Thai Tax on Foreign Pensions

[nigelforbes]

My question is very specific to one particular aspect and not a general discussion about tax on pension.

 

US SSc retirement benefit payments received in Thailand during the year they were earned are exempt from Thai tax and may only be taxed by the US.

 

UK State Pension payments however are not exempt under the dual tax agreement and are considered to be taxable in Thailand if remitted in the year they were earned.

 

I receive both pensions. It's very convenient to have them both deposited directly into my Bangkok Bank account although I realize that the bank may well report them both to the Thai Revenue each year as foreign earned income and the bank does have my tax ID number. 

 

My question is: in assessing my liability to Thai tax, based solely on the two pensions described above, is the US SSc payment considered to be disregarded income? If so, that would mean that the UK State Pension would almost fit into the tax free band each year, if not, it means the tax on the UK State pension could be much higher, probably in the 10% band.

 

Anyone?

[Epidemiologist Dave]

UK state/private  pensions are taxed in the UK but not taxed again when remitted to Thailand.

[nigelforbes]

1 minute ago, Epidemiologist Dave said:

UK state/private  pensions are taxed in the UK but not taxed again when remitted to Thailand.

I don't want to get into protracted debates about whether the UK State pension is or is not taxable in Thailand, I understand many people have very entrenched views on this subject. I'm clear that the DTA (below) does not exempt the UK State pension from Thai tax. 

 

"The UK does have a DTA with Thailand.

 

However, it doesn't include most people's pensions. Private pensions are not covered in the DTA, nor is the state/old age pension. Only certain pensions for government employees (yes them looking after themselves again LOL) are included in the DTA".

 

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf

 

This is why I said my question is very specific, my starting point is that the UK State Pension is taxable here and I'm not willing to debate that, the question I need answered is:

 

My question is: in assessing my liability to Thai tax, based solely on the two pensions described above, is the US SSc payment considered to be disregarded income? 

 

[Epidemiologist Dave]

I have lived in Thailand for 14 years and my UK pensions have  never been taxed in Thailand.

Do not dispute facts and confuse other UK pensioners.

[blackshadow]

36 minutes ago, Epidemiologist Dave said:

UK state/private  pensions are taxed in the UK but not taxed again when remitted to Thailand.

velly true....

[nigelforbes]

2 minutes ago, Epidemiologist Dave said:

I have lived in Thailand for 14 years and my UK pensions have  never been taxed in Thailand.

Do not dispute facts and confuse other UK pensioners.

I have lived in Thailand since 1998, which means precisely zero. I also have never been taxed on my UK pension and I do file a tax return every year. My next Thai tax return will be the first one that spans a year when my pensions were remitted directly, as such they need to be reported. Previously the UK State pension was deposited overseas and remitted the following year.

 

Now, if you don't mind, I posted a question I would like answered, if you want to debate this other aspect, please start your own thread4:

 

"My question is very specific to one particular aspect and not a general discussion about tax on pension".

 

"My question is: in assessing my liability to Thai tax, based solely on the two pensions described above, is the US SSc payment considered to be disregarded income? "

 

[JackGats]

If I remember right, according to Thai law everything not earned during the Thai tax year (not transferred to Thailand the same year it was earned) is not taxable in Thailand. The recommendation is to have your pension(s) paid on an account outside Thailand, then to have one or two lump sums transferred to your Thai bank account each year to finance your retirement in Thailand. What you transfer to Thailand is considered "savings" from the pensions earned the previous years. Regarding your question, I'd say "the US SSc payment" should be considered to be disregarded income by Thailand if you transfer the US SSc money as savings from a previous year and not as a pension payment on a monthly basis.

 

This is as far as Thailand is concerned. I understand some might prefer their pensions to fly directly off to Thailand so as to avoid drawing the attention of the taxman in their home country.

Edited October 25, 2022 by JackGats

[nigelforbes]

"My question is very specific to one particular aspect and not a general discussion about tax on pension".

