Advertorial Do expats working remotely in Thailand need to pay taxes in Thailand?

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If you're looking for a remote work destination, Thailand should be on your shortlist. The Land of Smiles offers affordable living, great quality of life, and diverse lifestyle options that cater to people of all ages and preferences. Bangkok and Chiang Mai, known as the "twin cities" of the digital nomad movement, are always among the most beloved cities for digital professionals who want to work remotely abroad.

 

Before you pack your bags and hop on the plane, however, it’s crucial to understand the tax implications of your move, both as they relate to Thailand and your home country. Fail to do so, and you could face fines if the violations are slight. More serious violations could result in a legal nightmare and make you regret your move altogether. Our friends at Pacific Prime Thailand have shared with us what they know about this topic, which we’ll share with you here.

 

But first, please remember that this discussion does not constitute legal or tax advice, which we are not qualified to provide, and you should seek from qualified lawyers or tax specialists. The purpose of this article is to shed some light on the topic, and give a heads-up of what you can expect to hear when you sit down with your professional advisor.

 

Naturally, we cannot possibly discuss the tax situation of your home country. The crucial questions as they relate to Thailand are as follows:

Are you a tax resident of Thailand?

This is the fundamental question to ask. Thailand’s Revenue Department categorizes everyone either as a tax resident or a tax non-resident of Thailand. Individuals who stay in the country for 180 days or more in the calendar year are considered residents, and those who spend less than 180 days in the calendar year are counted as non-residents.

 

Residents are taxed on their income on a worldwide basis, meaning that they will have to pay tax on their income wherever it is generated. However, income generated outside Thailand is taxable only if it is paid in Thailand, or brought or remitted into Thailand, in the same calendar year as the income is earned or distributed.

 

That means that, for example, if you receive some dividend income in your home country, but it is remitted a full year after distribution or not remitted into Thailand at all, then it is not subject to income tax in Thailand.

 

By contrast, if you spend less than 180 days of the calendar year in Thailand, that is, you are a tax non-resident, then as a general rule only your income for work performed in the country will be taxable in Thailand. This is the case regardless of where the payment is received or where your employer is located.

 

For example, if you are an expat working remotely from Thailand but spend less than 180 days of the calendar year there, and you also receive dividend income in your home country which you remit to Thailand as soon as it is received. Only your income from working remotely in Thailand is subject to the country’s personal income tax: your dividend income is not taxable in Thailand.

 

As of March 2023, the personal income tax rate of Thailand ranges from 5% to 35%. For the most up-to-date details, please click here.

Does your home country have a double tax agreement (DTA) with Thailand?

It doesn’t take mind-reading skills to know what you are likely pondering: what if a part of my income is taxable both in my home country and in Thailand? This is where double tax agreements (DTAs) come in.

 

DTAs prevent the same income from being taxed twice: once by the home country and once by the country in which the individual works or resides. Thailand has DTAs with numerous countries and regions, among them Australia, Canada, China, France, Germany, Hong Kong, Japan, Malaysia, Singapore, the United Kingdom, and the United States.

 

One governing principle of DTAs is that where the same employment income would otherwise become taxable in two tax jurisdictions, it is only taxable in the jurisdiction where the employment physically takes place. Thus, as an expat remote employee in Thailand, your employment income is taxable only in Thailand, provided your home country has entered into a DTA with Thailand.

 

Note, however, that some DTAs only give the resident country “first taxing” rights, meaning that the other party to the DTA can still impose a tax (which is often the “remainder” of what the individual would otherwise have to pay less the amount already paid to their country of residence). If such is your case, you are no better off simply because Thailand has lower personal income tax rates than your home country.

 

Moreover, if you are a tax non-resident of Thailand, and a permanent establishment does not pay your employment income in Thailand of your employer, another exception applies, which in effect means your employment income as a remote employee in Thailand is not liable to the country’s personal income tax, notwithstanding the fact that you are in Thailand when you work for pay.

 

As you can see already, this area of tax law is something only professional tax advisors or specialists can even come close to clearly explaining. The best we can do is give a rough outline of the principles involved.

Looking for a health insurance plan that meets your needs as an expat working remotely in Thailand?

Thailand is a treasure trove when it comes to cultural diversity. Add to that its friendly and easygoing people and mouth-watering cuisines, and it’s little wonder the Land of Smiles is one of the top destinations for expats from all around the globe.

 

To make your time in Thailand as enjoyable and worry-free as possible, in addition to careful tax planning, you need the peace of mind that comes from having sufficient and comprehensive health insurance. If you are trying to decide between long-stay visa insurance and expat health insurance, Pacific Prime Thailand is your ideal partner! With more than 20 years of experience, they have the expertise and experience to give you unbiased advice like few others.

 

So, contact them to discuss your needs or for a free plan comparison today!