (in simple words a visa for life, cancels only on your death).

 

Many here will say PR is too expensive (and it's not cheap), and has very little benefit.

 

But if your plan is to stay in Thailand forever the benefits:

 

- Once the Certificate of Residence (PR) book is issued you never need to visit Immigration (except for an exit/re-entry stamp as needed - which is a simple mechanical process, no questions asked, no interview, no update of your visa etc).

- No annual renewal, no complications as rules/regulations change, no 800,000 Baht or whatever in the bank etc.

- I've held Thai PR for 23 years, the biggest benefit for me (any many others will say the same), a 99.9% guarantee that I will never (because of visa complications/changes) be separated from my wonderful Thai family. 

 

Ultimately of course a personal decision.

 

Good luck...

[khunPer]

On 8/12/2021 at 9:16 PM, tezzaaa said:

Here comes my question: what are my options, shall I set up a ltd cny in Thailand in my wife's name as main shareholder and pay ourselves dividends, or use an umbrella cny? I would be based in Thailand more than 183 days per year so domiciled there.

You would still need some Thai employees for a work permit. If it's a partnership limited with your wide you only need two, and your wife can be on of them, and 1 million baht in registered capital; if it's a normal company limited with 3 shareholders you need 4 Thai employees, and 2 million baht in registered shareholder capital.

 

For taxation income tax might be better than paying company tax and dividend tax for the first 2 million baht, i.e. up to 25 percent income tax with the full rate only from 1,000,001 baht to 2,000,000 baht. Salary is deducted as expense from the company's profit.

 

Company tax is 20 percent - 30 percent if the company has a lot of profit - and dividend tax is 10 percent, so "salary" paid out as dividend will be "income taxed" by 28 percent (i.e. 100 minus 20% = 80 minus 10% = 72).

 

Take 2 million baht income as example:

As work income (wife has own income), the tax is 325,000 baht.

As dividend, the company tax and withholding tax together are 560,000 baht.

 

It will be worth having your wife as employed - you need two in the company - and let her have an income, the first 160,000 baht are tax exempt, and the tax rates begin with 5 percent. You can find a Thai income tax calculator HERE.

 

Have you considered to keep your UK limited company?

Check with the Double Taxation Agreement between UK and Thailand about dividend taxes in UK, it would probably be free from income tax in Thailand, if already taxed in UK. 

 

You are allowed to live from your savings. Foreign income is only income taxable in Thailand if the foreign income is transferred into Thailand during the same year as it's earned, the following year it's considered savings, and savings are free from income tax; i.e. if you UK company pays it's annual dividend in December, and you transfer the money in January the following year, it's tax free savings...????

[tezzaaa]

8 hours ago, khunPer said:

You would still need some Thai employees for a work permit. If it's a partnership limited with your wide you only need two, and your wife can be on of them, and 1 million baht in registered capital; if it's a normal company limited with 3 shareholders you need 4 Thai employees, and 2 million baht in registered shareholder capital.

 

For taxation income tax might be better than paying company tax and dividend tax for the first 2 million baht, i.e. up to 25 percent income tax with the full rate only from 1,000,001 baht to 2,000,000 baht. Salary is deducted as expense from the company's profit.

 

Company tax is 20 percent - 30 percent if the company has a lot of profit - and dividend tax is 10 percent, so "salary" paid out as dividend will be "income taxed" by 28 percent (i.e. 100 minus 20% = 80 minus 10% = 72).

 

Take 2 million baht income as example:

As work income (wife has own income), the tax is 325,000 baht.

As dividend, the company tax and withholding tax together are 560,000 baht.

 

It will be worth having your wife as employed - you need two in the company - and let her have an income, the first 160,000 baht are tax exempt, and the tax rates begin with 5 percent. You can find a Thai income tax calculator HERE.

 

Have you considered to keep your UK limited company?

Check with the Double Taxation Agreement between UK and Thailand about dividend taxes in UK, it would probably be free from income tax in Thailand, if already taxed in UK. 

 

You are allowed to live from your savings. Foreign income is only income taxable in Thailand if the foreign income is transferred into Thailand during the same year as it's earned, the following year it's considered savings, and savings are free from income tax; i.e. if you UK company pays it's annual dividend in December, and you transfer the money in January the following year, it's tax free savings...????

Many thanks for this detailed answers ????