 

"My question is: in assessing my liability to Thai tax, based solely on the two pensions described above, is the US SSc payment considered to be disregarded income? "

 

[nigelforbes]

The question in the OP may best be answered by Americans. If an American resident here files a Thai tax return to recoup tax paid on bank savings interest, would they also be obliged to report any US SSc income also, on that same return?  As said, the US SSc payment cannot be taxed here according to tax treaties but does it still have to be declared n the tax return?

[KannikaP]

The money in my UK and Private pensions was earned when I was working 10 years or more ago. No tax in UK or here.

Edited October 25, 2022 by KannikaP

[nigelforbes]

On 10/25/2022 at 11:42 AM, blackshadow said:

velly true....

 

On 10/25/2022 at 12:00 PM, KannikaP said:

The money in my UK and Private pensions was earned when I was working 10 years or more ago. No tax in UK or here.

 

On 10/25/2022 at 11:31 AM, Epidemiologist Dave said:

I have lived in Thailand for 14 years and my UK pensions have  never been taxed in Thailand.

Do not dispute facts and confuse other UK pensioners.

It doesn't seem as though I'm going to be able to get my question answered so I'll defer to the Thai Revenue and will ask them. But since a number of posters seem to want to have a different debate about the UK State pension and appear to not understand the tax laws, let's have the debate. (See earlier discussion posted along with copy of the Dual Tax Agreement DTA)

 

The UK State pension is NOT exempt from Thai tax under the dual tax agreement between the UK and Thailand, only government pensions are exempt (Section 19, DTA, above). If anyone thinks it is, please post the para in the tax regulations stating where this is the case.  https://www.rd.go.th/english/37748.html

 

Also useful to understand is page 34 of this link, note 4 on the right hand side.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/710099/DT_Digest_April_2018.pdf

 

Funds remitted to Thailand during the year they were earned are considered income under Thai tax law. If the UK State pension is remitted to Thailand in the year it is earned, it is taxable in Thailand, subject to the first 150k of income being exempt from Thai tax.

 

Anyone who receives the UK State pension in Thailand, during the year it was earned, and files a tax return to reclaim tax  paid on savings accounts here, must declare their UK State Pension on that return because both those things are income.

 

The argument is made that the State pension is taxed in the UK hence it is not taxable here. The UK State pension is within the UK personal allowance hence it is not taxable. Other income that sits on top of the pension, such as private pension income and rental income would likely mean the Personal allowance is exceeded and hence is taxable but the State Pension itself is not. Even if it were taxed in the UK it remains eligible to be taxed again here, unless it is exempt by virtue of the DTA, which it isn't.

 

Another argument is made that the money contained in UK State Pension payments was earned years ago when the person was working. That is incorrect. The contributions to the State Pension were made whilst working, not the payments from the pension fund, to the recipient, from the fund. Anyway, NI contributions are not taxable in the UK.

 

Thai banks can now report to the Thai Revenue the overseas income received by foreigners. With greater emphasis now being placed on anti-money laundering laws, expect greater scrutiny of those payments, by the Thai Revenue.

 

Anecdotally: my recent visit to the Thai Revenue to sort out some of my wifes tax affairs' (she has her own business and files separately) raised issues about whether or not she could take deductions for me and my medical insurance payments, which are tax deductible. The Revenue position was that she could, but that would necessitate the Revenue examining my overseas pension payments received here to determine the tax that is due, a clear veiled threat.

 

Over to you.

Edited October 26, 2022 by nigelforbes

[In the jungle]

Thank you for taking the time to post Nigel.  I found your posts very informative.

 

Of course other than issues of taxation there are other good reasons why it may make sense to deposit income earned abroad in a foreign account.  In my case these are because I do not want or need all my income from abroad coming here and because I can time any transfers to Thailand so that they are made when interest rates are advantageous.  A further consideration is that investment opportunities are much better in my home country than they are here. 

[radiochaser]

nigelforbes, does this help answer your question?

https://library.siam-legal.com/thai-law/u-s-thai-tax-treaty-pensions-and-social-security-payments-article-20/

 

Section Code: 0020

 

U.S. – THAILAND TAX TREATY 1998

Convention between the government of the United States of America and the government of the kingdom of Thailand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

Article 20: Pensions and Social Security Payments

 

Subject to the provisions of paragraph 2 of Article 21 (Government Service), pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

Notwithstanding the provisions of paragraph 1, social security benefits and other similar public pensions paid by a Contracting State to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.

Annuities derived and beneficially owned by a resident of a Contracting State shall be taxable only in that State. The term “annuities” as used in this paragraph means a stated sum paid periodically at stated times during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered).

Alimony paid to a resident of a Contracting State shall be taxable only in that State. The term "alimony" as used in this paragraph means periodic payments made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, which payments are taxable to the recipient under the laws of the State of which he is a resident.

Periodic payments, not dealt with in paragraph 4, for the support of a child made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, paid by a resident of a Contracting State to a resident of the other Contracting State, shall be taxable only in the first-mentioned State.

 

 

Edited October 27, 2022 by radiochaser

[radiochaser]

Now, to go off topic a little bit.

If I am receiving disability pension income from the U.S. Veterans administration, which is tax free in the United States, does that mean I can have it directly deposited into a Thai bank and not pay taxes on that income, to the Thai Government?  

Hopefully the answer is, yes, as there are no taxes in the "first-mentioned State" (the United States)!

[ThailandRyan]

On 10/25/2022 at 11:18 AM, nigelforbes said:

I don't want to get into protracted debates about whether the UK State pension is or is not taxable in Thailand, I understand many people have very entrenched views on this subject. I'm clear that the DTA (below) does not exempt the UK State pension from Thai tax. 

 

"The UK does have a DTA with Thailand.

 

However, it doesn't include most people's pensions. Private pensions are not covered in the DTA, nor is the state/old age pension. Only certain pensions for government employees (yes them looking after themselves again LOL) are included in the DTA".

 

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf

 

This is why I said my question is very specific, my starting point is that the UK State Pension is taxable here and I'm not willing to debate that, the question I need answered is:

 

My question is: in assessing my liability to Thai tax, based solely on the two pensions described above, is the US SSc payment considered to be disregarded income? 

 

Are pension payments not made from money vested into a pension fund from years before while employed and disbursed after a person retires?  That is your answer, as the money was earned prior to the year brought into Thailand.

[ThailandRyan]

13 minutes ago, radiochaser said:

Now, to go off topic a little bit.

If I am receiving disability pension income from the U.S. Veterans administration, which is tax free in the United States, does that mean I can have it directly deposited into a Thai bank and not pay taxes on that income, to the Thai Government?  

Hopefully the answer is, yes, as there are no taxes in the "first-mentioned State" (the United States)!

Your pension income is not being earned in the same year as you are transferring it to your account here, or they are depositing it here for you. This is also a lifetime pension granted to you based upon your disability and funded based upon the agreement with you at the time they disability retired you and offered you the amount you are receiving.

[nigelforbes]

3 hours ago, ThailandRyan said:

Are pension payments not made from money vested into a pension fund from years before while employed and disbursed after a person retires?  That is your answer, as the money was earned prior to the year brought into Thailand.

Not really. Those national insurance contributions or US SSc contributions are invested and crucially remain invested whilst payments are made, once retirement age is reached. Just because the person retires, does not mean that the investment process stops, the initial contributions continue to earn income. The disbursements from the fund run parallel with the initial contributions earning investment income hence the income is earned in the same year it is paid to the retiree and potentially in the same year it is remitted to Thailand.

[nigelforbes]

3 hours ago, radiochaser said:

Now, to go off topic a little bit.

If I am receiving disability pension income from the U.S. Veterans administration, which is tax free in the United States, does that mean I can have it directly deposited into a Thai bank and not pay taxes on that income, to the Thai Government?  

Hopefully the answer is, yes, as there are no taxes in the "first-mentioned State" (the United States)!

Whether those payments are free of Thai tax will depend entirely on the double tax agreement (DTA) between the US and Thailand and the Thai Revenue code. If the DTA forbids other countries to tax that income it will be tax free here, if it does not specifically say so, it will be taxable.

[nigelforbes]

3 hours ago, radiochaser said:

nigelforbes, does this help answer your question?

https://library.siam-legal.com/thai-law/u-s-thai-tax-treaty-pensions-and-social-security-payments-article-20/

 

Section Code: 0020

 

U.S. – THAILAND TAX TREATY 1998

Convention between the government of the United States of America and the government of the kingdom of Thailand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income.

Article 20: Pensions and Social Security Payments

 

Subject to the provisions of paragraph 2 of Article 21 (Government Service), pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

Notwithstanding the provisions of paragraph 1, social security benefits and other similar public pensions paid by a Contracting State to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State.

Annuities derived and beneficially owned by a resident of a Contracting State shall be taxable only in that State. The term “annuities” as used in this paragraph means a stated sum paid periodically at stated times during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered).

Alimony paid to a resident of a Contracting State shall be taxable only in that State. The term "alimony" as used in this paragraph means periodic payments made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, which payments are taxable to the recipient under the laws of the State of which he is a resident.

Periodic payments, not dealt with in paragraph 4, for the support of a child made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, paid by a resident of a Contracting State to a resident of the other Contracting State, shall be taxable only in the first-mentioned State.

 

 

Thanks...I'm reading and will answer your question shortly.

[topt]

On 10/25/2022 at 11:31 AM, Epidemiologist Dave said:

I have lived in Thailand for 14 years and my UK pensions have  never been taxed in Thailand.

Do not dispute facts and confuse other UK pensioners.

 

On 10/25/2022 at 11:42 AM, blackshadow said:

velly true....

Perhaps you would like to dispute this. As the OP has pointed out it may be true for you and others so far in practice. However, in theory they could be taxed depending on relevant Thai Revenue threshold's. Those are the facts.

 

One of the issues the Thai Revenue would have is sorting out what is income and what is savings so currently about the only way you are liable to be taxed is if you bring their attention to it in some way as referenced by the OP in a later post.

 

This has been discussed multiple times over the last few years on here especially when referenced to Thailand fully implementing the CRS regulations which has still yet to happen.

So currently nothing should change but you may want to be aware that at some point it probably will.

 

[nigelforbes]

2 hours ago, topt said:

 

Perhaps you would like to dispute this. As the OP has pointed out it may be true for you and others so far in practice. However, in theory they could be taxed depending on relevant Thai Revenue threshold's. Those are the facts.

 

One of the issues the Thai Revenue would have is sorting out what is income and what is savings so currently about the only way you are liable to be taxed is if you bring their attention to it in some way as referenced by the OP in a later post.

 

This has been discussed multiple times over the last few years on here especially when referenced to Thailand fully implementing the CRS regulations which has still yet to happen.

So currently nothing should change but you may want to be aware that at some point it probably will.

 

The choice will be, file a tax return to get back tax paid on savings accounts and in doing so, being obliged to declare overseas pension income, or, letting The Revenue keep the tax and not filing a return. Whilst interest rates on savings are low, this shouldn't be a problem for most people. For those of us who have other reasons to file a return, there seems little choice but to declare the pension income. Just as a reminder, the first 150,000 baht of income is tax free, 150k to 300k is taxable at 5% whilst 300k to 500k is taxed at 10% and 500k to 750K is taxed at 15%. 

[JackGats]

12 hours ago, nigelforbes said:

...

Anecdotally: my recent visit to the Thai Revenue to sort out some of my wifes tax affairs' (she has her own business and files separately) raised issues about whether or not she could take deductions for me and my medical insurance payments, which are tax deductible. The Revenue position was that she could, but that would necessitate the Revenue examining my overseas pension payments received here to determine the tax that is due, a clear veiled threat.

...

 

I'm not surprised at the "veiled threat". I find it a bit stiff to go beg for  refunds of tiny amounts of withholding tax in a country that kindly leaves your main revenues untaxed although its laws would allow for them to be taxed. Best thing to do is to let sleeping dogs lie.

[JackGats]

11 hours ago, radiochaser said:

Now, to go off topic a little bit.

If I am receiving disability pension income from the U.S. Veterans administration, which is tax free in the United States, does that mean I can have it directly deposited into a Thai bank and not pay taxes on that income, to the Thai Government?  

Hopefully the answer is, yes, as there are no taxes in the "first-mentioned State" (the United States)!

Water-tight solution: have two accounts in the US. Account Nr 1 is where your pension is paid. Account Nr 2 is where you transfer money to "cool off" until the following tax year.

 

In January of each year transfer to Thailand, from account Nr 2, the money that was "earned" (paid from your pension fund) in the previous year.

 

This way you would stick to the letter of Thai law 100%.

 

Few people I know bother to go to that extent. I myself don't have my pension paid directly to Thailand on a monthly basis though. I transfer a lump sum from time to time under the label "money for retirement". The transfer is also from my own foreign account, ie it doesn't show as coming from a third party like an (former) employer.

[delgarcon]

My advice to any UK pensioner, reading this bullsh1t is, as long as you don't earn money in Thailand, keep your pension earnings to yourself as you will never be asked to fill in a Thai tax return! You are NOT taxable here.

[nigelforbes]

29 minutes ago, delgarcon said:

My advice to any UK pensioner, reading this bullsh1t is, as long as you don't earn money in Thailand, keep your pension earnings to yourself as you will never be asked to fill in a Thai tax return! You are NOT taxable here.

I don't know what you mean by "keep your pension earnings to yourself". If the UK State pension is remitted here directly, it will be coded and noticed by the banks and it will be reported to The Revenue at some point. Whether the Thai Revenue will ask you to file a tax return to account for that remitted income is only a matter of time, ask yourself, what would the UK government/HMRC do if it noticed monthly payments going into your bank account, from an overseas pension source! You are quite wrong, you ARE taxable here or at least you can be, depending on your circumstances, when you might be asked to complete a tax return is an unknown but it certainly wont be never.

 

The other point that's worth making here is that you've not offered any evidence to suggests why foreign pensions are not taxable here and why foreigners will never be asked to fill out a tax return. Just saying they won't be, really isn't enough, you need to explain why.

 

Edited October 27, 2022 by nigelforbes

[JackGats]

7 minutes ago, nigelforbes said:

... ask yourself, what would the UK government/HMRC do if it noticed monthly payments going into your bank account, from an overseas pension source! ...

 

 

Just curious, would the UK bank report the matter to the tax revenue service of its own accord? Even if you are registered with your UK bank as living outside the UK, ie in Thailand? In some EU countries banks do not report anything except when the tax revenue service initiate an investigation, and tax revenue would only do so if they have you down as a tax resident (tax-liable in the country). In other words, tax residency has nothing to do with where your money gets paid. This makes sense as the opposite would, I think, frighten off foreign account holders.

[delgarcon]

I know you don't speak the King's English Nigel, but I would have thought that this is pretty clear, even for a Yank                                                  Article19                                                                                                                                                                                        
Governmental Services
(1) (a) Remuneration, other than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to any individual in respect of services of
a governmental nature rendered to that State or subdivision or local authority
thereof shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other Contracting
State if the services are rendered in that State and the recipient is a resident of
that other Contracting State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
performing the services.
(2) (a) Any pension paid by the Contracting State or a political subdivision or a local
authority thereof to any individual in respect of services of a governmental nature
rendered to that State or subdivision or local authority thereof shall be taxable
only in that State.
(b) However, such pension shall be taxable only in the other contracting State if
the recipient is a national of and a resident of that State.                                                                                          As I said, UK pensioners with no earnings in Thailand are NOT taxable here                                                                        

 

[nigelforbes]

28 minutes ago, JackGats said:

Just curious, would the UK bank report the matter to the tax revenue service of its own accord? Even if you are registered with your UK bank as living outside the UK, ie in Thailand? In some EU countries banks do not report anything except when the tax revenue service initiate an investigation, and tax revenue would only do so if they have you down as a tax resident (tax-liable in the country). In other words, tax residency has nothing to do with where your money gets paid. This makes sense as the opposite would, I think, frighten off foreign account holders.

Tax residency is determined by the number of days spent in a particular country, typically it's a minimum of 183 days per year.

 

Yes, you are correct, tax residency has nothing to do with where a person banks, it depends where a person spends their time.

 

I no longer know what reporting takes place between banks and a country's tax department, I do know that things have become a lot more complicated since money laundering rules were introduced and information sharing between governments has been enacted. Thailand is keen to clean up it's image in the international community where it has been seen in the past as a safe haven for criminals and money laundering. That's why foreigners now have to produce their passports more often when they perform even simple transactions at a bank. I think we can safety expect the banks and The Thai Revenue to go slightly overboard in enforcing the new rules and that we'll see more rules announced in the short/medium term.

 

[nigelforbes]

7 minutes ago, delgarcon said:

I know you don't speak the King's English Nigel, but I would have thought that this is pretty clear, even for a Yank                                                  Article19                                                                                                                                                                                        
Governmental Services
(1) (a) Remuneration, other than a pension, paid by a Contracting State or a political
subdivision or a local authority thereof to any individual in respect of services of
a governmental nature rendered to that State or subdivision or local authority
thereof shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other Contracting
State if the services are rendered in that State and the recipient is a resident of
that other Contracting State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the purpose of
performing the services.
(2) (a) Any pension paid by the Contracting State or a political subdivision or a local
authority thereof to any individual in respect of services of a governmental nature
rendered to that State or subdivision or local authority thereof shall be taxable
only in that State.
(b) However, such pension shall be taxable only in the other contracting State if
the recipient is a national of and a resident of that State.                                                                                          As I said, UK pensioners with no earnings in Thailand are NOT taxable here                                                                        

 

Para 19, as said previously in the link to the prior discussion on this subject, refers to Government Pensions, not the State Pension. The DTA also specifically excludes the State pension.

 

An excert follows from that previous thread which is linked on page 1:

 

"Here we go, I have managed to copy and paste. Item (b) is believe to most relevant to us.

 

(2)  (a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other contracting State if the recipient is a national of and a resident of that State.
 

But and it's a BIG but. As Oxx pointed out this statement applies to pensions from State or a political subdivision or a local authority thereof . I very nearly missed it myself".

 

BTW, I'm a Brit, born and bred.

Edited October 27, 2022 by nigelforbes

[nigelforbes]

15 minutes ago, delgarcon said:

BTW, I'm a Brit, born and bred

You're also an idiot born and bred!

 

Read this and then stop your scaremongering.

 

https://www.thaiembassy.com/faq/do-retirees-pay-income-tax

Be civil or don't debate!

 

The Thaiembassy link you posted is not an official Embassy of Thailand web site, it is a private link. The quote on the first page refers to Swiss nationals, who have  different reciprocal tax arrangements than the UK.

 

Instead of posting duff links that don't support your argument, how about pointing us to the Thai Revenue ta code rules or the Dual Tax Agreement between the two countries that explains why the UK State Pension is not taxable here?

Edited October 27, 2022 by nigelforbes